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Cite as: [2014] EWHC 4796 (TCC)

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		Neutral Citation Number: [2014] EWHC 4796 (TCC)
		No. HT-14-369

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY & CONSTRUCTION COURT

Rolls Building
Royal Courts of Justice

12th December 2014

B e f o r e :

HIS HONOUR JUDGE MARK RAESIDE QC
(Sitting as a Judge of the High Court)
____________________

	AL-WADDAN HOTEL LIMITED	Claimant
	- and -
	MAN ENTERPRISE SAL (OFFSHORE)	Defendant

____________________

Transcribed by BEVERLEY F. NUNNERY & CO.
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____________________

MR. A. NISSEN QC (instructed by Macfarlanes LLP) appeared on behalf of the Claimant.
MR. R. CHOAT (instructed by CMS Cameron McKenna LLP) appeared on behalf of the Defendant.
____________________

HTML VERSION OF JUDGMENT
____________________

JUDGE RAESIDE:

This is an ex tempore oral judgment which will be in eight parts. I introduction; II procedure; III test; IV contract; V facts; VI law; VII discussion; and VIII conclusions, which have been corrected and amended by the addition of the discussion and therefore reduction of the conclusions.

I. Introduction

This is a dispute between Al-Waddan Hotel Limited ('Al-Waddan') and MAN Enterprise SAL ('MAN') in respect of whether or not an arbitrator had jurisdiction to continue with the arbitration between the two of them, in which MAN Enterprise SAL are the claimants and Al-Waddan Hotel Limited are the defendants. The alleged lack of jurisdiction turns on whether a notice of decision of the Engineer, DAR Al Handasah ('DAR'), is a binding condition precedent and MAN are required to await the full contractual period before the dispute can go to arbitration.

II. Procedure

On 20^th October 2014 an arbitration claim form was issued by Al-Waddan claiming the following remedies: (i) under s.67 of the Arbitration Act 1986 that the Arbitrator lacked substantive jurisdiction; (ii) that the contract of 1^st April 2007 had a clause 67, and the Arbitrator was wrong to consider that the case fell under the general principle of a party taking advantage of his own wrong and apply Panamena. In support of that the witness statement of Mark Lawrence, dated 20^th October 2014, indicates that there were five grounds which had been before the Arbitrator of which grounds 1, 4 and 5 Al-Waddan agree with the award but as far as grounds 2 and 3 are concerned, Al-Waddan wish to challenge those. It was made clear that all other avenues had been exhausted including under s.57 of the Arbitration Act 1996.

The witness statement, first of all provided as Exhibit 1 the bundle of documents that were before the Arbitrator and, secondly, provides as Exhibit 2 a copy of the award. Reference was made to Macfarlanes LLP's letter to the Arbitrator of 28^th July 2014 confirming that (i) Al-Waddan wished to raise the jurisdiction objection; (ii) MAN owed Al-Waddan liquidated damages which exceeded the sums paid by MAN, and (iii) Al Waddan considered it had made a substantial overpayment to MAN. It also contains a statement of truth in the usual way.

So far as the appointment of an arbitrator is concerned, this matter came before Mr. Justice Ramsey (now Sir Vivian Ramsey) reported in [2013] EWCA 2356 and [2014] 1 Lloyd's Rep 217. So far as material to that application, to which only MAN attended through counsel, I read from paragraph 29 of the judgment which was said this: "On the material before me this is a case where there is a good arguable case that the provisions of clause 67 have been complied with. There is a good arguable case that the letter from the Engineer is in fact to be treated as a notice of decision. If that is wrong, there is a good arguable case on the construction of the Contract that clause 67 does not apply if, as is indicated by the Engineer's letter of 19 June, there is no Engineer. Alternatively in circumstances where the Engineer is not acting, it is arguable that the absence of an Engineer's decision is not a point which could be relied upon by the party who employed the Engineer. ...".

As a result of that, the LCIA appointed an arbitrator to resolve this dispute who was Mr. Roger Stewart QC. He produced what was described as a Corrected Partial Award, which was given under hand on 22^nd September 2014 and resigned on 25^th September 2014.

I do not propose to go through details of this Corrected Partial Award particularly in view of the fact this is a re-hearing. However, I briefly refer to his comments made on grounds 2 and 3 which is the subject of this application. I quote from paragraphs 39, 40, 42, 43 and 52 as follows:

"39. I deal with these grounds together because they were so dealt with by Mr Choat. In support of these grounds he relied upon: ...

b. ... the decision of the House of Lords in Panamena v Leyland [1947] A.C. 428 in which the House of Lords held that where the provision of a certificate by a surveyor employed by the owner was a pre-condition to payment and such certificate was not provided as a result of failures of the owner and surveyor, the owner was not entitled to rely on the absence of the certificate in refusing payment ... [also citing] Blackburn J in Roberts v Bury Improvement Commissioners, (1870) L.R. 5 C.P. 310 ...".

40. Mr. Nissen asserted, in relation to these arguments:

"a. That there was, in fact, an Engineer in place and MAN could not assert the contrary given its own pleadings;

b. That this case could be distinguished from Panamena in that AWH could not be said to have hindered or prevented MAN from making a claim to arbitration - all that MAN had to do was to wait for 84 days to elapse and they could then have commenced the same".

42. In such circumstances, I consider that MAN is correct in its contention that AWH is not entitled to rely upon the fact that MAN did not wait 84 days from the date of its reference before issuing its notice of 1^st August. The Engineer had made it known that he was not intending to fulfil his obligations under the contract (and, indeed, was not fulfilling them given his general obligations as set out in clause 2). AWH was responsible for this non-fulfilment as between itself and MAN. The contract permitted the Engineer up to 84 days in which to reach a decision - it did not, however, permit the Engineer to decide not to reach a decision and given an unbargained advantage to AWH - namely an enforced wait upon MAN before its claims could be the subject of decision even where the Engineer was not going to proceed to make a decision and AWH did nothing to facilitate it. Had AWH, immediately upon becoming aware of the stance of the Engineer, done everything it could in order to procure the giving of a decision, I can see that the position might be different - but that is not this case. There is no evidence that AWH did anything at all in order to see that the Engineer sought to carry out its duties. Instead it takes the position that it was somehow 'entitled' to a period of 84 days to elapse before a valid notice of arbitration could be issued when no purpose was being served by such a wait. It was not.

