Dispute Adjudication Or Avoidance Board Decision Under The 1999 FIDIC Red Book

In PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation [2015] 4 SLR 364 (SGCA) ("Perusahaan"), the Singapore Court of Appeal confirmed that interim awards made under Singapore's International Arbitration Act ("IAA") are final and enforceable. Notably, that an interim award based on a binding but non-final dispute adjudication or avoidance board ("DAB") decision made under the 1999 FIDIC Red Book Conditions of Contract for Construction (the "Red Book"), is final and enforceable.

The decision is also significant as it confirms that a DAB decision made under the Red Book must be complied with, and promptly, thereby reinforcing the "pay now, argue later" principle central to the DAB procedure. In this regard, the Singapore Court of Appeal clarified that any failure to comply with a binding but non-final DAB decision may be referred directly to arbitration without having to first attempt amicable settlement and/or allowing the period for amicable settlement to lapse. If the arbitral tribunal subsequently overturns the DAB decision, an account of money would be made, such that any overpayment or underpayment in the interim award based on the DAB decision, would be dealt with in the final award.

Brief background

The subject matter of the Singapore Court of Appeal's decision in PT Perusahaan Gas Negara (Persero) v CRW Joint Operation (Indonesia) [2015] SGCA 30 ("Perusahaan") related to a dispute that had arisen between PT Perusahaan Gas Negara ("Persero") and CRW Joint Operation (Indonesia) ("CRW"). The dispute had arisen from variation claims made by CRW under a 1999 FIDIC Red Book contract ("Contract") for the design, procurement, installation, testing and pre-commissioning of a pipeline to convey natural gas from South Sumatra to West Java, Indonesia. CRW referred the matter to the DAB constituted under the Contract, which decided that PGN was to pay approximately USD 17.3 million to CRW ("DAB Decision").

Despite the fact that the Contract contained a provision requiring PGN to comply with the DAB Decision, it refused to do so. A plethora of arbitral and court appeal proceedings followed. Essentially, CRW pursued enforcement of the DAB Decision through arbitration, and thereafter attempted to enforce the subsequent arbitral awards in the Singapore Courts as PGN continually refused to comply with the DAB Decision.

In 2011, after the High Court and Court of Appeal had set aside a previous arbitral decision, which required PGN to comply with the DAB Decision, CRW returned to arbitration, seeking two awards:

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