'90. In essence, the Parties' disagreement in the present dispute relates to the nature of the DAB - permanent or ad hoc - and results in their divergent positions as to the prerequisites for termination of the DAA and of the DAB's mandate in the 2nd DAB Procedure. Claimant's position is that, since the Adjudicator was appointed on an ad hoc basis, his mandate was terminated by issuance of the 1st DAB Decision. Respondent One submits that the DAB was permanent and, therefore, its mandate could be terminated only by mutual consent of Claimant and Respondent One pursuant to Article 7 GCDAA [The General Conditions of Dispute Adjudication Agreement of the FIDIC Red Book], which consent is missing. Moreover, Respondent One also argues that even if the Adjudicator were appointed ad hoc, the rule on termination under Article 7 GCDAA would still apply.1

13.1. Claimant's position

91. Claimant submits that if the DAB was constituted on an ad hoc basis, the DAA terminates after issuance of the decision in the dispute. Claimant's position is that this ground for termination applies in the case at hand since the appointment of the Adjudicator was of an ad hoc nature based on the arguments summarized below.2

92. According to Claimant, the Adjudicator was nominated after the dispute had arisen and was, therefore, intended as ad hoc DAB for the resolution of a specific dispute.3 The DAA was concluded six years after the signing of the Contract. If the Parties had had in mind a permanent DAB, they would have appointed an Adjudicator at the time the works under the Contract had commenced.4 The Parties also agreed on a lump-sum payment in the DAA for adjudication of one particular dispute and this amount was transferred pursuant to the schedule set forth by the Adjudicator for this dispute.5

93. Claimant further argues that the terms used in the DAA clearly refer to a specific dispute that the Adjudicator was tasked to settle. In particular, the object of the dispute is defined in the DAA in singular using the definite article "the": "…for elaborating the Decision regarding the dispute arisen between the Employer and the Contractor".6 If the Parties had had an indefinite number of disputes in mind, they would have used the terminology from Sub-Clause 20.4 of the General Conditions of Contract of the FIDIC Red Book (hereinafter the "GCC"): "any dispute", "a dispute of any kind whatsoever". Respondent One falsely interprets "dispute" according to the general meaning it has in the FIDIC Red Book whereas the definition in the DAA is the one that is relevant.7 Furthermore, the word "arise" is used in the DAA in the past tense.8 Considering that according to the rules of contract interpretation under the [applicable] law the priority must be given to the intent, the use of the word "arose" means that the Parties had a specific dispute in mind.9

94. Although the default rule in the FIDIC Red Book is that the DAB is permanent, the Parties did identify the dispute (such "identification" being "equivocal" [sic]10). By doing so, the Parties have derogated from this default rule.11 Therefore, the DAA in this part must be interpreted under [the applicable] law.12

95. The Adjudicator did not perform the typical tasks of a permanent DAB (such as on-site visits which was not even agreed upon by the Parties), i.e. he acted as an ad hoc DAB.13

96. The "Addendum" submitted by the Adjudicator to the Parties was in fact a new Dispute Adjudication Agreement and "cannot be taken into consideration since such addendum was not signed by the Employer and it is disputed".14The DAA is the "only agreement subject to interpretation".15

97. On 14 June 2011, Claimant expressly requested a termination of the DAA following the issuance of the 1st DAB Decision. This cannot be interpreted as an acceptance of "the validity of the DAA",16 as purported by Respondent One. Rather, this constituted an attempt to settle the dispute amicably and to appoint a new Adjudicator.17

98. In addition, the Adjudicator himself admitted that he had no jurisdiction in the 2nd DAB Procedure by requesting the Parties to sign the Addendum.18 Therefore, Claimant submits that, in the circumstances of the Dispute, the prerequisite for termination of the DAA is the issuance of the 1st Decision, which naturally renders the DAA terminated as of [the date of the 1st Decision].

.........

13.2. Respondent One's position

100. Respondent One submits that the rules on termination of the DAA, as they are envisaged in the FIDIC Red Book, are applicable to both ad hoc and permanent DABs and, therefore, the nature of DAB is irrelevant to the issue of termination.19

101. In particular, pursuant to Clause 7 GCDAA, the Dispute Adjudication Agreement can be terminated only by the parties' agreement.20

102. Respondent One, however, submitted that the Adjudicator was of a permanent nature, and, therefore, there is no room to argue that the Adjudicator's mandate was terminated by the issuance of the 1st DAB Decision.

