'F. Procedural Order No. 3 ...

1. Introductory remarks

98. The Sole Arbitrator has dealt with the following issues in his Procedural Order No. 3:

• Was the multi-tier resolution procedure complied with by Claimant and are Claimant's claims thus admissible?

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99. In the following, the Parties' positions and the Sole Arbitrator's considerations are restated. The Sole Arbitrator finds that none of the issues raised by Respondent during the Hearing (or after the issue of Procedural Order No. 3 in general) were such as to cause any change to Procedural Order No. 3.

2. Was the multi-tier resolution procedure complied with by Claimant and are Claimant's claims thus admissible?

a) Respondent's position

100. In Respondent's view, Claimant did not comply with the multi-tier dispute resolution procedure under the Contract. Consequently, Respondent submits that Claimant's Request for Arbitration is inadmissible.

101. First, Respondent argues that Claimant did not follow the claims' determination procedure under Sub-Clause 20.1 of the General Conditions for part of its claims, i.e. (i) the claim that [Claimant] is the Leader of the Consortium and has the power to bind the Consortium and (ii) the claim that Respondent's Termination Notice dated 20 July 2011 ... was unlawful, a breach of contract and ineffective.

102. Second, Respondent argues that if a dispute exists between the Parties, such dispute first hast to be referred to a DAB for determination. In Respondent's view, Claimant failed to comply with Sub-Clauses 20.4 and 20.5 of the General Conditions.

a) According to Respondent, it is only after a DAB has issued its decision (Sub-Clause 20.4 of the General Conditions), a Notice of Dissatisfaction has been served in accordance with the contractual provisions (Sub-Clause 20.4 of the General Conditions) and the period under the Contract for attempting to reach an amicable settlement has expired (Sub-Clause 20.5 of the General Conditions) that a dispute may be referred to arbitration (Sub-Clause 20.6 of the General Conditions).

b) Respondent submits that the fact the Respondent did not agree to appoint a DAB would not be sufficient to directly refer the dispute to arbitration under Sub-Clause 20.8 of the General Conditions. Rather, Respondent argues that Sub-Clause 20.8 of the General Conditions only applies if the procedures in Sub-Clauses 20.2 and 20.3 of the General Conditions were complied with, which they were not in the case at hand. In Respondent's view, the words "or otherwise" in Sub-Clause 20.8 of the General Conditions only refer to other reasons similar to the expiry of the DAB's appointment, i.e. causes which are of objective nature/independent of the Parties' wills.

c) Finally, Respondent states that Claimant wrongly invokes the issue of the signing of the DAB Agreement, because for a DAB Agreement to be signed, a DAB must first be appointed at all, which was not the case in the present case.

b) Claimant's position

103. Claimant submits that the Sole Arbitrator's jurisdiction arises from Sub-Clause 20.8 of the General Conditions.

a) According to Claimant, the words "or otherwise" in Sub-Clause 20.8 of the General Conditions mean that Claimant was able to bring arbitration proceedings at any time in relation to a dispute in circumstances where the DAB is, as it was in the present case, not "in place". According to Claimant, the words "or otherwise" are not linked to any other provisions, i.e. Sub-Clause 20.8 of the General Conditions does not stipulate any limit as to "causes independent of the parties' wills", as suggested by Respondent.

b) Claimant is further of the view that the reason why the DAB was not "in place" was because the Respondent had, in violation of the Contract, refused to sign and thereby to enter into a DAB Agreement, despite being asked by Claimant to do so on several occasions. There could therefore be no DAB. By supporting its position, Claimant, inter alia, refers to [the applicable law], according to which valid consent is required for there to be a binding agreement.

c) Claimant then submits that Respondent cannot rely on Sub-Clause 20.3 of the General Conditions (application to the FIDIC President for the appointment of a DAB). According to Claimant, a default appointment by the FIDIC President would not have resolved the problem, because such a default appointment still requires the Parties to sign a DAB Agreement; simply asking FIDIC to appoint a DAB is thus not sufficient. This is, according to Claimant, again supported by [the applicable law]: Without the signature of the DAB Agreement, there is no contractual or legal basis for a DAB to begin and then proceed to consider and issue a determination.

d) Against the background of the above, Claimant argues, it was left with no alternative but to resort to arbitration under Sub-Clause 20.8 of the General Conditions.

e) It is Claimant's view that the actions of Respondent to refuse, on the one hand, to sign the DAB Agreement and then, on the other hand, to try to use this as an excuse to suggest that the Sole Arbitrator does not have jurisdiction to consider the present dispute, are not actions of a party operating the Contract in good faith.