43. This case, does, I consider fall within the general principle that a party is not entitled to take advantage of its own wrong in enforcing contractual obligations. The 'wrong' in this case was not taking any steps to ensure that the contractual mechanism provided for by clause 67.1 was operated whilst still insisting on being afforded the time for the operation of such mechanism. AWH is not entitled to insist on the fulfilment of a condition precedent to jurisdiction which serves no purpose when the Engineer for whom AWH is responsible has made it plain that he will not carry out his obligations under the contract.

44. I do not consider that Mr. Nissen's attempt to distinguish Panamena is valid ...

52. In the circumstances I do not consider that AWH's objection to my jurisdiction are well-founded with the consequence that I have jurisdiction to determine the substantive dispute between the parties".

On that basis the Arbitrator considered he had jurisdiction to proceed with the arbitration.

In support of the hearing today I have been provided with detailed skeleton arguments. So far as MAN's skeleton argument is concerned, it is dated 10^th December 2014 and Mr. Choat takes several points. So far as the skeleton argument for Al-Waddan Hotel is concerned, provided by Alexander Nissen QC, dated 9^th December 2014, it focuses on the main point in this application.

III. Test

Section 67 of the Arbitration Act 1996 provides as follows:

"(1) A party to arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court—

(a) challenging any award of the arbitral tribunal as to its substantive jurisdiction; or

(b) for an order declaring an award made by the tribunal on the merits to be of no effect, in whole or in part, because the tribunal did not have substantive jurisdiction.

A party may lose the right to object (see section 73) and the right to apply is subject to the restrictions in section 70(2) and (3).

(2) The arbitral tribunal may continue the arbitral proceedings and make a further award while an application to the court under this section is pending in relation to an award as to jurisdiction.

(3) On an application under this section challenging an award of the arbitral tribunal as to its substantive jurisdiction, the court may by order—

(a) confirm the award,

(b) vary the award, or

(c) set aside the award in whole or in part.

(4) The leave of the court is required for any appeal from a decision of the court under this section."

It is well-known and accepted by both parties that under these provisions of the Arbitration Act 1996 this hearing is a new hearing rather than a review of the decision of Mr. Roger Stewart QC. That is apparent from as long ago as the well-known case of Azov Shipping Company v Baltic Shipping (No.1) [1999] 1 AER 476 and subsequent cases.

IV. Contract

The contract between these parties was, as is plain on its face, prepared by DAR. The agreement itself is in standard FIDIC form and provides this:

"This agreement made on 1^st April 2000 between Al-Waddan Hotel Ltd. (hereinafter called 'the Employer') of the one part and MAN Enterprise SAL (off shore) (hereinafter called 'the Contractor') of the other part".

It is signed by MAN and sealed by Al-Waddan.

The appendix to the agreement has various dates and a short summary indicates the amount of performance security was $1.4million; the minimum amount of third party insurance was $5 million; the time for issue of notice to commence was 30 days; and the time for completion was 31^st December 2007. There were provisions for liquidated damages at 0.1% of the Contract Price to a limit of 10% of the Contract Price. The defects liability period was 365 days while the retention was 10% with a limit of retention of 10% of the Fee. An advance was to be paid in the sum of $1.4 million and reference was made to interest at Libor +2%.

The contract sum was an estimated $14million. In accordance with such standard conditions prepared by DAR there are both general conditions, which are the Conditions of Contracts for Works of Civil Engineering Construction, Part 1, 4^th Edition 1987 (reprinted 1988 with editorial amendments, reprinted 1992 with further amendments), known colloquially as a FIDIC form or FIDIC 4^th Edition and, then there are conditions of a particular application for that form. There were then amendments to certain clauses and additions to other clauses. It is quite apparent that DAR were entirely familiar with the working of the FIDIC contract.

So far as notices were concerned, the Employer was defined as Al-Waddan Hotel Limited, and their address was given in Tripoli, Libya. The Engineer means Dar Al Handasah "Shair & Partners". Their address was given in Giza, Egypt.

So far as the additional clauses were concerned, there is a new clause 2.7 which limited the Engineer's operational liabilities in respect of health and safety. What was not added, and was of course apparent in the previous FIDIC form of contract, was any additional clause as to what would happen should the Engineer no longer be appointed. So far as other additional clauses were concerned, the most important I shall come to is the arbitration clause which I shall deal with later.

Looking at the FIDIC form, one sees from its Foreword reference to FIDIC having published a "'Guide to the Use of FIDIC Conditions of Contract for Works of Civil Engineering Construction' which includes comments on the provisions of the Fourth Edition of the Conditions. Users of the Fourth Edition may find it helpful to refer to this Guide".

So far as the definitions are concerned, in clause 1.1(a)(i), the Employer "means the person named as such in Part II of these Conditions and the legal successors in title to such person, but not (except with the consent of the Contractor) any assignee of such person". It is apparent the Employer is someone who can be their legal successors and that is to be distinguished from the Engineer, who, as in very many of these contracts, is a personal appointment of a particular firm and therefore does not rely on successors in title. I therefore come to the definition of the Engineer. "(iv) 'Engineer' means the person appointed by the Employer [that means Al-Waddan of course] to act as the Engineer for the purposes of the contract and named as such in Part II of these Conditions". So far as notice is concerned, that is provided in clause 1.5 which says: "Wherever in the Contract provision is made for the giving or issue of any notice ... [and other such terms], unless otherwise specified in the notice … shall be in writing and the word 'notify', 'certify' or 'determine' shall be construed accordingly".

