'IV. Discussion

This Partial Award will deal successively with the two issues which form its limited subject matter, i.e.:

(i) the jurisdiction of the Arbitral Tribunal;

(ii) whether the DAB's decisions are valid and binding.

4.1. The jurisdiction of the Arbitral Tribunal

4.1.1. As noted in the above summary of the facts, prior to the termination of the Contract, the Engineer issued notices to Respondent pursuant to Sub-Clause 2.5 of the General Conditions of Contract on behalf of Claimant. In its letter … to Respondent, the Employer listed nine separate heads of claim … [Later] the Engineer gave notice of a tenth item of claim …

When giving Respondent notice of the preliminary conciliation meeting …, Claimant listed only eight of the above-mentioned ten claims, valuing them at ...

The jurisdiction of the Arbitral Tribunal is not in question with respect to the above­ mentioned claims which will be settled in the Final Award and which are only mentioned here for the sake of clarity.

4.1.2. The jurisdiction of the Arbitral Tribunal is, however, in question with respect to yet two other claims in addition to those that had been identified by the Engineer in its notices and reports. These two other claims were mentioned for the first time in the Request for Arbitration:

"additional amounts ... related to the new tendering procedure " … also referred to as "addenda to the Technical Assistance Contract" …;

"liquidated damages" …

These two claims were referred to in this Arbitration as the "Disputed Claims".

As it is important to ascertain the exact subject matter of the Disputed Claims, they are best considered as expressly worded in the Request for Arbitration, i.e. respectively:

The Contractor is liable for the amount of … representing the value of the addenda to the technical assistance contract concluded by the Employer for the preparation of the new tendering documentation including tender evaluation procedure, following the termination by the Employer … of the works contract, due to Contractor's default.

As a consequence of the contractor's failure to comply with the contractual obligations (...), the Employer terminated the works contract ...

In order for the Employer to award a new contract (...), following this termination a new tender procedure was urgently required.

Employer's additional costs with the new contract (...) must be reimbursed by the Contractor.

It is thus clear that both Disputed Claims arose in relation to the conclusion of a new agreement for completion of the Works after termination of the Contract.

In its Answer, Respondent challenged the jurisdiction of the Arbitral Tribunal with respect to the Disputed Claims, albeit without further discussion ... Respondent initially developed the grounds for its challenge to the jurisdiction of the Arbitral Tribunal in respect to the Disputed Claims in its Memorandum …, which it further elaborated at the Hearing … and summarized and again developed in its Post-Hearing Brief …

4.1.3. Insofar as the contractual provisions relevant to the jurisdiction of the Arbitral Tribunal are concerned, the Parties' positions are quite different.

a) Respondent relies primarily on Sub-Clause 2.5. of the General Conditions of Contract, which, as already noted above, provides as follows:

2.5. Employer's Claims

If the Employer considers himself to be entitled to any payment under any Clause of these Conditions or otherwise in connection with the Contract, and/or to any extension of the Defects Notification Period, the Employer or the Engineer shall give notice and particulars to the Contractor. However, notice is not required for payments due under Sub-Clause 4.19 [Electricity, Water and Gas], under Sub­ Clause 4.20 [Employer's Equipment and Free-Issue Material], or for other services requested by the Contractor.

The notice shall be given as soon as practicable after the Employer became aware of the event or circumstances giving rise to the claim. A notice relating to any extension of the Defects Notification Period shall be given before the expiry of such period.

The particulars shall specify the Clause or other basis of the claim, and shall include substantiation of the amount and/or extension to which the Employer considers himself to be entitled in connection with the Contract. The Engineer shall then proceed in accordance with Sub-Clause 3.5 [Determinations] to agree or determine (i) the amount (if any) which the Employer is entitled to be paid by the Contractor, and/or (ii) the extension (if any) of the Defects Notification Period in accordance with Sub-Clause 11.3 [Extension of Defects Notification Period].

This amount may be included as a deduction in the Contract Price and Payment Certificates. The Employer shall only be entitled to set off against or make any deduction from an amount certified in a Payment Certificate, or to otherwise claim against the Contractor, in accordance with this Sub-Clause (Emphasis added).

According to Respondent, based on these provisions, when Claimant started to consider itself "to be entitled to any payment under any Clause" of the General Conditions of Contract "or otherwise in connection with the Contract", either Claimant or the Engineer should have given notice and particulars to Respondent, the Engineer should have proceeded to make fair determinations in accordance with Sub-Clause 3.5, and Claimant would "only" have been "entitled to set off against or make any deduction from an amount certified in a Payment Certificate, or to otherwise claim against the Contractor'', in accordance with Sub-Clause 2.5 (Sub-Clause 2.5 of the General Conditions of Contract, emphasis added).

