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Award

GLOSSARY
BQ or BoQ Bill of Quantities, forming part of the Contract
CPA Conditions of Particular Application, forming part of the Contract
C-Legal Grounds Claimant’s Submission on Legal Grounds, dated 31 May 2011
C-PHB Claimant’s Post Hearing Brief, dated 20 February 2012
EOT Extension of Time
C-SoC Claimant’s Statement of Claim, dated 15 March 2010
GCC General Conditions of Contract, forming part of the Contract
Joint Expert Report Joint Report of the Quantum Experts (Mr Kennedy and Mr Taft), dated 19 December 2011 (also referred to as Schott Schedule)
JOC Japan Overseas Consultants Co. Ltd, the Engineer
KCC Kyrgyz Civil Code
Kennedy I Expert Report by Mr William Kennedy (quantum expert), dated 9 March 2010 and produced with the SoC
Kennedy II Rebuttal (Quantum) Report by Mr Kennedy, produced on 27 September 2011 (Kennedy Reply Report)
Kennedy IV Final Report by Mr Kennedy, dated 18 January 2012 and produced xxx
Marshall I Reply Expert Report by Mr John Marshall (delay expert), dated 15 August 2011 and produced by the Respondent on 24 August 2011
Marshall II Report on Matters of Programme and Delay, comments on the Response of Mr Wiseman (Wiseman (III), dated 10 October 2011 and produced on 11 October 2011 by email only
Marshall III "Final Report" on matters of programme and delay by Mr Marshall, dated 29 November 2011 and produced xxxxx
Minutes of Contract Negotiations Minutes of Contract Negotiations with ENTES Company of August 1999 and attached to the Letter of Acceptance of 6 August 1999
P&M Plant and Machinery, referred to in particular in the context of the quantification of delay costs where reference also is made to Machinery and Equipment
R-PHB Final Submission of the Respondent, dated 20 February 2012
R-Rejoinder Rejoinder of the Respondent, dated 29 July 2011
Scott Schedule see Joint Expert Report
SoC The Claimant’s Statement of Claim, 15 March 2010
SoD Statement of Defence, 31 March 2011
Wiseman I Expert Report by Mr Bryn G. Wiseman (delay expert), dated 10 March 2010 and produced with the SoC (Hill International)
Wiseman II Revised Expert Report by Mr Wiseman, dated 22 June 2011 and produced by the Claimant on 1 July 2011
Wiseman III Rebuttal Report of Mr Wiseman, dated 26 September 2011, produced by the Claimant on 27 September 2011

Wiseman IV [forms part of the Joint Expert Report?] Supplemental
Taft I Report by Mr Wiseman, dated 19 December 2011 and produced xxxx Reply Expert Report by Mr Georges Taft (quantum expert),
Taft II dated 22 August 2011, produced by the Respondent on 24 August 2011 Comments on the Response of Mr Kennedy (Kennedy II),
Taft III dated 11 October 2011 and produced on that day by email only Final Quantum Report by Mr Taft, dated 19 December
Taft IV 2011 and produced xxxxx "Addendum I - Adjustments" to Mr Taft’s report of 19
Tr December 2011, daed 20 January 2012 and produced by the Respondent on 20 March 2012 Transcript of the Hearing in Bishkek from 18 to 21
October 2011, indicating the page number

1. INTRODUCTION

1.
This arbitration arose out of a Contract concluded on 30 August 1999 between ENTES Industrial Plants Construction & Erection Contracting Co. Inc., acting as the Contractor, and Claimant in the present proceedings, on the one hand and the Ministry of Transport and Communications of the Kyrgyz Republic, acting as the Employer, and Respondent in these proceedings, on the other hand.
2.
The Contract concerned the Second Road Rehabilitation Project Bishkek - Osh Road Civil works. It required that the Contractor rehabilitate two road sections of the Bishkek-Osh Road in the Kyrgyz Republic. The total Contract Price was US$43'839'882 plus 20% VAT in the amount of US$8'767'976.40.1 The project was funded by a loan of the Overseas Economic Cooperation Fund of Japan.
3.
The contractual Time for Completion was 1'065 days with 3 December 2002 as completion date. The works were seriously delayed and completed only on 12 October 2005, 1043 days later than provided in the Contract. During the performance of the works, the Contractor made 5 extensions of time (EOT) requests which were partially granted.
4.
At the end of the Project, in the Statement at Completion, the Contractor claimed for the cost of the prolongation in an amount of US$22'982'039.25.2 In his Determination of 18 May 2006, the Engineer decided that all 1043 days were "excusable"; he found that out of these only 150 days were "compensable" and granted US$1'161'870.19.
5.
In the Statement at Completion, the Contractor also claimed additional compensation for a number of specific incidents which the Engineer granted partially.
6.
The Contractor expressed dissatisfaction with the Engineer’s Determination and requested an Engineer’s Decision. This decision was issued on 16 October 2006 and confirmed the Engineer’s Determination.
7.
The arbitration was commenced by a Notice of Arbitration dated 15 January 2009. The Notice of Arbitration was communicated to the arbitrators on 31 July 2009. The Respondent sent Preliminary Comments on 21 August 2009. After consultations with the Parties about a draft Procedural Calendar and Outline Directions, including also financial conditions sent on 14 December 2009, the constitution of the Tribunal was completed and the directions issued on 22 December 2009.
8.
The time limits set out in the procedural calendar had to be extended at several occasions, due to extensions requested by the Claimant, change in Government and suspension of powers of Counsel on the Respondent’s side. Following the submission of the Statement of Claim on 15 March 2010 and the Statement of Defence on 31 March 2011, accompanied by large volumes of documentary evidence, expert reports and witness statements, the Tribunal held a Procedural Consultation by telephone on 27 April 2011 and gave further directions, concerning written submissions and an evidentiary hearing.
9.
After a further Procedural Consultation by telephone on 6 September 2011, an evidentiary hearing was held from 18 to 21 October 2011 in Bishkek.
10.
The Parties submitted further expert reports and Post-Hearing Briefs on 20 February 2012, followed by subsequent correspondence and claims for arbitration costs submitted in February 2015.
11.
The Tribunal deliberated in person at the end of the hearing in Bishkek and by correspondence. It adopted this award unanimously.
12.
The Tribunal and in particular the Presiding Arbitrator regret that, due to a number of unusual events during the course of the proceedings, the extraordinary factual complexity especially of the principal claim for Prolongation Costs and other circumstances delaying its work, this Final Award is rendered later than the Tribunal had hoped.

2. THE PARTIES AND THE ARBITRAL TRIBUNAL

2.1 The Claimant

13.
The Claimant, ENTES INDUSTRIAL PLANTS CONSTRUCTION & ERECTION CONTRACTING CO. INC. ("the Claimant", "the Contractor" or "Entes"), is a company organised under the laws of the Turkey, having its seat at Büyükdere CAD. NO: 107/5 Bengün Han Gayrettepe - Istanbul, Turkey.
14.
The Claimant was represented in this arbitration by Professor Dr Ziya AKINCI of the Akinci Law Office, Bebek Mahallesi Seljuk Sok. No: 4, Bebek 34342 Istanbul, Turkey.

2.2 The Respondent

15.
The Respondent is THE MINISTRY OF TRANSPORT AND COMMUNICATIONS OF THE KYRGYZ REPUBLIC ("the Respondent", "the Employer", "The Ministry of Transport or simply "The Ministry").
16.
In these proceedings the Respondent was represented, with interruptions due to the events in 2010, by Ms Mirgul Smanalieva of the Partner Law Firm, 25-2, Isanov Str., Bishkek, Kyrgyz Republic, 720017.
17.
On 26 February 2015, Ms Smanalieva informed the Tribunal that she no longer represented the Respondent. Subsequent correspondence from the Respondent emanated from the Ministry. On 25 March 2015, upon an enquiry from the Presiding Arbitrator, the Respondent confirmed on 25 March 2015 that further correspondence had to be sent to the email addresses of mtk@mtk.gov.kg and piumotckr@gmail.com (Mr N. Jumaliev, Director of IDB IPIG, Ministry of Transport and Communication of the Kyrgyz Republic).
18.
The Claimant and the Respondent are jointly referred to as "the Parties".

2.3 The Arbitral Tribunal

19.
The Arbitral Tribunal is composed of the following members:
20.
At the request of the Claimant dated 29 December 2008, the Secretary General of the Permanent Court of Arbitration at The Hague designated on 9 April 2009 as Appointing Authority Mr Jan Paulsson, then Partner Freshfields Bruckhaus Deringer LLP, 2 rue Paul Cézanne, 75008 Paris.
21.
Professor Turgut Oz, Kültür Üniversitesi Hukuk Fakültesi Medeni Hukuk, Anabildim Dali Sirinevler Kampüsü, E-5 üzeri, Sirinevler-Istanbul, Turkey, was appointed by the Claimant on 4 April 2009.
22.
Professor Sergei Lebedev, Staroalexeevskaya 16/49, 129626 Moscow, Russia, was appointed on 11 May 2009 on behalf of the Respondent by Mr Jan Paulsson, acting as Appointing Authority.
23.
Michael E. Schneider of LALIVE, rue de la Mairie 35, 1211 Geneva 6, Switzerland, chosen by the Co-arbitrators as Presiding Arbitrator and informed the Parties on 6 July 2009 that he accepted to act in this function.

3. THE FACTS OF THE DISPUTE

3.1 The Project and the Contract

24.
In the beginning of the nineteen-nineties (1990's), the Government of Kyrgyzstan decided to rehabilitate the Bishkek-Osh Road (the "Project"). This road is some 620 km long and traverses the Tien Chan Mountains. It connects Bishkek and Osh, the two largest cities in the Kyrgyz Republic.
25.
The funding of the Project was provided by a loan agreement between the Government of Kyrgyzstan and the Overseas Economic Cooperation Fund of Japan.
26.
Proceeding by way of public tender, the Respondent awarded the implementation of the Project to the Claimant. The contract for this implementation was concluded on 30 August 1999 (the "Contract"), with the Employer acting through its Project Implementation Unit (PIU).
27.
The Contract, produced as Exhibit C-1, consists of a number of documents, listed in the Form of Agreement, and of which the most important documents for the purposes of the Arbitration are:

(i) The Letter of Acceptance and Minutes of Contract Negotiations;

(ii) The bid by the Contractor;

(iii) Conditions of Particular Application (CPA);

(iv) General Conditions of Contract (GCC);

(v) Special Specifications;

(vi) General Specifications;

(vii) Special Requirements; and

(viii) The Priced Bill of Quantities.

28.
The Special Specifications described the location of the Works as follows:

"The Works are located roughly south-west of Bishkek in a mountainous area of the Tien Shan range with elevations ranging from about 1000 m to 2200 m. The terrain is mountainous and much of the road alignment is tortuous having numerous tight curves and steep gradients."3

29.
The rehabilitation and improvement work of the road included the carriageway, shoulders, slope stability, drainage system, structures and road furniture as well as the construction of new alignments in some sections.4 This scope of work required the repair of many of the existing bridges and widening them to accommodate the full width of the road. The road rehabilitation included provision and installation of new kilometre posts and traffic signs as well as the installation of road safety features such as road markings, steel guard rails and concrete parapets.5 The Works also included the rehabilitation of two short tunnels.
30.
The Works were divided into Section A (km 248-325) and Section B (km 361-412).6
31.
The Contract provides that the "law is that in force in the Kyrgyz Republic"7 and the settlement of disputes by UNCITRAL arbitration in Bishkek.8
32.
The GCC are a reproduction of the FIDIC Civil Engineering Conditions. Japan Overseas Consultants Co. Ltd was appointed as the Engineer,9 acting in the role which these conditions confer on the Engineer. The duties and authority of the Engineer and the Engineer’s Representative are defined in particular in Clause 2.1 CPA.
33.
The Parties concluded four Addenda, two on 15 and 23 May 2003 respectively and two on 15 December 2003, dealing with a variety of subjects, including extensions of time and additional payments.

