SYSTECH SOLICITORS LEGAL UPDATE

SYSTECH SOLICITORS 

LEGAL UPDATE 

1st Edition 

April 2016 

www.systech-int.com 

1

INTRODUCTION 

Welcome to the Systech Solicitors Legal Update 

We are delighted to welcome you to the first edition of our Legal Update which provides informative 

comment on recent legal issues and cases from around the world. 

The Update has been prepared by Solicitors, Trainee Solicitors and Paralegals from across our 

regions of operation with a focus on the practical issues for contracting organisations. 

Systech International has been established for 25 years and in this time we have become a leading 

provider of consultancy services to contractors in the construction, engineering, infrastructure and 

energy sectors, supporting the delivery of projects on time and to budget. 

Our integrated approach allows us to offer high quality multi-disciplinary services, including legal, 

from a single business under a single point of responsibility; our solicitors and counsel combine 

with commercial managers, claims consultants, forensic planners and experts to offer an innovative 

and cost effective legal services solution. 

We hope you enjoy the read and we would be delighted to receive your feedback. 

Rebecca and Tom 

Rebecca Redhead, Director of Legal Services, Europe 

Tom Allen, Director of Legal Services, MEA and APAC 

These articles are intended to provide general information about legal topics and have been compiled by Solicitors, 

Trainee Solicitors and Paralegals. Nothing in these articles or in the documents available through it, are intended to 

provide legal advice. You should not rely on any information contained in these articles, or in the documents available 

through it, as if it were legal advice. Systech International is not responsible for the operation or content of any external 

website or hyperlink referred to in these articles. 

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CONTENTS 

4 

7 

10 

13 

16 

19 

22 

26 

John Blackshaw 

Trainee Solicitor 

Reliance and the imposition of pre-contractual obligations in English law 

Young Byun 

Paralegal 

Client’s guide to enforcing arbitration settlements in the UAE 

Dai Edwards 


A practical guide for contractors as to how they can recover delayed payments on construction 

projects in the UAE 

Phil Gazzola 

Solicitor 

Cherry picking in adjudication 

Terry Kim 


The enforceability of FIDIC Sub-Clause 20.1 in the UAE 

Adam Perry 

Solicitor 

Protecting commercially valuable information 

Julia Sim 

Paralegal 

Singapore International Commercial Court 

Susanna Truong 


Security of payment under FIDIC - is an interim DAB award enforceable by the Singapore 

courts? 


3

RELIANCE AND THE 

IMPOSITION OF 

PRE-CONTRACTUAL 

OBLIGATIONS IN 

ENGLISH LAW 

John Blackshaw 

JOHN BLACKSHAW 


john.blackshaw@systech-int.com 

44 

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The first question to ask is: is reliance an issue 

within the construction industry? 

The global construction industry has changed 

significantly in the last fifty years, moving 

from predominantly companies who employ 

all necessary trades to large management 

organisations, who employ little or no tradesmen, 

preferring to secure labour, plant and materials 

from specialist sub-contractors. This was brought 

about by the growth of new forms of contract 

and procurement methods which has resulted 

simultaneously in bigger companies operating both 

nationally and internationally working on projects 

which have become larger and more complex 

requiring specialist knowledge in many areas. A 

further reason for this shift was a reduction of risk 

and the fact that with larger projects it would be 

almost impossible for a single company to employ 

all of the required specialist trades under one roof to 

complete a project. 

This paradigm shift has resulted in a dramatic growth 

in the number of smaller specialist sub-contractors. 

On the one hand this has provided a larger pool to 

choose from but has also increased the dominance 

of small companies in the market. 

Passing responsibility and risk to specialist subcontractors 

has allowed main contractors to operate 

as a more streamlined and professional organisation 

and better manage costs. However, the result 

of this transformation in the market is that main 

contractors have become more reliant on specialist 

sub-contractors and reliance in general has taken a 

more dominant role. 

A scenario to consider 

A main contractor is looking to secure a major new 

project and requires specialist sub-contractors to 

carry out specific packages of the works. He contacts 

suitable companies who provide him with a price, 

which he considers favourable and consolidates 

these prices into a single sum for his competitive 

tender submission to his client. A couple of weeks 

later he is delighted to learn he has been awarded 

the project and subsequently commences work on 

site. What can possibly go wrong? 

Well one possibility is that before he appoints one 

of the proposed specialist sub-contractors, whose 

prices were consolidated into the main bid, the 

company withdraws and notifies him that they have 

had second thoughts. In order to cover certain 

“unknown eventualities” they wish to increase 

their prices by 25% across the board. This, even 

though they are fully aware that you have already 

incorporated the original prices into your own tender 

submission and relied upon them to win the work. 

Despite your protestations they are adamant that 

they will not stick to the original prices. 

Due to this change in circumstances the main 

contractor cannot now profit from the works 

What does he do in this situation? The answer 

depends largely on where he is. The one place 

he may not like to be at this moment is in England 

or Wales as the law provides little or no protection 

in cases like this, unlike many other jurisdictions. 

Indeed England and Wales stand out amongst the 

major common law jurisdictions in not providing 

protection to the main contractor in this case. The 

main options available then are to either accept 

a higher price from the sub-contractor or look for 

someone else. The latter not always being an easy 

option. Redress through a legal means would not 

normally be afforded to the main contractor. 

So why is the main contractor in this situation? 

The reason you are now stuck with no redress 

against the subcontractor is that under English law 

there are little or no consequences for breaking 

off pre-contractual negotiations or withdrawing 

a tender before it is accepted even when the 

withdrawing party knows that his prices had been 

acted upon in good faith and relied upon by another 

party in securing a project. The subcontractor will 

in this case not normally be liable for any losses 

incurred by the main contractor. The English courts 

will not enforce a gratuitous promise and in these 

circumstances the tender submission from your 

specialist sub-contractor amounts to little more 

than this. For the promise to become an obligation 

there must “in general” be consideration. 

Is this fair? 

It certainly does not sound fair as it appears to 

allow subcontractors the opportunity to effectually 

blackmail main contractors into giving them work 

at prices they know they would not have secured 

otherwise. This being even more so the more 

specialised a sub-contractor may be. 

So is there a solution? 

There are several possible solutions including 

collateral agreements but one potentially less 

formalised solution which is used in relation to 

the submission of tenders and pre-contractual 

negotiations in many jurisdictions is in the form of 

an equitable remedy called Estoppel (common 

law jurisdictions) or Culpa in Contrahendo (civil law 

jurisdictions). Both are used to place an obligation 

on one party brought about by reliance on the 

part of the other. There is no need in this case for 

consideration. Reliance is the key issue. 

In the words of Lord Denning in the case of Central 

1 

{1947] KB 130 


5

London Property Trust Ltd v High Trees House 

Ltd (1947) 1 

“Estoppel…….is a principle of justice and 

of equity. It comes to this: when a man, by his words 

or conduct, has led another to believe in a particular 

state of affairs, he will not be allowed to go back on 

it when it would be unjust or inequitable for him to do 

so.” He further stated that “a promise made which 

was intended to create legal relations and to the 

knowledge of the promisor would be acted upon by 

the promisee and was in fact acted upon would be 

binding.” 