104. Claimant then submits that an Engineer's determination is not required before a dispute can form.

a) According to Claimant, this is, contrary to Respondent's allegation, not what the relevant provisions of the Contract/General Conditions say. If a DAB was only entitled to consider disputes about determinations made by the Engineer, then Sub-Clauses 20.1 and 20.4 of the General Conditions would say so explicitly; however, they do not in the case at hand. Rather, a party is, according to Claimant, able to refer a dispute of any kind, including disputes about determinations of the Engineer to a DAB, or to arbitration, if, as in the case at hand, a party is left with no alternative but to invoke Sub-Clause 20.8 of the General Conditions.

b) Further, Claimant submits that every claim made by Claimant in the present arbitral proceedings was previously put forward to Respondent. Those claims have been either rejected or ignored by Respondent. Thus, Claimant concludes, disputes eventually formed on 30 September 2011 ..., when Claimant noted that if Respondent does not reply in due time, then it will consider that there is a dispute in respect of a number of items such as the question of whether [Claimant] is the Leader of the Consortium and of whether Respondent's termination notice of 20 July 2011 ... was unlawful, a breach of contract and ineffective.

c) The Sole Arbitrator's considerations

105. The Sole Arbitrator finds that Claimant has complied with the multi-tier resolution procedure under the Contract and, consequently, that Claimant's claims are admissible, for the following reasons:

<underline>i) The Claimant was not obliged to refer the disputes to the DAB before referring to arbitration</underline>

106. Sub-Clause 20.8 of the General Conditions reads as follows (emphasis added):

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).

107. The Sole Arbitrator is of the view that Sub-Clause 20.8 of the General Conditions applies in the case at hand and that Claimant was allowed to directly refer the disputes to arbitration under Sub-Clause 20.8 of the General Conditions, i.e. without first referring the disputes to the DAB and waiting until the period under the Contract for attempting to reach an amicable settlement has expired (Sub-Clauses 20.4 and 20.5 of the General Conditions), for the following reasons:

a) It is not disputed between the Parties that a DAB has never been in place in the present case. Thus, the reason why there was and is no DAB in place is not any "expiry of the DAB's appointment" (Sub-Clause 20.8 of the General Conditions).

b) The Sole Arbitrator does not see why the words "or otherwise" in Sub-Clause 20.8 of the General Conditions should not precisely mean what they say, i.e. that a Party to the Contract is able to bring arbitration proceedings at any time if there is a dispute in circumstances where a DAB is, as in the present case, not "in place".

c) Respondent's argument according to which the words "or otherwise" only refer to other reasons similar to the "expiry of the DAB's appointment, which means causes which are of objective nature, independent of the parties' wills" does not convince the Sole Arbitrator. As Claimant has correctly pointed out in one of its submissions, the key word in Sub-Clause 20.8 of the General Conditions is not "otherwise", but "or", which is not a word that is used to link similar activities or reasons as Respondent suggests, but rather is a word that is used to introduce separate or alternative reasons. As Claimant has further correctly pointed out, if Sub-Clause 20.8 of the General Conditions had the meaning as suggested by Respondent, then said provision (or any other provision of the Contract) would explicitly stipulate so, which is not the case here.

d) The Sole Arbitrator then notes that it appears from the documents before him that a significant reason why the DAB was not in place was Respondent's refusal to sign the DAB Agreement, despite being asked by the Claimant to do so on several occasions:

• in its letter of 19 August 2011, Claimant referred to the need to sign the DAB Agreement and gives notice that if the DAB cannot be put in place, it will start arbitration proceedings ...

• in its letter dated 22 September 2011 to Respondent, Claimant again referred to the need to sign the DAB Agreement and invited Respondent again to agree to DAB and to sign the DAB Agreement, at the same time pointing out that otherwise Sub-Clause 20.8 of the General Conditions shall apply ...

• in a letter dated 27 September 2011, Respondent declined the invitation to sign the DAB Agreement ...

• Claimant, in its letter dated 31 October 2011, noted that Respondent was already invited to agree on the sole adjudicator and to sign the DAB Agreement ...; and

• with its letter dated 11 November 2011, Respondent again declined to agree to a DAB and to sign the DAB Agreement ...

e) The Sole Arbitrator further notes that especially Article 2 of the General Conditions of the Dispute Adjudication Agreement ... makes clear that the DAB Agreement is of no effect under the Contract as long as it is not signed by all relevant parties, i.e. also Respondent; without a DAB Agreement signed by all relevant parties, there is no contractual basis for the Adjudicator to begin and then to proceed to consider and issue a determination; Article 2 of the General Conditions of the Dispute Adjudication Agreement ... reads as follows:

The Dispute Adjudication Agreement shall take effect when the Employer, the Contractor and each of the Members (or Member) have respectively each signed dispute adjudication agreement.

f) In the Sole Arbitrator's view, Respondent cannot justify its refusal to sign the DAB Agreement by stating that Claimant did not submit its claims to the Engineer before starting arbitration, because, as the Sole Arbitrator will set out further below, in the case at hand, no determination by the Engineer is/was required. Either way, such statement by Respondent would have constituted a jurisdiction objection; however, according to the DAB Procedural Rules ..., the DAB has authority to decide upon its own jurisdiction.