3.2 Difficulties during the Performance of the Works

34.
During the performance of the Works a number of difficulties arose which caused delay and additional costs. The Contractor claimed for extensions of time to compensate these delays and for additional costs. Some of these claims were recognised and accepted by the Engineer and the Employer; others were not and form part of the issues in this arbitration.
35.
The difficulties on which the Contractor relied in his claims concerned a wide variety of causes, ranging from design changes, additional works and late instructions, shortages of materials, in particular petroleum products, inclement weather in particular harsh winters and political unrest, in particular the "Tulip Revolution" in March - April 2005.
36.
The principal claim in this respect is that for the costs of prolongation, discussed in detail below in chapter 8. In addition, there are a number of specific events on which the Claimant relies in this arbitration. They include the following:
37.
Damage caused in the context of political unrest, specifically a claim for US$ 39'490 for damage to the Contractor’s equipment and plant, specifically a grader. Other claims concerned road and emergency taxes, VAT, disputes with sub-contractors and delayed payments. The claims relating to these issues will be considered separately under the heading of the respective claim.

3.3 The Time for Completion, Delay and Time Extensions

38.
The Engineer issued the Notice to Proceed on 25 December 199910 and work started on 3 January 2000. The work programme was submitted to the Employer and the Engineer on 19 January 2000, and was approved by the Engineer on 22 January 2000.11
39.
The contractual Time for Completion was 1'065 days12 with the completion date being 3 December 2002.
40.
The Project suffered delay and the Works were completed only on 12 October 2005, i.e. an overall delay of 1'043 days. The Contractor applied for altogether five extensions of the time for completion (EOT claims) and was granted some such extensions consisting overall of 637 days, bringing the completion date to 28 September 2005. They may be summarised as follows:
41.
EOT 1 was requested on 25 July 2007 and concerned delays during the period between 3 January 2000 and 30 June 2002 for which the Contractor invoked Clause 44.1 GCC.13 On 17 September 2002, the Engineer granted the Contractor an extension of 83 days.14
42.
EOT 2 was requested in early 200315 and concerned the period between 1 July 2002 and 3 December 2002. On 28 April 2003, the Contractor terminated the Contract. This was followed by negotiations in May 2003 which led to Addendum N° 1, concluded on 15 May 2003 which, inter alia, granted an extension of the time for completion by 152 days, bringing the revised completion date to 15 August 2004.16
43.
EOT 3 was requested on 31 October 2003.17 It concerned the period between 1 April 2003 and 15 October 2003. The request was dealt with in Addendum N° 4, which granted the Contractor an extension of 180 days18 and brought the contractual completion dated to 20 November 2004.
44.
EOT 4 was requested on 8 September 200419 and concerned the period between 15 October 2003 and 12 August 2004. On 27 December 2004, the Engineer granted 94 days, bringing the contractual completion date to 23 May 2005.20
45.
EOT 5 was requested on 23 June 2005.21 It concerned the period between 13 August 2004 and 23 May 2005. On 13 July 2005, the Engineer granted an extension of 128 days,22 bringing the contractual completion date to 28 September 2005.

3.4 Completion, Taking Over and the Statement of Completion

46.
The Works were completed and taken over by the Employer in subsections. The Taking Over Certificates were issued as follows:

• On 07 November 2003 for Sub-section 1;

• On 07 November 2003 for Sub-section 2;

• On 07 November 2003 for Sub-section 3;

• On 07 November 2003 for Sub-section 4;

• On 07 November 2003 for Sub-section 5;

• On 18 December 2003 for Sub-section 6;

• On 18 December 2003 for Sub-section 7;

• On 23 July 2005 for Sub-section 8; and

• On 24 October 2005 for Sub-section 9.23

47.
After the last Section had been taken over, the Contractor submitted the Statement at Completion on 17 March 2006. According to Clause 60.10 CPA, this statement must be submitted by the Contractor to the Engineer not later than 84 days after the issue of the Taking-Over Certificate in respect of the whole of the Works. The Employer had extended the time for this submission;24 but the question whether the submission was timely remained controversial.
48.
In the Statement at Completion, part B, the Contractor claimed compensation in the amount of US$ 24'532'304.24; by far the largest part of this claim concerns costs for delay.
49.
On 18 May 2005, the Engineer issued its Determination on Part B of the Statement at Completion and awarded US$ 1'187'035.20.25
50.
On 7 June 2006, the Contractor expressed dissatisfaction with the Engineer’s Determination.26 The Contractor then requested on 20 June 2006 a Decision of the Engineer according to Clause 67.1 GCC.27
51.
The Engineer’s Decision under Clause 67.1 GCC was given on 16 October 2006. On 22 December 2006, the Contractor gave notice to the Employer, with a copy to the Engineer, of his intention to commence arbitration.28

4. THE ARBITRATION PROCEEDINGS

52.
The arbitration proceedings were initiated by the Claimant’s Notice of Arbitration, sent to the Respondent on 15 January 2009. The Arbitral Tribunal was formed as described above in Section 2.3 of this Award.
53.
During the course of the Tribunal’s constitution, the Arbitrators received the Notice of Arbitration on 31 July 2009. They then invited the Respondent to comment. The Respondent did so in the form of Preliminary Comments to the Claimant’s Notice of Arbitration submitted on 21 August 2009.
54.
In consultation with the Parties, the Arbitral Tribunal established on 22 December 2009 the Procedural Calendar and Directions, providing for the following steps:
55.
A Statement of Claim, scheduled for 15 February 2010 and a Statement of Defence, scheduled for 15 June 2010; each of these submissions had to be accompanied by documentary evidence, nomination of any witnesses together with a summary of the testimony on alleged facts as well as any expert reports. The Procedural Calendar provided for a procedural consultation after this first exchange of written submissions, at which the need for further written submissions and the arrangements for the evidentiary hearing would be discussed. The Tribunal reserved the possibility of appointing a secretary and a technical expert, subject to prior consultation about the person chosen and the financial conditions. In the same document, the financial conditions of the Tribunal’s activity were set out (see below Section 8 the Costs of the Arbitration).
56.
By letters dated 22 January 2010 and 2 February 2010, the Claimant requested a one-month extension of the time for submitting its Detailed Statement of Claim. The Tribunal granted the request and updated the Procedural Calendar and Directions on 10 February 2010. In this Update 1, the Tribunal also extended the time for the Respondent’s Statement of Defence to 16 August 2010.
57.
On 15 March 2010, the Claimant filed its Statement of Claim, accompanied by two folders of exhibits, an Expert Reports by Mr William Kennedy and Mr Bryn Wiseman of Hill International in 8 volumes including a large number of documents and Witness Statements of Mr Murat Ozkoseoglu, Mr Ahmet Alp and Mr Nuri Asman together with further exhibits.
58.
On 14 April 2010 the Respondent’s counsel wrote to the Tribunal and, referring to events in Kyrgyzstan, explained "Current events are terrible, as practically all population suffers". After providing further details about the events in the country, she added that the Interim Government had announced a six months period during which "a new Constitution would be passed, parliamentary elections would be held and a new Government would be designated. Accordingly, the new Minister of Transport will be designated". Since the Minister who had issued the power of attorney to her law firm "was dismissed", Counsel explained that these powers are "invalid at present time" and her firm was not authorised to represent the Respondent. She requested "to postpone the proceedings for a period not less than 6 months, at least until the formation of new Government and obtaining of authorities (power of attorney) on representation of interests of the Respondent".
59.
The Tribunal expressed its sympathy with the Kyrgyz people and invited further information about the Respondent’s representation.
60.
Respondent’s counsel explained on 6 May 2010 that it had addressed itself to the acting Minister of Transport and Communications with the "request to consider the issue of confirmation of our authorities to continue representation of interests of the Respondent in the arbitration".
61.
The Respondent’s counsel provided further explanations by letters dated 18 and 27 May 2010, stating that their authorization had not yet been confirmed.
62.
In a number of subsequent letters the Respondent’s counsel informed the Arbitral Tribunal that, despite its interventions, no powers to act on behalf of the Ministry had been conferred to it.
63.
On 1 July 2010, the Partner Law Firm informed the Tribunal that it had received an "interim response from the Ministry of Transport". Attached to the Letter of the Partner Law Firm was a letter that had been addressed on 28 June 2010 to the Partner Law Firm by the Secretary of State of the Ministry of Transport and Communications of the Kyrgyz Republic. Based on this letter, the Partner Law Firm informed the Tribunal that its "authorization is still in process of the coordination". It announced that the question of its authorization will be "decided after the formation of the Government KR, i.e. not earlier than October 2010".
64.
On 22 October 2010, the Tribunal wrote to the Partner Law Firm, summarised the correspondence concerning the Respondent’s representation and continued:

"October has come, the elections have taken place and no further information from the Respondent or the Partner Law Firm has been received by the Arbitral Tribunal.

From earlier communications the Arbitral Tribunal concludes that the Claimant wishes to proceed with the arbitration.

The Arbitral Tribunal now invites the Partner Law Firm to inform it by Monday 1st November 2010

(i) whether its power of attorney to act for the Kyrgyz Republic in the present arbitration has been restored; or

(ii) if this has not been the case, whether, apart from or in place of the Secretary of State in the Ministry of Transport and Communications, there is any other authority acting on behalf of the Kyrgyz Republic in the present arbitration.

Upon receipt of this response or if no response is received by the 1st November 2010 the Claimant is invited to inform the Tribunal how it wishes to proceed further in the arbitration."