103. The default rule set forth in the FIDIC Red Book is that the DAB is of permanent nature unless the parties explicitly agree that it is ad hoc. From Sub-Clause 20.2 GCC, it is clear that the DAB is nominated only once for many disputes. Further, practice supports the proposition that the same DAB member adjudicates all disputes that may occur under a respective contract.21 The Parties have not derogated from the default rule by including a specific wording to this effect into the DAA, and, therefore, the DAA provided for a permanent Adjudicator. The one and only issue in which the parties deviated from the FIDIC Red Book conditions in the DAA did not relate to the type of DAB but rather, to the payment modality.22 If it had been the Parties' intention to appoint an ad hoc DAB, they would have stipulated so in the DAA.23 This argument is supported by Clause 1 GCDAA (Definitions) and Sub-Clause 1.2 GCC (Interpretation), the latter setting forth that "provisions including the word 'agree', 'agreed', or 'agreement' require the agreement to be recorded in writing"24.

104. Additionally, under the FIDIC Red Book, a permanent DAB may also be nominated after the dispute has arisen.25 Under Clause 2 GCDAA, a Dispute Adjudication Agreement is effective from the Commencement Date of the Contract or from the signing of a Dispute Adjudication Agreement, whichever the later. Therefore, a permanent DAB can be appointed after the main contract has been signed.26 Jurisprudence submitted by Claimant only recommends to appoint a DAB as close to the Commencement Date as possible, but does not require this.27 The view taken by some authors, i.e. that if a Dispute Adjudication Agreement is concluded after the dispute has arisen, it must be considered to be ad hoc, is an isolated one.28

105. Furthermore, it is not the DAA but rather, the Contract that, by incorporating the FIDIC Red Book, provided for a permanent DAB. Therefore, even if the DAA was signed after the Commencement Date of the Contract, it is irrelevant, i.e. does not change the permanent nature of DAB.

106. The use of the singular in the phrase "the dispute arisen" in the DAA is not a valid argument in favour of the ad hoc nature of the Adjudicator since pursuant to Clause 1.2. GCC, "words indicating the singular also include the plural…". Had the Parties intended to empower the DAB to adjudicate only one particular dispute, they would have specified it in the DAA.29 The mere use of the word "arose" cannot change the whole nature of the Contract and, implicitly, the permanent nature of the DAB.30 The interpretation rules under [the applicable] law, relied on by Claimant, are not applicable since the DAA and the GCC clearly regulate the respective issues.31

107. As to the Adjudicator's alleged non-fulfillment of the permanent DAB's duties, Respondent One further contends that neither the Parties nor the Adjudicator himself requested or found it necessary to undertake on-site visits. The Parties only tasked the Adjudicator with ruling on the dispute between them32 and he did not request to be provided with access to the site, even though he would have been entitled thereto under the FIDIC Red Book. This merely means that the documents submitted by the Parties were sufficient for the Adjudicator and that the issues to be determined were more of a legal nature.33

108. According to Respondent One, Claimant's argument to the effect that the Adjudicator's asking the Parties to sign the Addendum implies that he admitted that his mandate terminated by issuance of the 1st DAB Decision (and, hence, was ad hoc), is of no avail for Claimant. The Addendum was not more than an addendum to the DAA that modified the payment modalities. It was not a new DAA.34 Moreover, the fact that Claimant ... requested separate termination of the DAA and appointment of a new DAB confirms that Claimant itself was of the opinion that the DAA continued to be in force after the 1st DAB Decision had been rendered.35

13.3. The Sole Arbitrator's findings

109. The Sole Arbitrator finds that there are legal arguments in favour of both types of the DAB, ad hoc and permanent, and, to this extent, the wording of the DAA respects the position of both, Claimant and Respondent One. In particular, considering that the DAA was established after the Dispute had arisen and contained the lump-sum remuneration for the DAB to render its decision, Claimant has properly substantiated its submission that the DAB was of an ad hoc nature. On the other hand, Respondent One's arguments, that a permanent DAB is the default type of a dispute board under the FIDIC Red Book and that the Parties did not, as one might naturally expect for an ad hoc appointment, explicitly identify the specific dispute in the DAA have equal merit.

110. The Sole Arbitrator based its reasoning and decision on the following considerations:

(i) The rules on termination of the DAA established in Article 7 GCDAA are applicable in the present dispute irrespective of the nature of the DAB. This Article requires a joint termination of the DAA.

(ii) Although the DAB was of a permanent nature, it could still be argued that the DAB's mandate ceased to exist due to the initiation of the ICC arbitration in accordance with Article 20.6 GCC, which rendered the DAB functus officio.