In addition, Respondent argues that if a dispute had arisen between the Parties as to such a determination, Sub-Clause 20.4 of the General Conditions of Contract should have applied in as much as it provides:

20.4 Obtaining Dispute Adjudication Board's Decision

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 (...) (emphasis added).

Sub-Clause 20.4 further provides that if either Party is dissatisfied with the DAB's decision, it may give notice to the other Party of its dissatisfaction, setting out the matter in dispute and the reasons for dissatisfaction, and that "except as stated in Sub-Clause 20.7 [Failure to Comply with Dispute Adjudication Board's Decision] and Sub-Clause 20.8 [Expiry of Dispute Adjudication Board's Appointment], neither Party shall be entitled to commence arbitration of a dispute unless a notice of dissatisfaction has been given in accordance with this Sub-Clause" (emphasis added). In addition, an attempt at settling the dispute amicably is required to be made before arbitration may be commenced (Sub-Clause 20.5 of the General Conditions of Contract).

b) As to Claimant, it relies on Sub-Clause 15.4 of the General Conditions of Contract as modified by the Particular Conditions of Contract, which reads as follows:

15.4 Payment After Termination

After a notice of termination under Sub-Clause 15.2 [Termination by Employer]

has taken effect, the Employer may:

(a) proceed in accordance with Sub-Clause 2.5 [Employer's Claims].

(b) withhold further payments to the Contractor until the costs of execution, completion and remedying of any defects, damages for delay in completion (if any}, and all other costs incurred by the Employer, have been established, and/or

(c) recover from the Contractor any losses and damages incurred by the Employer and any extra costs of completing the Works, after allowing for any sum due to the Contractor under Sub-Clause 15.3 [Valuation at Date of Termination]. After recovering any such losses, damages and extra costs, the Employer shall pay any balance to the Contractor (emphasis added).

Claimant stresses that Sub-Clause 15.4 gives Claimant the option not to comply with Sub­Clause 2.5 by the use of the word "may" and of the alternative wording "and/or" as, in the instant case, Sub-Clause 15.4 (c) could be applied in such a way as to provide that "after a Notice of Termination under Sub-Clause 15.2 ( ...) has taken effect, the Employer may ( ...) proceed in accordance with Sub-Clause 2.5 (...), and/or ( ...) recover from the Contractor any losses and damages incurred by the Employer and any extra costs of completing the Works, after allowing for any sum due to the Contractor under Sub-Clause 15.3 (...)" (Emphasis added).

Claimant also relies on Sub-Clause 20.8 of the General Conditions of Contract which provides:

20.8 Expiry of Dispute Adjudication Board's Appointment

If a dispute arises between the Parties in connection with, or arising out of, the Contract or the execution of the Works and there is no DAB in place, whether by reason of the expiry of the DAB 's appointment or otherwise:

(a) Sub-Clause 20.4 [Obtaining Dispute Adjudication Board's Decision] and Sub-Clause 20.5 [Amicable Settlement] shall not apply, and

(b) the dispute may be referred directly to arbitration under Sub-Clause 20.6 [Arbitration].

c) The Arbitral Tribunal notes that Sub-Clause 15.4 (c) allows the Employer, after a Notice of Termination under Sub-Clause 15.2, to recover its losses and damages as well as "any extra cost of completing the Works", subject to certain deductions only, and without any additional conditions, by the fact that it expressly allows the Employer to, at its option, either proceed in accordance with Sub-Clause 2.5 or make such recovery. In addition, Sub-Clause 15.4 provides this alternate choice to the Employer under the headline "Payment After Termination". Sub-Clause 15.4 thus specifically describes the remedies available to the Employer with respect to damages sustained after termination.

By contrast, Sub-Clause 2.5 has a much broader scope which indeed has as a corollary an equal broadness of its language when it refers to "any payment under any Clause of these Conditions or otherwise in connection with the Contract" or when it provides that the Employer shall only be entitled to remedy "in accordance with this Sub-Clause".

As a result, the Arbitral Tribunal finds that the apparent conflict between Sub-Clauses 2.5 and 15.4 cannot be resolved in favour of a precedence of Sub-Clause 2.5 by a mere exegetic construction. Indeed, the Parties did not limit their debate to such an analysis, but they also referred to learned commentary which has dealt with this conflict.

