The Respondent, an African State-owned entity, awarded a construction contract for part of a hydroelectricity project to the Claimant, a UK joint venture composed of three companies of different nationalities. The contract was based on the FIDIC Conditions of Contract for Works of Civil Engineering Construction, 4th edition, 1987, as amended and completed by conditions of particular application. The governing substantive law was the law of the African State (F) from which the Respondent originated. That law was based on English common law. Shortly after the signing of the contract, the Engineer requested that the project be modified to accommodate a delay in funding arrangements for a later phrase of the project upon which the initial phase of the project was dependent. Continuing uncertainty over those funding arrangements led to delays and disruption, causing the Claimant eventually to ask the Engineer to order the suspension of the works. The request was rejected and the Engineer instead sought to remove certain works from the contract by way of a variation order and to propose the partial taking-over of works that had been completed-the work removed would then be executed by another contractor when the funding became available (as it eventually did). The Claimant alleged that the variation order and the partial taking over of the contract by the Employer were breaches of contract. The Claimant announced its intention to commence arbitration proceedings and advised that it was ceasing work due to breach of contract by the Employer.La défenderesse, une entité africaine sous contrôle étatique, avait attribué un marché de construction à la demanderesse, une coentreprise britannique composée de trois sociétés de nationalités différentes, pour une partie d'un projet hydroélectrique. Le contrat se fondait sur les Conditions de contrat applicables aux marchés de travaux de génie civil de la FIDIC, 4e édition (1987), telles que modifiées, complétées par des conditions particulières. Il était régi au fond par la loi, basée sur la common law anglaise, de l'État africain (F) dont la défenderesse était originaire. Peu après la signature du contrat, l'ingénieur a demandé que le projet soit modifié afin de tenir compte d'un retard dans le financement d'une phase ultérieure du projet, dont dépendait sa phase initiale. Les incertitudes persistantes à propos de ce financement ont entraîné des retards et des perturbations, ce qui a conduit la demanderesse à demander à l'ingénieur d'ordonner la suspension des travaux. L'ingénieur a rejeté cette demande et tenté pour sa part d'exclure certains travaux du contrat au moyen d'un ordre de modification et de proposer une réception partielle des travaux achevés - le travail exclu devant dans ce cas être exécuté par un autre entrepreneur une fois que le financement serait disponible (comme il l'a finalement été). La demanderesse a estimé que l'ordre de modification et la réception partielle des travaux par le maître de l'ouvrage constituaient des ruptures de contrat. Elle a notifié son intention d'engager une procédure d'arbitrage et annoncé qu'elle cessait le travail en raison d'une rupture de contrat du maître de l'ouvrage.El demandado, una entidad africana de propiedad estatal, adjudicó un contrato para la construcción de una parte de un proyecto hidroeléctrico al demandante, una joint venture del Reino Unido formada por tres empresas de nacionalidades diferentes. El contrato se basaba en las condiciones contractuales para trabajos de construcción de ingeniería civil de la FIDIC (4ª edición, 1987), en su forma enmendada, y estaba completado por condiciones de aplicación particulares. La ley material aplicable era la ley del Estado africano (F) del cual provenía el demandado. Esta ley está basada en la common law inglesa. Poco después de la firma del contrato, el ingeniero solicitó una modificación del proyecto para adaptarse a una demora de los acuerdos de financiación para una etapa posterior del proyecto de la que la dependía la fase inicial del mismo. La constante incertidumbre respecto a estos acuerdos de financiación provocó retrasos e interrupciones, lo que finalmente condujo al demandante a solicitar al ingeniero que ordenara la suspensión de los trabajos. La petición fue rechazada y, en su lugar, el ingeniero intentó suprimir algunos de los trabajos del contrato mediante una orden de modificación y proponer una recepción parcial de los trabajos ya finalizados. La ejecución de los trabajos suprimidos entonces quedaría a cargo de otro contratista cuando los fondos estuvieran disponibles (como sucedió más tarde). El demandante alegó que la orden de modificación y la recepción parcial del contrato por parte del empleador constituían un incumplimiento de contrato. El demandante anunció su intención de iniciar un procedimiento de arbitraje y notificó el cese de sus trabajos por un incumplimiento del contrato por parte del empleador.

