The Claimant, a European company, was engaged by the Respondent, a West African State (State C), to carry out work related to the construction of a highway in State C. The parties' contract included the FIDIC Conditions of Contract for Works of Civil Engineering Construction (4th ed., 1987). Pursuant to Clause 67 of those Conditions, the Claimant submitted to the Engineer a request for the payment of amounts, including extra costs, it alleged were due to it. The Engineer acceded to part but not all of the request. The Claimant commenced arbitration proceedings to recover the amounts awarded to it by the Engineer in decisions which had become 'final and binding' under Clause 67 but which the Respondent had failed to pay, and to obtain a decision in its favour with respect to the costs denied by the Engineer. In its final award, the arbitral tribunal ruled on the claims that remained unresolved after its second partial award. These included a claim for an adjustment of the contract price based on an alleged variance of more than 15% between the estimated and actual contract values. The arbitral tribunal also revisited the question of interest.La demanderesse, une société européenne, avait été engagée par la défenderesse, un État d'Afrique occidentale (l'État C) pour réaliser des travaux liés à la construction d'une route dans l'État C. Le contrat des parties comprenait les Conditions de contrat applicables aux marchés de travaux de génie civil de la FIDIC (4e éd. 1987). Conformément à la clause 67 de ces conditions, la demanderesse a soumis à l'ingénieur une demande de paiement des sommes, y compris des frais supplémentaires, qu'elle estimait lui être dues. L'ingénieur n'a accepté qu'une partie de cette demande. La demanderesse a engagé une procédure d'arbitrage afin d'obtenir le paiement des sommes acceptées par l'ingénieur dans des décisions devenues « définitives et irrévocables », conformément à la clause 67, mais non payées par la défenderesse, ainsi qu'une décision en sa faveur concernant les frais refusés par l'ingénieur. Dans sa sentence finale, le tribunal arbitral s'est prononcé sur les questions qui restaient à trancher après sa seconde sentence partielle, dont une demande d'ajustement du prix du marché, compte tenu d'une variation de plus de 15 % entre l'estimation et le prix effectif. Le tribunal arbitral a également réexaminé la question des intérêts.El demandante, una empresa europea, fue contratado por el demandado, un Estado de África Occidental (Estado C), para realizar trabajos relacionados con la construcción de una carretera en el Estado C. El contrato entre las partes incluía las condiciones contractuales para trabajos de construcción de ingeniería civil de la FIDIC (4ª ed., 1987). De conformidad con lo dispuesto en la cláusula 67 de estas Condiciones, el demandante presentó una solicitud de pago al ingeniero en concepto de las sumas, incluidos los costes adicionales, que, según alegó, se le adeudaban. El ingeniero accedió únicamente a una parte de la petición. El demandante inició procedimientos de arbitraje para recuperar el importe que le adeudaba el ingeniero de acuerdo con decisiones que, según los términos de la cláusula 67, se habían convertido en "definitivas y vinculantes", pero que el demandado no había pagado, y para obtener una decisión a su favor en relación con los costes denegados por el ingeniero. En su laudo final, el tribunal arbitral se pronunció sobre las reclamaciones que quedaban por resolver después de su segundo laudo parcial. Entre ellas figuraba una reclamación relativa al ajuste del precio del contrato basada en una presunta divergencia de más del 15% entre el valor estimado del contrato y el valor real. El tribunal arbitral también reexaminó el asunto del interés.

'C. Clause 52.3 adjustment claim

155. The Claimant's final claim is for a Contract Price adjustment... pursuant to Clause 52.3 of the Contract's General Conditions... Clause 52.3 provides as follows:

If, on the issue of the Taking-Over Certificate for the whole of the Works, it is found that as a result of:

(a) all varied work valued under Sub-Clauses 52.1 and 52.2, and

(b) all adjustments upon measurement of the estimated quantities set out in the Bill of Quantities, excluding Provisional Sums, dayworks and adjustments of price made under Clause 70,

but not from any other cause, there have been additions to or deductions from the Contract Price which taken together are in excess of 15 per cent of the "Effective Contract Price" (which for the purposes of this Sub-Clause shall mean the Contract Price, excluding Provisional Sums and allowance for dayworks, if any) then and in such event (subject to any action already taken under any other Sub-Clause of this Clause), after due consultation by the Engineer with the Employer and the Contractor, there shall be added to or deducted from the Contract Price such further sum as may be agreed between the Contractor and the Engineer or, failing agreement, determined by the Engineer having regard to the Contractor's Site and general overhead costs of the Contract. The Engineer shall notify the Contractor of any determination made under this Sub-Clause, with a copy to the Employer. Such sum shall be based only on the amount by which such additions or deductions shall be in excess of 15 per cent of the Effective Contract Price.