So long as the promise was not made under duress 

then estoppel may be available to prevent the 

promisor going back on his promise (D & C Builders 

v Rees (1966) 2 QB 617 (CA)). 

So we are in the clear? 

Not if you are in England or Wales. For then you 

find yourself in one of the very few jurisdictions in 

the world which is out of step with everyone else 

and refuses to use Estoppel in a situation like the 

example above. 

Why should this be? 

When other common law jurisdictions including 

Canada, South Africa, Australia and the USA already 

afford protection to a main contractor in this situation 

and the House of Lords when judging cases from 

Commonwealth countries also have applied 

Estoppel why should things be different in regard to 

cases in England and Wales? Are we out of step 

and should a remedy of Estoppel be available to 

main contractors caught in the above quandry? 

It is evident that many other jurisdictions, both civil 

and common law, apply obligations during the precontractual 

negotiations phase. They do this in 

different ways but there are obligations none-theless. 

The fact that English courts are loathed to enforce 

pre-contractual obligations eminates from the 

doctrine of freedom of contract with its roots in the 

formation and rise of the British Empire since 1770. 

There is also the problem of accepting a duty to act 

in good faith during negotiations, unlike many other 

jurisdictions where good faith and fair dealing have 

been in ascendance. In many other countries there is 

a sense of “fair trade” rather than the English concept 

of “free trade”, with English law viewing a duty to act 

in good faith as “utterly repugnant to the adversarial 

nature of contractual negotiations” (Watford v Miles 

(1992) 2 AC 128) coupled with a belief in freedom to 

negotiate contracts without incurring legal liability. 

The issue then boils down to the way the courts 

view contractual relationships in England and Wales 

compared to other jurisdictions. Pistols at dawn to 

secure an advantage over the other party rather 

than a partnership to secure mutual advantage. The 

implications are not only relevant here but in general 

during the development of contractual negotiations. 

The question is whether this attitude can persist in 

light of the growth of international companies and 

projects and the way such relationships will be 

viewed in the future. 

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CLIENT’S GUIDE TO 

ENFORCING ARBITRATION 

SETTLEMENTS IN THE UAE 

Young Byun 

YOUNG BYUN 

Paralegal 

young.byun@systech-int.com 


7 7

The most prevalent form of contract in the 

construction industry in the UAE is FIDIC. Despite 

the recent emphasis on amicable resolutions to 

disputes, if parties are not able to reach a universally 

acceptable conclusion, arbitration provides an 

alternate means of settling issues. Therefore, it is of 

great importance and practicality to be familiar with 

every stage of the arbitration process, especially 

where the likelihood of disputes is high. This article 

will focus mainly on the enforceability of an arbitral 

award as it is clear that an unenforceable settlement 

has no value. 

Dubai International Financial Centre (DIFC) is one of 

the Free Zone in Dubai, which unlike the rest of the 

UAE, has its own legislation on arbitration. Settlement 

awards made in the Financial Centre are often given 

the same weight as court judgements within the 

Free Zone jurisdiction and therefore binding on 

the parties. Due to the relatively small size and low 

volume of construction, it will be sufficient to add 

that judgements made by the DIFC Courts can be 

enforced in Dubai courts outside the Free Zone. 

The UAE does not have comprehensive legislation 

dedicated to arbitration. However, despite the 

limitation that its primary purpose was to regulate 

domestic legal proceedings, the UAE Civil Procedure 

Code 1 (CPC), has provisions, which set out the rules to 

be followed in the arbitration process. Articles 203- 

218 are concerned with the award and enforcement 

of arbitration decisions made domestically while 

Articles 235-238 deal with the application of foreign 

arbitration decisions in the UAE courts. Procedural 

rules for execution of decisions are set out in Articles 

239-243. 

For a domestic arbitration award to be enforceable, 

the following requirements specified in Article 203 

have to be met: 

• The arbitration agreement has to be in writing 

• The subject matter of the dispute must be clearly 

indicated in the agreement. 

• It has to be signed by the arbitrator 

• Material facts of the case and the legal 

explanation for the decision has to be stated 

clearly 

• It must be supplemented by the written 

arbitration agreement 

Once the criteria above have been satisfied, the 

final stage of enforcing an arbitral award is to have 

it ratified by a court in the UAE. Article 215 of CPC 

dictates that the application process for ratification 

by the court be same as that for commencing legal 

action in the Court of First Instance. As an award can 

only be enforced after successful ratification in the 

court and agreement by both parties to accept the 

award. This requirement can be an opportunity for a 

disadvantaged party to challenge the ratification in 

the court. 

If challenged, a court hearing will be held in which a 

decision can only be made on account of procedural 

grounds. The historical trend of the UAE courts 

not enforcing arbitral awards is illustrated in the 

2004 case of International Bechtel v Department 

of Civil Aviation of Dubai 2 . As had generally been 

the pattern, the award was rejected on the basis of 

minor procedural technicalities. In the Bechtel case, 

the arbitrator had failed to comply with Article 41(2) 

of CPC pertaining to the swearing in of witnesses. 

Recent cases seemingly show UAE Courts taking a 

more favourable approach on the subject of award 

ratifications. However, some anomalies bring this 

general trend into question. When the judgment 

was made in 2012 for Case No.: 180/2011, the Court 

of Cassation rejected the arbitral award on the 

grounds that in matters of public policy an arbitrator 

lacks the authority to adjudicate. Under UAE law, 

‘public policy’ is given a liberal interpretation; even 

commercial matters can be argued to fall under 

public policy as it affects the distribution of wealth 

and freedom of commerce. Moreover, given the 

Civil Law system of the jurisdiction, previous court 

decisions may provide persuasive arguments but 

do not guarantee a consistent outcome. 

The New York Convention on the Recognition and 

Enforcement of Foreign Arbitral Awards came into 

effect in the UAE on 19th November 2006. Under 

Article 5 of the Convention, a signatory state has 

the obligation to enforce an arbitral award made in 

another signatory nation unless specified exceptions 

apply. 

In order to enforce a foreign arbitral award in the UAE, 

an authenticated original of the award or its certified 

copy must be submitted to the court along with the 

authenticated original arbitration agreement or its 

certified copy. Additionally, where the documents 

to be submitted are in a foreign language, they are 

required to be translated into Arabic. 

Article V (1) of the Convention sets out scenarios 

where a foreign award can be refused for not meeting 

the procedural requirements of the awarding state. 

Article V (2) allows refusal on the grounds of public 

policy. However, the greatest obstacle to enforcing 

foreign awards in the UAE is domestic legislation. 

Article 235 (a) – (e) of CPC provides a checklist that 

must be satisfied for enforcement of foreign awards. 