65.
On 28 October 2010 the Partner Law Firm informed the Arbitral Tribunal that its powers had not been restored. It explained that the election results had not been declared yet and no new government had been formed. It added: the Ministry "can not independently solve the issue on hiring of 'Partner' Law Firm for representation of its interest in arbitration...".
66.
The Tribunal invited the Claimant to state how it wished to proceed. After further correspondence, the Claimant communicated to the Tribunal the Ministry’s precise address for communication. On 20 December 2010 the Claimant informed the Tribunal that Mr Erkin Isakov who had been Head of the Project Implementation Unit remained Minister of Transportation and Communication.
67.
The Tribunal then addressed itself on 23 December 2010 to the Parties, including Mr Erkin Isakov, Minister of Transport and Communication of the Kyrgyz Republic, summarising the procedure in the arbitration and granted the Respondent a last extension until 31 January 2011 for filing the Statement of Defence as set out in the Procedural Calendar and Directions. The Tribunal also consulted the Parties about dates for a procedural consultation after the filing of the Statement of Defence.
68.
In response the Partner Law Firm informed the Tribunal on 30 December 2010 that its powers to represent the Ministry in this arbitration had been restored. In the same letter, the Respondent’s counsel requested an extension of time for the submission of the Statement of Defence until 28 April 2011.
69.
The Claimant objected to the requested extension. After further correspondence, the Arbitral Tribunal extended the time limit for the submission of the Respondent’s Statement of Defence until 31 March 2011.
70.
On 31 March 2011, the Respondent filed its Statement of Defence, together with one folder of documentary evidence. It named Mr Zhumaliev Nurbek Omurbekovich as witness, without further indication about the subject matter of its testimony.
71.
The Tribunal then convened a Procedural Consultation by telephone on 27 April 2011 in order "to provide the Parties and the Tribunal with an opportunity, after the first exchange of written pleadings, to consider the scope of the dispute and to focus further on proceedings". In addition to the members of the Tribunal, the following persons participated in this consultation: On the Claimant’s side as Counsel: Professor Ziya Akinci, Dr Cemille Demir Gokyayla, Ms Fatma Huseyin and Mr Sercan Kulaksizogullari and from Entes: Mr Ahmet Alp, Mr Murat Ozkoseoglu and Mr Nuri Asman; on the Respondent’s side as Counsel: Ms Mirgul Smanalieva, Ms Begaim Kaibyldaeva and Mr Vitaliy Khabarov.
72.
In preparation of the consultation, the Arbitral Tribunal had prepared a note with Observations and Questions for Consideration. In that note, the Tribunal had identified issues and questions which arose from a preliminary examination of the case, as it presented itself after the first exchange of written submissions.
73.
At the Procedural Consultation it was agreed that the Claimant would be authorised to make Submissions on Legal Grounds and the Respondent a Complementary Submission. It was also agreed that the Claimant would present the documents attached to the expert report of Hill International in a form that can be referenced and consulted. The Respondent was invited to present a witness statement by Mr Omurbekovoch and was given the opportunity of a response to the expert report presented by the Claimant.
74.
The Tribunal also discussed with the Parties their availability for an evidentiary hearing. Since the Respondent was not available before September 2011 and the Claimant not before October 2011, the hearing was fixed for the time from 18 to 21 October 2011. Differences arose with respect to the venue of the hearing, in particular relating to concerns about the attendance of the Claimant’s witnesses. The decision on the venue was reserved.
75.
The Tribunal submitted to the Parties Summary Minutes of the Procedural Consultation in draft form on 4 May 2011. After having received and considered the Parties’ comments on this draft, the Tribunal sent the final version signed by the Presiding Arbitrator with its letter of 6 July 2011.
76.
As agreed at the Procedural Consultation, the Respondent sent on 3 May 2011 the Kyrgyz Civil Code in Russian and in an "unofficial" English translation to the Claimant and the members of the Tribunal. The Claimant contested the accuracy of this English translation on 17 May 2011, stating that the "English versions of the Civil Code (both part 1 and part 2) are not effective and do not contain all the amendments"; attached to this letter were a number of articles from the Civil Code in Russian and the contested version of the Respondent’s translation. The Claimant requested that the Parties be informed of the Articles of the Code "which may be examined/referred, so that the applicable version and correct translation is presented". The Respondent replied on 24 May 2011, explaining that it had highlighted in the English translation those passages of the Civil Code on which it had relied in its Statement of Defence. The passages where the Claimant found the translation incorrect concerned other provisions of the Code.
77.
On 31 May 2011, the Claimant submitted its Submission on Legal Grounds as well as the documents attached to the Expert Report of Hill International. The latter consisted of four files (volumes 3 to 6) replacing the corresponding files of the previous submission.
78.
On 15 June 2011, the Respondent requested an extension of time until 25 August 2011 to submit its response to the Claimant’s Expert Report. The Claimant objected to this request.
79.
On 29 June 2011, the Respondent submitted the written statement of Mr. Nurbek Omurbekovich Zhumaliev.
80.
On 30 June 2011, the Respondent requested the Arbitral Tribunal to grant an extension until 30 July 2011 to produce its Complementary Submission.
81.
On 1 July 2011, the Claimant made an unsolicited submission, including a revised expert report by Mr Wiseman and a letter by him, dated 28 June 2011 addressing certain aspects of his report of 10 March 2010 that had been filed with the Statement of Claim. The submission also included a "Supplementary Evidence Pack Cover".
82.
The Arbitral Tribunal granted the Respondent’s requests for time extension on 11 July 2011 and fixed the time for the Respondent’s Complementary Submission at 30 July 2011 and for the Reply Expert Opinion at 25 August 2011.
83.
In its letter of 11 July 2011, the Tribunal proposed to appoint Mr Dimitri Iafaev as a Secretary to the Tribunal. It provided information about the qualification of Mr Iafaev and a biographical note. The Tribunal stated that Mr Iafaev’s work would be billed at the rate of CHF 300 per hour. The Parties replied by letters of 20 and 29 July 2011, informing the Tribunal that they had no objection to this appointment. On 29 July 2011, the Tribunal informed the Parties that it had appointed Mr Iafaev as Secretary to the Tribunal.
84.
On 29 July 2011, the Respondent filed its Complementary Submission, described as "Rejoinder of the Respondent", together with further exhibits.
85.
On 24 August 2011, the Respondent submitted the Reply Expert Opinion of Mr John Marshall (delay expert) and the Reply Expert Opinion of Mr George Taft (quantum expert).
86.
The Arbitral Tribunal and the Parties held a further Procedural Consultation by telephone on 6 September 2011 in order to determine steps that remained to be taken in preparation of the hearing and to consider the organisation of the hearing. In addition to the full Tribunal, the following persons attended the consultation: On the Claimant’s side Professor Ziya Akinci, Dr Cemile Demir Gokyayla, Ms Fatma Husseyin and Mr Mete Sonbahar, as counsel; on the Respondent’s side, Mr Nurbek Zumaliev, Ms Mirgul Smanalieva, Ms Begaim Kaibyldaeva and Mr Vitaliy Khabarov as counsel.
87.
At the Procedural Consultation, it was agreed that the Parties may submit further expert reports, but that these had to be limited to points that arose from prior opposing reports. The Parties also were invited:

"...to make arrangements for consultations between their experts with the objective of clarifying the experts’ respective positions and the assumptions made in their reports, for providing information which the opponent expert identified as missing, for eliminating contradictions and, to the extent possible, for reducing differences in opinion."

88.
Further points addressed at the Procedural Consultation concerned the organisation of the hearing. The Parties explained that they wished to hear all witnesses which their opponent had named. The Tribunal explained that it intended to take the lead in questioning the witnesses and experts but that the Parties also would be given an opportunity to question the witnesses and experts.
89.
Draft Summary Minutes of the Procedural Consultation were sent to the Parties on 10 September 2011 for comments. The corrected final version was sent on 26 September 2011.
90.
On 27 September 2011, the Claimant submitted written rebuttal report by Mr William Kennedy and Mr Bryn G. Wiseman.
91.
Considering the concerns raised by the Claimant about its witnesses travelling to Bishkek, the Tribunal invited the Parties on 1 October 2011 to examine jointly possible arrangements which could be taken to ensure the presence of the Claimant’s witnesses at the hearing. The Parties informed the Tribunal on 5 and 6 October 2011 that they could not agree on any such arrangement. Thereupon the Tribunal informed the Parties on 10 October 2011, that the hearing would take place in Bishkek and that the Claimant’s witnesses would be heard by video-conferencing.
92.
In the letter of 10 October 2011, the Tribunal communicated the proposed agenda for the hearing.
93.
The Tribunal also informed the Parties that, as anticipated in the Procedural Calendar and Directions, it wished to have at the hearing the assistance of a technical expert. It informed the Parties that it had retained Mr Alexander Hamann in this function and had invited him to examine the file and attend the hearing. For any further work beyond his presence at the hearing, it would consult the Parties.
94.
On 11 October 2011, the Respondent submitted the comments made by Mr John J. Marshall and Mr George Taft on points arising from the rebuttal report of the Claimant’s experts.
95.
The Hearing was held from 18 to 21 October 2011 at the hotel Hyatt Regency in Bishkek. It was attended by the full Tribunal, together with its Secretary and Mr Alexander Hamann, the Tribunal’s expert. On the Claimant’s side, attended Professor Ziya Akinci, Dr Cemille Demir Gokyayla, Mr Metehan Qaglar Sonbahar, as counsel, Mr Bryn Wiseman, Mr Ekrem Kaya, Mr William Kennedy, Mr Nurbek Sabirov and Mr Magomed Saaduev, as experts and Mr Nurjan Jumagulera, as interpreter; on the Respondent’s side attended Mr Kulanychbek Mamaev, as Party Representative, Ms Mirgul Smanalieva, Ms Nina Vilkova, Mr Vitaliy Khabarov and Ms Natalia Pak, as counsel, Mr Georges Taft and Mr John Marshall as experts, Mr Nurbek Jumaliev, as witness, Ms Aigerim Bershiaeva, Ms Begaim Kaibyldaeva and Ms Guliaim Kolbaeva, as interpreters.
96.
The Claimant’s witnesses, Mr Ahmet Alp, Mr Nuri Asman and Mr Murat Ozkoseoglu, were connected from Istanbul by video-link.
97.
The hearing was recorded by Ms Gail Mallaghan of Briault Reporting. The verbatim transcript of this recording was sent to the Tribunal and the Parties on 7 November 2011.
98.
The Parties were given the opportunity to address the Tribunal in Opening Statements. Thereafter, the Tribunal examined with the Parties their respective positions with respect to the issues which have to be decided and the evidence to be considered.
99.
The Claimant clarified that its claim had to be considered in the context of the Engineer’s Decision pursuant to Clause 67.1, issued on 16 October 200629 and the Notice of Intent to Commence Arbitration, dated 22 December 2006. The Engineer’s Decision had been based on the Engineer’s Determination on the Statement at Completion - Part B, dated 18 May 2006, including in particular Table 2 setting out the Engineer’s Determination concerning the delay related claims.
100.
On 20 and 21 October 2011, while the Tribunal examined other issues with the Parties, the Parties’ experts and the Tribunal’s expert, at the invitation of the Tribunal and with the agreement of the Parties, withdrew from the Hearing and examined jointly the issues raised by the time-related claim, in particular the questions of:

(i) how the decision of the Engineer in Table 2 had to be understood with respect to each of the claims for which he granted an extension of time but no compensation or less compensation than claimed, in particular what was the cause for which the Engineer awarded an extension of time;

(ii) which of the decisions for which the Engineer granted an extension of time also should lead to compensation for the Contractor’s costs caused by the delay; and

(iii) what compensation should be awarded for these compensable delays.

