By Mohan R Pillay
In a rare decision, the Singapore High Court in PT Perusahaan Gas Negara (“PGN”) v CRW Joint Operation (“CRW”) [2010] 4 SLR 672 refused to uphold an ICC arbitration award arising from a contract using the FIDIC Red Book 1999 Edition.
Disputes between the parties over variation orders and payment requests were referred to a Dispute Adjudication Board (DAB) by the contract. The parties accepted several of the DAB’s decisions, save one involving a disputed sum of over US$17 million.
The DAB decision was referred to arbitration and the Tribunal upheld it in its award. When CRW applied to register the arbitration award in a Singapore court, PGN sought to set it aside.
The Singapore High Court set aside the award on the basis that the arbitration tribunal exceeded its powers in rendering a final award in contravention of the parties’ agreement. The High Court interpreted the dispute resolution provisions in the FIDIC Red Book to mean that CRW was first required to refer the disputed DAB decision back to the DAB for review and confirmation, before involving arbitration.
Notably, the Court observed a possible gap in the 1999 FIDIC Red Book as it did not expressly allow a counter party’s failure to comply with a DAB decision to be referred directly to arbitration.
This is a rare instance of the Singapore High Court setting aside an arbitral award. It highlights the importance of parties understanding the clauses in their contract, especially how the reference to arbitration is to be properly invoked.
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