4.1.4. Respondent stresses that the requirement under a FIDIC Contract to take the steps above-mentioned is a precondition to arbitration and that this has been confirmed by Tribunals in several ICC Arbitrations as well as by authorized commentators. In a most relevant way, some of these commentators have noted a potential inconsistency between Sub­Clauses 2.5 and 15.4 and they have concluded that Sub-Clause 15.4 is complementary but subordinate to Sub-Clause 2.5, so that, even in the case of termination, the Employer is required to follow the steps provided for by Sub-Clauses 2.5, 3.5, 20.4 and 20.5 prior to going to arbitration.

Brian W. Totterdill comments Sub-Clause 15.4 as follows:

Subparagraphs (a) to (c) refer to three procedures whereby the Employer may recover money from the Contractor. However, the word "may" in the opening sentence of this Sub-Clause could lead to confusion. The choice of (a), (b), and/or

(c) will depend on the circumstances and the Employer must follow the Contract procedures ( ...).

The procedure for subparagraph (c) is more difficult. If the termination occurs early in the project, or there is a delay before a new Contractor can start on Site, the extra Costs incurred by the Employer could be substantial and may be disputed by the Contractor. Any such claim by the Employer would also seem to be covered by Sub-Clause 2.5 (...).

Any dispute which arises under the termination procedure could be referred to the DAB.

(Brian W. Totterdill, FIDIC Users' Guide, A Practical Guide to the 1999 Red and Yellow Books, Thomas Telford, p. 260 … emphasis added).

Other commentators recognize a confusion:

The word "may" here is potentially confusing, because it could suggest that compliance with the requirement set out in Sub-Clause 2.5 (...) is optional (...). Furthermore, the Employer's rights to withhold further payment and to recover losses and damages from the Contractor under Sub-Clause 15.4 (b) and (c) respectively are not expressly stated to be subject to Sub-Clause 2.5 (...). In this way, there is a potential conflict between these provisions and those of Sub­Clause 2.5 (...), in particular in relation to the Employer's right of set-off ( ...). It is, however, suggested that, reading the Conditions as a whole, the most pragmatic interpretation of these provisions is that, on termination under Sub-Clause 15.2, the Employer's obligation to pay is generally suspended, but that his entitlement to claim any losses and damages is nevertheless still intended to be subject to Sub-Clause 2.5 (...). However, it would seem that the Employer does not have to submit particulars or substantiate the claim until the losses and damages incurred have been established.

(Ellis Baker et al., FIDIC Contracts: Law and Practice, Section 8.222, p. 453, emphasis added).

The Arbitral Tribunal notes that such comments tend to favour the interpretation according to which Sub-Clause 15.4 would be "subordinated" to Sub-Clause 2.5. However, their authors' judgment in this respect is quite moderate and prudent, to say the least, when they merely state that the situation "would also seem to be covered by Sub-Clause 2.5" or this would be "the most pragmatic interpretation of these provisions". Where the issue at stake is one of jurisdiction of the Arbitral Tribunal, as is the case in the matter at hand, such an Arbitral Tribunal, in the exercise of the principle Kompetenz-Kompetenz, should not satisfy itself with inconclusive authorities.

4.1.5. The Parties have discussed at quite some length Christopher Seppala's views on this topic and they have agreed on his premises, referring in the Pleadings to the "Seppala test" (see above, § 3.1. I. and 3.1.2). This was further discussed at the Hearing. According to Mr Seppala, the Employer must follow the above-mentioned steps prior to commencing arbitration "unless the Employer can demonstrate that the counterclaim was effectively included in a dispute which had already been referred to the DAB for decision under Clause 20 and which is already in arbitration" (Christopher R. Seppala, "The Arbitration Clause in FIDIC Contracts for Major Works", ICLR 2005, p. 4 at 7). Mr Seppala explains as follows:

A purpose of the pre-arbitral DAB procedure is for both Parties and, subsequently, any Arbitral Tribunal that may be constituted, to have the benefit of a decision of the DAB on any dispute. A decision of the DAB may increase the chance of a settlement and avoid the need to arbitrate the dispute. That purpose is subverted if a party is relieved from complying with Clause 20 in respect of a dispute merely because the other party has done so with respect to another dispute.

