Obrascon Huarte Lain S.A. (trading as OHL Internacional) v Qatar Foundation for Education, Science and Community Development
| Jurisdiction | England & Wales |
| Judge | Mr Justice Butcher |
| Judgment Date | 24 June 2020 |
| Neutral Citation | [2020] EWHC 1643 (Comm) |
| Date | 24 June 2020 |
| Docket Number | Case No: CL-2019-000214 |
| Court | Queen's Bench Division (Commercial Court) |
[2020] EWHC 1643 (Comm)
Mr Justice Butcher
Case No: CL-2019-000214
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
IN AN ARBITRATION CLAIM
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Roger Ter Haar QC and Siddharth Dhar (instructed by Shearman & Sterling LLP) for the Claimant
Simon Lofthouse QC and Zulfikar Khayum (instructed by Quinn Emanuel Urquhart & Sullivan LLP) for the Defendant
Hearing dates: 3 and 4 June 2020
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
The underlying dispute between the parties relates to the construction of a very substantial hospital complex in Doha, Qatar. The Claimants, to whom I will refer as ‘the JV’ were the contractors on behalf of the Defendant, which I will call ‘the Foundation’.
There are for determination applications by the JV under ss. 67 and 68(2)(b) of the Arbitration Act 1996 (‘the Arbitration Act’). These seek the setting aside of paragraphs of an Addendum dated 5 March 2019 (‘the Addendum’) issued by an ICC tribunal consisting of Sir Stanley Burnton, Richard Fernyhough QC and Richard Wilmot-Smith QC (‘the Tribunal’) in respect of its Fourth Partial Award dated 21 November 2018 (‘the Fourth Partial Award’).
The Disputes and the Award
The contract for the construction of the hospital complex was signed in 2009, and the original Contract Price was approximately £1.8 billion. A large number of disputes have arisen between the parties. On 22 July 2014, the Foundation served a Notice of Termination, by which it terminated, or purported to terminate, the contract. The Foundation commenced ICC arbitration the next day. Amongst the numerous disputes that emerged during the project, the JV sought an extension of time for the completion of the works, and associated prolongation costs. This was of potential significance in at least two respects. First, for such periods of delay for which the JV was entitled to extensions of time, it would have a corresponding entitlement to the costs of having its attendance on the project prolonged. Secondly, the grant of extensions of time would operate to reduce its potential liability for liquidated damages under the contract.
The parties disagreed as to the extent, causes and consequences of delays in the construction of three aspects of the construction of the complex, namely (1) the Hospital Building, (2) an Outpatient Clinic and Underground Car Park, and (3) a Multi-Storey Car Park, At Grade Parking and External Works. The claims were analysed by the parties by reference to defined periods of time, referred to as ‘Windows’.
There was a hearing in relation to the JV's claims for extensions of time and prolongation costs in April and May 2018, over a period of some five weeks. There were further closing arguments in June 2018. The Fourth Partial Award was issued on 21 November 2018. In the Fourth Partial Award, the Tribunal:
(1) Declared that the JV was entitled to extensions of time in relation to the Hospital Building in respect of Window 1 (of 225 days) and 2 (of 121 days), with recovery of prolongation costs, but not in respect of Windows 3 or 4.
(2) Declared that the JV was entitled to extensions of time in relation to the Outpatients' Clinic in respect of Windows 1 and 2 (369 days), with recovery of prolongation costs, but not in respect of Windows 3 or 4.
(3) Declared that the JV was entitled to an extension of time of 371 days in relation to the Multi-Storey Car Park, with recovery of prolongation costs.
(4) Declared that the Foundation had lawfully terminated the contract for default, and was entitled to make calls on a Performance Guarantee and an Advance Payment Guarantee.
(5) Declared that the total progress value of the claims for variations in respect of which the JV was entitled to payment was QAR 181,956,723.60.
Applications under Article 35 of the ICC Rules
On 21 December 2018 both the JV and the Foundation served applications under Article 35 of the ICC Rules (the 2012 Rules, being the Rules applicable at the beginning of the arbitration) in respect of the Fourth Partial Award.
