'c) Admissibility Objection

aa) Overview

172. By the Admissibility Objection Respondent argues the Arbitral Tribunal cannot take the case at hand because Claimant has failed to submit its claims to the Engineer in its capacity as DAB, i.e. to conduct the so-called Adjudication Procedure …

173. The Adjudication Procedure is set forth in Sub-Clauses 20.2 (1) and 20.4 GC and the first sentence of Sub-Clause 20.6 (1) GC, as amended by Sub-Clauses 20.2, 20.4 (2) and 20.6 PC.

174. The questions to be decided under the Admissibility Objection are whether:1

(i) according to Sub-Clauses 20.2 and 20.4 GC, as amended by the Particular Conditions …, Claimant, before initiating the present arbitration proceeding, was mandatorily required to first pursue an Adjudication Procedure before the Engineer acting as DAB (see paras. 175 et seq. hereinafter); and

(ii) in the affirmative, Claimant had complied with the requirements of such an Adjudication Procedure (see paras. 195 et seq. hereinafter); and

(iii) in the event Claimant did not do so, the Arbitral Tribunal has to suspend proceedings or dismiss Claimant's claim (see para. 205 et seq. hereinafter).

bb) Mandatory nature of the Adjudication Procedure

(i) Compassion [sic] of the General Conditions with the Particular Conditions

175. In order to determine whether the Adjudication Procedure is mandatory or not, the Arbitral Tribunal must first determine to what extent the Adjudication Procedure set forth in the General Conditions has been amended by the Particular Conditions. 23 The following schedule … hereinafter shall illustrate this (emphasis added by the Arbitral Tribunal):

• Sub-Clause 20.2 - Appointment of the Dispute Adjudication Board

General Conditions

"Disputes shall be adjudicated by a DAB in accordance with Sub-Clause 20.4 [Obtaining Dispute Adjudication Board's Decision]. The Parties shall jointly appoint a DAB by the date stated in the Appendix to Tender."

(paras. 2 to 10 not quoted)

Contractually agreed version

"Disputes shall be adjudicated by a DAB in accordance with Sub-Clause 20.4 [Obtaining a Dispute Adjudication Board's Decision]."

(paras. 2 to 10 deleted)

• Sub-Clause 20.3 - Failure to agree Dispute Adjudication Board

General Conditions

(not quoted)

Contractually agreed version

(deleted)

• Sub-Clause 20.4 - Obtaining Dispute Adjudication Board's Decision

General Conditions

"If a dispute (of any kind whatsoever) arises between the Parties in connection with, or arising out of, the Contract or the execution of the Works, including any dispute as to any certificate, determination, instruction, opinion or valuation of the Engineer, either Party may refer the dispute in writing to the DAB for its decision, with copies to the other Party and the Engineer. Such reference shall state that it is given under this Sub-Clause.

For a DAB of three persons, the DAB shall be deemed to have received such reference on the date when it is received by the chairman of the DAB."

(paras. 3 to 7 not quoted)

Contractually agreed version

"If a dispute (of any kind whatsoever) arises between the Parties in connection with, or arising out of, the Contract or the execution of the Works, including any dispute as to any certificate, determination, instruction, opinion or valuation of the Engineer, either Party may refer the dispute in writing to the DAB for its decision, with copies to the other Party and the Engineer. Such reference shall state that it is given under this Sub-Clause.

The Engineer shall act as the DAB in accordance with this Sub-Clause 20.4, acting fairly, impartially and at the cost of the Employer. In the event that the Employer intends to replace the Engineer, the Employer's notice under Sub-Clause 3.4 shall include detailed proposals for the appointment of a replacement DAB."

(paras. 3 to 7 unchanged, not quoted)

• Sub-Clause 20.5 - Amicable Settlement

General Conditions

(not quoted)

Contractually agreed version

(unchanged, not quoted)

• Sub-Clause 20.6 - Arbitration

General Conditions

"Unless settled amicably, any dispute in respect of which the DAB's decision (if any) has not become final and binding shall be finally settled by international arbitration. Unless otherwise agreed by both Parties: ..."

((a) to (c) of para. 1 and paras. 2 to 4 not quoted)

Contractually agreed version

"Unless settled amicably, any dispute in respect of which the DAB's decision (if any) has not become final and binding shall be finally settled by arbitration. The arbitrator(s) shall be appointed by the [local] Chamber of Commerce. Unless agreed by both Parties: ..."