'213. The substantive contractual provisions relied upon by the Parties relate to the issues of (a) omission of works (FIDIC/GC 51.1(b))... (c) works to be performed by other contractors (GS 1.5)...

214. In respect to the issue of omission of works, FIDIC/GC 51.1(b) provides as follows:

51.1 The Engineer shall make any variation of the form, quality or quantity of the Works or any part thereof that may, in his opinion, be necessary and for that purpose, or if for any other reason it shall, in his opinion, be appropriate, he shall have the authority to instruct the Contractor to do and the Contractor shall do any of the following:

...

(b) omit any such work [i.e. any work included in the Contract] (but not if the omitted work is to be carried out by the Employer or by another contractor)...

.........

216. In respect to the issue of works to be performed by other contractors, GS 1.5 of the Contract provides as follows:

The Employer will arrange for works necessary for the completion of the Project other than that covered by this Contract to be executed by other contractors. The Contractor shall cooperate with the Employer and other contractors for the following separate contracts to ensure the satisfactory completion of the Project as a whole.

Lot I-2: Civil Works (Penstock line, powerhouse building and outlet channel)

Lot II: Hydromechanical Works (Gates and hoist for intake facilities, power station and irrigation outlet facilities; steel penstock and valves)

Lot III: Generating Equipment, Switchgear and Ancillary Equipment (Vertical Shaft Francis type turbines; generators; main transformer; and 132 kV switchgear)

Lot IV: Transmission Line, Substations and Substation Equipment (132kV transmission line from power station to the existing [A] substation; modification of the [A] and [B] substations and modification of the [C] switching station).

.........

239. Engineer's Decision No. 2... concluded in respect to the disputed Variation Order No. 4 that:

There has been no breach of contract by the Employer. The omission of the work was necessary and appropriate and permitted under Clause 51.1(b) since the Employer has not carried out this work itself nor awarded it to another contractor.

.........

241.... the Engineer informed the Contractor that, due to the delay of the Phase II loan, "we would like to get your agreement on the omission of the following works... [by] Variation Order". The listed works related to activities such as grouting around the metal gates to be installed in the water intake structure and installing plug concrete around the steel penstock tube to be inserted in the penstock tunnel, which work could only be done after the completion of interfacing works by other Project contractors, whose activities, it must be kept to mind, remained contingent on the release of the Phase II financing.

242.... the Contractor responded by describing the Engineer's proposal for a variation order as a "Cancellation of Works" and then as a "Partial Termination by Employer", respectively, stating that it was "preparing a revision of our programme to show our estimate of the programming results of such cancellation", that "the cancellation will require adjustments to Contract...", and that "the adjustments could most conveniently be made by way of a supplemental agreement".

.........

253.... the Contractor rejected Variation Order No. 4 and informed the Engineer that the variation order amounted to a "partial termination of the Works".

254.... the Contractor indicated to the Engineer that Variation Order No. 4 was "null and void" since the listed works remained to be done and thus could not be omitted by means of a variation order, and... also notified the Employer that the issuance of Variation Order No. 4 was a breach of GS 1.5 of the Contract amounting to a repudiation of the Contract, alternatively a breach of a fundamental term of the Contract enabling the Contractor to rescind the Contract and, on either basis, claim a quantum meruit for the works performed and/or damages. However, the Contractor further indicated to the Employer that it would be submitting a draft amendment to the Contract without prejudice to its position with respect to repudiation or rescission of the Contract.

255.... the Contractor presented a contract amendment to the Employer (which was not accepted) and thereafter continued to work towards substantial completion of the waterway works which could be completed, but without prejudice to its position that it had rescinded the Contract by notice given to the Employer...

256.... the Engineer replied to the Contractor's letter..., stating that "as the omitted work will not be carried out by the Employer or any other contractor at this time", Variation Order No. 4 fully met "the intent" of FIDIC/GC 51.1. The Engineer added that Variation Order No. 4 was effective and valid in the Contract, and that it allowed the Contractor to complete all other work, request a Taking-Over Certificate, and thus enable the Contract to be concluded.