156. It is the Claimant' s position that the "Effective Contract Price" (ECP) under the above provision, i.e. the estimated value of the works, under the BOQ [Bill of Quantities], excluding Provisional Sums, was [amount], while the price for the quantity of work actually performed was [amount]. According to the Claimant, this represents a percentage difference between the ECP and the actual Contract price of more than 15%, therefore entitling it to a price adjustment under Clause 52.3 to compensate it for unrecovered overhead and equipment costs included in the ECP.

157. When the Claimant originally submitted its Clause 52.3 claim to the Engineer for a determination pursuant to Clause 67, the Engineer rejected the claim on the ground that the Claimant had overstated the amount of the ECP. According to the Engineer, the Claimant had wrongly failed to deduct from the ECP the price contingencies included in the BOQ, which, according to the Engineer, are all to be regarded as Provisional Sums for the purpose of Clause 52.3. If, as the Engineer determined, such contingencies are deducted, the ECP is only [amount] and the 15% threshold set forth in Clause 52.3 is not attained, thus depriving the Claimant of a remedy...

158. In the arbitration, the Respondent has endorsed the position of the Engineer and, accordingly, has argued that the contingencies included in the BOQ form part of the Provisional Sums to be deducted from the ECP under Clause 52.3. In supporting its position, the Respondent relies upon the following definition of "Provisional Sum" contained in Clause 58.1 of the General Conditions:

"Provisional Sum" means a sum included in the Contract and so designated in the Bill of Quantities for the execution of any part of the Works or for the supply of goods, materials, plant or services or for contingencies, which sum may be used, in whole or in part, or not at all, on the instructions of the Engineer.

159. The Respondent, thus, contends that all contingencies listed in the BOQ should properly be treated as "Provisional Sums" for the purpose of Clause 52.3. The difficulty with this argument in the present case, however, is that, as the Claimant has noted in response, the contingencies to which the Respondent refers have not been "designated" as Provisional Sums in the BOQ, in accordance with Clause 58.1. Rather, the Grand Summary page of the BOQ contains a line for "Specified Provisional Sums" included in the Bills and a separate line for the "Price Adjustment and Physical Contingencies" that the Respondent contends should also be treated as Provisional Sums for the purpose of Clause 52.3.

160. Although the Claimant has, thus, characterized the issue presented as "one of straightforward contract interpretation with respect to what figures from the BOQ Grand Summary... are 'Provisional Sums'", the Tribunal does not consider that it is, in fact, required to reach that issue. Indeed, the parties are in agreement that the purpose of the price adjustment for which Clause 52.3 provides, when the actual quantities are less than the estimated quantities, is "to compensate the Contractor for under-recovery of overhead (due to lower than expected quantities)"... Thus, Clause 52.3 does not mandate a price adjustment whenever the 15 per cent threshold is exceeded. Rather, in the absence of party agreement on an appropriate adjustment, Clause 52.3 only provides for a "determin[ation] by the Engineer having regard to the Contractor's Site and general overhead costs".

161. It follows, in the view of the Tribunal, that in order to prevail on a claim for a Contract price addition under Clause 52.3, the Claimant must establish that it was prevented from recovering the jobsite and general overhead costs included in the BOQ due to the decrease in the actual quantities of work performed. In the present case, however, the Claimant has failed to establish the amount of the jobsite and general overhead costs included in the BOQ; nor has it even alleged, let alone established, that it failed to recover such overhead costs for the base Contract work or the original Contract period.

162. The Claimant's claim is therefore rejected.

D. Interest

163. In addition to the claims addressed above, the Claimant has requested the Tribunal to award it interest on any amounts found to be due to it as from... the date it submitted its request for a Clause 67 determination to the Engineer. Interest is claimed at an average annual rate of 8.5% compounded daily...

164. As the Tribunal has decided above that the Claimant is entitled to receive [amount] in compensation for the prolongation of the Contract period..., the Tribunal is now required to determine whether the Claimant is entitled to interest, if any, on that sum as from the date and at the rate claimed.

