'VIII.B.1. Whether the Respondent gave a valid notice of dissatisfaction

170. The first matter to be considered is whether the Respondent's communication of 29 November 2010 … constituted a valid notice of dissatisfaction under Sub-Clause 20.4.

171. This assessment carries significant practical implications. If it were found that no notice of dissatisfaction had been validly given, the DAB decision would have become "final and binding" under Sub-Clause 20.4. In that case, the Respondent's contractual obligation to pay the amount it was required to pay under the DAB decision (as well as the rejection of the claims the Respondent submitted to the DAB) would be both (i) directly enforceable under Sub-Clause 20.7, and, even more importantly, (ii) not subject to further review, irrespective of the soundness of the underlying claims and of the correctness of the DAB decision on its merits.

172. It is first necessary to establish whether the Respondent's notice of dissatisfaction was fully compliant, in all respects, with the provisions of the fourth paragraph of Sub-Clause 20.4. If it was not, it should be ascertained whether the flaws in the notice were such as to render it equivalent to a not given notice, with the effects set out above.

173. As seen in paragraph 162, the Claimants contend that the Respondent's notice of dissatisfaction of 29 November 2010 only listed the matters in dispute, but did not set out the reasons of dissatisfaction as required by Sub-Clause 20.4.

174. The text of the notice of dissatisfaction is the following:

Following the issuance of the DAB decision by [the DAB] as of the date of 22 November 2010, by virtue of Sub-Clause 20.4 [Obtaining Dispute Adjudication Board Decision] [Respondent] hereby submits its Notice of Dissatisfaction in respect of the said decision.

The reasons of dissatisfaction are mainly related to DAB's findings in respect of:

• Taking over of the works occurring pursuant to Sub-Clause 10.2 of the Contract;

• Rejection of the Employer's claims concerning operation costs;

• Rejection of the Employer's claims concerning utilities consumption between 2008-2010;

• Upholding Contractor's termination of the Contract;

• The Employer's obligation to pay for unexecuted works;

• The Employer's obligation to hand over the Performance guarantee;

• The Employer's obligation to pay financial charges for late payment of IPC 12 and first half of the retention money.

This represents a non-exhaustive list of the matters on which the Employer is dissatisfied with the DAB decision.

175. The fourth paragraph of Sub-Clause 20.4 requires a notice of dissatisfaction to set out both (i) the matters in dispute, i.e. the relevant Contractor or Employer's claim(s) or other disputes that constitute the object of the DAB decisions with which the party is dissatisfied, and (ii) the reasons for the dissatisfaction, i.e. the factual or legal grounds which justify the party's disagreement with the DAB's decision on the listed matters.

176. The Respondent's notice of dissatisfaction contains - as the document itself states - a "non-exhaustive list of the matters on which the Employer is dissatisfied". It does not expressly set out the reasons for this dissatisfaction. In its Post-Hearing Brief the Respondent argues that, by stating, ahead of the list of matters, that its "reasons for dissatisfaction [were] related" to the listed matters, it implicitly intended to maintain the arguments previously submitted to the DAB in relation to those matters.

177. In the Sole Arbitrator's view, it would be hard to conclude that, by so doing, the Respondent fully complied with the letter and the spirit of Sub-Clause 20.4. Clearly, the fact that a party is unwilling to accept a DAB decision on certain "disputed matters" would normally entail the party's intention to continue to rely on its previous arguments on such matters. But Sub-Clause 20.4 requires the dissatisfied party to explicitly include the actual reasons for its dissatisfaction in the notice (although the reasons may well be expressed in a summary form, or by reference to other, even pre-existing, documents where such reasons can be readily identified).

178. Nevertheless, having regard to the wording and intent of the provisions under discussion and to the facts of the case, the Sole Arbitrator believes that it would be excessive and unreasonable to conclude that the Respondent's notice of dissatisfaction of 29 November 2010 should be deemed as if never given. This is because, for the reasons briefly explained below, in the Sole Arbitrator's opinion:

(a) Sub-Clauses 20.4 and 20.7 do not expressly provide that a party's failure to set out the reasons for its dissatisfaction results, in all circumstances, in the notice of dissatisfaction being void or non-existent; and, considering the contents of other parts of Clause 20, such a provision would probably be excessive; and

(b) in the present case, the Respondent's notice of dissatisfaction did at least serve the fundamental purposes for which Sub-Clause 20.4 requires such a notice to be given, and did not give rise to any misunderstanding or any other prejudice to the Claimants.