.........

259. Generally speaking, a variations clause such as FIDIC 51.1 allows an Employer to make changes to the works without thereby committing a breach of contract.

260. The limit for that tolerance under the common law is that an Employer will not be allowed to use the variations clause as a means of undercutting the Contractor's bid or of abbreviating the contract, by taking work away in order to have it carried out by someone else for less cost or better quality.

261. The crux of the issue in the present case is whether the facts come within the proviso expressly stipulated in FIDIC/GC 51.1(b). In the view of the Claimant, the decision to omit works from the Contract without omitting the same works from the Project rendered the variation order invalid. In the view of the Respondent, FIDIC/GC 51.1(b) empowered the Engineer to instruct the omission of works from the Contract without the consent of the Contractor.

262. The Parties did not refer the Arbitral Tribunal to any [State F] legal authorities concerning the interpretation of variations clauses for building contracts. Instead, both Parties based their respective views concerning the proper construction of FIDIC/GC 51.1(b) on a number of English, Commonwealth and other common law judicial decisions as well as certain commentators on construction law in England and also within the Commonwealth.

263. In the case of Gallagher v. Hirsh from New York (45 N.Y. App. Div. 467 (1899)), a case for damages resulting from a breach of contract where a portion of the Contractor's excavation works were performed by another contractor, the Appellate Division interpreted the word "omissions" contained in a variations clause1 and concluded that:

It is evident that under the word "omissions" were intended to be included these things which were abandoned and left out of the plaintiff's contract and not such as were taken out of the plaintiff's contract and given to another to perform. The word "omission" did not mean omitted from the plaintiff's contract, but omitted from the work; and clearly could not be construed to have allowed the defendant to take two-thirds of the work from the plaintiff and then compel him to perform the rest.

264. In Carr v. J.A. Berriman ([1953] 89 CLR 327), the High Court of Australia interpreted a variations clause and held that it authorized the architect to omit items of work included in the plans and specifications, but did not authorize him to give the omitted items to another builder.

265. Likewise, in Commissioner for Main Roads v. Reed & Stuart ([1980] 12 Lloyd's Rep. 55), the High Court of Australia interpreted another variations clause and concluded with reference to Carr v. J.A. Berriman that the clause:

permits the omission from time to time by the proprietor of portion of the contract works. What it clearly enough does not permit is the taking away of portion of the contract work from the contractor so that the proprietor may have it performed by some other contractor.

266. The Claimant's authorities also included the rapporteur's notes from a FIDIC seminar convened on 28 September 1987 in connection with the launch of the 4th edition of the FIDIC Red Book. The chairman of the FIDIC drafting committee stated in respect to the proviso added to Clause 51.1(b) that:

It has been made clear that the Engineer is not empowered, without the Contractor's agreement, to omit from the Contract any part of the work if the reason for this is that the Employer now wishes to carry out such work or wishes to employ another contractor.

267. This comment was supplemented by the view of the invited commentator, who queried whether the proviso added to Clause 51.1 would be in the Engineer's interests during the clearing-up phase on a contract, noting that sometimes, if this clearing-up was delayed, it was helpful to the Employer to have the power to do the work itself, or to bring in another contractor, in order to gain earlier occupation.

268. The Arbitral Tribunal notes from these two informed commentaries on FIDIC 51.1(b) that the proviso serves as a limit on the power of the Engineer, and not merely as a limit on the Engineer's authority to exercise discretion in the application of assigned powers.

269. In the English case of Amec Building v. Cadmus Investments ([1996] 51 ConLR 105 (Official Referees)), the parties therein agreed that the reason for the contested omission "should not be considered as relevant". This point concerning the rationale for the omission was expressly adopted in Abbey Developments v. PP Brickwork (see next paragraph) ("This must be right since otherwise it would be necessary to qualify the right by subjective rather than objective criteria."). And just as with the American and Australian cases referred to above, the contested omission was not allowed.