Paragraph (e) deals with public policy, which is 

given the same wide interpretation as when trying 

to enforce domestic awards. The fact that ‘public 

policy’ is not defined in legislation means that 

1 

Federal Law No.11 of 1992 (CPC) 

2 

300 F. Supp. 2d 112 

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virtually any matter can be argued to fall under 

this heading. The traditional reluctance of the local 

courts in complying with the Convention duties was 

challenged by the case of Airmech Dubai LLC v 

Macsteel International LLC 3 . The Court of Cassation 

cited Article 238 CPC in its decision that domestic 

rules on foreign awards do not prejudice the 

obligations rising from an international convention 

to which UAE is a signatory. The Court of Cassation 

Case 156/2013 seemed to revert to the traditional 

stance. However it can be distinguished in that the 

court refused enforcement as neither party was 

domiciled in the UAE. Moreover, the verdict may 

have been influenced by the fact that the award had 

already been refused in other jurisdictions. 

UAE Courts are becoming comfortable with following 

the Convention duties in enforcing foreign awards 

and the mainstream opinion is that Articles 235- 

238 CPC are set aside in favour of the Convention. 

However, in the enforcement of both foreign and 

domestic awards the greatest obstacle remains the 

challenges made at the ratification stage, especially 

under Article 216 CPC for domestic awards. This 

means that entire process becomes very long and 

drawn out, adding further financial burden. There 

is no doubt that parties seeking enforcement can 

mitigate risks by strictly following all procedural 

requirements and being aware of additional factors 

that may render an award vulnerable to challenges. 

However, the core of the issue can only be resolved 

by input from the UAE Legislature by streamlining 

the bureaucratic requirements and redefining the 

scope of ‘public policy’ in the enforcement of arbitral 

awards. 

3 

Court of Cassation of Dubai, 18 September 2012 


9

A PRACTICAL GUIDE FOR 

CONTRACTORS AS TO 

HOW THEY CAN RECOVER 

DELAYED PAYMENTS 

ON CONSTRUCTION 

PROJECTS IN THE UAE 

Dai Edwards 

DAI EDWARDS 


dai.edwards@systech-int.com 

10 10 

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It is a fairly common scenario in the Middle East to 

be faced with a situation whereby a client unlawfully 

withholds payment from the contractor. This will 

often cause the contractor severe problems in 

terms of cash flow. So what options are available to 

the contractor in order to get the client to pay? 

1. Contractual measures can be used in order to 

pressurise a party into paying 

Some contracts will contain a suspension clause 

whereby a party can suspend work until it has 

received payment. An example of this is Clause 16.1 

contained in the FIDIC Red Book (1999). This gives 

the contractor the right to suspend work where 

there has been: 

• Failure to certify; 

• Failure to demonstrate the ability to pay; or 

• Failure to pay. 

Strict compliance with contractual notice provisions 

is critical. The UAE Civil Code can also assist under 

Article 247. This states that “In contracts binding 

upon both parties, if the mutual obligations are due 

for performance, each of the parties may refuse to 

perform his obligation if the other contracting party 

does not perform that which he is obliged to.” 

It is important to note that the contractor’s suspension 

of work will need to be reciprocal and proportionate 

to the employer’s breach. The pervasive application 

of the Civil Code is not always advisable as there 

is much that can be subject to interpretation and 

so it is best to ensure that the contract contains an 

appropriate suspension clause. 

2. Threaten to terminate the contract for nonpayment 

Under Clause 16.2 of the FIDIC Red Book a party can 

terminate a contract on 14 days’ notice if: 

• There has been a failure to demonstrate the 

ability to pay after 42 days of suspension; 

• There has been a failure to certify; 

• Failure to pay 

• Failure to substantially perform the obligations 

under the contract; 

• Prolonged suspension of the works; or 

• If the employer is insolvent. 

A contract can still be terminated even if the contract 

is silent on this matter as Article 892 of the UAE Civil 

Code provides that: “A contract of Muqwala shall 

terminate upon the completion of the work agreed or 

upon the cancellation of the contract by order of the 

court.” Article 272 of the UAE Civil Code deals with 

termination based on breach and provides for either 

an order of specific performance or for the contract 

to be cancelled and for damages to be paid for 

the breach. In construction it is far more common 

for damages to be paid rather than for specific 

performance to be ordered. 

Threatening to terminate a contract is normally a 

measure of last resort as the consequences are 

severe. Parties also need to be careful to ensure 

that their actions are not deemed to be unlawful 

by breaching the overriding duty of good faith 

provisions that are contained within UAE law. The 

courts will take a dim view of a party terminating a 

contract where it is not really justified (for example if 

the underpayments were only very minor). 

3. Retention of title clause 

A retention of title clause acts to protect the 

contractor by seeking to limit the extent of the 

debt owed by the employer. There needs to be 

an express provision for this made in the contract. 

Article 513(1) of the UAE Civil Code states that “If 

the price is deferred or payable in instalments, the 

seller may stipulate that the transfer of ownership to 

the purchaser be suspended until he pays the whole 

price, notwithstanding that the goods be delivered.” 

Alternatively, the contractor can ask the client’s 

parent company (if there is one) to provide a 

guarantee or payment bond. 

4. Non-contractual remedies - rights/liens over 

property 

The contractor can refuse to handover physically 

attached property upon completion if payment has 

not been made under Article 879(1) of the UAE Civil 

Code. This provides that “If the work of the Contractor 

produces (a beneficial) effect on the property in 

question, he may retain it until the consideration due 

is paid.” However, a cautious approach needs to be 

taken as it may result in a possible trespass action. 

Registering a right / lien over the property is another 

option. This is possible under Article 1527(1) of the 

UAE Civil Code. Registration of the property has to be 

recorded in the Land Register with the Dubai Land 

Department (Dubai Law No.7 of 2006 Concerning 

Land Registration in the Emirate of Dubai). 

It may also be worth pursuing a softer approach by 

using a local sponsor to liaise with the other party’s 

sponsor in order to try and obtain payment. In this 

way the sponsors act in a similar way to mediators. 

5. Sanctions through the courts 

The contractor may seek one of the following orders: 

• Order for payment – This is similar to a 

“summary judgment”. It requires unequivocal 

and fully documented debts substantiated 

by commercial instruments (i.e. engineers’ 

certificates, dishonoured cheques). 


11

• Precautionary Attachment Order – This prevents 

money from being wrongfully dispersed, so 

the client will not be able to wrongfully call in 

a performance bond. There are 2 ways to do 

this. The bond monies can either be frozen in 

the contractor’s account (i.e. “pre-call”) or in the 

client’s account if the order has already been 

made (i.e. “post-call”). 

• Performance Order / Incarceration Order – In 

order for this order to be made the debt has to 

be uncontested (i.e. there has to be a written 

acknowledgement that the amount is due), 

the due date has to have passed, and the debt 

should be unconditionally payable. The debtor 

should have been served a demand notice via 

registered mail giving him no less than 5 days 

in which to pay up. For this order a summary 

proceedings is necessary. The judge will then 

issue a decision within 3 days. Non-compliance 

with a Performance Order to pay can lead to the 

debtor being sent to prison. 

Conclusion 

It is clear that in any contract, prevention is better 

than cure. The above are options available to the 

contractor when payment issues arise, however 

raising disputes are a last resort. Amicable resolution 

and remaining within the parameters of the contract 

are always the best approach. 

