PTPerusahaan Gas Negara (Persero) TBK v CRW Joint Operation

• Jurisdiction: Singapore
• Judgment Date: 27 May 2015
• Date: 27 May 2015
• Docket Number: Civil Appeals Nos 148 and 149 of 2013; Summonses Nos 5277 and 5985 of 2014
• Court: Court of Appeal (Singapore)

PTPerusahaan Gas Negara (Persero) TBK

Plaintiff

and

CRW Joint Operation

Defendant

[2015] SGCA 30

Sundaresh Menon CJ

,

Chan Sek Keong SJ

and

Quentin Loh J

Sundaresh Menon CJ

and

Quentin Loh J

Chan Sek Keong SJ

(dissenting)

Civil Appeals Nos 148 and 149 of 2013; Summonses Nos 5277 and 5985 of 2014

Court of Appeal

Arbitration—Agreement—1999 edition of Conditions of Contract for Construction: For Building and Engineering Works Designed by the Employer (‘1999 Red Book’) —Interpretation of cl 20.4—Whether partial award on merits rendered decision of dispute adjudication board (‘DAB’) non-binding

Arbitration—Agreement—Scope—1999 Red Book—Interpretation of cl 20—Binding but non-final decision of DAB ordering payment of sum of money—Whether obligation to promptly comply with DAB decision enforceable by arbitration—Whether conditions precedent in cl 20 had to be fulfilled prior to referring dispute over non-compliance to arbitration

Arbitration—Award—Difference between interim/partial award and provisional award—Whether award ordering prompt compliance with DAB decision pending final determination of merits of underlying dispute provisional in nature—Section 19B International Arbitration Act (Cap 143 A, 2002 Rev Ed)

The appellant, PT Perusahaan Gas Negara (Persero) TBK (‘PGN’), engaged the respondent, CRW Joint Operation (‘CRW’) to carry out construction works in Indonesia. The contract between the parties (‘the Contract’) included a set of conditions of contract (‘Conditions of Contract’) which adopted, with modification, the standard provisions of the 1999 edition of the Conditions of Contract for Construction: For Building and Engineering Works Designed by the Employer(‘the 1999 Red Book’) published by the International Federation of Consulting Engineers (‘FIDIC’).

In the course of the project, a number of disputes arose between the parties which were referred to the dispute adjudication board (‘DAB’) constituted under the Contract in accordance with the dispute resolution mechanism set out in cl 20 of the Conditions of Contract. The DAB rendered several decisions. PGN accepted all of those decisions except the third decision (‘DAB No 3’), under which it was required to pay CRW a sum of US$17,298,834.57 (‘the Adjudicated Sum’).

A DAB decision was binding on both parties under cl 20.4 of the Conditions of Contract (‘cl 20.4’). They were required to ‘promptly give effect to it’ unless it was revised pursuant to an amicable settlement or an arbitral award. If either party was dissatisfied with the DAB decision, it could, within 28 days of receipt of that decision, issue a notice of dissatisfaction (‘NOD’) to the other party. The DAB decision became final and binding if no NOD was issued. Where an NOD was issued, cl 20.5 of the Conditions of Contract (‘cl 20.5’) required parties to first attempt to amicably settle their dispute. If attempts at amicable settlement failed or if no such attempts were made, the parties' dispute could be referred to arbitration pursuant to cl 20.6 of the Conditions of Contract (‘cl 20.6’) after 56 days from the day on which the NOD was issued. Under cl 20.7 of the Conditions of Contract (‘cl 20.7’), a party's failure to comply with a DAB decision which had become final and binding could be directly referred to arbitration under cl 20.6 without the parties having to obtain a separate DAB decision on the dispute over non-compliance or having to attempt to amicably settle their dispute over non-compliance.

PGN lodged an NOD against DAB No 3. Thereafter, CRW made several requests to PGN for payment of the Adjudicated Sum, but to no avail. CRW commenced arbitration in 2009 seeking a declaration that PGN had an immediate obligation to pay CRW the Adjudicated Sum and an order for ‘prompt payment’ of that sum. The majority of the 2009 Tribunal (‘the 2009 Majority Arbitrators’) granted CRW's applications in an award termed a ‘final’ award (‘the Final Award’). PGN applied to have the Final Award set aside. The judge found in favour of PGN and set aside the Final Award on the basis that the 2009 Majority Arbitrators had exceeded their jurisdiction in failing to consider the merits of the parties' underlying dispute over the merits of DAB No 3 (‘the Underlying Dispute’). On appeal, the Court of Appeal upheld the judge's decision and commented, obiter, that DAB No 3 was ‘enforceable directly by an interim or partial award’.