101.
At the end of this joint expert examination, the Tribunal’s Expert reported to the Tribunal the conclusions reached by the experts and the points on which they disagreed. This report was summarised in a table (based on Table 2 attached to the Engineer’s Determination), prepared by the Tribunal’s expert and distributed to the Parties. The Parties and their experts were given the opportunity to comment on these explanations and to provide additional explanations and testimony.
102.
During the course of the Hearings the Parties produced new documents, numbered HC 1 to HR 6. The table prepared by the Tribunal’s expert was numbered HT 7.
103.
With respect to further proceedings after the hearing, the Parties were given the opportunity to present by 30 November 2011 Additional Expert Reports on the identification of the delays (as compensable or not) and on quantum.30 To this effect, the Parties’ experts were invited, to the extent the position of their opponent may require clarification, to contact each other prior to the submission of their reports and to cooperate so that each expert could address the relevant issues with a full understanding of the case. In this respect the Parties’ quantum experts had already established contact immediately after the Hearing, agreeing on a meeting at which the Claimant’s expert would provide access to the data and documentation on which he relied in preparing his quantification. The Tribunal clarified that these contacts did not preclude the Respondent and its expert from concluding that the evidence produced is insufficient to support the claim made by the Claimant.
104.
It was also agreed that, if their reports require the submission of new documents, these documents would be disclosed beforehand to the other expert and then submitted in the arbitration jointly by the experts.
105.
As the final step in the arbitration it was agreed at the hearing that, following the submission of the expert reports, Final Written Statements, closing the submissions of the Parties, would be submitted by 31 January 2012.
106.
The Tribunal announced that, following these submissions, it would complete its deliberations. During these deliberations it may receive the assistance of its expert.31 However, the Tribunal stated that it did not intend to request a written report from its expert and intended to decide the case on the basis of the argument and evidence provided by the Parties. If the Tribunal, contrary to that expectation, would conclude that a written report from its expert were necessary, it would make such a report available to the Parties for comment.
107.
During the course of the hearing, the Respondent drew the attention of the Tribunal to Article 29 of the Kyrgyz Arbitration Act. The Tribunal invited the Respondent to inform the Tribunal and the Claimant whether the award which the Tribunal would issue may be delivered to the Parties by courier or equivalent means or whether it has to be announced orally at a hearing. If oral announcement is required, the Tribunal requested to be informed whether this announcement can be made by video-conference.
108.
At the end of the Hearing, the Tribunal enquired with the Parties whether there were any points of complaint which the Tribunal could address. The Parties stated that this was not the case and expressed their satisfaction with the manner in which the Hearing had been conducted.
109.
A draft of the Summary Minutes of the Hearing was sent to the Parties on 27 October 2011. Following proposed modifications from the Parties, the final version of the Summary Minutes was sent to the Parties on 23 December 2011.
110.
At the request of the Respondent the Tribunal extended until 19 December 2011 the time for the submission of Additional Expert Reports on the identification of the delays (as compensable or not) and on quantum.
111.
The Additional Expert Reports on delay and on quantum were indeed submitted by each of the Parties on 19 December 2011 together with a Joint Expert Report by the Respondent’s and the Claimant’s quantum experts.32
112.
On 21 December 2011, the Claimant wrote to the Tribunal stating (a) that it had noted reference to new documents in the submissions of the Respondent’s delay and quantum experts, (b) that Mr Marshall, the Respondent’s delay expert, had submitted a totally new analysis and (c) that Mr Taft, the Respondent’s quantum expert, had submitted a separate report in addition to the joint report. The Claimant requested the Tribunal:

• to remove the documents submitted by the Respondent’s Delay and Quantum Experts from the record;

• to remove from the record and disregard the new analysis of Mr Marshall;

• to disregard Mr Taft’s Quantum Report submitted on 19 December 2011; and

• to confirm that the Parties are not allowed to submit any further documents with the final submission.

113.
The Tribunal invited both Parties on 23 December 2011 to identify by 28 December 2011 which new documents were produced with the expert reports. It invited the Respondent to specify by that date for which of their conclusions Mr Marshall and Mr Taft relied on such new documents.
114.
Both Parties replied on 28 December 2011. The Claimant submitted a list of the new documents presented by the Respondent’s expert, Mr Marshall, and the documents submitted by Mr Wiseman in response to them. The Respondent replied that the conclusions of its experts, Mr Marshall and Mr Taft, did not directly rely on the "new documents".
115.
In its letter of 23 December 2011, the Tribunal reminded the Parties of its request for information concerning the requirement of Article 29 of the Kyrgyz Arbitration Act concerning oral announcement of the award. On 28 December 2011, the Respondent stated that, in the interest of saving costs, it had no objection against the announcement of the award via video conference with the subsequent delivery of the award via courier. The Claimant wrote on 2 January 2012 that the announcement of the award by video conference with the subsequent delivery of the award by courier was acceptable under Kyrgyz law.
116.
By email of 18 January 2012 the Claimant communicated to the Tribunal a written declaration from its quantum expert Mr Kennedy, stating that he had noted errors in his part of the Joint Report of 19 December 2011. He joined a "Final Report" in which these corrections were marked. The Respondent objected to this submission on 21 January 2012 considering it as "inadmissible". The Claimant replied on 23 January 2012 indicating that Mr Kennedy’s "Final Report" was only a "correction of Mr Kennedy’s part in the Joint Report dated 19 December 2011".
117.
In its letter of 21 January 2012 the Claimant reiterated the conclusions in its letter of 21 December 2011 and requested an extension of the time for the Post-Hearing Submissions.
118.
On 25 January 2012, the Tribunal decided on the pending applications as follows:

1. The new documents produced together with the Respondent’s expert reports, as well as Appendix 2 of Mr Marshall’s report of 29 November 2011 and Mr Taft’s Quantum Report submitted on 19 December 2011 are admitted in the proceedings. The Tribunal reserves its decision concerning their relevance for the outcome of the dispute.

2. No further documents may be produced without the Arbitral Tribunal’s express prior written authorisation.

3. The time for the submission of the Post-Hearing Briefs is extended to 20 February 2012.

119.
The Parties filed simultaneous Post-Hearing Briefs on 20 February 2012.
120.
These submissions by the Tribunal closed the proceedings.
121.
Without prior authorisation or request, the Respondent wrote on 20 March 2012, presenting "general comments to the Final Submission of the Claimant". It argued that the Claimant had disregarded the directions of the Tribunal and had presented a new argument. The Respondent then went on to discuss parts of the Claimant’s PostHearing Submission, with the objective of refuting the position presented in this submission.
122.
Attached to the Respondent’s letter was a document dated 20/01/2012 and entitled "Addendum 1 - Adjustments to G Taft report dated 19/12/2011"; part of this Addendum is a "Table of Adjustments". The Respondent explained that this Addendum had been sent to its Counsel on 20 January 2012 but did not state whether it had been communicated to the Claimant and its experts prior to 20 March 2012.
123.
The Respondent’s letter of 20 March 2012 concluded by stating:

"We believe that Arbitrators should render the award on the basis of those arguments and materials which were presented by the parties at the hearing and in addition to that on the basis of expert conclusions and opinions admitted by the Arbitral Tribunal. At this stage the parties have not been granted the right to offer new considerations in respect of expert opinions of the other party and to specify the position set forth at the hearing (including specification of calculations, etc.). The whole matter is confined to the hearing and summarised position of the parties in their submissions."

124.
The Claimant protested on 29 March 2012 against this submission and requested that it be disregarded. Nevertheless, the Claimant discussed some of the points that the Respondent had raised on 20 March 2010.
125.
No further communications on the substance of the dispute were made by any of the Parties.
126.
The Tribunal had made it clear at the October 2011 hearing and confirmed in the Summary Minutes that the Final Written Statements were "closing the submissions of the Parties". The Tribunal also had organised a procedure by which the Parties’ experts met, prepared a joint report on 19 December 2011. By its decision of 25 January 2012, the Tribunal allowed subsequent corrections and additional documents. The Parties had sufficient time to take these reports and documents into consideration when preparing their Final Written Statements, filed on 20 February 2012. As stated clearly at the hearing, this final submission was not limited to legal argument; it extended to the facts and to the presentations of the experts.33
127.
In these circumstances the submissions, both of the Respondent on 20 March and of the Claimant on 29 March 2012, were made without authorisation after the proceedings had been closed. As such they are inadmissible. However, the Tribunal has considered them in order to determine whether any of the statements made in them would have changed its conclusion if they had been admitted. It assured itself that such consideration did not impair the Parties’ right to be heard.
128.
The submissions on the costs of the arbitration and the Parties’ quantification of their claims in this respect were submitted on 3 and 6 February 2015. Each Party was given an opportunity to comment on its opponent’s cost claim and did so on 20 February 2015.
129.
The Tribunal has examined the Parties’ argument and evidence. It has deliberated at various stages of the proceedings in person and by correspondence and thus reached the unanimous decisions in the present award. It did not seek any further advice from its expert
130.
At the end of the proceedings the Tribunal rendered account of the costs of the proceedings by a Procedural Order on Costs, delivered on 26 September 2015.
131.
The Tribunal invited the Parties to consider the arrangements required for announcing this award by video-conference. The Claimant’s counsel proposed to make the necessary arrangements. In the absence of any objections from the Respondent, the Tribunal accepted this proposal and convened the meeting by videoconference for 29 September 2015. All participants confirmed that they would make arrangements ensuring their participation.

5. THE RELIEF SOUGHT BY THE PARTIES

5.1 Relief sought by the Claimant

132.
In its Statement of Claim, the Claimant sought the following relief:

1. An award of additional payment in the amount of US$ 22'639'037.81 corresponding to 808 days Extension of Time or such other amount corresponding to the Extension of Time that the Tribunal considers is reasonably and properly due to the Claimant in respect of that portion of the delay in completion for which the Tribunal considers the Respondent is culpable;

2. An award of additional payment in the amount of US$ 2'635'800 corresponding to 150 days Extension of Time due to the joint responsibility of the Claimant and the Respondent;

3. An award of payment in the amount of US$ 240'808.90 corresponding to the interest on late payments;

4. An award of payment in the amount of US$ 57'801.20 corresponding to the payment for end terminals/sloping sections of guardrails;

5. An award of payment in the amount of US$ 185'748.62 corresponding to the payment for the Value Added Tax;

6. An award of payment in the amount of US$ 39'969.47 corresponding to the payment for the Road and Emergency Tax;

7. An award of payment in the amount of US$ 39'490.00 corresponding to the damage to the Claimant’s equipment during the political unrest;

8. An award of payment in the amount of US$ 123'936.54 corresponding to the grader case during the political unrest;

9. An award of payment in the amount of US$ 379'519.65 corresponding to the damages arising out of the sub-contract with Interakt;

10. An award of payment in the amount of US$ 40'639.23 corresponding to the payment for the debts of the Nominated Subcontractor JASU;

11. An award from the Tribunal for the payment of interest by the Respondent to the Claimant in the amount representing the interest for the period between the outstanding date and the date of the payment by applying the legal interest rate under Kyrgyz Law to the amounts claimed and fine; and

12. An award from the Tribunal ordering the Respondent to pay: (i) the full costs of the arbitration (that is to say all monies paid to the Tribunal in respect of the Tribunal’s fees and other costs); and (ii) all of the Claimant’s costs reasonably and properly incurred in the arbitration.