((a) to (c) of para. 1 and paras. 2 to 4 different in text and not quoted (see fn. [3] hereinabove) …)

176. The emphasis added by the Arbitral Tribunal shows that both versions of Sub-Clause 20.2(1) use the verb "shall" while both versions of Sub-Clause 20.4(1) use the verb "may". Respondent did thus not change this different terminology in the Particular Conditions included in the tender documents. The Arbitral Tribunal will therefore first examine what the meaning of the verbs "shall" and "may" as used in the General Conditions is and then address the question whether the meaning so determined applies also to the Particular Conditions.

177. The words "shall" in Sub-Clause 20.2(1) GC and "may" in Sub-Clause 20.4(1) GC are contradictory: Sub-Clause 20.2(1) GC seems to point to a mandatory nature of the Adjudication Procedure while Sub-Clause 20.4(1) GC describes it rather as option.4 This contradiction originates from the corresponding Sub-Clauses 20.2(1) and 20.4(1) of the FIDIC Rules.

(ii) The nature of the Adjudication Procedure in the FIDIC Rules

178. The FIDIC Rules are also known as the FIDIC's "1999 Red Book" 5 which the Parties adopted without modification as the General Conditions …

179. The Fourth Edition of the FIDIC Red Book (the "FIDIC 1992 Rules") 6 preceded the actual FIDIC Rules. Its Clause 67 entitled "Settlement of Disputes" read in Sub-Clauses 67.1 and 67.3 as follows7 (emphasis added by the Arbitral Tribunal):

67.1 If a dispute of any kind whatsoever arises between the Employer and the Contractor in connection with, or arising out of, the Contract or the execution of the Works, ... the matter in dispute shall, in the first place, be referred in writing to the Engineer, with a copy to the other party. ...

67.3 Any dispute in respect of which:

(a) the decision, if any, of the Engineer has not become final and binding pursuant to Sub-Clause 67.1 ...

shall be finally settled, unless otherwise specified in the Contract, under the Rules of Conciliation and Arbitration of the International Chamber of Commerce ... .

180. The word "shall" in Sub-Clause 67.1 of the FIDIC 1992 Rules indicated that the proceeding before the engineer was mandatory and did not contradict any of the provisions of the FIDIC 1992 Rules. As Peter M. Wolrich wrote: 8

The FIDIC clause contained a clear, express obligation to proceed with the first tier prior to arbitration.

181. Also other authors and ICC jurisprudence confirmed that the FIDIC 1992 Rules or the earlier FIDIC rules in the third edition of the FIDIC Red Book of 19779 clearly required "parties to exhaust preliminary means before proceeding to arbitration". 10

182. Legal materials such as the "FIDIC Contracts Guide", FIDIC, Geneva 2000 (the "FIDIC Guide"), literature and jurisprudence on Clause 20 FIDIC Rules of the actual FIDIC Rules in the "1999 Red Book" on the mandatory or non-mandatory nature of the proceedings before DAB are very sparse. The FIDIC does not discuss this issue 11 As far as the Arbitral Tribunal is aware of, merely Christopher R. Seppälä addressed this question and wrote the following 12 (emphasis also in [exhibit]):

Whatever other disputes there may be between the parties, none may be arbitrated unless it has gone through the Board procedure in Clause 20. This can clearly be seen from the wording of the first sentence of the arbitration clause (in Sub-Clause 20.6):

...

It follows from this sentence that the only matter that may be submitted to arbitration is a "dispute" which:

(1) has been referred to the DAB for decision under Clause 20, and

(2) has not become the subject of a final and binding decision of the DAB because, typically, a party has given a notice of dissatisfaction with the decision of the DAB on that dispute within 28 days ...

Accordingly, if the arbitrators embark on any other matters, without the parties' consent, they will be exceeding their jurisdiction and, hence, their award may be set aside or refused recognition and enforcement by a competent court.

183. Neither Christopher R. Seppälä nor any other legal material known to the Arbitral Tribunal discusses the contradiction in the wordings between Sub-Clauses 20.2 (1) and 20.4 (1) GC referred to in para. 177 hereinabove.

184. In the Arbitral Tribunal's view the following considerations support the mandatory nature of the Adjudication Procedure pursuant to Sub-Clauses 20.2 and 20.4 of the FIDIC Rules adopted as the General Conditions:

(i) The procedure before the engineer pursuant to Clause 67 of the FIDIC 1992 Rules was regarded as mandatory unless otherwise agreed by the contracting parties.