Under clause 2.1 provision is made for the Engineer and the Engineer's Representative. Clause 2.1(a) provides this: "The Engineer shall carry out the duties specified in the Contract". Clause 2.6, under the heading of "Engineer to Act Impartially", provides: "Wherever, under the Contract, the Engineer is required to exercise his discretion by: (a) giving his decision … he shall exercise such discretion impartially within the terms of the Contract and having regard to all the circumstances. Any such decision ... may be opened up, reviewed or revised as provided in Clause 67".

There was provision in this contract, after completion, for a defects liability period under clause 49.1. The period of time I have already quoted. So far as other additional clauses are concerned, I refer to what is called a "Final Statement". That was a provision which means for 56 days after the issue of the defects liability certificate, pursuant to clause 62.1, MAN shall submit to the Engineer for consideration a draft final statement, with supporting documents. If the Engineer disagrees with or cannot verify any part of the draft Final Statement MAN must submit such further information as the Engineer may reasonably require and must make such changes in the draft as may be agreed between them. That gives one some idea of the obligations imposed on this Engineer and continuing obligations which they were under a mandatory obligation to carry out within the provisions of clause 2.1 as quoted.

The arbitration clause is contained under the heading "Settlement of Disputes". The first side-heading is "Engineer's Decision", 67.1. The arbitration clause in 67.3 was deleted by the special provisions which substituted a different wording as the period of time. It is not particularly material to the dispute before me.

I therefore come to clause 67.1, which is an unamended standard FIDIC form. I shall read it out fully as it is the centre of this dispute. It reads as follows:

"If a dispute of any kind whatsoever arises between the Employer and the Contractor in connection with, or arising out of, the Contract or the execution of the Works, whether during the execution of the Works or after their completion and whether before or after repudiation or other termination of the Contract, including any dispute as to any opinion, instruction, determination, certificate or valuation of the Engineer, the matter in dispute shall, in the first place, be referred in writing to the Engineer, with a copy to the other party. Such reference shall state that it is made pursuant to this Clause. No later than the eighty-fourth day after the day on which he received such reference the Engineer shall give notice of his decision to the Employer and the Contractor. Such decision shall state that it is made pursuant to this Clause.
Unless the Contract has already been repudiated or terminated, the Contractor shall, in every case, continue to proceed with the Works with all due diligence and the Contractor and the Employer shall give effect forthwith to every such decision of the Engineer unless and until the same shall be revised, as hereinafter provided, in an amicable settlement or an arbitral award.

If either the Employer or the Contractor be dissatisfied with any decision of the Engineer, or if the Engineer fails to give notice of his decision on or before the eighty-fourth day after the day on which he received the reference, then either the Employer or the Contractor may, on or before the seventieth day after the day on which he received notice of such decision, or on or before the seventieth day after the day on which the said period of 84 days expired, as the case may be, give notice to the other party, with a copy for information to the Engineer, of his intention to commence arbitration, as hereinafter provided, as to the matter in dispute. Such notice shall establish the entitlement of the party giving the same to commence arbitration, as hereinafter provided, as to such dispute and, subject to Sub-Clause 67.4, no arbitration in respect thereof may be commenced unless such notice is given.

If the Engineer has given notice of his decision as to a matter in dispute to the Employer and the Contractor and no notice of intention to commence arbitration as to such dispute has been given by either the Employer or the Contractor on or before the seventieth day after the day on which the parties received notice as to such decision from the Engineer, the said decision shall become final and binding upon the Employer and the Contractor."

Clause 68.1 provided for notices in very similar form to clause 5.1 [see paragraph 28 above which refers to para 15 and clause 3] which I have already quoted. It simply says this, under the heading "Notices": "Notice to Contractor. All certificates, notices or instructions to be given to the Contractor by the ... Engineer under the terms of the Contract shall be sent by post, cable, telex or facsimile transmission to or left at the Contractor's principal place of business or such other address as the Contractor shall nominate for that purpose". It indicates at clause 68.2: "Any notice to be given to the Employer or to the Engineer under the terms of the Contract shall be sent by post, cable, telex or facsimile transaction to or left at the respective addresses nominated in Part II" which I have already referred to.

Lastly, so far as the additional clause is concerned, there is yet another heading at 68.2: "Notices to Employer and Engineer". The Employer's address was Al-Waddan Hotel Limited, Zawait Aldahmani Street, Tripoli, Libya. The Engineer's address was Dar Al Handasah, "Shair and Partners", 15 Amr Street, Mohandessin, Giza, Egypt.

I now come to the Guide which, whilst not a contract document, is referred to in the foreword to this contract and is a document that people who work in the industry, such as these well-known engineers and possibly the parties to this contract, very often use and therefore assist the court in understanding the background to how some of these contracts work. This FIDIC guide to the 4^th Edition refers in the foreword to the 1957 International Federation of Consulting Engineers form, the contract that we knew as the first FIDIC form. The second and third forms were published in 1963 and 1977. In 1983 the Executive Committee of FIDIC appointed a drafting committee for a new form. The contract which I have quoted from comes precisely from that work. There was a similar body of participants who assisted with this work. The general note again confirms, if there was any doubt: "The material in this Guide does not form part of the Conditions nor is it intended to be incorporated in the Conditions other than by the use of example clauses. Further, it does not purport to give an authoritative legal interpretation of the Conditions, but it is envisaged that it will be helpful in the understanding of the intent of the Conditions and in drafting particular Part II Conditions".