The test of whether, for example, a counterclaim raised by the employer must be submitted to the DAB for decision should be whether the contractor had previously requested the DAB to decide a dispute which necessarily would have resulted in a decision on that counterclaim. (emphasis supplied)

Mr Seppala then gives an example of an application of this test:

An example of a dispute that the contractor might refer to a DAB which includes another dispute might be where the contractor claims that it has been wrongfully denied an extension of time by the engineer. Such a dispute might be considered to include the employer's claim (or potential claim) for liquidated damages (called "delay damages" in the FIDIC contracts) for the same time period. Therefore, the employer should not have to (although it may) submit such claim, as a dispute, to the DAB in order to be able to assert it as a counterclaim in the arbitration.

4.1.6. According to Respondent, the second reference it made to the DAB "dealt, inter alia, with the purported wrongful Engineer's determination under Sub-Clause 3.5. However, the reference did not include any part of the Disputed Claims (...). Hence, the Disputed Claims fail the Seppala test too" (Respondent's Memorandum …).

Claimant, on the other hand, submits that the Respondent's second referral to the DAB led to a decision on the Claimant's claims, specifying that it understands by its concept "not only those claims which were calculated by the Engineer … but also those who, following the Engineer's express suggestion were calculated by the Final Beneficiary, in order to cover all damages suffered by the Claimant" (Claimant's Memorandum …).

Indeed, the DAB's First Decision did include the DAB's opinion as to the issues of extension of time for completion of the Works and as to the termination of the Contract by Claimant:

1. I do give a decision that, as a matter of principle, the Claimant [the Contractor] is entitled to Extensions of Time for Completion under the Contract; and

2. I do give a decision that the Respondent's [the Employer's] Notice of Termination was an invalid and/or unlawful Notice of Termination under Sub­Clause 15.2 of the Conditions of Contract and/or [the applicable] law, and that the Respondent [the Employer] is liable to the Claimant in damages for wrongful termination of the Contract accordingly.

The Arbitral Tribunal finds that the "Seppala test" and the example provided by Mr Seppala himself of the application of the test he proposed can be applied mutatis mutandis in the instant matter. In Mr Seppala's example, the Employer is allowed to bring directly to arbitration a claim for delay damages because the DAB considered the denial of an extension of time by the Engineer. In the instant matter, the Employer seeks to submit directly to arbitration a claim for the extra costs of completing the Works subsequently to and as a result of termination by the Employer whilst the DAB has already considered and ruled on the appropriateness of such termination. The Arbitral Tribunal finds that the two situations are very similar, to the point that, for all practical purposes, they should have identical consequences.

This finding can be further justified by the consideration that the outcome of Claimant's claims as to the damages incurred in entering into a new agreement for the completion of the Works depends on whether the Arbitral Tribunal ultimately finds that Claimant's termination was justified - one of the core issues decided in the DAB's First Decision. The Disputed Claims are thus indeed intertwined with the issues that were decided upon by the DAB.

For all of the above reasons, the Arbitral Tribunal finds that Claimant was entitled to submit the Disputed Claims directly to arbitration without first notifying such claims and then following the pre-arbitral procedures laid down in the Contract. Consequently, the Arbitral Tribunal finds that it has jurisdiction over the Disputed Claims as well as over other claims asserted by Claimant.

4.2. The DAB's Decisions

4.2.1. As was also noted above, the Parties did not enter into the Dispute Adjudication Board Agreement within 42 days after the Commencement Date as provided for by Sub-Clause 20.2 of the General Conditions of Contract as amended by the Particular Conditions of Contract.

Respondent requested on several instances that Claimant agree to the appointment of a Dispute Adjudication Board. The Engineer conveyed Respondent's request to Claimant, supporting it. Claimant at some point considered such request and obtained information as to individuals who could be appointed as DAB and the costs involved. Nevertheless, Claimant never answered Respondent's request.

Ultimately, Respondent applied to the President of FIDIC on the basis of Sub-Clause 20.3 of the General Conditions of Contract as amended by Particular Conditions of Contract … and [the adjudicator] was appointed as Sole Dispute Adjudication Board Member.

For ease of reference, it is again noted that two Decisions were then issued:

- The "Dispute Adjudication Board's First Decision" … as follows:

1. I do give a decision that, as a matter of principle, the Claimant [the Contractor] is entitled to Extensions of Time for Completion under the Contract; and

2. I do give a decision that the Respondent's [the Employer's] Notice of Termination was an invalid and/or unlawful Notice of Termination under Sub­Clause 15.2 of the Conditions of Contract and/or [the applicable] law, and that the Respondent [the Employer] is liable to the Claimant in damages for wrongful termination of the Contract accordingly; and

3. I do give a decision that, as a direct consequence of wrongful termination, the Respondent has no right to call the Contractor's Performance Security and that any attempt by the Employer to call the Contractor's Performance Security is against the common intent of the parties when providing for such a security instrument in favour of the Employer under the Contract, and the Respondent is obliged to return to the Claimant the Performance Security without further delay. I do not go so far as to give a decision that any attempt by the Employer to call the Performance Security is fraudulent.