Caution must be taken before considering the 

application of provisions of the Civil Code and parties 

should seek local law advice. The local courts of 

the UAE are not always at ease with the complex 

nature of international construction contracts and, 

as such, the results of what may on paper seem 

a straightforward action can often be quite the 

opposite. 

12 

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CHERRY PICKING IN 

ADJUDICATION 

Phil Gazzola 

PHIL GAZZOLA 

Solicitor 

phil.gazzola@systech-solicitors.com 


13

The TCC case of St Austell Printing Company 

Limited v Dawnus Construction Holdings Limited 1 

has presented some interesting feedback from the 

courts in relation to the ‘cherry picking’ of a claim in 

adjudication proceedings. 

The project involved the construction of two 

industrial units under a JCT D&B 2005 contract. In 

December 2013, some months after the works had 

been completed; the contractor (Dawnus) issued an 

interim application for payment for the net amount of 

approximately £2.3 million, which included circa £1.9 

million for variations, of which circa £900,000 was 

for the measured work element of those variations. 

St Austell’s advisors, also in December 2013, 

issued a payment notice which stated that the 

payment to be made was nil, along with a ‘letter 

of clarification’ which referred to various reasons 

as to why no payment would be made but stating 

that a comprehensive response would be issued in 

January 2014 which would set out details of defects 

along with a response to the loss and expense 

element of the application for payment. 

No ‘comprehensive response’ was issued by St 

Austell, and so in August 2014 Dawnus started 

adjudication proceedings. The notice of adjudication, 

which set the adjudicator’s jurisdiction, stated “The 

Referring Party limits submissions in this adjudication 

to these 115 Changes as identified in the attached 

schedule, and reserves its right to deal with other 

matters in Interim Certificate 18, and later certificates, 

in the future.” 

The adjudicator decided in favour of Dawnus and 

ordered St Austell to make payment to Dawnus of 

circa £400k plus his fees. The case before the court 

was Dawnus seeking to enforce this decision, with St 

Austell seeking to resist enforcement by stating that 

the adjudicator lacked jurisdiction on two grounds. 

The first was, as Mr Justice Coulson described it, 

the “well-worn suggestion” that a dispute had not 

crystallised between the parties at the time of 

the notice of adjudication because St Austell had 

not formally responded to the claimed amounts. 

The second ground was the “rather more novel” 

jurisdictional challenge that the adjudicator could 

not order St Austell to make payment as the dispute 

that was referred was strictly limited to one element 

of the interim application. 

During the adjudication the adjudicator had 

dismissed both of these jurisdictional challenges; 

however St Austell sought to rely on both of these 

grounds to resist enforcement. At court, the first 

ground was dismissed, with the judge stating 

that it was “unarguable” that the dispute had not 

crystallised. 

It is the second ground of challenge, and the 

resulting comments from Mr Justice Coulson, which 

are of more interest. 

The judge firstly referred to the case of Fastrack 

Contractors Ltd v Morrison Construction Ltd 2 

in 

which the court had stated that it was permissible 

for a claiming party to “prune” elements of a claim 

as long as this did not transform the pre-existing 

dispute into something different. For example, if 

an interim application is for measured works and 

a loss and expense claim, a claiming party may 

solely present the measured work element of its 

application if it feels the loss and expense claim 

could be difficult to pursue. Mr Justice Coulson said 

“That is not only permissible, but it is a process that is 

to be encouraged.” 

St Austell had argued that the contract did not 

confer a liability on St Austell to make payment for 

part of an application, only for the whole application. 

St Austell did not claim that there had been a 

previous overpayment or that it had a counterclaim 

against Dawnus. As a result, the judge said that the 

only outcome if the adjudicator had been asked to 

consider the entire application for payment would 

be that he would have awarded more than, or at the 

very least not less than, the sums he awarded in this 

adjudication. 

Mr Justice Coulson went on to say that it would have 

been entirely permissible for St Austell to present a 

counterclaim in its defence to this adjudication, and 

that the wording of the Notice of Adjudication could 

not have prevented this. This is based on the case of 

Pylon Ltd v Breyer Group 3 in which the same judge 

said “...subject to questions of withholding notices 

and the like, a responding party is entitled to defend 

himself against a claim for money due by reference to 

any legitimate available defence (including set-off)...” 

The interesting point in this case is that the court 

stated its encouragement for parties to cherry pick 

the better elements of their claims for adjudication. 

Therefore if a party lacks confidence on the merits of 

certain items within its application, it is encouraged 

to exclude those items from the adjudication 

proceedings. This may seem like common sense, 

but there are a lot of adjudications which contain 

everything the claiming party can throw in to increase 

the value of its claim; following this judgment it is 

sensible to temper the desire to throw the kitchen 

sink at an adjudicator and to only include those 

items which are based on a solid foundation. 

The point regarding the ability to include a 

counterclaim to set-off the value of any claims 

1 

[2015] EWHC 96 (TCC) 

2 

[2000] BLR 168 

3 

[2010] EWHC 837 (TCC) 

14 

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from the responding party from sums due claimed 

by the referring party is also interesting. If there 

had been a previous overpayment or a valid 

counterclaim for items such as liquidated damages 

or defectrectification that fell for assessment at 

the time of the application for payment, the judge 

confirmed that this could not be excluded as a 

defence from the adjudication by the drafting of the 

Notice of Adjudication. Such a defence would only 

be permissible if a valid Withholding Notice (or Pay 

Less Notice under the new regime) had been issued. 

This confirms for a paying party the importance 

of ensuring that the contractual payment regime 

is adhered to which would ensure that any such 

claim could be used as a defence in adjudication 

proceedings if required. 


15

THE ENFORCEABILITY OF 

FIDIC SUB-CLAUSE 20.1 

IN THE UAE 

Terry Kim 

TERRY KIM 


terry.kim@systech-int.com 

16 16 

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When it comes to construction and standard forms 

of contract, FIDIC is synonymous with the Middle 

East. But to what extent are its provisions enforceable 

in the UAE? 

For contractors, a claim for an extension of time and 

or additional costs is preceded by serving a notice 

under the applicable provision of the contract. This 

will be followed by bringing a formal notice of claim 

within the prescribed time period under sub-clause 

20.1 of the current suite of FIDIC standard forms 

of contract. Such notice periods are commonly 

condition precedents that effectively discharge a 

contractor’s entitlement once the period has lapsed 

causing difficulties for the contractor. 

However, not all notice periods are strictly enforced 

and in many cases will depend on the wording 

of the contract. The House of Lords in Bremer 

Handelgesellschaft v Vanden Avenne 1 

provided 

a useful guideline in ascertaining a condition 

precedent. As per Lord Salmon, the clause should 

state the “precise time” within which the notice 

was to be served and clearly express that unless 

the notice is served within the time, the Contractor 

would “lose its rights” under the clause. 