(ii) There is no legal material indicating that the mandatory nature of the procedure under Clause 67 of the FIDIC 1992 Rules was abandoned in favour of a purely optional Adjudication Procedure.

(iii) The fact that Sub-Clauses 20.2 to 20.4 FIDIC Rules regulate the Adjudication Procedure in a more detailed manner than Clause 67 of the FIDIC 1992 Rules indicates that FIDIC intended to strengthen and not to weaken the institutional weight of the Adjudication Procedure.

(iv) One of the essential differences of the Adjudication Procedure between the FIDIC 1992 Rules and the FIDIC Rules of 1999 is that under the FIDIC 1992 Rules the engineer was to act like a DAB whereas in the FIDIC Rules of 1999 the parties nominate one or three DAB members other than the Engineer. The idea is that the parties should establish a DAB before a dispute arises 13 and that a DAB regularly visits the site. 14

(v) This idea can only be implemented if the DAB has a mandatory function, which is reflected in the "shall" wording of Sub-Clause 20.2(1) FIDIC Rules. Under the FIDIC Rules, only if the parties have established a DAB, 15 the parties actually have the possibility to refer a dispute to the DAB pursuant to Sub-Clause 20.4(1) FIDIC Rules. The Arbitral Tribunal considers that this is the reason for the "may" wording in Sub-Clause 20.4(1) FIDIC Rules and resolves the aforementioned conflict with the "shall" wording in Sub-Clause 20.2(1) FIDIC Rules.

(vi) For the said reasons, the words "if any" added in Sub-Clause 20.6(1) FIDIC Rules in parentheses does not indicate that the Adjudication Procedure under Clause 20 GC is optional as they consider that a dispute may be submitted to arbitration apart from a notice of dissatisfaction under Sub-Clause 20.4(5) FIDIC Rules also if a DAB fails to render a decision within 84 days after having received such reference.

(vii) Moreover, the "shall" wording of Sub-Clause 20.2(1) FIDIC Rules stands at the outset of the relevant Clauses 20.2 to 20.4 GC and relates thereby to the dispute and therefore in a mere systematical analysis of the dispute settlement mechanism agreed in conjunction with Arbitration Clause has a stronger weight than the "may" wording in Sub-Clause 20.4 GC which addresses the possibility of "either Party".

(viii) Similarly, the fact that the Engineer is bound to render the DAB decision within a fixed time of 84 days (Sub-Clause 20.4(4) GC) is considered an element in favour of the mandatory nature of the Arbitration Procedure. 16 The same applies in the Arbitral Tribunal's view for the fact that Sub-Clause 20.8 GC determines the circumstances under which the Adjudication Procedure "shall not apply".

185. The considerations in para. 184 hereinabove show that Claimant's arguments referred to in para. 79(i) and (iii) hereinabove do not suggest the alleged non-mandatory nature of the Adjudication Procedure. As to Claimant's reference reflected in para. 78(iii) hereinabove to a conciliation proceeding required in the arbitration clause analysed in DFT no. 4A.18/2007, the Arbitral Tribunal shares Respondent's view referred to in para. 78(iii) hereinabove that the wording 17 of this arbitration clause was too general to be interpreted as mandatory so that it cannot be compared with the requirement to set up an Adjudication Procedure set forth in Sub-Clause 20.2 FIDIC Rules.

186. Based on the considerations in paras. 184/185 hereinabove, the Arbitral Tribunal concludes that the Adjudication Procedure set forth in Clause 20 of the FIDIC Rules is mandatory.

(iii) The nature of the Adjudication Procedure in the General Conditions

187. As the Parties adopted the FIDIC Rules in their entirety as the General Conditions, in the absence of a different real intent mutually agreed between the Parties, this conclusion applies also to Clause 20 of the General Conditions. As none of the Parties has alleged that - apart from the modifications agreed in the Particular Conditions 18 - details of Clause 20 GC or the nature of its Adjudication Procedure have been discussed, no such different mutually agreed intent of the Parties has been established.

188. For the said reasons, the Adjudication Procedure in Clause 20 GC is mandatory. Accordingly, the Arbitral Tribunal must in a next step examine whether the modifications of Clause 20 of the General Conditions agreed in the Particular Conditions changed anything in the mandatory nature of the Adjudication Procedure.

(iv) Did the Particular Conditions change the nature of the Adjudication Procedure?