(Dispute Adjudication Board's First Decision …)

- The "Dispute Adjudication Board's Second Decision" … as follows:

I have been provided with a considerable amount of information by the Contractor and have done my best to take account of it all and to do justice to both Parties, even though the Employer has not taken part in this Adjudication. I hope that both Parties will see that I have addressed all of the points put to me and have arrived at a supportable decision, which I hope will enable them to settle their differences.

For all of the foregoing reasons, my decisions on the matters requested are as

follows:

3. The Employer shall pay to the Contractor the sum [established by the DAB] (which sum includes interest) within 28 days of the date of this decision.

4. the Employer shall pay to the Contractor interest of …, which sum is included in the [above-mentioned sum].

(Dispute Adjudication Board's Second Decision …)

The Arbitral Tribunal must consider Respondent's request that Claimant be ordered to enforce these Decisions, while Claimant objects that they are not binding because the DAB was improperly appointed. In addition, the Arbitral Tribunal must decide whether to enforce the DAB's decisions, whether to oblige Claimant to pay to Respondent the amount of … (plus interest as appropriate), and whether to order Claimant to return the Respondent's Performance Security, as requested by Respondent … or whether to reject the Respondent's request to enforce the DAB's decisions, and whether to reject Respondent's resulting claims, as requested by Claimant …

4.2.2. It is important to consider the contractual provisions referring to the appointment of the DAB within the overall contractual structure.

Section 2 of the Contract, in its relevant parts, provides as follows:

[T]he following documents shall be deemed to form and be read and construed as part of this Contract in the following order of precedence:

o) The Contract Agreement ( ...)

d) Appendix to Tender (...)

g) The Particular Conditions of contract

h) The General Conditions of Contract (...)

Thus, the Appendix to Tender prevails over the General Conditions of Contract and the Particular Conditions of Contract.

Also in its relevant parts, the Appendix to Tender provides:

As to Sub-Clause 20.2 of the General Conditions of Contract as amended by the Particular Conditions of Contract, it provides as follows when read in its entirety:

20.2 Appointment of the Dispute Adjudication Board

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

The DAB shall comprise one member who shall be appointed at the joint request of the parties by the President of FIDIC or by a person appointed by the President. Such nomination shall be deemed to be accepted by both the Employer and the Contractor.

The parties shall enter into the Dispute Adjudication Board Agreement (in the form enclosed in Schedules) with the member appointed following the above procedure within 42 days after the Commencement Date.

The agreement between the Parties and either the sole member ("adjudicator'') or each of the three members shall incorporate by reference the General Conditions of Dispute Adjudication Agreement contained in the Appendix to these General Conditions, with such amendments as are agreed between them.

The terms of the remuneration of either the sole member or each of the three members, including the remuneration of any expert whom the DAB consults, shall be mutually agreed upon by the Parties when agreeing the terms of appointment. Each Party shall be responsible for paying one-half of this remuneration.

If at any time the Parties so agree, they may jointly refer a matter to the DAB for it to give its opinion. Neither Party shall consult the DAB on any matter without the agreement of the other Party.

If at any time the Parties so agree, they may appoint a suitably qualified person or persons to replace (or to be available to replace) any one or more members of the DAB. Unless the Parties agree otherwise, the appointment will come into effect if a member declines to act or is unable to act as a result of death, disability, resignation or termination of appointment.

If any of these circumstances occurs and no such replacement is available, a replacement shall be appointed in the same manner as the replaced person was required to have been nominated or agreed upon, as described in this Sub-Clause.

The appointment of any member may be terminated by mutual agreement of both Parties, but not by the Employer or the Contractor acting alone. Unless otherwise agreed by both Parties, the appointment of the DAB (including each member) shall expire when the discharge referred to in Sub-Clause 14.12 [Discharge] shall have become effective.