In the recent case of Obrascon Huarte Lain SA v 

Her Majesty’s Attorney General for Gibraltar 2 , the 

Technology and Construction Court considered the 

condition precedent in FIDIC sub-clause 20.1 3 : 

“If the Contractor considers himself to be entitled to 

any extension of the Time for Completion and/or any 

additional payment…the Contractor shall give notice 

to the Engineer, describing the event or circumstance 

giving rise to the claim. The notice shall be given as 

soon as practicable, and not later than 28 days after 

the Contractor became aware…” 

“If the Contractor fails to give notice of a claim within 

such period of 28 days, the Time for Completion shall 

not be extended, the Contractor shall not be entitled 

to additional payment, and the Employer shall be 

discharged from all liability in connection with the 

claim…” 

The court ruled that sub-clause 20.1 was a condition 

precedent to the contractor making a claim. 

However, it was said that the clause should not 

be construed strictly against the contractor, and 

provided that a clear notice in writing was served 

on the engineer, the onus would then be on the 

employer to prove the contractor was out of time. 

Moreover, in reference to sub-clause 8.4, it was 

suggested that a contractor has a choice to give 

either a “retrospective notice” when completion is 

delayed or a “prospective notice” when completion 

will be delayed. This suggests that a contractor can 

consider the event to only begin when there is an 

actual impact on the project. 

Contractors out of time in the UAE may be able 

to rely on the Civil Code for additional protection 

against time barring. 

The particular legislation that contractors should 

draw their attentions to is the UAE Commercial 

Transactions Law 4 . As per Article 95: 

“The obligations of traders towards each other and 

concerning their commercial activities, shall not be 

actionable on the expiry ten years from the date on 

which the performance of the obligation falls due, 

unless the law stipulates a shorter period.” 

This provision potentially imposes a ten-year time 

limit for commercial claims. So how would Article 95 

apply to contractors? 

The Commercial Transactions Law is applied to 

all commercial activities including construction 

contracts. Article 2, of the same law states that 

commercial activities are firstly governed by the 

contract entered into between the parties. It is noted, 

however, that pursuant to Article 31 of the UAE Civil 

Code, contracts are subject to mandatory provisions 

in the law which include statutory time limits. 

As per Article 487(1) of the Civil Code: 

“It shall not be permissible to waive a time-bar defense 

prior to the establishment of the right to raise such 

defense, nor shall it be permissible to agree that a 

claim may not be brought after a period differing from 

the period laid down by law.” 

Subject to the aforementioned clauses, it would 

appear that FIDIC sub-clause 20.1 is unlikely to 

apply in the UAE, as it provides for a period of time 

less than ten years. 

Further consideration should be given to Sharia law. 

Like many of its neighboring countries, Sharia is a 

main source of legislation in the UAE and the case 

of Harley and others v Smith and another 5 in the UK 

explored limitation periods in Sharia law. Although 

this was not a construction case the court had to 

consider whether the claimants were time-barred 

by the expiry of the relevant period of limitation, 

which in this case was a one year period under 

Saudi employment law.In delivering its judgment, 

the court consulted two experts on Islamic law – 

Professor Adnan Amkhan, an Honorary Fellow at the 

1[1978] 2 Lloyd’s Rep 109 

2[2014] EWHC 2291 (TCC) 

3The Yellow Book: Conditions of Contract for Plant and Design-Build (First Ed, 1999) 

4Federal Law No. 18 of 1993 

5[2010] EWCA Civ 78 


17

University of Edinburgh, whose primary expertise is 

in Islamic law, and Mr Alissa, an attorney licensed to 

practice in the KSA. In the judgment, both experts 

concluded in a joint statement as follows: 

“Unlike modern Arab legal systems, Sharia does not 

recognise the concept of time limitation…” 

In considering time bars, it is also helpful to 

understand the principles of good faith which is at 

the core of the UAE Civil Code. 

Article 246(1) stipulates that a “contract must be 

performed in accordance with its contents, and in 

a manner consistent with the requirements of good 

faith.” Article 246(2) provides that a “contract shall not 

be restricted to an obligation upon the contracting 

party to do that which is expressly contained in it.” 

The principle of good faith could be widely 

interpreted and require the contracting parties to act 

in a manner of good faith, which includes the duty 

not to cause unjustified damage to the other. 

Article 106 of the Civil Code states that a party will 

be held liable for unlawful exercise of his rights if the 

interests desired are disproportionate to the harm 

that will be suffered by the other party. 

This suggests refusing a valid claim for extension of 

time on the grounds that a contractor is time-barred, 

would be acting in bad faith by the employer and 

or unlawful as the contractor is likely to suffer harm 

which is unjustified and disproportionate to the right 

of receiving notice. 

Nevertheless, it remains to be seen how the local 

courts would actually apply Article 95 to construction 

contracts. Whilst contractors may take away from 

this article that it would be difficult for an employer 

to waive a contractor’s entitlement to an extension 

of time in the UAE by imposing a short notice period, 

contractors should always, by means of good 

practice, keep and maintain accurate records and 

notices to ensure its right of claim is protected. 

18 

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PROTECTING 

COMMERCIALLY 

VALUABLE INFORMATION 

Adam Perry 

ADAM PERRY 

Solicitor 

adam.perry@systech-solicitors.com 


19 19

The drafting of confidentiality agreements, also 

referred to as Non-disclosure agreements is a small 

but important part of knowledge required by those 

involved in the construction and engineering field. 

The English ‘law of confidence’ is commonly used 

by international parties as the basis for agreements 

used to protect commercial and technical data. 

This article will look at the challenges of protecting 

confidential information, the key terms that need to 

be included in a confidentiality agreement and the 

common mistakes made. 

The origin of the law of confidence is in equity and 

contract. A duty of confidence will arise naturally in 

many situations under the jurisdiction of English law, 

although not in enough some footballers may say! 

Around twenty years ago a Japanese manufacturer 

invented a material that was used in super absorbent 

nappies. It was keen to expand its business overseas 

and develop process plants in strategically placed 

locations around the world. It was faced with the 

question how it could best protect its intellectual 

property. 

One option would have been to register a patent. 

One downside being the protection would only 

last for a set period and the necessary public 

disclosure of the information would eventually lead 

to competitors copying the product. 

A second option would have been only to proceed 

if like Coca-Cola the information could be kept a 

closely guarded secret. The practicalities of such 

an approach are often challenging. Manufacturers 

are required to provide detailed information on its 

plant and process before a partner has confidence 

to invest. 

The Japanese manufacturer decided rather than 

registering a patent it would be appropriate to 

disclose the necessary information to its partner 

under the terms of a confidentiality agreement, 

albeit trying to limit information provided as far as 

possible. 

Now the Japanese manufacturer is faced with 

competitors in Europe and China who have built 

competing plants that manufacture very similar 

products yet it has no remedy. Although the breach of 

IP rights is a well known problem in China the lack of 

a remedy in Europe relates to the inadequacy of the 

negotiated terms of the confidentiality agreement 

highlighting the need for careful consideration when 

drafting the terms of agreement. 

Having reviewed hundreds of confidentiality 

agreements it is quite common to receive the 

instructions: we would like to keep it very simple, is 

the attached okay to sign? 

Although around 80% of a well drafted confidentiality 

agreement will be almost identical to another well 

drafted agreement the critical terms will require a 

detailed understanding of the specific facts. Before 

answering you need to ask: 

• Are you disclosing information, receiving 

information or both? 

• What is the information being disclosed? 