It then says this (at page 41), so far as the reference to the Engineer is concerned, having defined it: "It should be noted that this definition identifies the Engineer as a person named as such in Part II of the conditions, the effect of which is to prevent the Employer from changing the Engineer without the consent of the Contractor. The reason for this change from the 3rd Edition is that the identity of the Engineer (and his reputation) has been a factor in the calculation of the Contractor's tender". I have not referred to, but it is well-known in this particular 4th Edition, that the tender documents do name an Engineer and so a Contractor has notice at an early stage.

Under clause 2.1, "The duties of an Engineer", the Guide says this: "Reference has been made earlier to the function, duties and responsibilities of the Engineer". It is quite clear from this Guide, indeed the contract terms to which I have referred, that these engineers are duty bound, as a question of mandatory obligation, to carry out their services as described in the contract. They are not discretionary matters, and include matters up to the defects liability certificate and, in this case, under special conditions, the final statement.

There is then reference to the Engineer acting impartially, in clause 2.6, and the notes indicates the Engineer's determination can be challenged by either party in accordance with the procedures for disputes laid down in clause 67. However, in order to avoid delay or interruption of the works, the Engineer's determination must be adhered to by both Al-Waddan and MAN unless and until it is varied by the Engineer himself or an arbitral tribunal as provided by clause 67. Again that gives an indication of how the Engineer should act and how these rights in this particular form permitted things to take place.

Turning to the Guide, to clause 67 itself, this is what the notes indicate to assist users of this particular modern standard form: "The term 'decision' in the FIDIC Conditions, has been reserved for use in Clause 67. If there is a difference of opinion between the parties to the Contract that is, between the Employer and the Contractor, it is probable that such difference of opinion will have arisen as a result of an instruction given by the Engineer. If the matter cannot be clarified to the satisfaction of both parties, either may in the first instance refer the dispute to the Engineer for a decision, stating the reference is made under Clause 67.

Any such reference to the Engineer must be copied to the other party. In this respect, it should be noted that generally when the reference of a dispute is made to the Engineer, under Clause 67, it is dealt with by a senior person in the Engineer's firm and preferably one who has not been involved in the day to day administration of the Contract. The Engineer's decision, which is given under Clause 67 for settlement of the dispute, will not be final and binding upon either of the two parties if one of the parties disagrees with it and gives notice within 70 days of an intention to commence arbitration. This is a shorter period for challenging a decision than in the third Edition where the period was 90 days.

The action necessary to prevent the decision becoming final and binding is a notification by one party (no longer to the Engineer) to the other party of his intention to commence arbitration as to the subject matter of the decision. The notification shall be copied to the Engineer for information but the legal effect lies in the notice to the other party, which establishes the entitlement of the party giving the notification to arbitrate the matter in dispute".

It is well-known, and some might say trite law, among international arbitrators that the Engineer's notice of decision in clauses such as this clause 67 of the well-known FIDIC is taken to be a condition precedent; in other words, an important step in the process between a dispute arising going via the Engineer and therefore coming to arbitration. If one wants authority for a domestic decision under a different form but a simple summary of that, one can, of course, have reference to the decision in J T Mackley v Gosport Marina [2002] BLR 367, a decision of His Honour Judge Richard Seymour QC, in which having quoted at para.9 the particular wording in the ICE Conditions (6^th edition, February 1998) clause 66, which, of course, is not the same contract but has slightly similar wording, and the reference in clause 66(3) to disputes going to the Engineer, he there very briefly indicates in para.28: "The procedure for resolution of disputes to which the parties in the present case agreed, as Mr. Coulson reminded me, involved in the first instance, a reference to the Engineer for his decision. He submitted that it was a condition precedent to the right of a party to a contract which incorporated the provisions of Clause 66 of the ICE Conditions to refer a matter to arbitration under Clause 66(6) that a decision of the Engineer on the matter in question should first have been obtained. As matters turned out, one of the critical differences between the parties proved to be whether this submission was well-founded." The decision appears shortly at para.35, as already referred to, as follows: "Contrary to the submissions of Mr, Hawker, in my judgment a decision of the Engineer is a condition precedent to the entitlement of a party to a contract which incorporates the ICE Conditions to refer a dispute to arbitration. In the present case there was either no reference of a dispute to the Engineer in advance of, as opposed to contemporaneously with, the giving of the Notice to Refer, or the decision of the Engineer was made more than three calendar months before the giving of the Notice to Refer and was thus out of time."

So far as this court is concerned, there is no doubt at all as to the workings of the FIDIC form of contract and that the procedure under clause 67 is a condition precedent to the process of arbitration and therefore jurisdiction of the Arbitrator.

I now turn to other matters one would imply into this contract in the usual way. As this contract does not have provision, as it used to have, in terms of appointing a new Engineer, one has to have regard for what would happen in the event in the future that such Engineer is no longer appointed or has ceased to exist for reasons that we will come to on the facts of this case. It is, in my judgment, trite law that either as a matter of cooperation or as a matter of prevention of performance of the contract, certain terms would readily be implied. If one needs authority for that, one can go back to Mackay v Dick [1881] 6 AC 251 at p.263. I quote: "where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect". The line of authorities that follow on from that include the decision of Roberts v Bury Commissioners [1870] supra and Panamena v Frederick Leyland [1947] AC supra.

So far as the converse of this arrangement is concerned, it is often called the prevention of performance. Again the matters go back to trite law, as far back as Stirling v Maitland (1864) 5 B & S 840, at 852. I quote: "... if a party enters into an arrangement which can only take effect by the continuance of a certain existing set of circumstances, there is an implied engagement on his part that he shall do nothing of his own motion to put an end to that state of circumstances, under which alone the arrangement can be operative". Again a long line of authority for this back to Holme v Guppy (1838) 3 M. & W. 387 and such cases again as Mackay v Dick, Roberts v Bury and the long line of authority which I will not cite but they are extremely well known.