133.
The claims remained essentially unchanged during the course of the proceedings, except that the claims in (i) and (ii) were combined into one claim. In its Post-Hearing Submission dated 20 February 2012, the Claimant seeks the following relief:

1. An award from the Tribunal of additional payment in the amount of US$ 24'195'975.18 or such other amount corresponding to the Extension of Time that the Tribunal considers is reasonably and properly due to the Claimant;

2. An award from the Tribunal that the Respondent pays an amount of US$ 151'889.38 corresponding to the interest on late payments;

3. An award from the Tribunal that the Respondent pays an amount of US$ 202'304.20 for the claim corresponding to guardrails and the end terminals/sloping sections of guardrails;

4. An award from the Tribunal that the Respondent pays an amount of US$ 185'748.62 corresponding to the claim for the Value Added Tax;

5. An award from the Tribunal that the Respondent pays an amount of US$ 39'969.47 corresponding to the claim for the Road and Emergency Tax;

6. An award from the Tribunal that the Respondent pays an amount of US$ 39'490.00 corresponding to the claim for damages to the Claimant’s equipment during the political unrest;

7. An award from the Tribunal that the Respondent pays an amount of US$ 123'936.54 corresponding to the claim for the Road Grader Case;

8. An award from the Tribunal that the Respondent pays an amount of US$ 379'519.65 corresponding to the claim for damages arising out of the sub-contract with Interakt;

9. An award from the Tribunal that the Respondent pays an amount of US$ 40'639.23 corresponding to the claim for the debts of the Nominated Subcontractor JASU;

10. An award from the Tribunal that the Respondent pays to the Claimant such other relief as the Arbitral Tribunal deems appropriate under the circumstances, or such other amount that the Tribunal considers is reasonably and properly due to the Claimant;

11. An award from the Tribunal that the Respondent pays interest to the Claimant in the amount representing the interest for the period between the outstanding date and the date of the payment to the amounts claimed, and a fine; and

12. An award from the Tribunal ordering the Respondent to pay: (i) the full costs of the arbitration (that is to say all monies paid to the Tribunal in respect of the Tribunal’s fees and other costs); and (ii) all of the Claimant’s costs reasonably and properly incurred in the arbitration.

134.
In the cost claim, the Claimant sought US$ 1'335'068.37, as further explained below in Chapter 18.

5.2 Relief sought by the Respondent

135.
The Respondent did not present a formal prayer for relief in its Statement of Defence.
136.
However, the Respondent made the following declaration:

"In this Statement of Defence the Respondent declares that it completely disagrees with the claims raised against it by the Claimant in the Statement of Claim. The Respondent holds that the Claimant’s claims set forth in the Statement of Claim are unfounded and should be dismissed on the grounds listed below in this Statement of Defence."34

137.
In its Final Submission, the Respondent requested that the Claimant’s claims be dismissed and that the Respondent be awarded "the arbitration costs, legal and other costs incurred in the course of the present arbitral proceedings, including also the following expenses of the Respondent:

1) $ 225'000.00 USD Arbitration costs;

2) $ 130'000.00 USD services of the representative of the Respondent Law Firm "Partner";

3) $ 357'150.00 USD payment for the services of the experts for preparation of the expert reports;

4) $ 2'358.00 USD other expenses of the Respondent such as courier, interpreter and etc;

5) and other expenses connected with this Arbitration".

138.
In the cost claim the Respondent sought US$ 487'238, as further particularised below in Chapter 18.

6. ISSUES OF JURISDICTION

6.1 The Arbitration Agreement

139.
The agreement to arbitrate is contained in Clause 67.3 GCC which reads as follows:

"Any dispute in respect of which:

(a) the decision, if any, of the Engineer has not become final and binding pursuant to Sub-clause 67.1, and

(b) amicable settlement has not been reached within the period stated in Sub-clause 67.2,

shall be finally settled, unless otherwise specified in the Contract, under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by one or more arbitrators appointed under such Rules. The said arbitrator/s shall have full power to open up, review and revise any decision, opinion, instruction, determination, certification or valuation of the Engineer related to the dispute.

Neither party shall be limited in the proceedings before such arbitrator/s to the evidence or arguments put before the Engineer for the purpose of obtaining his said decision pursuant to SubClause 67.1. No such decision shall disqualify the Engineer from being called as a witness and giving evidence before the arbitrator/s on any matter whatsoever relevant to the dispute.

Arbitration may be commenced prior to or after completion of the Works, provided that the obligations of the Employer, the Engineer and the Contractor shall not be altered by reason of the arbitration being conducted during the progress of the Works."

140.
Clause 67.3 CPA modified this provision by replacing the reference to "the Rules of Conciliation and Arbitration of the International Chamber of Commerce" by the "UNCITRAL arbitration rules" and adding that the "arbitration shall take place in Bishkek".
141.
There is no dispute between the Parties that this arbitration agreement is valid and binding and applicable in the present case.
142.
The Contract was concluded in 1999. Therefore it is the 1976 version of the UNCITRAL Arbitration Rules, in force at the time of the conclusion of the Contract, which is applicable in the present arbitration.

6.2 Issues concerning the Composition of the Arbitral Tribunal

143.
In the Statement of Defence the Respondent also complained about the composition of the Arbitral Tribunal, in particular to the nationality of the arbitrators. It referred to a letter it had addressed to the PCA in the context of the designation of the Appointing Authority and the nomination of an arbitrator on behalf of the Respondent. In its letter of 21 April 2009 the Respondent wrote:

"Besides we feel that the arbitrator on the part of the Claimant and the arbitrator on the part of the Respondent should not be selected from the citizens of Turkey or Kyrgyzstan."35

144.
The UNCITRAL Rules provide that, when making its appointment, the Appointing Authority

"... shall have regard to such considerations as are likely to secure the appointment of an independent and impartial arbitrator and shall take into account as well the advisability of appointing an arbitrator of a nationality other than the nationalities of the parties".

145.
The provision does not apply to the choice of an arbitrator by the Parties. This provision has been respected by the Appointing Authority when appointing the arbitrator on behalf of the Respondent. The Respondent has not pointed to any rule in the law of Kyrgyzstan, governing the arbitration, or the UNCITRAL Rules which contains a nationality requirement with respect to the arbitrators appointed by the parties.
146.
It must be noted that later in the arbitration, the Respondent has not further pursued its criticism of the composition of the Tribunal.
147.
The Tribunal concludes that its composition is in full conformity with the applicable arbitration law and the UNCITRAL Rules.

6.3 The scope of the arbitration agreement and its application to certain claims

148.
The principal difference between the Parties with respect to jurisdiction concerns the question whether the arbitration agreement applies to three of the claims brought by the Claimant. In this respect, the Respondent argues that the claims concerning

(i) the damage caused to the Grader;

(ii) the debts of the Nominated Subcontractor JASU; and

(iii) damages arising out of the sub-contract with the Interakt company

are not covered by the arbitration clause.

149.
Article 21 (3) or the UNCITRAL Rules requires that a "plea that the arbitral tribunal does not have jurisdiction shall be raised not later than in the statement of defence...". The Respondent’s objection to jurisdiction has been raised in the Statement of Defence, at paragraphs 99, 109 and 111. Therefore, it has been made timely and is admissible according to the UNCITRAL Rules.
150.
In support of its objection to jurisdiction with respect to the named claims the Respondent argues that the claims concern "relations arising between the Claimant and third parties which are not a party to the Contract".36
151.
The Respondent’s argument was developed at the hearing in the Respondent’s opening statement37 and was discussed at that occasion.38 The matter was also addressed in the Respondent’s Final Submission.
152.
The Claimant argues that the claims are not directed against third parties but concern the liability of the Respondent for events involving third parties. Indeed, as it was considered at the hearing, the manner in which the claims are presented does not concern the question whether the third parties are liable to the Contractor, but whether the Contractor is entitled to claim from the Respondent under the Contract.39
153.
This is a matter which must be determined with respect to each of the three claims. The Tribunal will therefore address the matter separately when considering each of these claims.

6.4 Limits resulting from the procedure prescribed in Clause 67 CC

154.
In addition to the limits to the Tribunal’s jurisdiction resulting from the arbitration agreement, the Tribunal must also consider those limits which result from the procedures prescribed by the arbitration agreement itself: as stated above, the present dispute is brought under Clause 67 of the Conditions of Contract, as modified by Clause 67.3 CPA. The former clause provides for a series of steps which must be followed before an arbitration may commence and which limit the recourse to arbitration to disputes that have progressed through these steps in a timely manner.
155.
In particular these clauses require that any "matter in dispute shall, in the first place, be referred in writing to the Engineer". Clause 67.1 continues by providing in the relevant parts the following:

"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 [in time] then either the Employer or the Contractor may [within the specified time] give notice to the other party, [...] of his intention to commence arbitration. [...] 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."

156.
Clause 67.3 makes it clear that arbitration is available only for disputes in respect of which the decision of the Engineer has not become final and binding.
157.
Before considering any claim made in this arbitration, the Tribunal must therefore examine whether the claim has been brought before the Engineer for a decision under Clause 67 and, if the Engineer has given his decision, whether the Employer or the Contractor has expressed his dissatisfaction and gave notice of his intention to commence arbitration.
158.
During the course of the performance of the works, the Contractor announced its intention to claim on a number of occasions. In the Statement at Completion of 17 March 2006, the Contractor claimed a total of US$25'054'966.78,40 including, in part B of the statement, 8 claims for the total amount of US$24'532'304.24.41 The Engineer considered these claims and issued on 18 May 2006 his Determination,42 stating that "he determines and certifies a sum of US$1'187'035.20 as the entitlement of the Contractor under Part B of the Statement at Completion".
159.
The Contractor wrote to the Engineer on 7 June 2006, contesting some of the explanations in the Engineer’s Determination and requesting reconsideration of the Determination.43 The Engineer replied on 15 June 2006, provided additional explanations for its Determination but did not modify it.44
160.
Thereupon, the Contractor requested an Engineer’s decision pursuant to Clause 67.1 on 20 June 2006;45 in a letter of 16 August 2006, the Contractor provided additional details and raised a number of questions.46 The Engineer responded to the Contractor’s letter of 20 June 2006 by stating on 12 September 2006 that he believed "that the Engineer’s Representative’s Determination and Certification is accurate, reasonable and impartial".47
161.
The Engineer’s decision was then issued on 16 October 2006.48 To the question whether the Contractor was entitled to the sum claimed in the Statement at Completion, the Engineer replied: "The Contractor is payable the amount certified by the Engineer". In other words, the Engineer refused to revise the Determination and rejected the Contractor’s request to this effect.
162.
On 22 December 2006, the Contractor wrote to the Employer with copy to the Engineer a letter showing as it subject: "Notice of Intention to Commence Arbitration under Clause 67.1 of the Conditions of Contract". In the text of the letter, the Contractor stated:

"Please refer to the Clause 67.1 Engineer’s Decision dated 12 September 2006 and its details dated 16 October 2006 on the Statement at Completion.

The Contractor is dissatisfied with the Engineer’s Decision under Clause 67.1 of the Conditions of Contract and hereby notifies the Employer of his intention to commence Arbitration pursuant to Clause 67.1 of the Conditions of Contract."49

163.
On 15 January 2009, the Claimant addressed its Notice of Arbitration to the Respondent. The Notice started as follows:

"Reference is made to our Notice of Intent to Commence Arbitration dated 22-12-2006. As the Claimant, we have decided to take the following disputes/claims to International Arbitration according to Clause 67 of the Conditions of Contract".

164.
This was followed by the brief description of six claims with a total of US$18'521'845 plus a claim for interest up to 31 December 2008 for US$3'219'466.90. The six claims described in the Notice of Arbitration included some but not all of the claims which the Contractor had presented in part B of the Statement at Completion and which were dealt with in the Engineer’s Determination. The Notice ended by the Claimant stating that it "reserves the right to amend the claims during the course of the arbitration".
165.
In the Statement of Claim of 15 March 2010, the Claimant developed its position concerning the claims included in the Notice of Arbitration; in addition to these claims, further claims were added from part B of the Statement at Completion. The Claimant confirmed that the "subject matter of this arbitration is the Engineer’s Determination-Part B of the Statement at Completion dated May 18, 2006".50
166.
The scope of the arbitration was further clarified by the Claimant at the Hearing and recorded in the Summary Minutes as follows:

"5. The Claimant clarified that its claim had to be considered in the context of the Clause 67.1 Engineer’s Decision on the Statement at Completion, issued on 16 October 2006 and the Notice of Intent to Commence Arbitration, dated 22 December 2006. The Engineer’s Decision had been based on the Engineer’s Determination on the Statement at Completion - Part B, dated 18 May 2006, including in particular Table 2 setting out the Engineer’s Determination concerning the delay related claims."

