SYSTECH SOLICITORS LEGAL UPDATE

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.
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