The learned editors of Keating on Building Contracts 9^th edition provide a good summary of the concept of such implied terms. They see these implied terms as essentially a cooperation matter. I now quote from para.3.046: "The negative aspect of the same principle [that is cooperation of course] is that the employer should not interfere with the proper performance by the certifier of the duties imposed upon him by the contract. If to the employer's knowledge the architect persists in applying the contract wrongly in regard to those matters where the architect must act fairly between the parties, he must dismiss him and appoint another". That cites the well-known case of Panamena v Leyland to which I have just referred. So far as the general principles are concerned, it refers to Perini v Commonwealth of Australia [1969] 12 BLR 82; the well-known decision of Minster Trust Ltd v Traps Tractors [1954] 1 WLR 963, p.975, and again Panamena, supra. Further down the page they say this at para.3.047: "The implied term of co-operation extends to those things which the architect must do to enable the contractor to carry out the work and the employer is liable for any breach of this duty by the architect. If instructions, nominations, information, plans or details are required, they must be supplied at reasonable times". Again reference to those quotes are, once more, to Panamena v Leyland supra and Roberts v Bury supra.

There is, therefore, a well-known body of authority which repeats at least two authorities which I shall come to in due course, that makes it perfectly plain that a contract such as this would have such implied terms to the extent that the matters are not already expressed. If one takes the modern approach to implied terms, which, in my judgment, is now becoming firmly established in the decision of the Privy Council in Attorney General of Belize v Belize Telecom [2009] 1 WLR 1988 and in what will become, in my judgment, the seminal judgment of Lord Hoffmann, it provides a very good review of the general principle for implied terms and indicates a starting point, being his decision in Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896 at pp.912-913. He says this in para.16: "It is this objective meaning which is conventionally called the intention of the parties, or the intention of Parliament, or the intention of whatever person or body was or is deemed to have been the author of the instrument." Certificates or decisions or matters in contracts, such as the FIDIC contract, it seems to me must fall within that principle and therefore that is the correct approach to take generally in terms of the modern approach. So far as one sets about that, I do not quote, but if needs be I can quote fully, between para.17 and 26 inclusive of how the law now looks at implied terms (what used to be called necessity or business efficacy) as implied terms which are not imposed by the law itself.

Summarising Belize shortly for the purpose of this decision, I simply quote briefly from para.21, the last sentence in which Lord Hoffmann says this: "There is only one question: is that what the instrument, read as a whole against the relevant background, would reasonably be understood to mean?"

V. Facts

On 10th June 2012 MAN sent DAR a fax and couriered letter which provides as follows:

"Dear Sirs,

Referral of dispute under Clause 67.1 of the contract dated 1 April 2007 between MAN Enterprises and Al-Waddan Hotel

We assume that your appointment as Engineer for the Al Waddan Hotel project remains live, but please confirm.

…

Accordingly, pursuant to Clause 67.1 of the Contract, we hereby refer the dispute detailed below to you for your decision"...

(1) Non-payment of Interim Certificate 18; … (2) Non-payment of retention monies; … (3) Non-payment of additional labour costs; … (4) Interest.

"We request a decision from you as to MAN's entitlement to payment of:

1. $1,809550.89 for Interim Certificate 18

2. $1,252,189.42 for the retention monies

3. $461,517 for Additional Labour costs

4. Interest on PC18 and retentions: 326,357 USD...

"This letter is also copied to AWH and its legal advisers, Herbert Smith LLP. We trust that if Dar Al-Handasah 'Shair & Partners' are no longer engaged as the Engineers on the project, AWH will issue appropriate instructions for their re-appointment".

This letter is signed by Michel Abi Nader, the chairman and executive officer of MAN. It enclosed the attachments indicated in its text which I do not need to go to for the purpose of this hearing. It is shown to be copied to Herbert Smith LLP, to Al-Waddan at the address given, and also to DAR. The full dispute resolution clause 67 is attached.

The second witness statement of Antoine Lebnen Fakhry, provided this in para.4: "As I mention in my first statement, the letter was - in fact - sent on Monday 11 June 2012. The heading of the letter [he gives a heading there] started 'Referral of dispute under Clause 67.1'." It therefore follows there is witness evidence before me indicating that that letter was sent, and the date for any period of time for computation, would be Monday, 11^th June 2012.

On 19^th June 2012 DAR sent a letter to Mr. Michel Abi Nader, chairman and executive officer of MAN as follows. I quote from it in full:

"Dear Mr. Abi Nader,
Subject: Al-Waddan Hotel, Tripoli, Libya

We are in receipt of your letter [it gives a reference] dated 10^th June 2012 and advise you that our services contract with our Client on this project has effectively expired on 31/12/2010, and hence we no more have capacity to assume any duties in relation and have already ceased to be the Engineer under the construction contract.

Please be advised that accordingly we will not act on your aforementioned letter and draw your attention not to address us on this issue anymore.

Yours sincerely".

It is both stamped and signed by Mr. Riad Mneimneh, Director of Operations of DAR in Libya. As a matter of record, this document does not show that it was sent to Al-Waddan.

The response to that letter, on Tuesday, 1^st August 2012, from MAN was as follows. That was sent to Al-Waddan Hotel's general manager, and it also enclosed two enclosures, that is the letter of 10th June which I have just quoted and the Engineer's letter of 19^th June which I have quoted in full. It was also cc'd to Herbert Smith. It said this, again headed "Al-Waddan Hotel, Libya. Contract dated 1st April 2007":

"We refer to our letter to Dar Al Handasah 'Shair & Partners' ('DAH') dated 10 June 2012 (which we copy to you) and enclose a copy of their reply dated 19 June 2012 in which DAH indicates that they are no longer the Engineer under the Contract.
Therefore, we are communicating to you the present Letter pursuant to which, please within 14 days of the date of this letter:

(1) Admit the matters set out in the letter to DAH of 10 June and identify when you will pay us the sums referred to at the end of that letter; or

(2) Confirm that you have re-engaged DAH as the Engineer or appoint a new Engineer.