1. The Parties' positions

165. In support of its position, the Claimant argues that entitlement to pre-judgment interest is "a fundamental tenet of arbitration law"... It further contends, in reliance upon [State C legislation], that a [State C] court has the power to award interest on any sum found by the court to be due as from the date on which the claim arose, unless the court directs otherwise... When the debt or damages are calculated in a foreign currency, according to the Claimant, the rate of interest should be the commercial borrowing rate in that currency in the relevant country. The Claimant claims to have derived the claimed rate of 8.5% on the basis of the overdraft bank rates charged by commercial banks in both Germany and [State C]... It refers to Clause 60 of the Contract (which applies to the late payment of sums certified by the Engineer) and international arbitration authority in support of its request for compound interest...

166. In answer to the Claimant, the Respondent argues that the Claimant's request for pre-judgment interest is barred by the Contract... It contends, in particular, that the current claim for interest is analogous to the claim for interest on design fees that was considered and rejected by the Arbitral Tribunal in its Second Partial Award. The Respondent notes that the Arbitral Tribunal rejected the claim for interest on the design fees on the basis that Clause 60.10 of the Contract "provides for interest in respect of the late payment of sums certified by the Engineer" only... As the Engineer had not certified any sums in relation to the claim for design fees, the Arbitral Tribunal concluded that interest was not payable. Against this background, the Respondent further argues that, not only did the Engineer not certify any of the amounts now claimed by the Claimant, it specifically rejected those amounts...

167. In addition, the Respondent opposes the Claimant's request for interest on the basis of the [State C legislation]. The Respondent contends that [the relevant State C statute] only grants discretion to order pre-judgment interest to the [State C] courts, and not to arbitral tribunals... If it was intended, according to the Respondent, that such discretion should extend to arbitral proceedings, this would have been provided for in the [State C arbitration statute]... which is silent on the issue... Even if the Tribunal had discretion to award interest, the Respondent maintains that, due to the allegedly fraudulent conduct of the Claimant, such discretion should not be exercised in this case...

168. In any event, the Respondent argues that there is no basis under [State C] law for the Claimant' s claim to daily compounded interest at an annual rate of 8.5%...The "Bank rate prevailing", as referred to in the [relevant State C statute], is instead a risk-free simple interest rate in the currency in which the Award is sought... The Respondent also contests the precedential value of the international arbitral jurisprudence upon which the Claimant relies.1 In the view of the Respondent, the present circumstances do not require the Tribunal to deviate from the general principle that simple interest should be awarded for breach of contract claims. Nor is it relevant that compound interest is payable under Clause 60 of the Contract, as the circumstances where such interest applies are strictly provided for in the Contract and do not extend to the present claims.

2. The Tribunal's findings

169. In deciding whether the Claimant is entitled to pre-judgment interest, the Tribunal is required to be guided by any relevant provisions of the Contract and applicable law.

170. In its Second Partial Award, the Tribunal already noted that the Contract only provides for interest in respect of the late payment of sums certified by the Engineer. In such cases, interest is payable at the rate stated in the Appendix to the Tender, which provides for the payment on the [State C currency] and DM components, respectively, at the "prevailing compound interest rates of Commercial Banks... [in [State C] and Germany] on overdrafts".

171. Although the Contract does not provide for the payment of interest in any other circumstances, the Tribunal cannot agree with the conclusion that the Respondent seeks to draw from this, i.e. that pre-judgment interest is "flatly barred" under the Contract in respect of sums that have not been certified by the Engineer... Rather, in the absence of an express contractual provision barring pre-judgment interest, the Tribunal may be guided by the applicable law.

172. In this regard, the Respondent has relied upon the Tribunal's denial in its Second Partial Award of pre-judgment interest in respect of the design fees awarded therein to the Claimant. However, as is explicitly stated in the Second Partial Award, the Claimant' s interest claim was denied in that case because the Claimant wrongly claimed interest on the basis of the Contract and had "failed to provide any alternative basis for an award of the interest" that it was seeking...

173. In the present case, the Claimant now advances both [State C] legal authority and references to international arbitration jurisprudence in support of the proposition that the award of pre-judgment interest by an international arbitral tribunal sitting in [State C] and applying [State C] law is not only permitted, but "necessary to provide claimants with full relief when there has been a delay in payment"... After having carefully reviewed all of the authorities produced, a majority of the Tribunal's members can find no impediment, in either the law of [State C] or [its arbitration statute], to the award of pre-judgment interest on sums found to be owed to the Claimant in the present circumstances.