• What is the purpose of disclosing the information? 

• How can the other party use the information? 

• How long will the information remain valuable? 

After obtaining the pertinent facts you need to 

reflect them in the confidentiality agreement. 

If you are just receiving information, your only 

concern is whether the agreement places any 

restrictions on the information that will constrain 

your intended use. If you are disclosing information 

under either a unilateral or bilateral agreement 

much greater care is needed over how ‘confidential 

information’ is defined and how it can be used. 

When defining confidential information parties will 

often take the kitchen sink approach, believing all 

information will be caught. The danger of this if 

some information does not ‘have the necessary 

quality of confidence’ as defined by English law it 

will not be protected. Although no clear definition of 

this test exists it can be appreciated that there must 

be some value in the information. Plans to meet up 

for lunch do not fulfil the requirement, a top secret 

missile plan would, the grey area in between is much 

harder to define. Clear drafting that certain technical 

information or commercial data should be treated 

as confidential is likely to be persuasive to a judge, 

rather than a catch all provision. 

A confidentiality agreement should also include 

administrative procedures that are proportional to 

the sensitivity of the information. A top military secret 

may warrant being stored on an offline computer, in 

an encrypted format, in a secure room where only 

limited personnel, who have signed an individual 

declaration, can access. However disclosure of 

less sensitive information will require less onerous 

obligations in order to maintain business efficiency. 

The other key clause is the purpose clause. It is not 

uncommon to see agreements where a detailed 

definition of confidential information is given. The 

party receiving the information is placed under 

onerous obligations to avoid disclosure to third 

parties but can freely make commercial use of the 

confidential information as long as it is not disclosed. 

Finally it is important to consider the term of the 

agreement. A confidentiality agreement will typically 

contain two terms; a disclosure period in which the 

parties will finish exchanging information and a period 

in which the information will remain confidential. The 

former is often short and easily agreed. The latter 

20 

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can be fiercely negotiated and range from a year up 

to an unlimited period. Many parties are particularly 

reluctant to accept an unlimited period. 

Returning to the Japanese manufacturer of super 

absorbent material used in nappies, unable to obtain 

an unlimited period it accepted 20 years. This was 

at a significant detriment to its future business. The 

confidentiality term is not something that should be 

horse-traded in negotiations but set based on the 

predicted time period the information will remain 

valuable. 

Conclusions 

In conclusion when reviewing confidentiality 

agreements it is important to make sure that critical 

terms reflect your intentions. Although most clauses 

of an agreement will be very familiar it is the subtle 

differences that lead to the effective protection of 

your commercial interests. 


21

SINGAPORE 

INTERNATIONAL 

COMMERCIAL COURT 

Julia Sim 

JULIA SIM 

Paralegal 

julia.sim@systech-int.com 

22 22 

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The SICC confirms 

Singapore as a Dispute 

Resolution Hub, 

with the Singapore 

International Arbitration 

Centre and Singapore 

International Mediation 

Centre 

The last year brought about an exciting development 

in Singapore’s legal landscape, when the Singapore 

International Commercial Court (SICC) opened its 

doors in January 2015. 

An Asian “Dispute Resolution Hub” 

The SICC joined the Singapore International 

Arbitration Centre and the Singapore International 

Mediation Centre to set the stage for a dispute 

resolution hub in the region. This provided parties 

with the options of litigation, arbitration or mediation 

as the need arises, within the framework of 

Singapore’s business friendly legal system. 

In view of the region’s bustling trade activity and 

economic growth, the Dispute Resolution Hub will 

significantly lower the cost of settling disputes for 

parties in Asia and even internationally. The SICC, 

with its commercial focus and specific expertise, 

aims to provide an avenue where disputes are 

settled quickly through the litigation process and 

costs are kept low. 

The need for the SICC 

The SICC was first proposed as a response to the 

increase in international commercial litigation work. 

The Court and the litigation process will also be able 

to address the perceived limitations of arbitration. 

While the Singapore International Arbitration Centre 

has enjoyed great success, arbitration has come 

under increasing criticism that it is costly, takes a 

long time to resolve, and lacks transparency due to 

its confidential nature. 

1 

Singapore International Commercial Court (2015) 

2 

ibid 

WHAT? 

WHO? 

Parties can bring their 

cross border disputes 

to a Court that can 

handle the international 

focus and commercial 

demands of the cases 

Litigation is also a key option when certain subject 

matters are not amendable to arbitration, or 

where multiple arbitrations for the same project 

are prohibited. Arbitration may result in multiple 

proceedings over a main contract and subcontract, 

and litigation may prove to be the better option. It is 

therefore imperative that litigation, especially those 

catered to international parties, is effective and 

affordable. The SICC provides an avenue for disputes 

to be resolved more quickly, due to its commercial 

focus, such that the usual perceived pitfalls of the 

court-based avenue will not be a deterrent for the 

parties involved. 

How the SICC works 

WHERE? 

Singapore, as a neutral 

third party, will allow 

representaiton of 

foreign lawyers in the 

International Court 

The SICC is part of the Supreme Court of Singapore, 

constituted as a statutory division of the High Court 

and having identical jurisdictional limits to the High 

Court 1 . Appeal cases will be heard in the Singapore 

Court of Appeal 2 . 

The SICC will be hearing cross border disputes that 

are “of an international and commercial nature” as a 

neutral third party if parties have submitted to the 

jurisdiction under a written jurisdiction agreement. 

A recent case heard by the court involved a joint 

venture between the subsidiary of an Australian 

company and an Indonesian company. The court will 

determine if a case is relevant, but unlike traditional 

courts will not decline jurisdiction if there is a 

more appropriate forum (the forum non conveniens 

principle). Judges, unlike in arbitration, cannot be 

nominated by the parties, but one with the right 

qualifications or experience may be appointed from 


23

the international panel of judges, thereby reinforcing 

the commercial focus of the court that will help to 

ensure a timely resolution. 

The SICC will offer great flexibility, hearing cases 

governed by both Singapore and foreign law, with 

the court taking judicial notice of the foreign law 3 . 

Cases that involve foreign law will allow the court 

to make an order allowing any question of foreign 

law to be determined on the basis of submissions 

by both parties, which is a simpler process than the 

usual basis of proof. 

Foreign lawyers will be able to make representation 

in the SICC as long as it is an “offshore” case, i.e. 

there is no substantial connection to Singapore or 

Singapore law, and they are registered with the SICC 

under the Legal Profession Act 4 . A foreign lawyer 

with more than 5 years of court or tribunal advocacy 

experience can apply for a full registration, otherwise 

a restricted registration is available. A foreign lawyer 

who is granted restricted registration may still 

appear in relevant proceedings and provide advice, 

but may not plead in the relevant proceedings or 

represent any party. The registration is done through 

a simple process of submitting a completed form 

and an affidavit attesting to his/her good standing 5 . 

The application can be processed within 14 days for 

a fee of SGD 300 (£150/USD$220). This eases the 

process of international litigation, ensuring the same 

lawyer can see his client through the entire dispute 

resolution without worries about jurisdiction. 