13.3.1. Non-termination of the DAA based on the applicable rules on termination

111. The Sole Arbitrator has thoroughly analyzed the Parties' submissions as to the correlation between the type of the DAB and the procedure of termination of the Dispute Adjudication Agreement. However, there is no convincing authority to suggest that the rules on termination envisaged in the FIDIC Red Book can be derogated from by simply changing the type of DAB from permanent to ad hoc.

112. The Guidance for the Preparation of Particular Conditions Forms of Letter of Tender, Contract Agreement and Dispute Adjudication Agreement (hereinafter the "Guidance"), which forms part of the FIDIC Red Book, makes a distinction between the permanent and ad hoc DAB in the following terms:

It is preferable, but not essential, for the individual(s) to be agreed before the Letter of Acceptance is issued, and for the DAB to visit the Site on a regular basis. Under the example text in the Appendix to Tender, the Parties may either so agree before the Letter of Acceptance is issued or agree the appointment within the specified period thereafter. Alternatively, the Parties may prefer to defer the appointment until a dispute has arisen, in which case Sub-Clause 20.2 plus the Appendix - General Conditions of Dispute Adjudication Agreement with its Annex (Procedural Rules) and the Dispute Adjudication Agreement should be amended to comply with the wording.36

113. Hence, the Guidance expressly provides for an amendment of the conditions in case the parties decide to opt for ad hoc DAB instead of a permanent one, which is the default type of DAB.37 In such a case other relevant conditions, including those on the termination of the Dispute Adjudication Agreement, would need to be modified. However, in the case at hand, the Parties have not amended the FIDIC Red Book rules on termination accordingly. Therefore, the only difference between permanent and ad hoc DAB could be seen in the point in time when it was actually established (appointed) - before or after the dispute has arisen between the Parties - which understanding is also reflected in leading commentaries on the types of DAB. This temporal element is, however, irrelevant to the issue of termination or inexistence of the DAA since the FIDIC Red Book rules on termination still apply ...

114. Considering that the relief requested by Claimant is exclusively (i) to declare the termination of the DAA by issuance of the 1st DAB Decision and (ii) to declare its inexistence, the Sole Arbitrator will first determine the grounds for termination of a Dispute Adjudication Agreement under the FIDIC Red Book. In the further course, depending on whether such grounds exist in the case at hand, the question of whether or not the DAA has actually been terminated will be evaluated.

115. Article 7 GCDAA provides (in the relevant parts):

At any time: (i) the Employer and the Contractor may jointly terminate the Dispute Adjudication Agreement by giving 42 days' notice to the Member; or (ii) the Member may resign as provided for in Clause 2 [emphasis added].

[…]

Any such notice, resignation and termination shall be final and binding on the Employer, the Contractor and the Member. However, a notice by the Employer or the Contractor, but not by both, shall be of no effect [emphasis added].

116. The FIDIC Red Book unambiguously stipulates that the termination of a Dispute Adjudication Agreement is possible only under the condition of the Employer's and Contractor's mutual consent. Absent such consent, a Dispute Adjudication Agreement will remain in force until the completion of works under the contract (Sub-Clause 20.2 GCC).

117. As a corollary, in order to determine whether the DAA was terminated, it needs to be established whether Claimant and Respondent One unanimously agreed on such a termination. It is clear that Respondent One never agreed to a termination of the DAA, which yields the required unanimous consent missing and, therefore, the DAA cannot be deemed as terminated under this provision.

13.3.2. Non-termination of the DAB's mandate

118. The FIDIC Red Book provides for a permanent DAB,38 meaning that the DAB has an actual mandate until the completion of works and can decide all disputes between the Employer and the Contractor in the course of the Project.39 The signing of the Dispute Adjudication Agreement was designed for the purpose of identifying a particular dispute which the Employer and the Contractor called the DAB to rule on, appointing a Member of the DAB and stipulating remuneration scheme for his services as well as setting a procedural framework for adjudication of this particular dispute.

119. However, the accomplishment of the task as defined in the Dispute Adjudication Agreement does not render the DAB's mandate terminated. The mandate of the DAB remains valid as it derives from the main contract in which the Employer and the Contractor agreed on the rules - including the permanent nature of the DAB - envisaged in the FIDIC Red Book. The procedure of termination of such a mandate is also based on the FIDIC Red Book, which provides for the joint termination of the Dispute Adjudication Agreement.

120. In the dispute at bar, the Parties, at the time of signing the Contract, have opted for the FIDIC Red Book and, consequently, for the permanent DAB. By doing so, they have empowered the DAB - whose Member was appointed later on by way of signing of the DAA - with a limited mandate to resolve any disputes between them.

121. The Parties did not revoke or deviate from the legal nature of the DAB in the DAA and did not agree on the DAA's joint termination.