174. Indeed, the Tribunal's majority does not consider that the failure of the [State C arbitration statute] to provide the Tribunal with express authority to award pre-judgment interest should, in the absence of any other authority to the contrary (of which none has been cited), deprive the Tribunal of the power to provide the Claimant with full relief for the losses incurred by it due to the time that has been required for the resolution of the parties' dispute. The Tribunal, by a majority, thus, sees no reason why it should not have as much authority to award pre-judgment interest in this arbitration as a [State C] court indisputably would have under the [relevant State C statute].

175. Thus, as under [State C] law the courts enjoy discretion either to award or deny pre-judgment interest, the issue that arises in the present case is how the Tribunal should exercise the discretion that it should also be considered to have in awarding or denying the same.

176. It is the position of the Respondent in this regard that:

... if there is discretion to be exercised here, it must be exercised in favour of Respondent which has challenged Claimant's various contentions in good faith and has raised, at a minimum, serious questions as to whether Claimant and other persons engaged in fraudulent or otherwise improper conduct....

177. However, the Tribunal's majority is unpersuaded that pre-judgment interest should be denied the Claimant merely because the Respondent mounted its defense to the claims in good faith. Nor does the Tribunal's majority consider, as indicated above, that any of the issues of alleged fraud, as raised by the Respondent, have any bearing on this matter. Rather, in deciding whether to award interest, the Tribunal's majority considers that it should be guided by the question of whether there has been avoidable delay in the payment of the sum awarded herein and, if so, the extent of the Claimant's loss.

178. In considering whether there has been avoidable delay, the Tribunal's majority has taken into account that, under the Contract, the Respondent is not obligated to make any payments until the corresponding sums have been certified by the Engineer. Moreover, under Clause 67.1 of the Contract's General Conditions, the parties are bound to give effect to every decision of the Engineer unless and until the same shall be revised. In the present case, the Engineer not only did not certify the sums in question but determined that no sums were due.

179. Nonetheless, under Clause 67.3, the Tribunal has the authority to open up, review and revise any decision on certificates of the Engineer. In deciding that the Claimant is entitled to the sums being awarded herein, the Tribunal is therefore at the same time determining that those sums should have been certified by the Engineer. Although the Respondent cannot be criticized for abiding by the Engineer's Clause 67 determination, it should not procure a benefit either from the Engineer's failure to certify for payment sums to which the Claimant is entitled. Thus, the Tribunal considers that it is appropriate for it to exercise its discretion to award interest on the sums awarded herein as from the date when they would have attracted interest under the Contract had they been properly and in due time certified by the Engineer.

180. Under Clause 60.10 of the Contract, the Respondent was obligated to pay the Claimant within 56 days after the issuance of any certificates. Thus, interest should accrue in this case as from the 57th day following the date upon which the sums awarded should have been certified by the Engineer. In the Tribunal's view, the Engineer could not have been expected to certify for payment any of the sums awarded herein until the Claimant produced satisfactory evidence in support of its extended overhead costs claim. The Claimant did not do so, however, until July 8, 2005, when it for the first time produced supporting project records. The Tribunal, by a majority of its members, therefore finds that the Claimant is entitled to pre-judgment interest on the amount awarded as from September 3, 2005 (i.e. 57 days later).

181. As regards the rate of interest to be applied as from that date, the Tribunal' s majority considers that it would be appropriate to apply the rate for late payment set forth in the Contract, given that that is the rate that would have been applied had the sums in question been certified by the Engineer, i.e. "Prevailing Compound Interest rates of Commercial Banks in German [sic] on overdrafts". The Claimant has contended that the appropriate rate to be applied, consistent with this provision, is 8.5%, while the Respondent has argued, on the basis of "average" EURIBOR and EONIA rates, that the rate should be no more than 2%. Neither party has provided sufficient evidence to persuade the Tribunal that the rates referred to by them are consistent with the relevant rates prevailing since September 2005.'

1
In particular, Compania del Desarollo de Santa Elener, SA v. Republic of Costa Rica, Case No. ARB. 96.1, February 17, 2000, 15 ICSID Rev. FICJ 169 (2000)...

2
Contract, Appendix to Tender, Clause 60.11.