Alternatively, please treat this letter as a notice of intention to commence Arbitration as to such dispute (so as to trigger clause 67.2 of the General Conditions of the Contract)".

That is signed by Michel Abi Nader, the chairman of MAN.

So far as there were responses to that letter, there are two in evidence. The first is of 13^th August 2012 at 8.42, being an email sent to MAN Enterprises. It is short and says this:

"Dear Sirs,
Thank you for your letter dated 1 August 2012.
We are considering the points raised by your letter and will respond
further in due course.
Best regards
Adel A Guenena
Director
ALWaddan Hotel Limited."

A second letter of the same date, which has been translated, of 13^th August 2012, is sent to the general manager, Enterprise Company. It is headed "Al-Waddan for Investment S.A.", and gives an index number for an address. It says:

"Greetings,
We refer to your letter [of 1^st August 2012] to Al Waddan Hotel who has in turn referred it to us on 7/08/2012 A.D. regarding abstract no. (18) as well as the execution of maintenance at the Al Waddan Hotel for us to be able to closeout these unfinished matters.
Therefore,
We hope you appoint an auditor from your firm for review of these documents with our company auditors and it is preferable that he is accompanied by an engineer from Dar Al Handasseh (the office in charge of the project) in order to settle on the amounts which will be agreed upon.
God Bless".

And it is signed by Dr. Massoud Ali Barakeh, Head of Steering Committee. It is copied to the Steering Committee; Administrative and financial departments; Internal Audit, and General Committee.

There is no evidence from Al-Waddan which disputes the fact that it is said in this letter that their understanding is that this letter was sent on behalf of Al-Waddan. The letter appears to be an attempt at some alternative dispute resolution process by means of an extra contractual suggested route. There is no evidence before me of any intention on the part of Al-Waddan to either reappoint DAR or find a replacement engineer in order that a notice of decision could have been given in the balance of the contract period set for such decision.

As a matter of fact, on 16^th November 2012 CMS Cameron McKenna wrote to Herbert Smith Freehills, under the heading "Contract dated 1 April 2007" saying: "We act for MAN. We understand that you still act for AWH. In case you do not, this letter is copied and directed to AWH. MAN intends to commence arbitration against AWH under clause 67 of the Contract. We enclose, by way of service, a Notice for the Appointment of an Arbitrator. We would be grateful to hear from you as soon as possible". It is shown on its face to be copied to AWH for the attention of their Chairman and/or General Manager. The actual notice itself is short, a pro forma notice. It cites a contract on 1^st April 2007 and it refers to the contract sum in the FIDIC form and records the Engineer being DAR. It then cites and repeats that by letter dated 10^th June 2012 Al-Waddan referred to the Engineer a dispute that had arisen between Al-Waddan and MAN as to how much of the former's claim in a total sum of $4 million was due and records the stance of the Engineer in reply and the intention to refer this dispute to arbitration.

On 14^th December 2012 Herbert Smith wrote to CMS Cameron McKenna LLP in this way, so far as material: "Thank you for your letter and enclosure (the "Notice") of 16 November 2012. We confirm that we still act for Al-Waddan Hotel although we have no instructions to accept service of any proceedings. ...".

So far as the basic claim that is the subject of the arbitration is concerned, I have been provided with the statement of claim itself, which is dated 21^st May 2014. It cites the contract dated 1^st April 2007 and it refers to the works; the Engineer appointed being DAR; it refers to other express terms, including clause 49 for the defects liability period and other clauses for monthly payments and so on. It then indicates clause 67, which it quotes, being the arbitration clause. It then indicates in para.23, an implied term of the contract that Al-Waddan would correct any wrongful failure to certify by the Engineer by instructing him to certify. It then under the heading of "Dispute" says this:

"By a letter dated 10 June 2012 MAN referred to the Engineer, under Sub-Clause 67.1 of the Contract, the dispute that is set out in this Statement of Claim ('the Dispute')
34. The Engineer replied by a letter dated 19 June 2012 [and quotes from that letter] ...
35. By a letter dated 1 August 2012, MAN gave AWH a 'notice of intention to commence arbitration' in respect of the Dispute.
36. On16 November 2012, with no amicable settlement having been reached in respect of the Dispute [and they refer to the CMS Cameron McKenna letter to which I have just referred] ...
37: "On 23 May 2013 Ramsey J ordered that the President or a Vice-President of the London Court of International Arbitration (the 'LCIA') may appoint an arbitrator". And then the appointment was made on 6th September 2013. It then refers to the breaches, including the retention monies, related costs and other matters. Then the prayer sets out the relief they seek.

VI. Law

So far as the giving of a notice under the FIDIC 4^th Edition, the subject contract of this dispute, is concerned it seems to me that one should first of all cite from some historic authority as to how such notices were considered before coming to more up-to-date law and how, with that slightly older case law in mind, one can continue to construe a notice under the important part of a clause such as this. The well-known case of Monmouthshire County Council v Costelloe & Kemple, 17^th June 1965, the decision at 5 BLR p.87 of the Court of Appeal, Lord Denning MR, Harman and Winn LLJ. Lord Denning cited the clause 66 in this particular contract at p.87, in which the wording is again slightly different as I noted in a previous decision we looked at of His Honour Judge Seymour. It then refers at p.89 to the letter of 7^th April 1961 as to the decision and quotes what that letter said. It said: "With reference to your letter of 8^th March 1961, I enclose herewith my observations and comments on your claims numbered 1 to 11 … I cannot agree with or consider this claim". That is the detail of that letter under that particular contract.

Lord Denning, at p.90, says: "The third point is this: Did the engineer state his decision in writing and give notice of it? It is said by the Council that the engineer stated his decision in the letter of 7 April 1961. I do not think he did. The engineer does not purport to state a decision. He only makes observations and comments on all the 11 claims ... I do not regard the letter of 7 April 1961 as a decision on a dispute or difference, but merely as a rejection of claims. That means that clause 66 never came into operation at that time ...".