167.
The scope of this arbitration, therefore, is clearly circumscribed: it concerns those parts of the Engineer’s Determination of 18 May 2006 which were contested by the Contractor. The Tribunal examined for each of the claims made in this arbitration whether it falls within this scope. In particular, it examined, on a claim by claim basis, whether each claim was properly pursued following the procedure of Clause 67 of the Conditions of Contract.

7. TIME BAR AND TIMELY NOTICE

168.
The Respondent argues that the claims made in this arbitration are time-barred under the applicable law and that, in any event, the Claimant having failed to give timely notice, is precluded from pursuing the claims.

7.1 Time bar under the law of the Kyrgyz Republic

169.
The Respondent relies on Articles 212 and 216 (2) CC and concludes that the claims made by the Claimant in this arbitration are time barred.51
170.
The Parties are not in complete agreement with respect to the accuracy of the English translation of the Code52 and with the applicability of these provisions since a modification occurred in August 2009. The disagreement is not material in relation to the dispute here.
171.
Both Parties agree that the applicable period is three years.53
172.
In defence against the Respondent’s time bar argument, the Claimant invoked Article 215 CC which provides in its paragraphs (3) and (4) exceptions.54 The Respondent argues that these provisions are applicable only in cases where extraordinary circumstances have prevented a claimant to act within the period of limitation. This does indeed seem to be the correct interpretation of the quoted article. It appears doubtful that, in the present case, the Claimant may rely on such extraordinary circumstances.
173.
However, before considering whether the Claimant may be excused for having failed to meet the three year period of limitation, it must be determined when, in the present case, this period started to run and whether, by the time the arbitration commenced, the period had expired.
174.
The Parties agree that the start of the period is determined by Article 216 (2) KCC which reads in translation:

"The duration of the term of statute of limitation starts from the date when the person learns or should have learned of the violation of his right. The Code and other laws may establish exceptions to this rule."

175.
The question therefore is which are the rights invoked by the Claimant in this arbitration and when the Claimant learned or should have learned that these rights had been violated.
176.
The Claimant seeks compensation for a number of losses or additional costs, i.e. those resulting from the prolongation of the works and the losses caused by the events forming the basis of the other claims. In order to receive such compensation, the Contractor must apply to the Engineer who must render a determination. This determination must be a fair decision, respecting the rights of the Contractor and the Employer in a balanced manner.55
177.
Under the terms of the present contract claims for additional payments such as those which are submitted in this arbitration, are determined by the Engineer. Clause 53.1 GCC, which will be considered in further details below, states quite clearly that a "condition precedent to any entitlement to additional costs" is the "submission of the proper notices and detailed particulars" under that clause. If the Engineer makes a determination as requested by the Contractor, the Contractor is made whole and suffers no damage, provided the Employer complies with the Engineer’s Decision. It is therefore the failure of the Engineer to grant the requested additional payment and to make the requested determination, if it is wrongful, which causes the violation of the Contractor’s rights.
178.
As the Claimant clarified at the hearing, it is this determination which it attacks in this arbitration. Its complaint is that the Engineer wrongly denied the requested compensation.
179.
The Tribunal concludes that violation of the Contractor’s rights of which the Claimant complains occurred in the form of the Engineer’s Determination. This Determination was notified to the Contractor on 18 May 2006. The Notice of Arbitration was filed on 15 January 2009 and thus before the expiration of the period of limitation. The claims included in the Notice of Arbitration are not time barred under the Kyrgyz Civil Code.

7.2 Time bar under the Contract - Notice Requirements

180.
The Respondent also argues that the claims must be dismissed because the Contractor failed to give timely notice and therefore lost the right to make the claims under the Contract.
181.
Clause 53.1 GCC, on which the Respondent relies in this respect, provides as follows:

"Notwithstanding any other provision of the Contract, if the Contractor intends to claim any additional payment pursuant to any Clause of these Conditions or otherwise, he shall give notice of his intention to the Engineer, with a copy of the Employer, within 28 days after the event giving rise to the claim has first arisen.

Submission of the proper notices and detailed particulars within the time limits specified in this sub-clause and elsewhere in these conditions shall be a condition precedent to any entitlement to additional costs or to an extension of time under the Contract."

182.
It is undisputed that the claim for compensation of the prolongation cost (and of some other losses) was made not at the time when the cause for the prolongation arose and the Contractor claimed for the five EOTs. This claim was made only in the Statement at Completion of 17 March 2003, more than 28 days after the events causing the delay had occurred and after the works had been completed.
183.
The Respondent concludes that, because of this failure of the Contractor to comply in due time with this notice requirement, the Contractor is deprived of "the opportunity to claim".56
184.
The Claimant relies on Clause 53.4 GCC which provides:

"If the Contractor fails to comply with any of the provisions of this Clause in respect to any claim which he seeks to make, his entitlement to payment in respect thereof shall not exceed such amount as the Engineer or any arbitrator or arbitrators appointed pursuant to Sub-Clause 67 assessing the claim considers to be verified by contemporary records (whether or not such record were brought to the Engineer’s notices as required by SubClauses 53.2 and 53.3)."

185.
This clause clearly addresses the situation in which the Contractor, as in the present case, failed to comply with notice provision in clause 53. It makes it quite clear that claims filed after the expiration of the 28 days’ notice period are not excluded. They are simply subject to a restriction with respect to the evidence on which the Contractor may rely in order to support its claim: the claim must be established on the basis of contemporary records.
186.
The Tribunal concludes that, despite the Contractor’s failure to give notice of its claims within the 28 days period and then to substantiate the claimed losses, the Claimant may seek compensation for the events to which the claims relate. However, the claims may be awarded only to the extent to which they are established on the basis of contemporary records.

8. THE CLAIM FOR PROLONGATION COSTS

8.1 The claim and its history

187.
The Claimant seeks an award for the costs resulting from the prolongation of the works. The amounts claimed and the manner in which they were calculated have varied over time. In its latest submission, the Post-Hearing Brief, the Claimant quantifies this claim at US$24'195'975.18; it presents two alternative quantifications of US$22'334'204.28 and US$20'549,536.88. The claim makes allowance for US$1'161'870.19 certified by the Engineer and paid by the Employer. In all three quantifications, this amount is deducted already.
188.
The Respondent denies the claim, arguing that it was late, insufficiently substantiated and unfounded.57 It also points out that the Engineer considered the claim for prolongation costs and assessed these costs. The costs so assessed were paid by the Respondent.58 According to the Respondent, the Contractor is not entitled to any additional payments.
189.
The Claim is presented by reference to five requests for extension of time (EOT requests) which the Contractor had presented during the course of the Project. In these EOT requests, the Contractor identified the duration of the extension requested; it also stated its intention to claim prolongation costs, but did not quantify these costs.59 The EOT requests were granted in part: the Engineer issued decisions with respect to EOT 1, 4 and 5; with respect to EOT 2 and 3, the Parties agreed on extensions by Addenda 1 and 4 to the Contract. In this manner the Contract Period was extended by 637 days.60
190.
In the Statement at Completion of 17 March 2006 the Contractor claimed for the costs incurred from the original completion date of 3 December 2002 to the effective completion on 12 December 2005, a total of 1'043 days. He counted the costs on a month by month basis for "Personnel Costs", "General Expenditures", "Machinery Costs" and "Financial Costs", producing a total of US$22'928'039.25. These costs were further broken down and partly evidenced by Summaries of Personnel Cost Records for Turkish and for Local Personnel, Overhead Costs, lists of Machinery on Site and their monthly costs together with machinery rental documents.61
191.
The Engineer adopted a different approach: In his Determination of 18 May 2006 the Engineer determined the "excusable" delay, i.e. the period for which the Contractor was granted an extension of time. Within the overall period of excusable delay, the Engineer distinguished between "compensable" and "non-compensable". Prolongation costs were granted only for the "compensable" delay.
192.
When examining the days of delay, the Engineer proceeded by reference to each EOT request and determined the delay that had been claimed for the periods covered by these requests. The Engineer granted 1043 days as excusable, the number of delay days suffered by the Project and claimed by the Contractor. The increase of the number of days for which an extension of time was granted (i.e. days of the excusable delay) was due primarily to the fact that the Engineer took into account 318 days of "Winter Break" and some "Lost Days", as they shall be discussed below.
193.
Within the total of 1043 days of excusable delay, the Engineer identified only 153 days as compensable delay, while 890 days were excusable but non-compensable.62 For the quantification of these 153 days of compensable delay, the Engineer considered the different heads of cost which the Contractor had quantified in the EOT requests but proceeded in a different manner, as shall be discussed in further details below. The Engineer arrived at US$131'511.84 for personnel costs and US$1'030'358.35 for "Machinery Costs" and a total of US$1'161'870.19.63
194.
In the correspondence following the Engineer’s Determination the Contractor64 questioned the Determination and, when the Engineer did not change his opinion requested an Engineer’s Decision according to Clause 67.1 CC.65 After further correspondence in which the Contractor provided additional information,66 the Engineer replied on 12 September 200667 and gave his Decision on 16 October 2006.68
195.
In the Notice of Arbitration of 15 January 2009 the Claimant referred to the extension of the completion date and the five EOTs; it mentioned the financial costs related to the delays in the project completion as quantified in the Statement at Completion and complained that "the Engineer did not certify the costs related to the approved EOT's".69 The claimed amount for this item was US$17'777'607.36.
196.
In the Statement of Claim the Claimant referred to the extensions of time that had been granted and stated that it "does not claim any additional extension of time" but "claims for the additional payment".70 It presented the additional payments by reference to the EOT requests, described as "Interim Claims" for a total of 672 days and added claims for the delay due to the Winter Suspension Period of 136 days and an additional 150 days Winter Suspension Period attributed to the Joint Responsibility of the Employer and the Contractor.71
197.
At the hearing in Bishkek the Claimant confirmed that its claim for Prolongation Costs had to be considered by reference to the Engineer’s Decision of 16 October 2006 and the Engineer’s Determination of 18 May 2006. The Claimant clarified at the Hearing that it accepted the duration of the time extension which the Engineer had granted/confirmed in the Determination so that there was no longer a need for the delay analysis of Mr Wiseman, the Claimant’s delay expert.72 The dispute therefore was reduced (i) to the compensability of certain delays, i.e. the question whether some or all of the delays which the Engineer had classified as noncompensable in reality were compensable, and (ii) the quantification of the costs caused by all those delays which the Engineer or the Tribunal had determined as compensable.
198.
Following the October 2011 hearing the Parties’ delay experts updated their reports and the Parties’ quantum experts consulted with each other, as it had been agreed at the hearing and recorded in the Summary Minutes. Mr Kennedy, quantum expert for the Claimant, and Mr Taft, quantum expert for the Respondent met on 7 and 8 December 2011 and then prepared a Joint Report, dated 19 December 2011, in the format of a Scott Schedule in which they set out their respective positions on the relevant issues of quantification.
199.
Mr Kennedy, the Claimant’s quantum expert submitted a final report on 18 January 2012, in which he complemented and corrected some of the positions expressed in the Joint Expert Report and some of the numbers used in the quantification. An Addendum 1 to Mr Taft’s report of 19 December 2011 was produced by the Respondent only on 20 March 2012. This submission has been addressed above at the end of Section 4.
200.
Concerning the position which the Claimant expressed at the hearing about the Engineer’s Determination of the duration of the excusable delay, the Respondent argued that, by expressing this position, the Claimant "abandoned its claims for payment of the extension of time under the Contract in the amount of 808 days".73 The Claimant responded by stating that it merely "clarified" its position.74
201.
The Tribunal has considered the position of the Claimant as expressed at the hearing. It noted that, with respect to the duration of excusable delay, the Claimant now relies solely on the Determination by the Engineer. This constitutes a clarification which simplifies the proceedings for both Parties and for the Tribunal. The Claimant continues to claim for the costs of compensable delay. The substance of the claim remained the same.
202.
In any event, even if one were to consider the modification in the Claimant’s position as an amendment to its claim, it was a useful amendment which simplified the proceedings. Such amendments are admissible under Article 20 of the UNCITRAL Arbitration Rules. The Respondent had the possibility at the hearing and in its post hearing submission several months after the hearing to comment the Claimant’s position and the Respondent’s experts had ample opportunity to comment this position as clarified at the hearing. To the extent this were required, the Tribunal accepts the amendment.
203.
The Respondent also raised objections based on time bar and notice requirements. These have been considered above in Section 7 and need not be repeated here. To the extent to which notice issues arise specifically concerning certain aspects of claim for prolongation costs, they shall be addressed in their respective context.