g) Respondent's argument that for a DAB Agreement to be signed, a DAB member must first be appointed at all, is also not convincing: Firstly, as the Sole Arbitrator understands it, Respondent has not only refused to sign the DAB Agreement, but also refused to appoint a DAB member. Secondly, a default appointment in accordance with Sub-Clause 20.3 of the General Conditions would, as Claimant has correctly pointed out, not have changed anything with regard to the fact that under the Contract the DAB Agreement must be signed by all parties, i.e. also Respondent.

h) Finally, and most importantly, the Sole Arbitrator notes that it is most striking - if not even contrary to the principles of good faith respectively amounting to an abuse of rights - that Respondent, on the one hand, refused to sign the DAB Agreement, having the consequence that there could be no DAB, and, on the other hand, uses the fact that there is no DAB as a basis to argue that Claimant's claims are not admissible. This is even more true against the background of the fact that at the time Claimant filed its Request for Arbitration, the works under the Contract were nearly finished, while the idea of a DAB mainly is that ongoing construction works are not delayed.

108. The Sole Arbitrator thus concludes that Claimant was allowed to directly refer the disputes to arbitration under Sub-Clause 20.8 of the General Conditions.

ii) Determination of the Engineer is not required

109. Respondent argues that Claimant did not follow the claims' determination procedure for part of its claims, i.e. the claim that [Claimant] is the Leader of the Consortium and the claim that Respondent's termination notice of 20 July 2011 ... was unlawful, a breach of contract and ineffective. In order to turn into disputes, Respondent submits, these two claims should first have been submitted to the Engineer under Sub-Clause 20.1 of the General Conditions.

110. Respondent's arguments in this regard are not only confusing, but also not convincing. However, from the fact that the Sole Arbitrator has concluded above that Claimant was allowed to directly refer the disputes to arbitration under Sub-Clause 20.8 of the General Conditions, i.e. without first referring the disputes to the DAB and waiting until the period under the Contract for attempting to reach an amicable settlement has expired (Sub-Clauses 20.4 and 20.5 of the General Conditions), it follows logically, that Claimant was also not obliged to submit its claims to the Engineer first.

111. For the sake of completeness, the following must be mentioned:

a) It appears from the documents before the Sole Arbitrator, that

• Claimant, by letters dated 15 September 2010 ... and 23 September 2010 ..., notified Respondent that [Claimant] has taken over sole responsibility for the Consortium's obligations under the Contract;

• Claimant, thereafter, made a number of requests that Respondent recognizes [Claimant] as Leader of the Consortium ...

• Respondent refused (and still refuses!) to recognize [Claimant] as Leader of the Consortium ...

• Claimant - as response to Respondent's termination notice of 20 July 2011 ... - informed Respondent that it regards its termination notice as "an abusive conduct of the Employer and a misinterpretation of the contractual provisions with a clear scope: the Employer is not willing to fulfill his contractual duties" ...; and

• that on 30 September 2011 ..., Claimant noted in a letter to Respondent that if Respondent does not reply in due time, then it will consider that there is a dispute in respect of a number of items such as the question of whether [Claimant] is the Leader of the Consortium and of whether Respondent's termination notice of 20 July 2011 ... was unlawful, a breach of contract and ineffective.

b) Thus, in the Sole Arbitrator's view, there is no question that a dispute "in connection with or arising out of the Contract", "of any kind whatsoever" (Sub-Clause 20.4) has arisen between the Parties with regard to the questions of (i) whether [Claimant] is the Leader of the Consortium and has the power to bind the Consortium and (ii) whether Respondent's termination notice of 20 July 2011 ... was unlawful, a breach of contract and ineffective.

c) Further, the relevant part of Sub-Clause 20.4 of the General Conditions reads as follows:

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 disputes 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.

d) In the view of the Sole Arbitrator, according to the clear wording of Sub-Clause 20.4 of the General Conditions ("including any disputes as to any […], determination, […] of the Engineer, […]."), a DAB is not entitled to exclusively consider disputes about determinations made by the Engineer (Sub-Clause 20.1 of the General Conditions). Rather, a DAB is entitled to also consider disputes "of any kind whatsoever" about determinations made by the Engineer.

d) Summary

112. The Sole Arbitrator concludes that Claimant has fully complied with the multi-tier procedure under the Contract and Claimant's claims/its Request for Arbitration are/is thus admissible.

.........

Based on the foregoing discussion and reasoning the Sole Arbitrator issues the following Award:

(1) It is confirmed that the multi-tier resolution procedure under the Contract was complied with by Claimant and that Claimant's claims are thus admissible. ...'