189. When entering into the Contract, by agreeing to the Particular Conditions, the Parties amended the General Conditions in the sense that the Engineer should act as DAB pursuant to Sub-Clauses 20.2 and 20.4(2) PC. Claimant argues that the Engineer, who - pursuant to Sub-Clause 20.4(2) PC - as DAB has to act "fairly, impartially and at the cost of the Employer" (the Respondent) is "not impartial and independent" and that such an Adjudication Procedure does not make sense because Claimant would need to appeal before the Engineer against the Engineer's own decision … Although these arguments have some merit, 19 they do not prevent parties from agreeing on such a solution which the FIDIC Guidance for Preparation of Particular Conditions includes as an alternative paragraph for Sub-Clause 20.4. 20 Since parties can prevent that the decision of the Engineer acting as DAB becomes binding by filing a notice of dissatisfaction, this autonomy of the parties must be respected.

190. The Particular Conditions were included in the tender documents and presented to Claimant together with the General Conditions. 21 As Claimant explained, there were no negotiations on the Particular Conditions, Claimant was merely allowed to ask questions 22 and the "procedure for signing of the contract did not provide a stage of negotiations between the Employer and the selected tenderer" so that there was no possibility "for the winning tenderer to amend, vary or modify the terms" of the General Conditions or the Particular Conditions with the effect that merely clarifying questions resulting in "simple answers of the Employer" were possible … In the context of these clarifying questions, Claimant did not ask any question on the Particular Conditions and thus not ask any clarification on the Adjudication Procedure introduced by the Particular Conditions … Accordingly, Clause 20 GC as amended by the Particular Conditions was neither discussed by the Parties nor explained by Respondent in the context of clarifying questions of Claimant.

191. Even if it were correct that a modification of the Particular Conditions was not possible, there would be no reason not to recognize the mandatory nature of the Adjudication Procedure because Claimant accepted it by signing the Contract and thereby consented to the Contract documents including the General Conditions and the Particular Conditions.

192. For the said reasons, Claimant did not establish that when accepting the Particular Conditions the Parties' mutually agreed intent was to provide for a non-mandatory Adjudication Procedure and/or to change the mandatory nature set forth in the General Conditions. Accordingly, the acceptance of the Particular Conditions did not change the mandatory nature of the Adjudication Procedure set forth in Clause 20 of the General Conditions. As this result of the Arbitral Tribunal's interpretation of Clause 20 GC as amended by the Particular Conditions could be determined by applying the general means of interpretation, there is no doubt to be solved in application of the in dubio contra preferentem rule, i.e. the subsidiary rule of interpretation according to which a contradicting contract term must be interpreted against the author of such term. Moreover, the fact that Claimant prepared a formal notice to the Engineer describing the Adjudication Procedure in the last line as "the mandatory DAB procedure" and sent it to the Engineer as an unsigned draft … shows that Claimant understood that the dispute settlement mechanism agreed in conjunction with the Arbitration Clause required the prior conducting of a mandatory formal Adjudication Procedure.

193. Finally, Claimant's view that because of the Engineer's lack of impartiality and independence, the Adjudication Procedure does not meet the requirements of Art. 3 and 4 of the Appendix entitled "General Conditions of Dispute Adjudication Agreement" … and therefore makes the DAB provisions in the Particular Conditions ineffective overlooks that this Appendix as a result of the deletion of Sub-Clause 20.2(5) GC referring to the "General Conditions of Dispute Adjudication Agreement contained in the Appendix to these General Conditions" has not become a part of the Contract Documents.

(v) Summary

194. It results from paras. 175 to 193 hereinabove that the Adjudication Procedure under Sub-Clauses 20.2 to 20.4 of the FIDIC Rules of 1999 adopted as the General Conditions in its original form as well as in the form adopted in casu by Sub-Clauses 20.2(1) and 20.4 GC as amended by Sub-Clauses 20.2 and 20.4(2) PC are to be regarded as mandatory. The Arbitral Tribunal must therefore examine whether Claimant had complied with the requirements of such an Adjudication Procedure.

cc) Did Claimant comply with the Adjudication Procedure?

195. The second sentence of Sub-Clause 20.4 (1) GC requires that a party referring a dispute to the DAB has to do so in writing (with copies to the other Party and the Engineer) and that "[s]uch reference shall state that it is given under this Sub-Clause".

196. The Parties agree that by email … accompanied by an unsigned draft of a formal letter … Claimant informed the Engineer that "it decided to invoke the DAB" but never submitted a final and signed version of [the aforesaid letter] to the Engineer ...