8.2 Compensable delay

8.2.1 The principle of compensability

204.
In the Statement at Completion the claim for prolongation costs was based on the assumption that the Contractor was entitled to the full costs of the extended contract period. The Engineer contested this assumption. He accepted that 1'043 days delay in the completion of the works were "excusable", i.e. the Contractor was not responsible for the delay and was granted an extension of the Time for Completion according to Clause 44.1 GCC. To the extent to which such an extension is granted, the Contractor’s failure to complete within the stipulated time is not subject to the sanction according to Clause 47.1 GCC and the Employer may not claim liquidated damages.
205.
However, the extension of the Time for Completion, in and of itself, does not justify any other claim. In particular, it does not oblige the Employer to make any additional payments to the Contractor. The Engineer has pointed this out clearly to the Contractor;75 and the Respondent has insisted on this principle in the arbitration.76
206.
This principle is stated clearly in a provision which in the CPA was added to Clause 44.1:

"The granting of an extension of time for completion shall not entitle the Contractor to any additional payment. Where, in the opinion of the Contractor, additional costs have been incurred in connection with or in consequence of the cause or the event for which extension of time for completion has been granted, such costs shall be documented and claimed separately, in accordance with the provision of Clause 53."

207.
In other words, claims for additional payments must be related to the "cause or event for which extension of time for completion has been granted". If such a cause entitles the Contractor to compensation, the additional costs "incurred in connection with or in consequence of" this cause also may be claimed. But the Contractor has to demonstrate such a causal relationship with the events that entitle the Contractor to compensation.
208.
The Engineer used the concept of "compensable delay". He distinguished among the days of excusable delay those which were "compensable" and those which were "non-compensable"; only for the former category the Engineer accepted that the Contractor could claim for the costs of the delay. The latter were defined by him as follows:

"... delays for which neither party is at fault: act of God, epidemics, etc. as set forth in the delay clause. Time extension is the only remedy for such delays."77

209.
The Claimant also accepts that, in order for the delay to be compensable, there must be a "legal ground either under the Contract or the local law, i.e. Kyrgyz law".78
210.
In the Tribunal’s opinion this distinction is necessary: the Respondent can be required to make additional payments for excusable delay only if the Claimant shows a legal basis which justifies such a claim for additional payment.
211.
The distinction between compensable and non-compensable delay is now uncontested in this arbitration. The Claimant accepts that, in order to claim costs for a given period of delay, it must demonstrate not only that the delay was "excusable" but also that it is "compensable"; and it sets out to demonstrate the legal basis for such compensation.79
212.
The question concerning "excusable" delay and its duration has been resolved and needs no longer be addressed: the Engineer has fixed the number of days of excusable delay in the Determination.80 The Employer has not contested this determination and has not required that it be submitted to arbitration. The Contractor has accepted at the hearing that his claim be assessed by reference to the number of excusable delay days fixed by the Engineer in Table 2 of the Determination. The issue of compensability therefore is reduced to the question whether, beyond the 153 days of compensable delay certified by the Engineer, any other days of excusable delay are compensable.
213.
Two basic grounds to justify compensation of delay or prolongation costs have been identified: the Contract and the law of Kyrgyzstan. The scope and limits of these grounds must be examined one by one.

8.2.2 Delay in issuing drawings and instructions - Clause 6.4 GCC

214.
The Contract contains a number of provisions which entitle the Contractor to additional payment and which are relevant for the claims made in this arbitration. The first of these provisions concerns delay in the Engineer’s issuing of drawings or instructions necessary for the Contractor’s work. It is contained in Clause 6.4 on which the Claimant relied expressly.81 The clause reads as follows:

"If, by reason of any failure or inability of the Engineer to issue, within a time reasonable in all the circumstances, any drawings or instructions for which notice has been given by the Contractor in accordance with Sub-Clause 63, the Contractor suffers delay and/or incurs costs then the Engineer shall, after due consultation with the Employer and the Contractor, determine:

(a) any extension of time to which the Contractor is entitled under Clause 44, and

(b) the amount of such costs, which shall be added to the Contract Price,

and shall notify the Contractor accordingly, with a copy to the Employer."

215.
This clause applies in all those cases in which the Engineer has accepted delay in issuing drawings or instructions and granted extensions of time. Clause 6.3,82 to which Clause 6.4 refers, requires that the Contractor give notice to the Engineer about the risk of delay or disruption if drawings or instructions are not issued in time. In cases where the Engineer has extended the time under Clause 6.4 GCC, it may be assumed that such notice has been given, unless the Engineer has expressly stated that this was not the case.
216.
Since Clause 6.4 applies to both extension of time and additional costs, an uncontested extension of time has as the necessary consequence that, as a matter of principle, any additional cost must also be compensated - provided, of course, that they have been properly substantiated and the causal link with the grounds for entitlement has been established.
217.
The Tribunal therefore accepts that, in all those cases where the Engineer has accepted that the late drawings or instructions have caused excusable delay, the related prolongation costs are compensable. This is indeed the manner in which the Engineer has proceeded: "design delays" or similarly described excusable delays in Table 2 of the Engineer’s Determination were all included in the category of "compensable delay".

8.2.3 Special Risks - Clause 65 GCC

218.
Another contractual provision which entitles the Contractor to additional payments is Clause 65 GCC, concerning Special Risks, as defined in Clause 20.4 CPA. The relevant parts of Clause 65.5 GCC provide compensation in the following terms:

"Save to the extent that the Contractor is entitled to payment under any other provision of the Contract, the Employer shall repay to the Contractor any costs of the execution of the Works (…) which are howsoever attributable to or consequent on or the result of or in any way whatsoever connected with the said special risks,... but the Contractor shall, as soon as any such cost comes to his knowledge, forthwith notify the Engineer thereof. The Engineer shall, after due consultation with the Employer and the Contractor, determine the amount of the Contractor’s costs in respect thereof which shall be added to the Contract Price and shall notify the Contractor accordingly, with a copy to the Employer."

219.
The special risks are defined in Clause 65.2 GCC which refers to Clause 20.4 GCC. This latter provision has been replaced by Clause 20.4 CPA. The relevant passage is 20.4 (a) (ii) CPA which identifies "rebellion, revolution, insurrection, or military or usurped power, or civil war", Clause 65.2 (b) clarifying that these events must "relate to the country in which the Works are to be executed".
220.
At the hearing the Respondent argued that the costs for which the Contractor may claim compensation under Clause 65.5 GCC are "any costs but not for prolongation or delay, for delay of their works".83 The Tribunal sees no basis for excluding prolongation costs from those which must be reimbursed to the Contractor under Clause 65.5 GCC. This clause defines the costs in the broadest possible manner: "which are howsoever attributable to or consequent on or the result of or in any way whatsoever connected with the said special risks". The Tribunal accepts that this definition of compensable costs includes those caused by the prolongation of the works.
221.
The question whether a specific event qualifies as "special risk" in the sense of Clause 20.4 CPA and 65.5 GCC and whether the notice provision specific to Clause 65.5 GCC has been respected must be considered in the context of the specific claim in which these provisions are invoked.

8.2.4 Additional works

222.
Under the Contract the Contractor is paid for the work performed in the agreed manner and the agreed time. If the Contractor is required to perform additional work, he also must be paid for this additional work. Since the Contractor is paid at unit rates set out in the Bill of Quantities (BOQ), such additional work does not cause any difficulty insofar as it is paid through the BOQ rates and prices. Details are set out in Clause 51 GCC under the heading "Alterations, Additions and Omissions". All of this is uncontested.
223.
The controversy in the present case arises from the Contractor’s claim for prolongation costs caused by the additional works. The Engineer denied the Contractor’s claims for prolongation costs on this basis and justified the denial on the following grounds:

"... where an increased amount of work justifies an extension of time, the Engineer has to consider whether the increased amount has rendered the Contract rate inapplicable. The nature of the work does not have to change, but if the overheads during the extended period exceed the overheads covered by the additional volume of work, the rate for the work is no longer applicable and should be adjusted.

The Contractor did not take the above stated actions [notice according to Clause 52.2 GCC concerning the fixing of "a suitable rate or price" ], therefore no additional cost for extended period due to additional works was approved."84

224.
In other words, the Engineer accepted, as a matter of principle, that costs caused by delay resulting from additional works had to be compensated; but he was of the opinion that this had to be done through the adjustment of the contractual rates and prices and that the Contractor had failed to observe the notice periods for requesting such adjustments. For the Engineer, it is therefore not a question of whether prolongation costs caused by additional works are compensable but only a question of the method in which this is done. This question of method will be discussed below in the context of the quantification of the prolongation costs.85
225.
The experts of both sides, too, are of the view that prolongation costs caused by additional works are compensable. At the hearing, Mr Hamann reported that the experts agreed that additional works were compensable;86 the Experts Consultation Table also showed additional works as being compensable. Mr Marshall confirmed this in his Final Report:

"I would expect that additional works would usually be considered 'compensable' in that clause 52.2 of the Conditions allows the contractor to claim extra payment or a varied rate in specified circumstances provide notice had been given."87

226.
The Respondent does not question that, as a matter of principle, additional works and prolongation costs resulting from them are compensable; it merely supports the Engineer’s position, according to whom, these costs must be quantified according to Clause 52.2 GC.
227.
The Tribunal concludes that under the Contract, additional works must be paid. Normally, additional works or variations are paid through the rates and the prices of the BOQ; where necessary these rates and prices may be adjusted according to Clauses 52.1 and 52.2 GCC. If, as the result of additional work, the Contractor has incurred additional costs which cannot be priced adequately in this manner, they may be claimed under the additional Clause 44.1 CPA. The method of compensation shall be considered and determined below.

