International Construction Law Review
INTRODUCTION
In the last issue we led with an article by Nick Henchie, a partner in Mayer Brown International LLP, on the effect on international construction of the present financial troubles. We continue the theme in this issue with our first paper by our co-editor, Professor Doug Jones AM, on “The Effects of the Credit Crunch: An Australian Perspective” (at page 397). The paper is based upon that delivered to the IBA Seventh Conference on Project Finance in April of this year. It is therefore of wide relevance and its “Australian Perspective” is an opportunity to consider in detail the effect not only on construction but also on many other projects of the decrease in the availability of finance. Professor Jones thus looks at the ramifications of the present situation as regards PPPs in Australia and in doing so he examines the fundamental elements of the credit crunch as it applies globally as well as the approaches of the state. Thus there is discussion of tendering, e.g., one tender, two stages and two parallel tenders, as well as government taking more of the risk than it would otherwise have done in various ways, such as underwriting or lending, etc. Equally the position of the contractor as financier is examined.
At page 414 Mr Christopher Seppälä writes about an interesting award made in ICC Arbitration No 10619. Extracts from the award have been published, together with the subsequent Final Award, in the Bulletin of the ICC International Court of Arbitration, Volume 19, No 2, page 85. The claimant contractor had sought an order for the respondent employer to pay provisionally amounts recognised as due by decision of the engineer given under clause 67 of the FIDIC Conditions of Contract, Fourth Edition, 1987 (the Red Book). It obtained an award to that effect (although payment of interest was not ordered). Since the tribunal specifically ordered provisional enforcement the award was provisional in nature. The grounds relied on by the employer for resisting such an award (which were not as full as might have been expected) and the reasons for the tribunal’s decision are set out in Mr Seppälä’s excellent paper. The contractor had given due notice of dissatisfaction with certain decisions because it considered that the engineer had not given it enough money and also because it was dissatisfied with extensions of time. However, the employer had not given any notice of dissatisfaction. Mr Seppälä discusses the implications of this decision, both for the 1987 edition of the FIDIC Red Book and for the latest edition in which the engineer will probably have been replaced by a Dispute Board. The article is well worth reading in detail. Some points arise from it for further discussion and debate. For example, Mr Seppälä is of the view that the effect of such an award in addition to providing protection against the employer’s insolvency (assuming the award was paid) would reverse the parties’ positions in the arbitration on the merits. In Case 10619 the contractor continued to claim more time and money than had been
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