179. Concerning point (a), Clause 20 does not expressly specify the consequences of the failure of the notice of dissatisfaction to set out the reasons for dissatisfaction. The last words of the sixth paragraph of Sub-Clause 20.4
("…unless notice of dissatisfaction has been given in accordance with this Sub-Clause") might seem to support the conclusion that a notice of dissatisfaction has no effect unless it is fully "in accordance with" that Sub-Clause. However, the last paragraph of the same Sub-Clause 20.4 ("If …no notice of dissatisfaction has been given …, then the decision shall become final and binding") and the first paragraph of Sub-Clause 20.7 (which refers to the case in which "neither Party has given notice of dissatisfaction within the period stated in Sub-Clause 20.4") could support the contrary conclusion that a document identifiable with sufficient clarity as a notice of dissatisfaction, even if not utterly "perfect", is sufficient (if notified within the stated deadline) for the purposes of the mentioned clauses.

180. Furthermore, the following features of Sub-Clauses 20.4 to 20.7 should be borne in mind. First, under Sub-Clause 20.4, last paragraph, and Sub-Clause 20.7, the DAB's decision becomes "final and binding upon both Parties" if neither party has given notice of dissatisfaction. If either party gives a notice of dissatisfaction, the decision does not become final and binding. The clauses under discussion do not envisage the possibility of the DAB decision becoming final and binding on one of the Parties but not on the other. Consequently, if either party gives a notice of dissatisfaction in respect of a matter constituting the object of a given DAB decision, either party - including, therefore, the party that has not given a notice of dissatisfaction - may refer the whole dispute to arbitration under Sub-Clause 20.6.1

181. Second, if the above conclusion is correct, then it follows that, provided that a notice of dissatisfaction has been given, the party that has not given the notice may refer the dispute to arbitration, and request the arbitrators to decide differently from the DAB, without having ever specified the reasons for its dissatisfaction with the DAB decision.

182. Third, the practical significance of the reasons for dissatisfaction required under Sub-Clause 20.4 is further reduced by the fact that under Sub-Clause 20.6 "Neither Party shall be limited in the proceedings before the arbitrator(s) … to the reasons for dissatisfaction given in its notice of dissatisfaction".

183. For these reasons, while Sub-Clause 20.4 requires a notice of dissatisfaction to set out the reasons for the dissatisfaction, the practical relevance of such reasons is not fundamental as the claims subsequently brought to arbitration may well be based on reasons, i.e. factual allegations and legal arguments, which are not set out in a notice of dissatisfaction. As Sub-Clauses 20.4 to 20.7 do not contain express or unambiguous language to the effect that a party's failure to set out the reasons for its dissatisfaction results, in all circumstances, in the notice of dissatisfaction being automatically deemed void or non-existent, there is no reason, in the Sole Arbitrator's opinion, to construe an implicit provision, or in any event resolve the ambiguity, to this effect.

184. Clearly, in order for a communication from one party to another to be defined as a "notice of dissatisfaction" under Sub-Clause 20.4, that communication must be expressly defined or at least unambiguously identifiable as such. Otherwise, it would not serve its principal purpose of enabling the other party to understand, without any uncertainty whatsoever, that the dispute remains unsettled and that, consequently, Sub-Clauses 20.5 and 20.6 apply.

185. In this case the Respondent's notice of 29 November 2010 was unambiguously meant to constitute a notice of dissatisfaction under Sub-Clause 20.4 in respect of the DAB decision of 22 November 2010. It was expressly captioned "Ref: Notice of Dissatisfaction", it stated that it was given "by virtue of Sub-Clause 20.4", and it clearly identified the claims that the Respondent reserved to bring to arbitration. Also, it would have been reasonable for [Claimant 2], on receipt of the notice, to assume that the reasons for the Respondent's dissatisfaction must have consisted of, or included, the arguments that the Respondent had unsuccessfully submitted to the DAB.