CRW commenced a second arbitration seeking a final determination that PGN was liable to pay CRW the Adjudicated Sum, and pending that final determination, a partial or interim award for the same sum (with interest) (‘the 2011 Arbitration’). The majority of the 2011 arbitral tribunal issued an ‘Interim Award’ ordering PGN to ‘promptly pay’ CRW the Adjudicated Sum pending the final resolution of the parties' Underlying Dispute. Despite the issuance of the Interim Award, PGN maintained its refusal to pay CRW the Adjudicated Sum. CRW obtained leave to enforce the Interim Award. PGN applied to have the Interim Award and the enforcement order set aside.

The judge (‘the Judge’) dismissed PGN's applications. PGN appealed against the Judge's decisions.

PGN also applied for leave to adduce further evidence. Summons No 5277 of 2014 (‘SUM 5277’) concerned leave to adduce the second affidavit of Mr Muhammad Husseyn Umar (‘Mr Umar’). The key exhibit in that affidavit was a unanimous partial award (‘the Partial Award’) which was made in the 2011 Arbitration after the hearing before the Judge. The 2011 Tribunal expressly stated that the Partial Award ‘revise [d] ’ the Interim Award in so far as two of the nine heads of claim formulated by the DAB in considering the dispute that formed the subject of DAB No 3 were dismissed. The Partial Award effectively reduced the Adjudicated Sum in DAB No 3 from US$17,298,834.57 to US$13,615,078.49. PGN contended on this basis that the determination in DAB No 3 was no longer correct pending the final resolution of the Underlying Dispute; CRW on its part contended that while it was seeking more in the arbitration than had been awarded under DAB No 3, the real issue concerned the status and effect of the Interim Award that had earlier been issued.

Summons No 5985 of 2014 (‘SUM 5985’) concerned leave to adduce Mr Umar's fourthaffidavit. That affidavit concerned arguments made by CRW in the 2011 Arbitration that a new basis, different from that adopted by the DAB, should be used to calculate the quantum it was entitled to.

Held, allowing SUM 5277 and dismissing the appeals and SUM 5985 (Chan SJ dissenting):

In unanimity:

(1) It was relevant for the court to consider the effect which the Partial Award had on the finality of the Interim Award. Leave was granted to adduce Mr Umar's second affidavit in evidence: at [40] and [112] .

(2) Mr Umar's fourth affidavit related to the parties' Underlying Dispute and not the Interim Award. Leave was not granted to adduce that affidavit in evidence: at [44] and [112] .

Per Sundaresh Menon CJ and Quentin Loh J:

(1) A partial award was one which finally disposed of part, but not all, of the parties' claim in an arbitration, leaving some claims for further consideration and resolution in future proceedings in the arbitration: at [46] .

(2) An interim award was one which decided a preliminary issue relevant to the disposing of a particular claim: at [47] .

(3) A provisional award was one which was issued to preserve a factual or legal situation so as to safeguard rights the recognition of which was sought from the tribunal having jurisdiction as to the substance of the case. Provisional awards did not definitely or finally dispose of either a preliminary issue or a claim in an arbitration. The Interim Award was not a provisional award. It was a final determination of whether PGN had an immediate and enforceable contractual obligation to comply with DAB No 3 even though it had issued an NOD in respect of that decision: at [49] , [50] and [100] .

(4) The term final award could be understood in a number of ways. It could refer to an award which resolved a claim or matter in an arbitration with preclusive effect. It could also refer to an award which had achieved a sufficient degree of finality in the arbitral seat. Lastly, it could refer to the last award made in an arbitration which disposed of all remaining claims: at [51] , [52] and [53] .

(5) Clause 20.4 imposed one distinct contractual obligation on the parties and conferred a conditional right on a party who wished to challenge a DAB decision. It imposed an affirmative obligation on the parties to promptly give effect to the DAB decision. In particular, the paying party (ie, the party that was required to make any payment under the DAB's decision) had a contractual obligation to pay promptly, notwithstanding its views on the merits of the DAB's decision. Clause 20.4 also granted a dissatisfied party a conditional right to challenge a DAB decision. A dissatisfied party (usually the paying party) who wished to challenge a DAB decision had to issue an NOD, and thereafter firstattempt to amicably resolve its disagreement with the other party over the DAB decision. It was only if no amicable settlement was reached or if no attempt at amicable settlement was made that the dissatisfied party had, after 56 days from the date of issuance of the NOD, the right to refer the merits of the DAB decision to arbitration: at [55] and [58] .

(6) Where compliance with a DAB decision entailed the obligation to pay a sum of money determined by the DAB, this obligation was capable of being enforced by way of a separate arbitration or by way of a separate interim award within the same arbitration that was also concerned with the underlying merits of that DAB decision: at [60] and [83] .

(7) There was no need for the receiving party to refer its dispute with the paying party over the latter's non-compliance with a...