(Emphasis added)

Lastly, as already mentioned above, Sub-Clause 20.3 of the General Conditions of Contract as amended by the Particular Conditions of Contract provides:

20.3 Failure to Agree Dispute Adjudication Board

If any of the following conditions apply, namely:

(a) the Parties fail to agree upon the appointment of the sole member of the DAB by the date stated in the first paragraph of Sub-Clause 20.2,

(b) either Party fails to nominate a member (for approval by the other Party) of a DAB of three persons by such date,

(c) the Parties fail to agree upon the appointment of the third member (to act as chairman) of the DAB by such date, or

(d) the Parties fail to agree upon the appointment of a replacement person within 42 days after the date on which the sole member or one of the three members declines to act or is unable to act as a result of death, disability, resignation or termination of appointment,

then the appointing entity or official named in the Appendix to Tender shall, upon the request of either or both of the Parties and after due consultation with both Parties, appoint this member of the DAB. This appointment shall be final and conclusive. Each Party shall be responsible for paying one-half of the remuneration of the appointing entity or official.

The appointing official is the President of FIDIC, or a person appointed by the President.

(Emphasis added)

4.2.3. The Parties recognize the poor drafting of the General Conditions of Contract as amended by the Particular Conditions of Contract, especially Sub-Clause 20.2. This poor drafting results in inconsistencies which preclude a mere application of the above-mentioned provisions on their face, i.e. according to their literal meaning, and thus triggers the need for interpretation.

According to Sub-Clause 20.2 as modified by the Parties, they had to enter into the Dispute Adjudication Board Agreement within 42 days after the Commencement Date. This appears prima facie as a mandatory requirement because of the use of the word "shall". As the Parties could not possibly sign the Dispute Adjudication Board Agreement without a DAB having being appointed first, it is to be understood that the Parties had to make their joint request to the President of FIDIC for such appointment earlier, within that 42-day period of time.

However, Sub-Clause 20.3 as also amended by the Parties does not appear to be quite consistent with such a scheme. Sub-Clause 20.3 (a) refers to a situation where "the Parties failed to agree upon the appointment of the sole member of the DAB by the date stated in the first paragraph of Sub-Clause 20.2" (emphasis added). This is firstly inconsistent with Sub­Clause 20.2 because, as modified, the latter does not provide for the appointment of the DAB by the Parties but by the President of FIDIC. And it is inconsistent with Sub-Clause 20.2, secondly, because there is "no date stated'' in the first paragraph of Sub-Clause 20.2, as the 42 day period of time is stated in the third paragraph of Sub-Clause 20.2.

The remainder of Sub-Clause 20.3 is irrelevant in the instant matter. Sub-Clause 20.3 (b) and (c) relate to the situation of a three-member DAB, and they should therefore have been deleted since Sub-Clause 20.2 provides for a single member. Sub-Clause 20.3 (d) contemplates the case in which the sole member or one of the three members declines to act or is unable to act, which is not the case in the instant matter.

If, however, one accepts, as Respondent argues, that the phrase ''fail to agree upon the appointment of the sole member of the DAB" should be understood as ''fail to jointly request from the President of FIDIC the appointment of the sole member" and that "by the date stated in the first paragraph of Sub-Clause 20.2", the Parties meant the same date as stated in the second paragraph of such Sub-Clause, then, as Respondent also argues, Respondent was entitled to refer to the last sentence of Sub-Clause 20.2, according to which "the appointing official is the President of FIDIC".

4.2.4. Both Parties have supported their positions with legal arguments based on [the applicable] Contracts law [according to which] "contracts must be interpreted according to the common intention of the Parties rather than pursuing the literal meaning of the contractual terms". …

Other guidelines for contractual interpretation apply where the common intent of the Parties does not appear clearly. As in many legal systems, [the applicable law] provides that "when a clause has two meanings, it shall be construed in the meaning that may have an effect, not in the meaning producing none". In addition, [the applicable law] requires that "the words which may carry several meanings shall be interpreted in the meaning suiting best the nature of the contract". Further, [the applicable law] provides that "all the clauses of agreements are mutually explanatory, each of them being assigned the meaning resulted from the whole document". …

4.2.5. The determination of the common intent of the Parties may be difficult to ascertain on the face of the contractual provisions. However, their behaviour and statements between the time when the Contract was entered into and its termination may provide relevant evidence as to the way each of them understood it, which can in turn be deemed to reveal their respective intents.

a) There is no doubt as to Respondent's intent as early as the end of 2005, when Respondent wrote to Claimant for the first time that it believed it was "incumbent on the Parties" to appoint a DAB "at the earliest time" ... Again [subsequently] Respondent wrote to Claimant that "after nine months, the invitation to appoint jointly a Dispute Adjudication Board member has not produced effect", that "the Contract needs urgently the DAB" and, perhaps in an even more relevant way, that:

we inform you that any further delay will constrain us to proceed under Sub-Clause 20.3 of Conditions of Contract and the Appendix to Tender, directing our request to the President of FIDIC or the person appointed by the President (Facsimile from Respondent to Claimant …)