197. While the Arbitral Tribunal does not consider it pertinent that a written reference of a dispute to the DAB is signed, it deems the submission of a mere draft as insufficient, unless the draft is later confirmed to be the final version. The reason for requiring such a formal reference of a dispute to the DAB is that both Parties and the DAB clearly know if and when an Adjudication Procedure starts. Sub-Clauses 20.4 (4) to (7) GC draw severe legal consequences such as a forfeiture of rights for the Party which does not respect them. 23

198. For the said reason, a Party can be dispensed from the requirement of a formal reference of a dispute to the DAB only under exceptional circumstances. 24 Such exceptional circumstances have to be substantiated and proved by the Party invoking them.

199. Claimant argues that the Engineer suggested "not to follow" the formal Adjudication Procedure but to await "the outcome of what had been agreed [at a previous meeting 25]", i.e. a fair assessment of the "real amount of work" (see para. 79(vii) and (ix) hereinabove). As this agreement … does not constitute a waiver of the Adjudication Procedure, Claimant had the opportunity to formally refer to the Adjudication Procedure after the meetings held [some four months later] when the Parties and the Engineer discussed the "Claim Analysis Report" … made by the Engineer …, Claimant's comments thereon and "an amicable settlement" … These discussions do not constitute exceptional circumstances.

200. Claimant, furthermore, argues that the Engineer had made "the agreed … 'fair and impartial' report, but since obviously the Respondent did not agree to the contents of this report, it was withdrawn and it was 'substituted' by a new (and presumably very different) report, called 'Claim Analysis Report …' ..." (see paras. 79(x) and 199 hereinabove). Even if this allegation proved to be true, the Engineer, at that time, acted in his function as Engineer and not as DAB. Claimant can therefore not validly invoke exceptional circumstances under this assumption either.

201. As the Adjudication Procedure was not formally started and Claimant cannot invoke exceptional circumstances enabling Claimant to disregard the formal reference of a dispute to the DAB, the Arbitral Tribunal does not have to answer the questions whether the "Claim Analysis Report" … could be regarded "as a DAB decision" and whether the respective statement … of Claimant's letter … is to be considered as "notice of dissatisfaction" pursuant to Sub-Clause 20.4 (5) and (6) GC … From a mere practical point of view, the Arbitral Tribunal wonders without answering the question why Claimant, if it had actually considered [the Claim Analysis Report] as a decision of the DAB pursuant to Sub-Clause 20.4(5) and (6) GC, did not file a formal notice of dissatisfaction pursuant to Sub-Clause 20.4(5) and (6) GC.

202. It results from paras. 195 to 200 hereinabove that Claimant has up to now not complied with the requirements of an Adjudication Procedure set forth in Sub-Clauses 20.2(1) and 20.4 GC as amended by Sub-Clauses 20.2 and 20.4(2) PC and that Respondent's Admissibility Objection must be upheld.

203. Before coming to this conclusion, the Arbitral Tribunal has also discussed the question whether the Adjudication Procedure agreed by the Parties has become inoperative not because of the fact that he was appointed and paid by Respondent but because of his actual conduct in the preparation of the "Claims Analysis Report" referred to in paras. 199/200 hereinabove. However, the Arbitral Tribunal came to the conclusion that it is not within the task of this Arbitral Tribunal to decide on the Engineer's conduct in an assessment procedure which was not yet a formal Adjudication Procedure.

204. Likewise, the Arbitral Tribunal examined the question whether Respondent's insistence on the compliance with the Adjudication Procedure is abusive within the meaning of Art. 2 CC, 26 but concluded that there is no evidence in the file that Respondent made Claimant believe that it agreed or otherwise accepted that Claimant commences arbitration without first initiating a formal Adjudication Procedure. Claimant's allegation … that it was pushed by the Engineer not to follow "the formal DAB-route" but should "await the outcome of what had been agreed [at the meeting referred to in para. 199 above]" does not suffice in this context. Moreover, Claimant overlooks that, according to the file before the Arbitral Tribunal, Claimant never notified Respondent that it considered the requirement of a formal adjudication procedure as waived, redundant or otherwise repudiated with the effect that it would have been Respondent's duty to inform Claimant on its insistence on the formal Adjudication Procedure already at that time and not in the course of this arbitration …

dd) Stay of proceedings

205. Claimant suggests … that in the event the Arbitral Tribunal upholds the Admissibility Objection, it should suspend proceedings.

206. In the following, the Arbitral Tribunal must therefore decide whether it can suspend the arbitration, i.e. stay proceedings until an Adjudication Procedure has been completed or must dismiss Claimant's claims as inadmissible for the time being. Doctrine and jurisprudence suggest both solutions.

