ICC Awards

This extract concerns a case where the contractor had referred some 216 claims against the employer to ICC arbitration. The employer had responded by claiming that the ICC tribunal did not have jurisdiction under clause 67. Specifically, the employer raised two jurisdictional defences, as follows:

(1) In order to be able to refer a matter to the engineer under clause 67, there must first exist a "dispute" as to such matter between the contractor and the employer. The contractor had been unable to establish that there had existed a dispute as to any of the matters which the contractor had referred to the engineer under clause 67. Instead, the contractor had merely referred "claims" to the engineer under other clauses of the FIDIC Conditions, e.g., clause 44 dealing with extensions of time and clause 52 dealing with payment for variations. Such claims could not ripen into disputes until at least they had been rejected by the engineer, which had not happened before these matters were referred to arbitration.

(2) Even if there had existed disputes as to such matters, the contractor had not formally referred such disputes to the engineer under clause 67.

With respect to these two jurisdictional defences, the tribunal commented in its award as follows:

'The first issue for consideration is whether the three letters referred to in paragraph 3.1 to 3.3 above constitute an effective reference under clause 67 of the I.C.E. Conditions. The tribunal accepts that clause 67 involves a 'twotier' process. This means that before a claim or contention can constitute a dispute to be referred under clause 67, it must first have been submitted and rejected under the contract. It follows that if the matters submitted to the engineer are claims which have not previously been rejected, they cannot be regarded as submitted under clause 67, whatever language is used in the submission. Furthermore, where a claim has been submitted to the engineer, it is open to the contractor to resubmit the claim for consideration under the contract, without invoking the special prearbitral procedure of clause 67. The procedure under clause 67, if invoked, obliges the parties to proceed thereafter to arbitration in accordance with the time scale laid down. If clause 67 is to be invoked, it has been consistently held that the reference must be clear and unequivocal in view of the serious consequences which may flow from the reference: See Keating on Building Contracts, 5th ed., p. 922927 and the English case Monmouth C.C. v. Costelloe & Kemple [1964] 63 LGR 131 and [1965] 64 LGR 429.

Applying these principles to the 3 letters in question, the tribunal is of the view that the letters demonstrate a clear intention to submit the claims for consideration under the appropriate conditions of the contract, particularly under clauses 44 and 52, regarding respectively extensions of time and additional payment. Whether or not the claims referred to have previously been submitted to the engineer, the letters suggest strongly an intention to have the matters reviewed rather than submitted as an existing disputes. Further, to the extent that any of the claims had previously been submitted, the tribunal finds that the three letters do not constitute a clear or sufficient reference under clause 67 so as to invoke the second tier procedure under that clause.

The tribunal, therefore, is of the opinion that as at the date on which the claimant maintained the engineer had given a decision under clause 67, the engineer had been asked only to review the claims which were submitted or resubmitted. The response given by the engineer on the above date is entirely consistent with this construction. The tribunal therefore finds that on the above date disputes or differences come into existence which, in accordance with the first sentence of clause 67, should be referred for decision to the engineer as a precondition to arbitration. These disputes remain capable of being so referred subject, however, to the Claimants further contentions that the tribunal has jurisdiction.'

The tribunal thus upheld both of the employer's jurisdictional defences: it concluded that there had been no existing disputes between the parties when the contractor had referred matters to the engineer under clause 67 and, even if there had existed such disputes, the contractor had not clearly requested a decision of the engineer on such matters under clause 67. Consequently, the tribunal ruled that the contractor had not complied with clause 67 so as to give the tribunal jurisdiction over any of the claims advanced. As a result, the tribunal declared that it had no jurisdiction over such claims. [Note: An extract of the award in this case is also published in French translation in the Journal du Droit International, 1993, p.1024.]