Article 35 of the ICC Rules is, insofar as material, in these terms:
‘1. On its own initiative, the arbitral tribunal may correct a clerical, computational or typographical error, or any errors of similar nature contained in an award, provided such correction is submitted for approval to the Court within 30 days of the date of such award.
2. Any application of a party for the correction of an error of the kind referred to in Article 35(1), or for the interpretation of an award, must be made to the Secretariat within 30 days of the receipt of the award by such party, in a number of copies as stated in Article 3(1). After transmittal of the application to the arbitral tribunal, the latter shall grant the other party a short time limit, normally not exceeding 30 days, from the receipt of the application by that party, to submit any comments thereon. The arbitral tribunal shall submit its decision on the application in draft form to the Court not later than 30 days following the expiration of the time limit for the receipt of any comments from the other party or within such other period as the Court may decide.
3. A decision to correct or to interpret the award shall take the form of an addendum and shall constitute part of the award. …’
Part of the Foundation's application under Article 35 was as follows:
‘[32] The Award does not address [the Foundation's] submissions as to the proper interpretation of Article 14 of the GCOC [which was a provision in relation to notification of claims for extension/prolongation costs] …
[33] In particular, the Award does not deal with the submissions that:
[33.1] Any entitlement to prolongation costs pursuant to Article 14.2 of the GCOC is limited to prolongation costs resulting from a change directed by [the Foundation].
[33.2] Any entitlement to prolongation costs pursuant to Article 14.2 is also subject to compliance with all relevant provisions of Article 14 of the GCOC and Appendix D to the Contract.
[34] In its opening submissions for the April 2018 hearing, the [Foundation] noted that notice was a prerequisite to an entitlement to an extension of time.’
The Foundation's Article 35 application continued:
‘[43] In light of the matters set out above, the [Foundation] respectfully requests corrections to paragraphs 246, 261, 352, 353, 379, 393, 401 and 1003(1), (2), (4) and (5) of the Award. The corrections sought are for those paragraphs of the Award to reflect a dismissal of the Respondents' claim for prolongation costs. Alternatively, the Claimant seeks an interpretation of the Award to make clear that any findings made to date are subject to addressing the arguments set out above which will be considered at a subsequent hearing.
[44] The [Foundation] notes that this division of elements of entitlement is consistent with other aspects of the dispute. In relation to termination, defects were addressed in 3 separate awards, firstly whether the defects could be relied on for termination in that they were properly notified, secondly whether the defect existed and if it existed at the relevant dates and finally whether the defect justified termination.
[45] In the premises where the Tribunal concludes that the claims for prolongation and disruption cannot be dismissed by way of interpretation or correction, the correct approach (indeed the only approach) is to correct or provide interpretation to the statements of entitlement to time and money to make clear that this is subject to addressing the arguments set out above which will be addressed at a subsequent hearing….’
The Addendum
Following the parties' submissions, the Tribunal issued the Addendum to the Fourth Partial Award on 5 March 2019. In the Addendum, the Tribunal began by considering the principles applicable to applications under Article 35.2 of the ICC Rules. The Tribunal said this:
‘[11] The provision for correction of the award is not aimed at substantive matters or at dealing with an interpretation of the award. The classic problems are a failure to insert a ‘not’ before a verb, or where it is evident that the award should read ‘claimant’ instead of ‘respondent’, or where the figures in the dispositive either do not add up or do not correspond to those in the discussion part of the award.
[12] The authorities (see Gannet Shipping Ltd v Eastrade Commodities [2001] EWHC Comm 483 at paragraph 24) draw distinctions between errors affecting the expression of the Tribunal's thought (which can be corrected) and errors in the Tribunal's thought process (which cannot). Corrections to reflect ‘second thoughts’ are impermissible.
[13] The purpose of giving the Tribunal the power to interpret the award under Article 35(2) of the ICC Rules is to permit the clarification of an award so as to allow its correct execution by the parties:
It is not to be used to require the tribunal to explain, or to reformulate, its reasons. It does not provide an occasion for the reconsideration of the tribunal's decision. Should this be the basis of the parties' application, the tribunal will be quite justified in finding it unnecessary or inappropriate to render the requested interpretation …
Interpretation thus consists of eliminating any ambiguities or uncertainties, if any, and clarifying the genuine meaning of the decision without modifying it. In other words, interpretation...
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