Similar positions were again taken by Respondent on [subsequent dates].

b) It should be noted that the Engineer clearly adopted the same position as Respondent. [At around the same time] the Engineer advised Claimant to "appoint the DAB as soon as possible" … It reiterated its advice [later] in an unambiguous way:

I note that the Contractor has also requested joint appointment of the DAB several times during the last ten months and has twice drawn attention to its right to unilaterally seek appointment. In such a case, a DAB would be imposed on [Claimant], by the same authority that is specified in the Particular Conditions of Contract. [Claimant's] continued refusal to engaged [sic] on this issue is technically a breach of Contract, and could potentially damage [Claimant]'s position in dispute resolution.

The Engineer added:

I emphasize my previous advice for [Claimant] to comply with the terms of the Contract regarding the selection and appointment of the DAB.

(Facsimile from the Engineer to Claimant …)

Indeed, the Engineer even took that position in its correspondence with Respondent …:

[Y]ou are entitled to act in accordance with Sub-Clause 20.3 of the General Conditions of Contract and contact the President of FIDIC directly. However, while the effect of this Sub-Clause is not very different from the actual Contract requirements, I will raise this matter urgently with the Employer today, to try and achieve a mutual and amicable resolution of this question.

(Facsimile from the Engineer to Respondent …)

c) Claimant itself seemed to be of the opinion that the appointment of a DAB was still an appropriate step to take [at around the same time].

[At that time], Claimant wrote to the Engineer and asked him to contact the experts that had been suggested by Respondent to enquire on their fees and cost ... [H]aving received some information in this respect, Claimant asked the Engineer to advise it "as regards the total amount (cost and time) for each of the two potential sole adjudicators", adding that it had to "arrange a budget" and that it considered that one of the two individuals being discussed was "too expensive".

However, it is not until the DAB was appointed [some four months later] that Claimant took the position that such an appointment was not possible.

Thus, the evidence before the Arbitral Tribunal with respect to the Parties' common intent is in favour of the position according to which a DAB could still be appointed after the expiration of the 42-day time-period. However, that evidence being somewhat indirect since it does not refer to the time at which the Contract was entered into, but to a later stage, the Arbitral Tribunal has been considering other interpretation methods also.

4.2.6. Assuming, for the sake of discussion, that the common intent of the Parties cannot be determined, then the Arbitral Tribunal has to look for the meaning of the relevant provisions of the Contract "that may have an effect" rather than "the meaning producing none" ([per the applicable law]). The Tribunal notes that this principle of "effet utile" is consistent with general principles of contracts interpretation. It may thus be found in various provisions of international contracts law, although they are not applicable in the matter at hand, such as Article 4.5 of the 2004 UNIDROIT Principles. When considering the various provisions of the Contract, the Tribunal should take them as "mutually explanatory, each of them being assigned the meaning resulted from the whole document" ([the applicable law]). The Tribunal notes that this provision is also consistent with general principles of contracts interpretation (see, e.g., Article 4.4 of the 2004 UNIDROIT Principles).

In this respect, Respondent correctly notes, and it was discussed at the Hearing, that the Appendix to Tender prevails over both the Particular Conditions of Contract and the General Conditions of Contract according to Section 2 of the Contract.

It appears from the examination of the Appendix to Tender that the purpose of the amendments to the General Conditions of Contract by the Particular Conditions of Contract was not to remove any effect from Sub-Clause 20.3. The Appendix to Tender provides in relation to Sub-Clause 20.3: "appointment (if not agreed) to be made by" the President of FIDIC or a person appointed by the President. As the Appendix to Tender prevails over the Particular Conditions of Contract, the said Particular Conditions of Contract cannot be deemed to have eliminated the purpose of Sub-Clause 20.3 which provide the same thing as Sub­Clause 20.3 purports to do.

Obviously, Sub-Clause 20.2 is to produce effect also and this is further confirmed by the Appendix to Tender which provides, in reference to such Sub-Clause 20.2, that the DAB shall be comprised of a sole member.

As a result, the interpretation of the contractual scheme taken as a whole as per [the applicable law], and respecting the precedence of the Appendix to Tender over the Particular Conditions of Contract and then over the General Conditions of Contract, as required by Section 2 of the Contract, appears to be that, if the Parties did not sign the Dispute Adjudication Board Agreement within 42 days from the Commencement Date, then Sub-Clause 20.3 gave either Party the possibility to apply individually to the President of FIDIC.