Lord Justice Harman, reviewing a similar matter, p.91, said this: "So far as the defendants are concerned, when you look at the letter of 12 April, in which they say in reply to the engineer: 'You will appreciate that under the relevant clauses of the general conditions of contract, once a dispute has arisen between a contractor and the engineer, the contractor must give notice that he wishes the matter to be dealt with under clause 66',
It is quite clear they did not consider that they had so far taken that step: in other words, they had made no reference to the engineer to act under that clause. There was no demur to that letter and I think that was the view of everybody at that time; and this notion that everything was decided in 1961 was rather an afterthought, though no doubt an honestly held one. The other consideration which moves me is this. This is a process by which the defendants can be deprived of their general rights at law and therefore one must construe it with some strictness as having a forfeiting effect. It is not a penal clause, but it must be construed against the person putting it forward who is, after all, trying to shut out the ordinary citizen's right to go to the courts to have his grievances ventilated. Therefore, I think it would require very clear words and a very clear decision by the appointed person, namely the engineer, to shut the defendants out of their rights. I agree they have been dilatory to a very blameworthy extent. I agree when they go to arbitration they may find they cannot get much satisfaction out of it, but it is another matter to say no ventilation of their grievances can be allowed because they had written a letter in 1961 which, to put it at its highest in the plaintiffs' favour, can be interpreted in two ways. In my judgment there is nothing here to exclude the appellants from their rights. It ought to have been declared that the letter of 12 April was not a decision within the meaning of clause 66 and the obligation to appoint an arbitrator had not in fact arisen until 1964 when the defendants did claim arbitration". Lord Justice Winn entirely agreed with both judgments.

I therefore come to the working through of those implied terms or, indeed, the Guide, as may be necessary, in terms of understanding this contract and what must be taken to have occurred. On this occasion I cite from Hudson's Building and Engineering Contracts, 12^th Edition, which provides a very similar approach and very similar set of cases to those that I have quoted in Keating. The view taken by these authors is simply this, and I quote from para.4.051: "So too cases of failure to appoint a new Certifier on the death or retirement of a predecessor. The prevention principle also has a positive side, since there is also a duty to do whatever may be necessary to enable the other party to perform their part of the contract". It then cites as a footnote there a decision from the well-known 4^th Edition of Hudson's Building and Engineering Contracts, the case of Kellett v New Mills UDC (1900). Reading on it then says this: "Thus, in the Panamena case, where the Certifier had, of his own initiative, taken a wrong view of his terms of reference and refused a certificate for that reason, the prevention principle was again in the forefront of Lord Thankerton's speech in the House of Lords, and, indeed, implicit in Goddard L.J.'s judgment in the Court of Appeal, quoted in sub-section (f) below ...". And it cites from those pages. It also there cites Perini v Commonwealth, supra, which was cited in Keating.

Under the heading "Interference" the matter is put in a slightly different way. I now read from para.4.053: "A second basis for invalidating certificates under the present heading arises, independently of breach of contract, under the prevention principle, namely that a person cannot take advantage of the non-fulfilment of a condition the performance of which they themselves have hindered". There it cites the case of Roberts v Bury, a decision of Blackburn J., but then reading on, in fact cites directly out of and no doubt borrowed from Lord Templeman from the decision of Ashhurst J. in Hotham v East India (1787) 1 Term R 638, p.645, and then goes on to indicate other authorities. So that is the approach in that textbook.

I also refer to Keating on Construction Contracts and there I cite 5.20 heading "Prevention by the employer": "But if the employer or its agent prevents the architect giving a certificate, the employer cannot rely on its absence, for 'no person can take advantage of the non-fulfilment of a condition the performance of which has been hindered by himself". There it cites Roberts v Bury, the decision of Blackburn J., Panamena v Frederick Leyland, supra. Further down it says this: "This may occur if the employer fails to call upon the architect or engineer to act where the employer knows that they are not acting in accordance with the contract. If the architect wrongly neglects, or deliberately, as a result of a mistaken view of their powers, refuses to issue a certificate and the employer concurs in their action and the contractor has done everything necessary for the issue of the certificate, the employer cannot take advantage of the absence of the certificate... Failure to appoint another surveyor would have absolved the contractor from the necessity of obtaining a certificate". Yet again citing Panamena and Kellett v New Mills in the 4^th Edition, Volume 2 of Hudson's Building and Engineering Contracts. Then 5.021, another example, under this heading "Death or incapacity of the certifier": "... it may be an implied term that the employer has a right to appoint a new architect. The right may also be a duty and failure to appoint a new architect a breach of contract by the employer entitling the contractor to damages. If there is no term express or implied providing for the appointment of a new architect, it is submitted that the employer cannot rely upon the absence of a certificate caused by the death or incapacity of the architect".

I thus come to Roberts v Bury Improvements, the heading of the case is "Building Contract, Construction of - Certificate of Architect - Party taking advantage of his own wrong". The decision in that case was read out by Kelly CB but in fact was a judgment of Blackburn and Mellor LLJs. I read briefly from p.325 indicating: "The contractor also, from the nature of works, could not begin his work until the commissioners and their architect had supplied plans and set out the land and given the necessary particulars; and therefore, in the absence of any express stipulation on the subject, there would be implied a contract on the part of the commissioners to do their part within a reasonable time; and, if they broke that implied contract, the contractor would have a cause of action against them for any damages he might sustain, and the commissioners would be precluded from taking advantage of any delay occasioned by their own breach of contract: for, it is a principle very well established at common law, that no person can take advantage of the non-fulfilment of a condition the performance of which has been hindered by himself; see Com. Dig. Condition".

