ABS & Co is proud to have successfully represented Power Construction Corporation of China Limited (PCCCL) in a significant contractual dispute arising out of the Tarbela 5th Extension Hydropower Project, co-financed by the World Bank and AIIB.
The dispute concerned the Employer’s attempt to impose a large reduction in the contract price on the basis of alleged pricing errors. ABS & Co challenged the determination before the Dispute Avoidance and Adjudication Board (DAAB) and achieved a landmark victory for PCCCL.
In a decision believed to be the first of its kind under the FIDIC 2017 Red Book, the DAAB held that a contractor’s right to refer a dispute does not lapse simply because 42 days have passed since submitting a Notice of Dissatisfaction (NOD) – if no DAAB was in place at the time. The Board clarified that the 42-day period under the dispute resolution clause only begins once a DAAB is actually constituted, resolving a long-standing ambiguity in FIDIC’s procedural framework.
This unprecedented issue prompted the DAAB to seek an independent expert opinion from Mr. Christopher Seppälä, Legal Advisor to the FIDIC Contracts Committee, to guide its interpretation of the contract.
ABS & Co advanced several legal arguments on behalf of PCCCL, including:
- That the NOD was submitted on time (28 March 2022) following the Engineer’s Determination (25 March 2022), and the only reason a reference to the DAAB was not made within 42 days was because no DAAB existed at that time;
- That Sub-Clause 21.4 (regarding referral deadlines) cannot apply where no DAAB is in place, and in such cases Sub-Clause 21.8 becomes operative, preserving the contractor’s rights;
- That the FIDIC 2017 Red Book is silent on how to proceed when a DAAB is constituted after the 42-day period – creating ambiguity that must be resolved in accordance with established contractual interpretation principles, including the contra proferentem rule;
- That the DAAB Procedural Rules empower the Board to determine its own jurisdiction, and that the contract must be interpreted in a way that furthers the objectives of the DAAB – namely, efficiency, fairness, and access to adjudication.
This comprehensive approach proved decisive.
James Perry, Chair of the DAAB and a leading authority on FIDIC contracts, acknowledged this as a landmark ruling – one that resolves a significant legal uncertainty in international construction contracts governed by FIDIC’s 2017 Redbook. Given the novel question involved in the matter, DAAB (comprising of James Perry, Engr. Mushtaq Ahmad Smore and Engr. Mian Abdul Sattar) had appointed Mr. Christopher Seppälä, pursuant to the DAAB’s powers under Rule 5(d) to provide an expert opinion on the matter. The position taken by Seppälä was consistent with the position taken by ABS.
This decision sets a major precedent that will influence how future FIDIC-based disputes are resolved, particularly governing situations under the 2017 Red Book where DAAB has not been constituted. It is now clear that even if DAAB has not been constituted by the parties, the time-bar contained in Sub-Clause 21.4 to refer a matter to DAAB within 42 of the NoD would not apply to render the NoD invalid. If the DAAB is subsequently constituted many months later and the reference to DAAB on the same dispute is made after 42 days of DAAB’s constitution, the reference would not be time-barred and DAAB would retain jurisdiction to adjudicate upon the matter-
The matter was led by Bakhtawar Bilal Soofi who presented the Contractor’s position before DAAB. The legal team drew on ABS & Co’s deep expertise in construction disputes and infrastructure contracts, integrating both procedural and technical arguments to advance the Claimant’s case.
ABS & Co is consistently ranked in Band 1 for Construction Disputes by The Legal 500, and this result adds to the firm’s growing portfolio of successful outcomes in large-scale construction projects.