Enforceability 

The international nature of the court comes in handy 

where it may be more appropriate to coerce parties 

in a multi-party dispute to a certain jurisdiction, 

and still have the decision be fully effective for 

enforcement in other jurisdictions. 

The reach of the binding decision is a cause of 

great concern, but judges have alleviated them, 

with Justice Vivian Ramsey (UK) expressing that 

“international enforceability is rarely resisted because 

both parties comply it as a contractual agreement 

to have the dispute resolved either in the Court or by 

arbitration” 6 . 

Courts outside of Singapore are also keen to uphold 

the SICC’s authority, where Australian courts have 

ruled to freeze a Perth-based company’s shares 

pending the decision of the SICC. Furthermore, there 

are reciprocal enforcements of Commonwealth 

judgments in most states in India and Australia, and 

in Malaysia, England and Hong Kong, providing 

assurance to those who are concerned about 

enforceability. 

Impact on construction law practice 

With international construction dispute resolution 

experiencing a rapid shift of workload from the 

West to the Middle East and Asia, and specifically 

South East Asia, the construction industry can 

greatly benefit from the presence of the SICC, which 

provides the option of a more cost-effective litigation 

avenue when dealing with disputes. 

Arbitration is sometimes preferred over litigation 

in construction disputes because of a perceived 

neutrality, as local parties are seen to have an 

advantage in court. Furthermore, detailed technical 

issues that become points of legal arguments are 

seen to be better decided by arbitrators who may 

have the competency and experience to tackle 

complex construction disputes, rather than judges 

who may also deal with other areas of law. These 

concerns can arguably be mitigated by the SICC, 

which as an international court affirms it as a neutral 

third party venue, and where judges may be better 

equipped to deal with complex issues and be 

mindful of the parties’ commercial concerns. 

On a larger perspective, the SICC also helps 

to develop the legal landscape of the industry 

due to the transparency of litigation. Arbitration’s 

confidential nature poses a problem whereby the 

private resolution of disputes, unlike a public court 

process, does not help to develop the set rules and 

guidelines that provides a basis for the construction 

industry. Litigation, and especially an authority on 

the international level, will be able to form case 

precedence and help to build the framework that 

the international construction industry can operate 

within. 

Experts have predicted that with the renown of 

the London Commercial Court and the Dubai 

International Finance Centre’s Court, and the lively 

activity of arbitration in Singapore, the SICC is poised 

to serve the region and the industry well. 

3 

http://www.lawgazette.com.sg/2014-11/1177.htm 

4 

Legal Profession Act s. 36P 

5 

Rules 5 and 6 of the Legal Profession (Foreign Representation in SICC) Rules 2014 

6 

n 2 

24 

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Summary 

While arbitration as an alternative dispute resolution 

method has been increasingly popular, there are 

many areas in which this method alone cannot 

adequately serve the needs of the construction 

industry. Arguably the most important benefit of 

the SICC will be the ability to provide parties the 

opportunity to “tailor processes to serve particular 

needs” 7 . 

The SICC places great emphasis on its international 

and commercial nature, attempting to save time and 

eliminate practical procedural issues by allowing 

foreign lawyers representation in the court, while also 

being able to tackle issues of foreign law. Its neutral 

venue provides a great advantage for parties doing 

business in the region, and will provide flexibility in 

“catering to the ever-growing market for international 

commercial dispute resolution in Asia” 8 , filling the 

gap to “provide an internationally accepted dispute 

resolution procedural framework … in accordance with 

substantive principles in international commercial 

law” 9 . 

The SICC now poises business-friendly Singapore 

as a one-stop dispute resolution hub where parties 

have the luxury of options to best resolve their 

issues quickly and prevent unnecessary costs, and 

its success and efficiency are eagerly awaited. 

7 

iThomas J Stipanowich, “Arbitration: The Choice is Yours” (2010) 3(1) Jams Global Construction Solutions 7 

8 

Duane Morris and Selvam, “Singapore International Commercial Court” (Press Centre) 

9 

n5 


25

SECURITY OF PAYMENT 

UNDER FIDIC - IS AN 

INTERIM DAB AWARD 

ENFORCEABLE BY THE 

SINGAPORE COURTS? 

Susanna Truong 

SUSANNA TRUONG 


susanna.truong@systech-int.com 

26 

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The question as to whether the Singapore Courts will 

enforce an interim Dispute Adjudication Board (DAB) 

award under FIDIC has long caused uncertainty 

amongst construction practitioners. Many thought 

that the issue had been clarified in 2014 with the 

High Court decision in the long running case known 

as the ‘Perusahaan Saga 1 ’, however the defendants, 

true to form, appealed throwing the issues back into 

contention. 

Unfortunately, and much to the dismay of those in 

the construction industry, the Court of Appeal 2 (CoA) 

decision did not provide the resonant ending that 

we were all hoping for. 

Security of Payment 

Payment disputes often require time and money in 

order to settle matters with any finality, invariably 

leaving the contractor in a weakened financial 

position and vulnerable to the Employer’s increased 

leverage. 

The Security of Payment (SOP) regime, established 

within sub-clauses 20.4 – 20.7 of FIDIC 1999 Red 

Book, is a pragmatic mechanism used within the 

construction industry with the central purpose of 

addressing the imbalance between contractor and 

employer when payment disputes arise. 

Under the SOP regime, the contractor refers the 

dispute to the DAB under sub-clause 20.4. If the 

award is granted in their favour, the DAB can require 

the employer to pay the disputed sum to the 

contractor, without preventing the employer’s future 

entitlement to argue the merits of the payment at a 

later date. It thereby facilitates the contractor’s cash 

flow by granting an instant right to payment despite 

the employer’s right to further determination. For 

this reason, the mechanism is commonly referred to 

as ‘pay now, argue later’. 

The effectiveness of the SOP regime depends 

fundamentally on the enforceability of the DAB 

award and its ability to compel the employer to 

make payment. 

If the employer does not dispute the DAB’s decision, 

according to sub-clause 20.4, it is considered as 

‘final and binding’. However, if the employer issues 

a notice of dissatisfaction within the contractually 

prescribed deadline, usually 28 days, then the 

award is only considered as ‘binding’. The only way 

of gaining any finality is by proceeding to arbitration 3 . 

What concerned contractors were recalcitrant 

Employers who used this to their advantage to 

refuse payment in discordance with the SOP regime. 

The Background 

The ‘Perusahaan Saga’ started when PGN, an 

Indonesian state owned company, contracted with 

CRW (under FIDIC 1999 Red Book) for the installation 

and construction of a pipeline in Indonesia. A dispute 

arose between the parties in relation to a number of 

variation claims (Underlying Dispute). 

The issue was referred to the DAB who held in 

favour of CRW, ordering PGN to pay USD$17 million 

in line with the SOP regime. PGN issued a notice 

of dissatisfaction with the DAB’s decision disputing 

CRW’s right to enforce immediate payment 

(Secondary Dispute). 

In 2009, CRW commenced arbitration proceedings 

seeking enforcement of payment. PGN argued that 

as it had issued a notice of dissatisfaction, the DAB’s 

decision was binding but not final and therefore subclause 

20.6 could not compel immediate payment 

unless the arbitral tribunal heard the merits of the 

Underlying Dispute too. However, the tribunal held 

in favor of CRW and a final award issuing immediate 

payment was granted. 