207. In ICC Case no. 6535 (1992) 27 which dealt with the mandatory nature of the DAB in Clause 67 of the FIDIC 1992 Rules, the arbitral tribunal dismissed 216 claims as the claims had not been priorily submitted to the engineer. 28

208. Voser, 29 Voser/Ettlinger 30 and Poudret/Besson 31 consider a stay of proceeding as the most adequate solution. This is also the solution applied by English courts. 32

209. As both solutions are possible, it falls within the Arbitral Tribunal's discretion to determine the adequate solution.

210. The procedural history and the Parties' different positions on Claimant's main claim … suggest that there is a considerable chance that one of the Parties will not accept the decision of the Engineer acting as DAB in the Adjudication Procedure pursuant to Sub-Clauses 20.2(1) and 20.4 GC as amended by Sub-Clauses 20.2 and 20.4(2) PC with the consequence that the dispute must ultimately be resolved by arbitration. This supports a solution preserving litispendence. Accordingly, the Arbitral Tribunal stays proceedings and sets Claimant a deadline to formally refer the dispute over the claims summarized in paras. 5.2 and 4.16 at footnote 39 ToR by a written notice under Sub-Clause 20.4 PC for an Adjudication Procedure to the Engineer referred to in para. 10 hereinabove … acting as DAB, stating that the notice is given under the said Sub-Clause (the "Notice to the Engineer"). Moreover, this Interim Award shall indicate that in the event Claimant fails to comply with this deadline, the Arbitral Tribunal will dismiss Claimant's claims as inadmissible.

211. In the interest of efficiency, the Adjudication Procedure pursuant to Sub-Clause 20.4 (4) to (7) GC shall be complied with independently from the final outcome of Respondent's Jurisdictional Objection. The Arbitral Tribunal will therefore state that the deadline referred to in para. 210 hereinabove runs independently from a challenge of this Interim Award before the Swiss Federal Tribunal.

212. In the event the Adjudication Procedure takes place, Claimant shall submit a copy of its timely Notice to the Engineer to the Arbitral Tribunal. If Claimant fails to do so, the Arbitral Tribunal will dismiss Claimant's claims submitted by Claimant's Initial Prayers quoted in para. 53 hereinabove as inadmissible.

213. Sub-Clause 20.4(5) GC allows the initiation of arbitration if the DAB does not render its decision within 84 days (or otherwise approved) and if a party, within 28 days after this period has expired, files a notice of dissatisfaction with the other party or if a party files a notice of dissatisfaction with the other party within 28 days after receiving a decision. The period of 84 days referred to in Sub-Clause 20.4(5) GC starts with the date of receipt of the Notice to the Engineer by the first recipient of the two members of the consortium the Engineer consists of ...

214. Therefore, in the event Claimant complies with the directives referred to in para. 212 hereinabove, the Arbitral Tribunal will stay the arbitration until either Party has notified the Arbitral Tribunal of (i) an outcome of the Adjudication Procedure resulting in a final solution of the dispute 33 allowing to terminate the arbitration or (ii) an outcome without such solution, i.e. an outcome which allows either Party to proceed with the arbitration under the terms of Sub-Clause 20.4(5) and (6) GC or - in the event that there should no DAB be in place - under Clause 20.8 GC.

215. Claimant shall report to the Arbitral Tribunal on the progress of the Adjudication Procedure once per month, for the first time eight weeks after the date of the Notice to the Engineer referred to in para. 210 hereinabove.

216. Because - as stated in para. 210 hereinabove - there is a "considerable chance that one of the Parties will not accept the decision of the Engineer", the Parties might for reasons of efficiency and cost considerations prefer to save the time and costs involved with the Adjudication Procedure. Therefore, Respondent may wish to waive the necessity to go through an Adjudication Procedure and agree with Claimant that the arbitration may continue even before the lapse of time periods referred to in paras. 212 to 215 hereinabove.

………

Summary of the conclusions

219. As for the Admissibility Objection, the Arbitral Tribunal concludes that the Adjudication Procedure is mandatory, that Claimant failed to comply with the Adjudication Procedure and that in lieu of dismissing Claimant's claims as inadmissible for the time being, the Arbitral Tribunal shall stay proceedings until Claimant has complied with the Adjudication Procedure in the manner further described in paras. 210 to 216 hereinabove.