122. The Sole Arbitrator has established that the DAA was not terminated at the time the 1st DAB Decision had been rendered and, therefore, was in force at the time of the Adjudicator's 2nd DAB Decision. The relief requested by Claimant therefore cannot be granted. However, with a view to [the question of the validity of the execution of the 2nd DAB procedure], the Sole Arbitrator does not wish his decision to be understood as endorsing the jurisdiction of the Adjudicator in relation to the 2nd DAB Procedure.

123. Considering that the Notice of Dissatisfaction has been duly filed in accordance with Sub-Clause 20.4 GCC, the 1st DAB Decision has not become final and binding.

124. Pursuant to Sub-Clause 20.6 GCC:

[…] any dispute in respect of which the DAB's decision […] has not become final and binding shall be finally settled by international arbitration.

[…]

The arbitrator(s) shall have full power to open up, review and revise any […] decision of the DAB, relevant to the dispute.

125. Consequently, the issue submitted to the Adjudicator in the 2nd DAB Procedure would have had to be ultimately resolved in arbitration. To this end, Respondent One has filed a request for arbitration with the ICC Court in relation to the 1st DAB Decision, however, having preceded this action with the initiation of the 2nd DAB Procedure, two days earlier.

126. Under Sub-Clause 20.6 GCC, a DAB ceases its jurisdiction once a dispute has been submitted to arbitration, i.e. it becomes functus officio. Consequently, once the claim with the ICC Court in relation to the 1st DAB Decision had been lodged, ... the Adjudicator's jurisdiction in the 2nd DAB Procedure (revolving around the same dispute) ceased to exist.

127. In principle, this is in line with Claimant's arguments ... and Respondent One's reasoning in its Post-Hearing Submission, where it is argued that "it is not the DAB decision which is referred to arbitration, but the dispute between the Parties itself".40 Furthermore, Respondent One put forward that the notice of dissatisfaction does not even have to be submitted to the DAB as a copy, the reason being that "it has completed its task with respect to that dispute and will not be involved further on within the same dispute".41 However, in direct contrast, Respondent One further argues that the arbitration following the party's dissatisfaction with the DAB's decision has no effect on the DAB's jurisdiction.42

128. This argument would lead to the situation that both the DAB and the arbitral tribunal would have jurisdiction over the same dispute. Such an understanding of the DAB's mandate not only contravenes the general legal principle of lis pendens, which is widely accepted as preventing parallel actions on the same legal matter, but also contradicts a prevailing view deriving directly from Sub-Clause 20.6 GCC, i.e. that in case of a party's dissatisfaction with the DAB's decision, the dispute, including the claims regarding enforcement of DAB's decision, will be finally settled in international arbitration.43 This can only have one effect on the DAB's jurisdiction over the underlying dispute - namely, that it seizes [sic] to exist.44

129. On the face of it, this would confirm Claimant's arguments as, in essence, this ruling arrive [sic] at the same conclusion. However, Claimant's requests for relief were not directed at the 2nd DAB Decision itself or addressing the lack of jurisdiction of the Adjudicator. Rather, Claimant has exclusively confined its request for relief strictly to two issues: (i) whether the DAA was terminated by rendering of the 1st DAB Decision and (ii) whether the DAA, based on which the Adjudicator was appointed in the 2nd DAB Procedure, is inexistent. Both requests are in principle procedurally admissible but strictly limited in their scope. They have also been discussed at the Hearing. Also after the Post-Hearing Submission, the request for relief by Claimant was confined to the issue of termination and inexistence of the DAA itself. Therefore, for the reasons laid out in this Award, the Sole Arbitrator had to dismiss Claimant's claim.

14. Conclusion

130. Considering that the Parties did not modify the pertinent provisions of the FIDIC Red Book, the DAA could only be terminated by mutual consent of Claimant and Respondent One pursuant to Sub-Clause 7 GCDAA which was not reached by them. Therefore, the DAA was not terminated by issuance of the 1st DAB Decision.

.........

16. Final Award

141. In consideration of the above, the Sole Arbitrator hereby issues the following Final Award:

1. The Sole Arbitrator has jurisdiction over the present dispute.

2. Claimant's claims are dismissed in their entirety.

3. Claimant shall pay to Respondent One the amount of ... as costs of the arbitration and ... towards the latter's legal costs.