270. In Abbey Developments v. PP Brickwork ([2003] Con Ind Law Letter 2033, TCC), the English court for construction cases noted that provisions entitling an owner to vary the works have to be construed carefully:

so as not to deprive the contractor of its contractual right to the opportunity to complete the works and realise such profit as may then be made.... The basic bargain struck between the employer and the contractor has to be honoured, and an employer who finds that it has entered into what he might regard as a bad bargain is not allowed to escape from it by the use of the omissions clause so as to enable it then to try and get a better bargain by having the work done by somebody else at a lower cost once the contractor is out of the way...

271. The Judge in Abbey Developments then stated the question as: "What purpose did the contract envisage?" To this, the Judge concluded:

In my judgement,... the purpose of a variations clause is to enable the employer to alter the scope of the works to meet its requirements. As a project proceeds it may become clear that some change of mind is needed to attain the result now desired. That might be... for some other reasons such as lack of money. The test must therefore be whether the variations clause is or is not wide enough to permit the change that was made. If, with the advantage of hindsight, it turns out that the variation was not ordered for a purpose for which the power to vary was intended then there will be a breach of contract.

Again in this case the contested omission was not allowed.

272. In considering the proper construction of FIDIC/GC 51.1, the Respondent suggested the following points:

(a) By its terms FIDIC/GC 51.1 excludes omissions of the work if the work is to be carried out by the Employer or another contractor. Consistent with the use of the present tense, if the choice is between the present Contractor or another contractor, then the omission is prohibited. If, however, the choice is between the present Contractor or not having the work done by another contractor (at least, for the time being), then the omission is allowed.

(b) In order to make FIDIC/GC 51.1 workable, the test must be: for what purpose is the work being omitted? If it is being omitted in order to give it to another (whether for reasons of quality or cost), then the omission is not permitted. If it is being omitted for any other reason than to give it to another, the omission is permitted.

(c) FIDIC/GC 51.1 includes provision for compensating the Contractor in respect of any variation instructed, i.e. appropriate compensation for the loss of contribution to overheads and profit, valued under FIDIC/GC 52.

273. The Arbitral Tribunal observes that the FIDIC 4th variations clause is in principle very wide in that it permits the Engineer to make "any variation of the form, quality or quantity of the Works or any part thereof that may, in his opinion, be necessary and for that purpose, or if for any other reason it shall, in his opinion, be appropriate, he shall have the authority to instruct the Contractor to:... (b) omit any such work [i.e. any work included in the Contract] (but not if the omitted work is to be carried out by the Employer or by another contractor)..." (Emphasis added).

274. As noted above in paragraph 239, the Engineer pronounced in its Decision that the omission of works instructed in Variation Order No. 4 was both "necessary" and "appropriate". Under the terms of FIDIC/GC 51.1, one or the other ground is sufficient, and in the circumstances prevailing as at the scheduled Completion Date for the Contract, the Arbitral Tribunal shares the view of the Engineer that the omission of works which could not be completed until after other contractors would complete their own works presented a useful solution to the serious problem created by the lack of the interfacing works due to the unfulfilled contingency of the Phase II financing. For the reasons given below, however, the omission of such works could not in this instance be validly effected without the consent of the Contractor.

275. The controlling consideration is that the proviso to FIDIC/GC 51.1(b) limited the Engineer's authority to omit works. The fact that the works identified in Variation Order No. 4 were omitted from the Contract but were not intended to be omitted from the Project means that Variation Order No. 4 was given without contractual authority. In addition, without a concurrent omission of the identified works from the Project, the argument based on the verbal tense of the phase "is to be" employed in the proviso to FIDIC 51.1(b) is of no avail to the Respondent in the context of the facts presented by this case.

276. This conclusion also follows directly from a true application of the "purpose test" suggested by the Respondent, and is thus fully consistent with the holding of Abbey Developments. The said "purpose test" relates to the purpose served by the terms of a contract, and not to the purpose served by the omission of works from a contract. The purpose envisaged by the variations clause in the Contract was to authorize necessary or appropriate variations to the Works, including omissions. But clearly it was not intended to enable a unilateral reallocation of tendered lots attributed under the Project. As emphasized in both Amec Building and Abbey Developments, the purpose of the omission itself is irrelevant "since otherwise it would be necessary to qualify the right by subjective rather than objective criteria". It is in all events clear from the facts of this case that, far from omitting the listed works from the Project, the Employer intended to continue the Project and to have the omitted works performed later under another contract. The rationale for the omission, no matter how justifiable it might seem, cannot vest the Engineer with a power excluded by the Contract.