186. On the other hand, [Claimant 2] does not appear to have ever doubted that this document was meant to constitute a notice of dissatisfaction under Sub-Clause 20.4 or to have ever raised any objection, at the relevant time, as to the validity and effectiveness of the notice.

187. It is concluded that on 29 November 2010 the Respondent gave a valid notice of dissatisfaction in respect of the DAB decision of 22 November 2010. Consequently, the DAB decision did not become "final and binding" under the last paragraph of Sub-Clause 20.4.

VIII.B.2. Sole Arbitrator's decision on the Claimants' request for enforcement of the DAB decision

188. As seen above, pursuant to Sub-Clause 20.4, fourth paragraph, of the Conditions of Contract, the decision by the DAB, when given, is "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".

189. In this arbitration the Claimants request the Sole Arbitrator to enforce this provision and, consequently, to order the Respondent to pay the amount that the DAB had ordered the Respondent to pay. From the wording of the Request for Arbitration, the Terms of Reference and the Statement of Claim, it is clear that by this claim the Claimants do not request the Sole Arbitrator to review the merits of the claims that [Claimant 2] had referred to the DAB or issue an award on them. The Claimants simply request the Sole Arbitrator to order the Respondent to comply with Sub-Clause 20.4 of the Conditions of Contract.

190. The Sole Arbitrator having reached the conclusion set out in paragraph 187 above, the discussion that follows relates to a DAB decision which is "binding" under the fourth paragraph of Sub-Clause 20.4 but not "final and binding" under the seventh paragraph of the same Sub-Clause.

191. As indicated above (paragraph 164(b)), the Respondent first contends that a DAB decision loses its binding effect once a notice of dissatisfaction is given.

192. This statement is not correct. Under Sub-Clause 20.4, the DAB decision remains binding until revised in an amicable settlement or an arbitral award. Therefore, until that moment (which in the case of an arbitral award is necessarily after the notice of dissatisfaction was given), the decision remains binding and the parties must give effect to it.

193. The fact that a DAB decision is binding implies that the party with the right to a payment or other performance under the decision should be entitled to the remedies for breach of contract provided by the contract or the law if the other party does not comply with the decision. For example, it is generally recognized that, if the DAB decides that the Employer is required to pay a sum to the Contractor, the Contractor may, in case of non-compliance, exercise its right of suspension and even termination under Sub-Clauses 16.1 and 16.2. 2 The available remedies also include damages for breach of contract. 3 The Claimants had included a claim for damages in the Terms of Reference, but they subsequently withdrew it ...

194. The question here is whether that party may also request and obtain, under Sub-Clause 20.6, an arbitral award ordering specific performance of the payment or other obligation required to be performed by the other party under the DAB decision.

195. A DAB decision does not have the force of an arbitral award of other "jurisdictional" act. The parties' obligation to comply with it is a contractual obligation. In the case of a "binding" DAB decision (as opposed to a "final and binding" DAB decision), this obligation is effective "until [the DAB decision] shall be revised" by the arbitral tribunal. In making the award, the arbitral tribunal has, under Sub-Clause 20.6, "full power to open up, review and revise" the DAB decision. This means that, if in the arbitration either party disputes the correctness of the DAB decision, the arbitral tribunal is required to exercise that power and, consequently, examine the dispute and the claims that the parties had submitted to the DAB (to which we shall refer as the "underlying" dispute and claims) on their merits.

196. It logically follows that, if the correctness of the DAB decision on the underlying claims is disputed, then the "binding" nature of the DAB decision ceases when the arbitral tribunal finally settles the relevant dispute under Sub-Clause 20.6. This also logically implies that the final award may not give effect to a disputed DAB decision as such, i.e. if the cause of action submitted to the arbitral tribunal is limited to the "binding" nature of the decision under the fourth paragraph of Sub-Clause 20.4.