So far as the decision of, as it was, a reversal of the name, from the Court of Appeal, that is Leyland v Panamena, the decision of Lord Justice Goddard, cited in Hudson and also I therefore cite it, it seems to be a well-known judge citing a simple and well-known, as I say, trite proposition of law. He says this: "I do not propose adding anything to what has been said by my Lord as to the construction of this contract as I am in entire agreement with him. The first question that arises is, can the defendants rely on the absence of a certificate from their surveyor, the production of which is a condition precedent to their liability to pay, when the absence of that certificate is due to a refusal by their surveyor to perform the duty assigned to him by the contract. It is and must be conceded that if a party desires to rely on the non-performance of a condition precedent he must do nothing to prevent the condition from being performed, and if there is anything that must be done by him to render possible the performance of the condition, a failure by him to do what is required disentitles him from insisting on performance of the condition.

The appointment of the surveyor in this case was to be made by the defendants, and they could appoint whom they liked. If they failed to appoint anyone, obviously they could not rely on the absence of a certificate. Equally, it seems to me, they must appoint someone who is willing to perform the duty assigned to him by the contract. If he will not or cannot perform that duty they must appoint someone who will. Here it is clear that Dr. Telfer refused to perform the simple duty of certifying whether the work was properly done, from the point of view of quality, because he took the view, and I will assume honestly, that the contract enabled and indeed required him to do something else and to concern himself with cost, with which he was in no way concerned and which was the business of the Costs Investigation Branch. He, therefore, was unwilling to carry out the duty assigned by the contract to him. The defendants either were of the same opinion or adopted his view; for this purpose it matters not which. Consequently they neither required him to certify in accordance with the contract nor did they appoint anyone else in his place. It is no answer for them to say that that was because they misinterpreted the contract. It is often the case that a person is guilty of a breach of contract because he has placed a wrong construction on it, but that affords him no defence".

The House of Lords decision of what was then Panamena v Leyland [1947] AC 428, this was a decision of Lord Thankerton sitting with Lord Porter, Lord Uthwatt and Lord Du Parcq. The particular clause was clause 7, which is quoted as being an obligation to pay for repairs on the first page of the report. In the headnote the fourth holding is: "that the repairers were entitled to recover that amount without producing a certificate of the surveyor in pursuance of cl.7".

So far as the judgment of Lord Thankerton is concerned, it is of course extremely well-known and therefore I cite some short parts of it. So far as relevant, at p.433, he indicates the background facts: "It will be convenient to state briefly the facts which gave rise to the present litigation. On February 13, 1942, the respondents wrote to the Costs Investigation Branch, to whom I will refer as the C.I.B., stating that their costs to February 3, 1942, amounted to 28,234l. 1s. 4d., to account of which they had received 19,000l., leaving a balance of 9.234l. 1s. 4d., and they asked the C.I.B. to certify this figure. On the same day they wrote to Dr. Telfer asking him to certify that the work had been carried out satisfactorily, and, in his reply dated February 14, 1942, Dr. Telfer asked for a list of work which the respondents wished him to certify and also for 'such information as to labour, materials, dock and cranage charges as to enable a rapid and accurate appreciation to be made of the position'. There is no dispute that this information was only required by Dr. Telfer because of the view held by him that his function of certification was not confined to passing the actual quality of the work done, but that he was also entitled to consider the manner in which the work had been carried out, and, in particular, whether there had been a reasonable economy in time, labour and materials. The respondents challenged this view of the construction of the clause of the contract, maintaining that Dr. Telfer's duty of certification was confined to questions of the quality of the work carried out. The appellants agreed with the view of Dr. Telfer, and it is the fact that Dr. Telfer and the appellants maintained that position up to and after the issue of the writ in the present action, Dr. Telfer declining to deal with the question of certification until the information asked for by him was forthcoming".

These now are, therefore, the key words that one quotes regularly from this case which, in its day, was taken to be a very important case and clarified any doubt as to how the law might have worked, in which this is said, and I now read from p.437 under IV, second paragraph: "This means that an illegitimate condition precedent to any consideration of the granting of a certificate was insisted on by Dr. Telfer and by the appellants. It is almost unnecessary to cite authority to establish that such conduct on the appellants' part absolved the respondents from the necessity of obtaining such a certificate, and that the respondents are entitled to recover the amount claimed in the action". He cites Hotham v East India Co. from Ashhurst J., and that is a quotation that follows:
"... in delivering the judgment of the court, said: 'It is unnecessary to say whether the clause relative to the certificate be a condition precedent or not; for granting it to be a condition precedent, yet the plaintiffs having taken all proper steps to obtain the certificate, and it being rendered impossible to be performed by the neglect and default of the company's agents, which the jury have found to be case, it is equal to performance. If it were necessary to cite any case for this, which is evidence from common sense, it was so held in Rolle's Abridgement 445, and many other books'. It is sufficient to add two short passages from the well-known case of Roberts v Bury Improvement Commissioners. Blackburn J. says: 'It is a principle very well established at common law, that no person can take advantage of the non-fulfilment of a condition the performance of which has been hindered by himself ... and Kelly C.B. says in reference to the failure of the defendants and their architects to supply plans and to set out the land necessary to enable the plaintiff to commence the works (4): 'The rule of law applies, which exonerates one of two contracting parties from the performance of a contract when the performance of it is prevented and rendered impossible by the wrongful act of the other contracting party.' If the appellants had taken the contrary view of their surveyor's function under cl.7, it would have been their duty to appoint another surveyor to discharge that function, and if they had refused to appoint another surveyor, the respondents would clearly have bene absolved from the necessity of obtaining the surveyor's certificate; the respondents are equally so absolved when the appellants' wrongful view of their surveyor's function under cl.7 prevents the appellants from obtaining the certificate. I agree with the view expressed on this point by Goddard L.J." Insofar as Lord Uthwatt was concerned, he agreed with that as did Lord Porter and Lord du Parcq.

VII Discussion