4. All other requests for relief are dismissed.'

1
Full Statement of Defence ...

2
Full Statement of Claim ...

3
Full Statement of Claim ...

4
Full Statement of Claims ...

5
Full Statement of Claims ...

6
Full Statement of Claims ...

7
Full Statement of Claim ...

8
Full Statement of Claims ...

9
Full Statement of Claim ...

10
Full Statement of Claim ...

11
Full Statement of Claim ...

12
Full Statement of Claim ...

13
Full Statement of Claim ...

14
Full Statement of Claim ...

15
Full Statement of Claim ...

16
Full Statement of Claim ...

17
Full Statement of Claim ...

18
Full Statement of Claims ...

19
Full Statement of Defence ...

20
Full Statement of Defence ...

21
Full Statement of Defence ...

22
Full Statement of Defence ...

23
Full Statement of Defence ...

24
Full Statement of Defence ...

25
Full Statement of Defence ...

26
Full Statement of Defence ...

27
Full Statement of Defence ...

28
Full Statement of Defence ...

29
Full Statement of Defence ...

30
Full Statement of Defence ...

31
Full Statement of Defence ...

32
Full Statement of Defence ...

33
Full Statement of Defence ...

34
Full Statement of Defence ...

35
Full Statement of Defence ...

36
Guidance for the Preparation of Particular Conditions Forms of Letter of Tender, Contract Agreement and Dispute Adjudication Agreement (FIDIC, 1999), p. 19.

37
Christopher R. Seppala, Letter to the Editor - The International Construction Law Review (ICLR 3 2000), Available at: http://www1.fidic.org/resources/contracts/seppala_letter00.asp, p. 2.; Gwyn Owen, Brian Totterdill, Dispute Boards: Procedures and Practice (Thomas Telford Publishing 2010), p. 11; Markus P. Fellner and Patrizia Netal, Chapter IV: Alternative Dispute Resolution - Is Austria Fit for Adjudication? in Christian Klausegger, Peter Klein, et al. (eds), Austrian Yearbook on International Arbitration 2010, (C.H. Beck, Stämpfli & Manz 2010), p. 239; Cyril Chern, The Dispute Board Federation and the Role of Dispute Boards in Construction - Benefits without Burden in Miguel Ángel Fernández-Ballesteros and David Arias (eds), Spain Arbitration Review | Revista del Club Español del Arbitraje, (Wolters Kluwer España 2010 Volume 2010 Issue 9 ), p. 8.

38
Axel-Volkmar Jaeger l Götz-Sebastian Hök, FIDIC-A Guide for Practitioners (Springer-Verlag Berlin Heidelberg 2010), p. 425; Cyril Chern, The Dispute Board Federation and the Role of Dispute Boards in Construction - Benefits without Burden in Miguel Ángel Fernández-Ballesteros and David Arias (eds), Spain Arbitration Review | Revista del Club Español del Arbitraje (Wolters Kluwer España 2010 Volume 2010 Issue 9) p. 8.

39
Christopher R. Seppala, Letter to the Editor - The International Construction Law Review (ICLR 3 2000), Available at: http://www1.fidic.org/resources/contracts/seppala_letter00.asp, p. 1; Cyril Chern, The Dispute Board Federation and the Role of Dispute Boards in Construction - Benefits without Burden in Miguel Ángel Fernández-Ballesteros and David Arias (eds), Spain Arbitration Review | Revista del Club Español del Arbitraje, (Wolters Kluwer España 2010 Volume 2010 Issue 9 ), p. 8.

40
Respondent One's Post-Hearing Submission ...

41
Respondent One's Post-Hearing Submission ...

42
Respondent One's Post-Hearing Submission ...

43
C.R. Seppälä, An Engineer's / Dispute Adjudication Board's Decision is Enforceable by An Arbitral Award (TDM 1 2010); Markus P. Fellner and Patrizia Netal, Chapter IV: Alternative Dispute Resolution - Is Austria Fit for Adjudication? in Christian Klausegger, Peter Klein et al. (eds), Austrian Yearbook on International Arbitration 2010 (C.H. Beck, Stämpfli & Manz 2010), p. 244; Jane Jenkins and James Stebbings, Chapter 5 - Adjudication and Dispute Review Boards in International Construction Arbitration Law (Kluwer Law International 2006), p. 112; Dr Goetz-Sebastian Hoek, FIDIC/MDB Approach in Respect of Dispute Adjudication Boards (Paper - Presentation at 12th Annual DRBF International Conference on 4 May 2012), p. 8.

44
Markus P. Fellner and Patrizia Netal, Chapter IV: Alternative Dispute Resolution - Is Austria Fit for Adjudication? in Christian Klausegger, Peter Klein, et al. (eds), Austrian Yearbook on International Arbitration 2010 (C.H. Beck, Stämpfli & Manz 2010), p. 244.