197. This does not mean that the binding nature of a "binding" but not "final and binding" DAB decision has no practical significance. First, as noted above, if a party fails to comply with the decision, significant contractual or legal remedies are available to the other party. Second, if appropriate (e.g. if urgent, or if significant time is needed to arrive at a final award on the underlying claims due to the complexity of the dispute), the arbitral tribunal may order performance of a "binding" DAB decision on a provisional basis by way of an interim award or interim measure. 4

198. In the case at hand, the Respondent: (i) contends (see paragraph 164 above) that the Claimants are not entitled to an award in their favour merely by virtue of Sub-Clause 20.4, fourth paragraph, but only if and to the extent that they substantiate their underlying claims, i.e. their right to the claimed payments for work performed under the Contract; and (ii) disputes its underlying obligation in respect of the amount corresponding to the unpaid portion of the total amount awarded by the DAB to the Contractor.

199. By disputing its underlying obligation to pay the remaining portion of the amount awarded by the DAB to the Contractor, the Respondent has effectively requested the Sole Arbitrator to "revise" the DAB decision rejecting the Claimants' claim for payment of the remaining amount.

200. In light of the discussion in paragraphs 194 to 196, the Sole Arbitrator concludes that, since the Respondent made such a plea, the DAB decision of 22 November 2010 may not be enforced as such. As the Claimants' claims, as formulated, are limited to a request for enforcement of the DAB decision as such, the Claimants' claims must be rejected.

………

XI. Decisions

382. For all the above reasons, the Sole Arbitrator decides as follows:

(i) both Claimants have capacity and standing to commence and continue this arbitration and Claimants' counsel have the power to represent both Claimants in this arbitration;

(ii) the Sole Arbitrator has the jurisdiction and power to decide on all claims of all the Parties;

(iii) all the Claimants' claims are rejected;

(iv) all the Respondent's counterclaims are rejected;

(v) each Party shall bear its own legal and other costs;

(vi) the Claimants, jointly, and the Respondent shall each bear 50% of the other costs of the arbitration as fixed by the ICC Court; and

(vii) any other claim or request of any kind made by any of the Parties is rejected.'

1
This conclusion is shared, for example, by C. Seppälä, "Enforcement by an Arbitral Tribunal of a Binding but not Final Engineer's Decision or DAB's Decision under the FIDIC Conditions", in International Construction Law Review, 2009, p. 414, commenting on the well-known ICC Case no. 10619, relating to the similar issue of the enforcement of binding Engineer's decisions, discussed the question "whether the Respondent, who has not objected within the prescribed time limit to the Engineer's decisions and has not stated his intention to commence arbitration to have the same reviewed and revised, may take advantages of the notice made by the Claimant to that effect and request the Arbitral Tribunal to reverse the Engineer's decision". According to the ICC tribunal in the referenced case, "[t]he answer should be in the affirmative considering that the Claimant has declared his dissatisfaction with the entire content of the Engineer's decision. Therefore, … the Engineer's decisions have not become final and binding and 'the arbitrator(s) shall have full power to open up, review and revise any decision, opinion, instruction, determination, certificate or valuation of the Engineer related to the dispute'". The Author agrees with this conclusion and considers it applicable, mutatis mutandis, to DAB decisions for the purposes of Sub-Clauses 20.4 to 20.7 of the 1999 FIDIC forms of contract. The same conclusions are reached, e.g., in E. Baker, B. Mellors, S. Chalmers, A. Lavers, FIDIC Contracts: Law and Practice, Informa, London, p. 549.

2
E. Baker, B. Mellors, S. Chalmers, A. Lavers, FIDIC Contracts: Law and Practice, supra, p. 540.

3
See e.g. T. Dedezade, "The legal justification for the 'enforcement' of a 'binding' DAB decision under the FIDIC 1999 Red Book", in Construction Law International, Vol. 7., Issue 1, March 2012, and the authorities therein cited.

4
See C. Seppälä, supra, commenting on ICC Case no. 10619. See also F. Gillion, "Enforcement of DAB decisions under the 1999 FIDIC Conditions of Contract - A recent development: CRW Joint Operation v. PT Perusahaan Gas Negara (Persero) TBK [2011] SGCA 33", in International Construction Law Review, 2011, p. 385, who addresses certain different opinions expressed by Singapore courts in the case the author commented.