FIDIC Contracts And The Enforceability Of Interim Arbitral Awards In Singapore

PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation [2015] SGCA 30

INTRODUCTION

There has been uncertainty over the enforceability of decisions issued by the dispute resolution board ("DAB") in FIDIC contracts. The difficulties in the dispute resolution process provided for in FIDIC contracts are clearly illustrated by the long-running litigation proceedings in Singapore which were first commenced in 2010 and resulted in a decision issued by the Singapore Court of Appeal ("CA") in 2011 (CRW Joint Operation v PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation [2010] 4 SLR 672) ("2011 CA decision").

Following from the 2011 CA decision, there was a further arbitration in 2011 and subsequently, enforcement proceedings in the Singapore High Court.

The appellant, PT Perusahaan Gas Negara (Persero) (TBK) ("PGN") was dissatisfied with the decision of the Singapore High Court (in PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation (Indonesia) and another matter [2014] SGHC 146) and brought the present appeal in the CA against the respondent, CRW Joint Operation ("CRW").

In the present appeal, the following questions were raised:

whether an interim arbitral award ordering PGN to pay CRW a sum of over US$17.3 million ("Interim Award"), which was an amount that the DAB found PGN liable to CRW for, should be set aside; and whether the order of court granting CRW leave to enforce the Interim Award against PGN in the same manner as a court judgment should be set aside. In coming to its decision, the CA also considered the interpretation of section 19B of the International Arbitration Act (Cap 143A) ("IAA"). Section 19B of the IAA provides that an arbitral award made by an arbitral tribunal pursuant to an arbitration agreement is final and binding on the parties to the arbitration agreement, and that an arbitral tribunal shall not vary, amend, correct, review, add to or revoke the award.

An interesting question that arose was whether the Interim Award was an "award" as defined in section 2 of the IAA (i.e. a final and binding decision of the arbitral tribunal on the substance of the dispute), or whether the Interim Award was in substance a provisional award that could subsequently be revoked or amended by the arbitral tribunal. If the Interim Award did not fall within the definition of an "award" in section 2 of the IAA, the Interim Award would not be enforceable under section 19 of the IAA in the same manner as a judgment of the Singapore High Court.

Directors Cavinder Bull, SC and Foo Yuet Min successfully represented CRW in the appeal.

BACKGROUND

In 2006, PGN and CRW entered into a contract to design, procure, install, test and pre-commission a pipeline to convey natural gas from South Sumatra to West Java. The contract between PGN and CRW was based on the 1999 edition of the Red Book published by FIDIC and governed by Indonesian law ("Contract").

The Contract between the parties included a dispute resolution framework based on Clause 20 of the 1999 edition of the FIDIC Red Book (the "1999 FIDIC Red Book"). The Contract inter alia provided that:

a decision of the DAB (a "DAB Decision") "shall be binding on both Parties, who shall promptly give effect to it unless and until it shall be revised in an amicable settlement or an arbitral award..."; if either party is dissatisfied with a DAB Decision, either party may file a notice of dissatisfaction ("NOD") within 28 days of receiving the DAB Decision. If no NOD is filed within that time, the DAB Decision shall become final and binding; if an NOD is issued, both parties shall attempt to settle the dispute amicably before commencing arbitration. Unless both parties agree otherwise, arbitration may be commenced 56 days after the NOD, even if no attempt at amicable settlement has been made; unless amicably settled, any dispute in respect of which the DAB Decision has not become final and binding shall be finally settled by international arbitration. Disputes arose in respect of variation claims submitted by CRW under the Contract. The disputes...