………

Interim Award:

………

3. Respondent's Admissibility Objection is upheld by ordering a stay of proceedings on the following terms:

(i) Claimant shall commence the Adjudication Procedure within 4 weeks as of receipt of this Interim Award by a Notice to the Engineer as described in para. 210 hereinabove.

(ii) The four weeks period referred to in item 3(i) of this Interim Award is independent from a challenge of this Interim Award before the Swiss Federal Tribunal.

(iii) If Claimant fails to comply with item 3(i) of this Interim Award, the Arbitral Tribunal will dismiss Claimant's Initial Prayers … as inadmissible.

(iv) If Claimant complies with item 3(i) of this Interim Award, (a) Claimant shall submit a copy of the Notice to the Engineer to Respondent and the Arbitral Tribunal and thereafter report to the Arbitral Tribunal on the progress of the Adjudication Procedure once per month, for the first time eight weeks after the date of the Notice to the Engineer and (b) the Arbitral Tribunal will terminate the arbitration in the event of an outcome of the Adjudication Procedure resulting in a final solution of the dispute and continue proceedings in the event of an outcome without such solution and allow a Party to proceed with the arbitration in the manner described in paras. 212 to 215 hereinabove.'

1
See Dyalá Jiménez Figueres, "Multi-Tiered Dispute Resolution Clauses in ICC Arbitration", ICC International Court of Arbitration Bulletin, vol. 14 no. 1, Spring 2003, pp. 71 to 88, in particular pp. 71/72.

2
Sub-Clauses 20.3 GC has been deleted in its entirety by the Particular Conditions while Sub-Clause 20.5 GC remained the same, but is not relevant for the present purposes as it relates to amicable settlement discussions before the commencement of arbitration.

3
Although the Particular Conditions state that Sub-Clause 20.6 GC is deleted "in its entirety" by Sub-Clause 20.6 PC, its text differs from Sub-Clause 20.6 GC merely by the deletion of the word "international" in the first sentence of paragraph (1), the new second sentence in paragraph (1) and the different wording in sub-paragraphs (a) and (b) of paragraph (1).

4
For the general interpretation of "shall" and "may" clauses see Klaus Peter Berger, "Law and Practice of Escalation Clauses", Arbitration International, vol. 22 no. 1, 2006, pp. 1 to 17, in particular p. 5; see also Jiménez Figueres, op. cit. in fn. [1] hereinabove, p. 72; Fabian M. Friedrich, "The Enforceability of Mediation Clauses - The Approach of English and German Courts and ICC Arbitral Tribunals", in: SchiedsVZ 2005, no. 5, pp. 250 to 254, p. 254.

5
See Bunni [The FIDIC Form of Contract, 3rd ed., Oxford 2005], pp. 488 and 503 et seq.

6
The FIDIC 1992 Rules were preceded by earlier different versions.

7
See Nael G. Bunni, The FIDIC Form of Contract, 2nd ed., Oxford 1997, pp. 563 et seq.

8
Peter M. Wolrich, "Multi-Tiered Clauses: ICC Perspectives In Light Of The New ICC ADR Rules", published on October 2, 2002 and Presented at The International Bar Association 2002 Conference in Durban, South Africa, October 20 - 25, 2002, with reference to ICC Cases no. 6276, 6277, 6238 and 6535.

9
See Bunni, op. cit. in fn. [5] hereinabove, pp. 7 et seq.

10
See Jiménez Figueres, op. cit. in fn. [1] hereinabove, in particular p. 1 et seq. with reference to ICC Case 6276, Partial Award of January 29, 1990, printed in Figueres, pp. 76 to 78; see also Christopher R.Seppälä, "International Construction Contract Disputes: Commentary On ICC Awards Dealing With The FIDIC International Conditions of Contract", The ICC International Court of Arbitration Bulletin, vol. 9 no. 2, November 1998, pp. 32 to 62, in particular on pp. 34/35, with reference to ICC Cases no. 6238 and 6535

11
In the comments on Sub-Clauses 20.2 (pp. 303 et seq.) and 20.4 (pp. 313 et seq.) of the FIDIC Guide nothing is said on this issue. In the schedule on p. 4 of the FIDIC Guide entitled "Comparison of the main features of the three books", preceding the introduction of said guide, it reads, without addressing the notice of the procedure: "The Contract is administered by the Engineer who is appointed by the Employer. If disputes arise, they are referred to a DAB for its decisions."