277. It is important to observe in this respect that the Phase I and Phase II contracts were envisaged to run concurrently, not sequentially. The Lot I-1 portion... was programmed to take longer (48 months) than the other portions of the Project works, and thus it was necessary to commence earlier in order to be able to finish the Lot I-1 works concurrently with the other works, programmed to take only 36 months. In addition, the dividing line between the Lot I-1 and Lot I-2 portions of the civil works for the Project was not temporal, but essentially geographical...

278. The Arbitral Tribunal therefore concludes that Variation Order No. 4 was a breach of FIDIC/GC 51.1(b). However..., Variation Order No. 4 is a breach of contract sounding in damages only; it thus did not constitute a fundamental breach amounting to a repudiation of the Contract or otherwise afford the Contractor with a right of rescission.

.........

323. The Claimant submitted... that the Respondent breached GS [General Specification] 1.5 by failing to arrange for the Engineer to issue on a timely basis the Orders to Commence in respect of the other contractors on the Project.

324. The Respondent answered with a denial of any breach of GS 1.5 in relation to the non-commencement of the hydro mechanical or other works.

325. In the view of the Respondent, GS 1.5 amounts to no more than a particular application of the general obligation of cooperation set out in FIDIC/GC 31, and does not place any contractual obligation on the Employer to proceed with the other works at any particular time; nor, indeed, at all. In its Closing Statement, the Respondent argued that GS 1.5 places an obligation on the Contractor to cooperate with other contractors, but so far as the Employer is concerned merely states that the Employer will employ other Contractors to complete the Project, and not per se the Works under the Contract.

326. The Claimant accepted that, apart from GS 1.5, the Contract does not contain any express provision concerning the alleged obligation on the Employer to order commencement of the Lot II hydro mechanical works on a timely basis in order to enable the Contractor to complete the Lot I-1 Works on a timely basis. However, in the view of the Claimant, the Works dependent on interface with the works of other contractors made it necessary as a matter of business efficacy or as the obvious but unexpressed intention of the Parties for certain terms to be implied into the Contract.

327. The implied terms suggested by the Claimant are as follows:

(a) The Employer shall take all reasonable steps to ensure that the Contractor is able to carry out the Contract Works in accordance with the Contract and in particular with the programme.

(b) The Employer shall do all that is necessary to cooperate with the Contractor and to ensure that the Contract Works can be carried out in accordance with the programme and/or the Contract.

(c) The Employer shall not do anything and shall not allow the Engineer to do anything that may hinder or impede performance by the Contractor.

(d) The Employer shall not unreasonably or unnecessarily withhold or delay approval of any recommendation, evaluation, determination or decision of the Engineer with respect to the extension of time under Clause 44.1 of the Conditions of Contract or the variations of the Works under Clause 51.1 of the Conditions of Contract or the valuation of variations under Clause 52.1 of the Conditions of Contract or the power of the Engineer to fix rates under Clause 52.2 of the Conditions of Contract or the amendment of the Contract Price under Clause 52.3 of the Conditions of Contract or the finalization of claims under Clause 53 of the Conditions of Contract.

(e) The Employer shall issue the Notices to Commence for the necessary... contracts within the time for completion foreseen in Contract... to enable the Contractor to complete the entire works in Contract...

(f) The Employer shall issue the Notice to Commence to the... Joint Venture [to which the contract for Lot I-2 was awarded] within the time for completion foreseen in [the contract for Lot I-1].

(g) The Contract is binding on the Employer regardless of whether foreign funding is available.

(h) The Employer shall not prevent the Contractor from completing the Contract.

(i) The Employer shall not terminate the Contract for its own convenience including for lack of foreign funding.

328. The Respondent considered that most of the implied terms suggested by the Claimant can be rejected on the simple ground that the obligations are already provided for in the Contract and, in most instances, in the form of a remedy, i.e. extension of time, additional payment, suspension, termination, or omission.