4.2.7. Thus, on the one hand, the common intent of the Parties, in as much as the Arbitral Tribunal has been able to find evidence of such a common intent, is that the appointment of a DAB was still possible after the expiration of the 42 day-period. This was the position taken at all times by Respondent, confirmed by the Engineer and at least impliedly accepted by the Claimant who did not change its position in this respect until after the termination of the Contract. On the other hand, the only way to give the contractual scheme, considered it as a whole, a consistent meaning is to accept that Sub-Clause 20.3 does provide either Party with a right to apply for the appointment of a DAB in case the Parties did not jointly request such an appointment from the President of FIDIC within 42 days from the Commencement Date.

As a result, the Arbitral Tribunal finds that the appointment of the DAB was validly made in compliance with the Contract.

4.2.8. Respondent requests that the Arbitral Tribunal order Claimant to comply with the Decisions of the DAB, relying on the requirement of Sub-Clause 20.4 of the General Conditions of Contract that:

[T]he decision shall be binding on both Parties who shall promptly give effect to it unless and until it shall be revised in an amicable settlement or an Arbitral Award as described below. …

Respondent stresses that the DAB's decisions are binding on both Parties even if one of them issues a Notice of Dissatisfaction, the only effect of their being no such Notice of Dissatisfaction being that "the decision shall become final and binding upon both Parties" (Sub-Clause 20.4 of the General Conditions of Contract, last paragraph, emphasis added).

As a result, argues Respondent, the Decisions of the DAB in the instant matter should be made enforceable directly by a Partial Award. Respondent relies upon an Interim Award made in ICC Case Nr 10619 … on the basis of similar language included in Clause 67 of the Fourth Edition Red Book (1987) of FIDIC, the predecessor to Clause 20 of General Conditions of Contract. As noted by Respondent, the Tribunal was approved by commentators for having granted an Interim Award ordering payment of the amount awarded by the Engineer (who was in charge of issuing such decisions in the system of the 1987 Red Book) "immediately upon notification of the present Award'' with provisional enforcement. However, it should be stressed that the Employer in that case did not have any Claims against the Contractor and that the Tribunal reserved the issues of interest (which had not been dealt by with the Engineer) and of legal fees as well as "the rights of the Parties as to the merits of their case, including but not limited to the final and binding effect" of the decisions so being enforced.

In the matter to be settled by this Arbitral Tribunal, by contrast, the Employer (Claimant) has Claims on its own against Respondent. Yet, this is not a circumstance sufficient to lead to a different result. The Arbitral Tribunal will consider Claimant's claims in due course, in a later award. The issue of whether to order Claimant to execute the DAB's decisions, including the payment to Respondent of the amount of … (plus interest as appropriate) and the return of the Respondent's Performance Security, is clearly intended by the Parties as one that should be settled in this Partial Award and it was debated in their pleadings as such.

It was never suggested to the Arbitral Tribunal that it should limit itself to deciding in this Partial Award, which both Parties equally requested, whether the decisions of the DAB are valid and binding in the abstract, without drawing the practical consequences of such a finding. As a result, the Arbitral Tribunal finds that it is bound to decide whether the decisions of the DAB should be executed, irrespective of the remaining claims to be settled later, and irrespective of the fact that it may ultimately reverse the decisions of the DAB.

This Tribunal thus finds that it flows from the Contract that the Decisions of the DAB should be complied with by the Parties, subject to the Arbitrators retaining their "full power to open up, review and revise" such Decisions of the DAB as provided for by Sub-Clause 20.6 of the General Conditions of Contract. Thus, a decision by the Arbitral Tribunal ordering compliance with a DAB decision does not indicate any pre-judgment of the issues submitted to arbitration.

As a result, the Arbitral Tribunal will order Claimant to comply with the Decisions of the DAB, the merits of the case being reserved.

………

Award:

Having considered the evidence, submissions and documents submitted by the Parties, the Arbitral Tribunal hereby renders its Partial Award as follows:

1. The Arbitral Tribunal has jurisdiction over [Claimant]'s claims on Addenda to the Technical Assistance Contract ... and liquidated damages ...

2. [Claimant] has no right to call [Respondent]'s Performance Security and [Claimant] shall return to [Respondent] the Performance Security within 28 days from the notification of this Award.

3. [Claimant] shall pay to [Respondent] the sum [established by the DAB] within 28 days from the notification of this Award.

4. The decision on all remaining issues, including the costs of the Arbitration, is reserved until a subsequent Award of the Arbitral Tribunal.'

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