12
See "The Arbitration Clause In The FIDIC Contracts For Major Works", a paper presented at the conference on International Construction Contracts and Dispute Resolution, Cairo, Egypt, on April 9 to 10, 2005, pp. 4/5 filed as R-34. Christopher R. Seppälä wrote this paper in his function as legal advisor of the FIDIC Contracts Committee. See also Brian W. Totterdill, FIDIC User's Guide, A Practical Guide to the 1999 Red Book, Thomas Telford 2001: the Arbitral Tribunal understands that the flow chart on p. 50 indicates that the Adjudication Procedure under Clause 20 GC is to be regarded as mandatory.

13
Of course, also under the FIDIC Rules of 1999 it is possible to establish a DAB ad hoc when a dispute has arisen (see p. 303 of the FIDIC Guide, introduction to Sub-Clause 20.2 FIDIC Rules).

14
See Article 1 of the Procedural Rules (in the annex of the General Conditions).

15
If the parties fail to nominate their DAB member, the default provision of Sub-Clause 20.3 FIDIC Rules applies.

16
See DFT 4A.18/2007 of June 6, 2007, para. 4.3.2 at the end.

17
The relevant part of the respective arbitration clause reads as follows: "Toute controverse et tout différend en rapport avec le présent contrat et qui ne pourront être résolus à l'amiable (y compris la conciliation selon les règles de l'OMPI) devront être soumis à un tribunal arbitral ...".

18
On these modifications see para. 189 et seq. hereinafter.

19
See FIDIC Guide, p. 303/304; Totterdill, op. cit. in fn. [12] hereinabove, p. 246.

20
See Totterdill, op. cit. in fn. [12] hereinabove, p. 245. The wording of this alternative corresponds exactly to the text in Sub-Clause 20.4(2) PC.

21
Pleaded at the Second Hearing and not contested by Respondent.

22
Pleaded at the Second Hearing.

23
See as to Clause 67 of the FIDIC 1992 Rules Seppälä, op. cit. in fn. [10] hereinabove, p. 35; see also the flow chart in Totterdill, op. cit. in fn. [12] hereinabove, p. 50.

24
Seppälä, op. cit. in fn. [10] hereinabove, p. 35, seems not to accept exceptions as he states: "[A]ny submission to the engineer ... must clearly refer a dispute for him to decide under the clause; it is not sufficient for a party merely to indicate an intention to submit a dispute to the engineer at a later point in time."

25
Editor's note: Para. 79 of the award states that at this meeting between the Parties in the office of the salvage expert of the Engineer it was agreed that the Engineer would fairly assess the real amount of work related to the wreck removal and evaluate the possibility of an amendment to the Contract.

26
The Swiss Federal Supreme Court has applied Art. 2(2) CC in the context of a conciliation proceeding under factual circumstances which cannot be compared with the present case (see DFT 4A.18/2007 of June 6, 2007 published and commented in ASA Bulletin 1/2008, pp. 87 et seq. and 103 et seq.).

27
Reported by Seppälä, op. cit. in fn. [10] hereinabove, pp. 34/35.

28
Seppälä, on p. 35 of his article referred to in fn. [10] hereinabove, does not discuss the question whether the arbitral tribunal would or should have stayed proceedings so that the contractor could comply with Clause 67 of the FIDIC 1992 Rules.

29
Nathalie Voser, "Enforcement of Multi-tiered Dispute Resolution Clauses by National Courts and Arbitral Tribunals - the Civil Law Approach", revised version of the paper presented at the IBA Conference in Durban, December 2002, p. 7.

30
Nathalie Voser and Claudius Ettlinger, Swiss report to the 2001 IBA Conference in Cancún, in: Arbitration and ADR, Enforcement of Multi-Tiered Dispute Resolution Clauses, pp. 23/24.

31
See Poudret/Besson, [Comparative Law of International Arbitration, 2nd ed., London/Zurich 2007 (translated by Stephen V. Berti and Annette Ponti)], ann. 13 on pp. 12/13.

32
See HHJ Peter Coulson QBD (TCC) in its decision DGT Steel & Cladding v. Cubitt Building and Interiors dated July 4, 2007, published in Building Law Reports 2007, pp. 371 to 380, where the judge decided to stay court proceedings in order to enable that an adjudication procedure to be followed (references inter alia to the following court decision: Cable & Wireless plc v. IBM United Kingdom Ltd (2002), EWHC 2059 (Comm) and Channel Tunnel Group Ltd v. Balfour Beatty Construction Ltd (1993), AC 334.

33
A decision of the Engineer as DAB which is not being challenged within the deadline set forth in Sub-Clause 20.4(5) GC.