329. However, before considering the issue of implied terms, the Arbitral Tribunal considers that it is appropriate to consider first the criteria which might entitle the Contractor to rescind the Contract on the basis of a fundamental breach or a breach of a fundamental term.

330. In Suisse Atlantique Société d'Armement Maritime SA v. NV Rotterdamsche Kolen Centrale ([1966] 2 All ER 61, [1967] 1 AC 361), Lord Upjohn observed that the phrases "fundamental breach" and "breach of a fundamental term" are quite different from each other:

the words "fundamental breach" [represent] no more than a convenient shorthand expression for saying that a particular breach or breaches of contract by one party is or are such as to go to the root of the contract which entitles the other party to treat such breach or breaches as a repudiation of the whole contract. Whether such breach or breaches do constitute a fundamental breach depends on the construction of the contract and on all the facts and circumstances of the case...

But the expression "fundamental term" has a different meaning. A fundamental term of a contract is a stipulation which the parties have agreed either expressly or by necessary implication or which the general law regards as a condition which goes to the root of the contract so that any breach of that term may at once and without further reference to the facts and circumstances be regarded by the innocent party as a fundamental breach...

331. The Arbitral Tribunal first of all considers that GS 1.5 does not amount to a fundamental term of the Contract, and that an implied term addressing the programming effects of the interfacing works, even if the Arbitral Tribunal would reach the conclusion that it should by implication be deemed part of the Contract, would not be regarded as a condition going to the root of the contract. In all events considered in light of the facts and circumstances of the case, the Arbitral Tribunal therefore determines that neither ground would result in a breach by the Employer of a fundamental term of the Contract.

332. However, the Claimant also submitted that the Contract was based on a condition that the Employer would commence the Phase II work before the completion of the Contract in order to enable the Contractor to complete the entire Works in accordance with the Schedule. In connection with this argument, the Claimant suggested that the Respondent was responsible for the delay to the Phase II financing, to the extent that the delay was associated with allegations of generalized corruption in [State F] reflected in press clippings presented as evidence in these proceedings. However, the Claimant did not present any direct documentary or testimonial evidence to the Arbitral Tribunal in support of any suggestion that [Respondent] itself was responsible for the delay to the Phase II funding, and the Arbitral Tribunal finds the indirect allegations of generalized corruption as against [Respondent] entirely unproven.

333. With respect to the question of "fundamental breach", the Arbitral Tribunal was referred by the Claimant to one [State F] legal authority concerning the test in law for repudiation of contracts by conduct.

334. [In this case] the Court of Appeal... held, with express reference to Universal Cargo Carriers Corporation v. Citati ([1957] 2 All E.R. at 84 (Q.B.D.)), that the correct test for repudiation of a contract where there has been no expressed intention to repudiate is to ask whether the conduct of the renunciating party, including through its representatives, was such as would cause a reasonable person to come to the conclusion that the renunciating party did not intend to or was unable to fulfil its contract.

335. The Arbitral Tribunal considers on the basis of the facts that a reasonable person would not come to the conclusion that the Employer intended to renounce or was unable to fulfil the Contract. Every indication in the facts reflects instead the desire of the Respondent to maintain the Contract notwithstanding the difficulties presented by the delayed release of the Phase II financing.

336. In addition, both Parties also made reference to a number of English decisions concerning repudiation of contracts in law, and the Respondent asserted that these cases are consistent with [State F] law.

337. Amongst these decisions, the Arbitral Tribunal was referred to the decision of the English Court of Appeal in Decro-Wall International SA v. Practitioners in Marketing Ltd ([1971] 2 All ER 216, [1971] 1 WLR 361), wherein Buckley LJ observed that:

To constitute repudiation, the threatened breach must be such as to deprive the injured party of a substantial part of the benefit to which he is entitled under the contract.

He then stated the test as follows:

[W]ill the consequences of the breach be such that it would be unfair to the injured party to hold him to the contract and leave him to the remedy in damages as and when a breach or breaches may occur?