Undaunted from the ruling, PGN continued to 

refuse payment. The matter was taken to the High 

Court and later to the CoA where they both set 

aside CRW’s application, albeit on different grounds. 

The CoA stated that the arbitral tribunal by making 

a final award was denying PGN the opportunity to 

reopen the case. The CoA did state however that 

it would have been permissible for the tribunal to 

order an interim award. The CoA also held that the 

Underlying Dispute must be settled in the same 

arbitration proceedings so that the full merits of the 

case could be decided. 

In 2011, undeterred from the setback, CRW brought 

a second round of arbitral proceedings this time 

seeking an interim award to enforce DAB decision 

as well as the final award to settle the Underlying 

Dispute, as advised by the CoA. 

PGN resisted with a new line of argument that a 

tribunal had no power to issue an interim award as 

this would be contrary to Singapore’s International 

Arbitration Act (IAA) 4 . 

S19B of the IAA states that “an award whether final 

or interim, made by an arbitral tribunal pursuant to 

an arbitration agreement is final and binding on the 

parties, and that the arbitral tribunal must not vary, 

amend, correct, review, add to or revoke the award”. 

PGN argued that the interim award according to IAA 

was final and binding and therefore could not be 

altered by a final award which would unjustly deny 

1 

PT Perusahaan Gas Negara (Persero) TBK (PGN) v CRW Joint Operation (Indonesia) [2014] SGHC 146 

2 

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

3 

Sub-clause 20.6 – Arbitration 

4 

International Arbitration Act Chapter 143A 2002 Revised Edition 


27

them the right to seek future determination. 

The majority of the arbitral tribunal were not 

convinced of PGN’s defence and issued an interim 

award compelling PGN to make payment under the 

DAB’s decision pending the tribunal’s decision on 

the Underlying Dispute. Once again PGN disputed 

the arbitrator’s award and took it before the High 

Court. 

High Court in 2014 

The High Court agreed with the tribunal majority 

and rejected PGN’s argument that an interim award 

was in breach of s19B of the IAA, stating that the 

award was final and binding on the specific subject 

that it dealt with. The award was there to “decide 

with finality CRW’s substantive but provisional right to 

be paid promptly without having to wait”, whilst still 

preserving PGN’s right to argue the case later. The 

High Court stated that it was important to look at 

the intentions of the contracting parties when they 

signed the contract, which in this case clearly saw 

both parties agreeing to the SOP regime and its 

facilitation of provisional relief. 

PGN subsequently appealed the decision to the 

CoA. 

Court of Appeal in 2015 

Unable to come to a unanimous decision the CoA 

split 2:1 in favour of CRW. In Justice Chan’s 95 page 

dissenting judgment he rationalised that FIDIC’s 

original intention, traced back from its history, was 

for DAB decisions to go through the local courts 

and advocated in favour of the ‘gap’ in enforcement 

of a DAB decision. The majority however, affirmed 

the High Court’s decision stating that sub-clause 

20.4 imposed a distinct contractual obligation on 

the parties to comply with a DAB decision which 

was final and binding, regardless of whether a 

notice of dissatisfaction was given or whether it was 

subsequently revised. 

What is also of note is CoA’s disagreement from the 

earlier 2011 CoA judgment, where the latest decision 

held that the parties did not require the Underlying 

Dispute and Secondary Dispute to be settled in 

the same arbitration. The Secondary Dispute was 

a dispute within its own right and was capable of 

having a standalone decision. 

Conclusion 

Where a payment dispute arises, incorporating 

dispute resolution sub-clauses 20.4 to 20.7 from 

FIDIC (not only Red but also those using Silver, 

Yellow and Pink Books) the Singapore courts have 

shown that they are willing to enforce interim relief 

granted by the DAB to a contractor in accordance 

with the contract. The CoA reiterated the importance 

that delay is contrary to the intended purpose of the 

SOP regime. As a result, this judgment hopefully 

provides a deterrent to employers who wish to use 

these clauses to shield themselves from making 

prompt payment to the contractor. 

It is a shame that the conclusion of this saga is 

not more convincing as the detailed dissenting 

judgment as well as the majority’s deviation from 

a previous CoA decision may encourage other 

employers to try their luck, however, it is understood 

that FIDIC Drafting Committee is presently working 

on revising their suite of contracts to incorporate an 

express right to enforce non-final DAB decisions. 

Parties to a construction contract are advised to 

adopt this if they want a fool proof means of avoiding 

the commotion. 

28 

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Systech Solicitors offers a truly unique service – a global legal 

solution from a single business. 

Our solicitors and counsel combine with commercial managers, claims consultants, forensic planners and 

experts from Systech International to offer contractors an innovative and cost effective approach to legal 

services. 

We provide contentious and non-contentious advice to our clients over the full lifespan of a project – from 

initial involvement in the structuring and drafting of contracts to formal dispute resolution and advocacy. 

Our solicitors are also available for short and medium term secondments, becoming part of your team and 

working under your instruction. 

Our solicitors, counsel, advocates and paralegals, who are regulated by the SRA in England and Wales, 

operate across different jurisdictions from both civil and common law systems and a number of our team 

sit as part-time judges, arbitrators or adjudicators and on dispute review boards. 

Our consultants work together under a single point of responsibility to provide a fully co-ordinated and 

seamless service from the outset of a project to its conclusion, avoiding the abortive work that often arises 

when using multi-party advisors. 

Our cost effective performance fee based service is half the cost of that charged by traditional solicitor 

practices and also benefits from full legal professional privilege (Water Lilly v Mackay). 

Legal issues are often complex and we are able to use our in-house visualisations expertise to demonstrate 

the key facts pictorially, aiding communication with the key decision makers and avoiding the confusion 

that can be caused by language issues. 

We operate from our offices across Europe, the Middle East and Africa, Asia Pacific and the Americas, 

locations that are ideally placed for the global seats of arbitration. 

• International Chamber of Commerce, Paris [ICC] 

• Dubai International Arbitration Centre [DIAC] 

• Singapore International Arbitration Centre [SIAC] 

• London Court of International Arbitration [LCIA] 

Contentious and non-contentious services 

• Procurement strategy 

• Contract advice 

• Contract risk 

• Partnering / JV / framework agreements 

• PPP / PFI 

• Dispute management and resolution 

• Adjudication, mediation, arbitration and litigation 

• Training 

• Interim legal services 

Sectors 

• Construction [Building, civil engineering, MEP] 

• Transportation [rail, air, highways] 

• Energy [power, oil and gas, mining] 

• Telecommunications and IT 

• Shipping and marine 

• Industrial and process 

• Facilities Management 

Contacts 

Rebecca Redhead 

London 

Director of Legal Services, 

Europe 

rebecca.redhead@systech-solicitors.com 

Tel: +44 (0) 207 940 7656 

Tom Allen 

Dubai 

Director of Legal Services, 

MEA and APAC 

tom.allen@systech-solicitors.com 

Tel: (+971) 4 420 8900 


29

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