338. The Arbitral Tribunal considers on the basis of the facts and circumstances of the case that the delay in the commencement of the Phase II contracts cannot be said to have deprived the Contractor of a substantial part of the benefit to which it was entitled under the Contract, nor that it would be unfair to leave the Contractor to the remedy in damages resulting from the Employer's failure to commence the Phase II work in sufficient time before the completion date for the Contract in order to enable the Contractor to complete the whole of the Works in accordance with the contractual Programme.

339. In light of this conclusion, and in view of the fact that only declaratory relief is requested in the context of these proceedings, it is not necessary to consider the extent to which implied terms, if any, form part of the Contract and would or would not have been breached by either Party.

340. Having considered the arguments of the Claimant and formulations of common law tests for repudiation of contracts under [State F] law, the Arbitral Tribunal concludes that the alleged breach of GS 1.5 invoked in the Contractor's notice of repudiation and rescission letter..., as well as the breach of FIDIC/GC 51.1(b) discussed above in connection with the challenge to Engineer's Decision No. 2, did not amount to a repudiation of the Contract by the Employer; GS 1.5 is not a fundamental term, or representative of a condition of the Contract, breach of which could entitle the Contractor to consider that the Contract had been repudiated. At best, GC 1.5 could reflect a warranty by the Employer that it would arrange for the necessary interfacing works in order that the whole of the Works could be performed by the Contractor in due time. Likewise, under the facts and circumstances, Variation Order No. 4 and the breach of FIDIC/GC 51.1(b) did not deprive the Contractor of a substantial part of the benefit to which it was entitled under the Contract or otherwise go to the root of the Contract. The failure of the Employer to commence the Phase II contracts in accordance with the Lot I-1 Construction Schedule thus did not amount to a repudiation of the Contract or give the Claimant a right to rescind the Contract.

.........

386. The trouble with the Contractor's position does not stem merely from the ultimately mistaken view that it was entitled to rescind the Contract, but logically it also stems from the view that the improper omission of works operated by Variation Order No. 4 somehow obviated the very possibility of a Taking-Over Certificate ever being issued, thus starting the Defects Liability Period.

387. In the context of a contractual termination, it is plain and obvious that the term "repudiated" as it is integrated into the FIDIC form at least embraces the legal meaning of "repudiation" under English common law. At the same time, however, the Engineer's opinion given in respect to FIDIC/GC 63.1 was not a legal opinion under any law, and it is in all events subject to arbitral review. With respect to the Engineer's opinion, it is the plain and ordinary meaning of the verb "repudiate"2 that will be decisive.

388. During his cross-examination at the witness hearing, [the Project Engineer] was asked what he understood by the term "repudiation" which he had certified. His response was that repudiation means not doing or not executing the works in accordance with the contract. When further asked his opinion as to the difference between "repudiation" and "breach of contract", the reply was that "… repudiation … means abandonment of the contract. Breach of contract is violation of the contract."

389. Certainly under [State F] law as presented to the Arbitral Tribunal in terms of the judgment of the Court of Appeal... cited above in para. 334, the test for repudiation by conduct in a legal sense is to ask whether the conduct of the renunciating party was such as would cause a reasonable person to come to the conclusion that the renunciating party did not intend to or was unable to fulfil its contract. As noted above, this decision was based on precedent from English common law (Citati case).

390. Consistent with this test, the Arbitral Tribunal considers that a reasonable person could come to the conclusion on the basis of the Contractor's conduct... that the Contractor did not intend to perform the Contract any further. Accordingly, the contractual repudiation contemplated by FIDIC/GC 63.1 and certified by the Engineer... was clearly established and the analysis can stop there, without touching on whether or not the circumstances as they stood [in the following year] might also constitute grounds for a repudiation in law.'

1
"Should the owner at any time during the progress of the said building request any alteration, deviation, additions or omissions from the said contract he shall be at liberty to do so, and the same shall in no way affect or make void the contract, but will be added or deducted from the amount of the contract, as the case may be, by a fair and reasonable valuation."

2
The Concise Oxford Dictionary defines "repudiate" as "… 2. Disown, disavow, reject; refuse dealings with; deny. 3. Refuse to recognize or obey (authority, treaty) or discharge (obligation, debt)."