8.2.5 Grounds for the compensation of prolongation costs under the law of Kyrgyzstan

228.
The Claimant also relies on the law of Kyrgyzstan in support of its claims. In particular, it invokes two provisions of the Kyrgyz Civil Code (KCC). One of these provisions, Article 368, is taken from Chapter 20 of the Code which deals with Liability for Breach of Obligations in general; the other, Article 638, is contained in Chapter 30 which concerns specifically the Work Contract.

"Article 368 Obligor’s Delay

1. The obligor who delayed performance, shall be liable to the obligee for losses caused by the delay as well as for the incidental impossibility of performance occurred during the delay.

2....

Article 638 Customer’s Assistance

1. The customer shall render assistance to the contractor during the performance of the work in cases, volume and procedure provided by the work contract.

In case of non-fulfilment of this obligation by the customer the contractor may demand the indemnification of losses inflicted, including additional expenses, caused by the idleness of shifting of terms of the performance of work or by the increase of the price indicated in the contract.

2...."88

229.
These provisions confirm the conclusions that result from the above analysis of the obligations under the Contract: where the Employer has undertaken to perform, directly or through the Engineer, certain functions, for instance delivering drawings or instructions, he is liable for any damage resulting from delay in performing these functions.
230.
The Engineer had the same understanding of the Employer’s liability when defining "compensable delays" in the following manner:

"...[delays] due to some act or omission of the Employer, for example lack of site access. In such cases the Contractor is entitled to damages for extra cost incurred unless there is a valid contract clause barring such recovery."89

231.
In his Determination, the Engineer applied these principles by granting prolongation costs to the Contractor where he determined "adequate cause for awarding compensation to the Contractor" and identified such cause as "failures of the Employer in fulfilling his contractual obligations". He included in causes which entitle the Contractor to compensation

"delays caused by late approval of designs, untimely relocation of Utilities and late issuance of commencement order";90

232.
The Claimant followed a similar understanding of compensability and sought to demonstrate for each period for which it sought compensation a legal basis for the Respondent’s liability.91
233.
The Respondent does not deny in principle the obligations flowing from the quoted provisions of the KCC. It does, however, contest specific obligations, such as those relating to design.92 These will have to be considered in the context of the specific claims to which they relate.

8.3 Principles of Quantification of the Prolongation Costs

234.
The quantification of the compensable delay costs, as it was argued in this arbitration, gives rise to a number of questions of principle, resulting from different positions taken by the Parties and, in particular, by their respective experts. These positions developed and crystallised as the proceedings progressed, through successive expert reports, the discussions at the hearing and the updated reports thereafter, in particular the Joint Expert Report.
235.
Before examining the specific claims made in the five EOT requests on which the Claimant relies in this arbitration, the Tribunal will, therefore, have to consider these issues of principle. The issues were discussed primarily in the reports of the Parties’ experts and by these experts at the hearing. In their Post Hearing Submissions, the Parties primarily relied on these explanations and discussions by their experts. The Tribunal, therefore, refers largely to the explanations of the experts as reflecting also the position of the Parties having appointed them, unless the Parties have taken a different position.

8.3.1 The records

236.
When considering the timeliness of the claims, the Tribunal found that the Contractor had failed to give notice for its intention to claim for prolongation costs. As a result, Clause 53.4 of the GCC applies and the claim must "be verified by contemporary records".
237.
During the performance of the work, detailed records were kept by the Contractor. Much of the information from these records was included in the Monthly Reports submitted by the Contractor.93 These reports and the material attached to them were made available to the Engineer and the Employer. Therefore, the reports are the principal element of the contemporary records.
238.
The material contained in these Monthly Reports also served the Engineer to keep his own records. It became apparent at the Hearing that the Engineer was well documented and had «very precise figures». These enabled him to identify the value of all those items of Plant & Machinery for which he did not use Daywork rates.94 He also had precise information about the personnel: "he has very precise figures, he can tell us there were 173 foremen and 30 draggers, he knows exactly how many things were at site".95 Indeed, on the basis of the "record kept in [the Engineer's] file which is base material for the monthly Progress Report", the Engineer was able to quantify the compensable costs for personnel and for machinery.96
239.
An additional source of contemporary records is the Contractor’s accounts. These accounts were subsequently audited and formed the basis of the Contractor’s audited accounts from which the Contractor took the data on which much of the claim calculation is based. The Claimant provided with its submission and with the reports of its experts documents from these records and tables summarising their content. At the hearing the Claimant provided additional information, "including a hard copy of a printout of Entes’ project accounts showing general expenditures costs. These data were very voluminous. It was therefore agreed at the hearing that the information would be made available to the Respondent in electronic form on a memory stick. The communication of data and records occurred at the hearing and continued after the hearing, in particular in the meetings of the experts and their work on the Joint Expert Report.97
240.
This exchange of information based on the contemporaneous data and records and the analysis of this data absorbed much of the time of the Respondent’s expert time after the hearing and enabled him to produce "large and complex spreadsheets", which aimed at "providing the Tribunal as much information as possible".98 Mr Taft, too, speaks of the "significant amount of information and assessment that has been undertaken since receipt of the progress records and the hard copy of project accounting records at the Hearing."99
241.
The Tribunal is satisfied that the information and records thus provided to the experts and used by them in their evaluation of the claims qualifies as "contemporary records" in the sense of Clause 53.4 GCC. This information and these records provided a solid basis for the analysis of the claims, in particular the quantification of the prolongation costs. The Tribunal has borne in mind that any deficiency in these records had to be construed against the Claimant and that the claims were admissible only to the extent to which they could be based on contemporary records.

8.3.2 Methods of quantification

242.
The prolongation costs were first quantified in the Contractor’s Statement at Completion. In this quantification the Contractor assumed that he was entitled to the compensation for the total of his prolongation costs, without distinguishing between compensable and non-compensable costs. The claim consisted in the addition of the costs which the Contractor claimed to have incurred during the period after the contractual completion date. The summary sheet of the claim showed, on a month by month basis, (i) personnel costs, (ii) general expenditures, (iii) machinery costs and (iii) financial costs. This summary sheet is backed up by detail on the costs in each of these categories. The total adds up to US$22'928'039.25, the amount claimed for prolongation costs.100
243.
The Engineer introduced the distinction between compensable and non-compensable. He identified the number of days which he considered as compensable by reference to each of the five EOT. However, he did not determine the compensation per month, year or EOT separately but collectively for the total of 153 days of compensable delay, relying on the contractual Daywork rates and the cost information which the Contractor had provided. The total compensation for these 153 days was US$1'187 million. It is therefore not possible to know how much the Engineer awarded per day of compensable delay at the different stages of the project; only the average daily compensation, in the order of US$8'000, is known.101102
244.
The Parties’ experts recognised that the costs of the delay vary during the course of the performance of the work, depending in particular on the resources engaged in the relevant activities. They agree that the delay costs should be quantified not by considering the compensable delay as a whole but separately for the periods to which each of the five EOT claims applies and, within these periods, separately for each of the periods during which the specific compensable delay occurred. The experts quantify the delay costs for each of these separate delay periods.
245.
The Tribunal agrees with this approach and therefore considers the delay costs separately for each period within an EOT for which compensable delay has been identified.
246.
Apart from the agreement on this basic element and with respect to the use of Daywork rates, which shall be discussed next, the experts disagree on most other elements of their quantification. The disagreement concerns in particular the approach to be used in identifying the relevant costs, as it shall be discussed thereafter, i.e. the question whether all of the project costs are to be considered during the relevant period or, as proposed by Mr Taft’s "bottom up approach", only the sections of the work and the resources which can be shown to have been specifically affected by the delay at the time when the delay occurred.

8.3.3 The use of rates

247.
In the Determination, the Engineer adopted a method for quantifying the costs of compensable delay that differed from that used by the Contractor in the Statement at Completion. He did so not on the basis of the Contractor’s costs but used the contractual Daywork Rates.103 These are contained in the Bill of Quantities of the Contract and specifically in Bill 13 for "Dayworks: 1 Labor" and "Dayworks: 3 Constructional Plant".
248.
The Engineer applied these Daywork rates for quantifying the delay costs of personnel and to all cases where he "managed to find a rate for a particular item of plant".104 For those items where he did not find a rate, he used the Contractor’s list of "'Monthly cost of Machinery and Equipment on Site' together with Statement at Completion" and applied the values from this list to the items on the "List of Machinery on Site according to Monthly Reports".105
249.
With respect to overheads, the Engineer explained that "Daywork rates include the overheads"; where monthly rates did not, the Engineer adjusted these rates to make allowance for overheads.106 For this reason, the Engineer did not allow overheads as a separate item in his quantification of the claim.
250.
The Contractor did not accept this approach and in the arbitration the Claimant and its experts continued to quantify the claim on the basis of the Contractor’s costs and not by reference to Daywork rates.
251.
Mr Taft, the Respondent’s quantum expert, took the same position. He explained in his Final Report:

"... in my opinion, the use of the rates and prices set out in the Contract should be reserved for those delays that have been caused by works instructed under a Variation...".107

252.
The Tribunal notes that the Daywork rates in the contract are part of the Contractor’s pricing. Therefore, they are applicable when the Contractor is paid for work not otherwise priced in the Contract. They are not applicable in those cases where the costs must be determined. Therefore, the Tribunal agrees that Daywork rates are not the correct manner of quantifying the costs of delay. The actual costs must be used. The question concerning the quantification of delay costs caused by variations has been discussed separately above.108
253.
When calculating the costs of delay, the Claimant’s experts followed an approach which determined the delay costs on a monthly and daily basis. They applied the daily costs so determined to the relevant number of days of compensable delay and referred to the daily costs so determined as "rates". However, the rates so determined are different from the Daywork rates in the Contract. They are calculated by reference to the Contractor’s costs during a certain period. This approach to quantification, the development of the rate, was summarized as follows:

"... the rate at which [the Claimant’s expert] calculated on the basis of [information available to him] is for most of the project [US$] 30'000 per day, in some periods it goes up to 35'000, towards the end it goes down to 13'000."109

254.
Mr Taft, the Respondent’s expert, adopting the "bottom-up" approach, does not proceed by calculating a daily rate for the Contractor’s costs but a total of the costs attributable to given compensable delay. Nevertheless, in order to provide a comparison with the Claimant’s expert, Mr Taft also shows daily rates.
255.
Having accepted the approach by which the costs of delay during a period are applied to the number of days of compensable delay, the Tribunal also refers to these daily costs in terms of "rates". It points out, however, that the rates so determined are derived from the Contractor’s costs and are different from the contractual Daywork rates.

8.3.4 The "Bottom-up" method: restricting the claim to directly impacted resources

256.
The most important difference between the Parties and their experts concerns the question whether, during a period of critical compensable delay, the costs of all the Contractor’s resources on site must be considered or only those which can be shown to have been impacted by the cause of delay on which the entitlement to compensation is based. Mr Taft, who insisted that this latter approach should be applied, described it as "bottom-up approach", distinguishing it from the "top-down approach", the expression by which he described the method of quantification used by the Claimant’s experts.110
257.
Mr Kennedy, the Claimant’s expert, explained his approach in the following manner: he determined, on a month by month basis, the personnel costs, general expenditures and machinery costs. For each claim which Mr Wiseman, the Claimant’s delay expert, had identified as compensable, he took

"... the entire period in which the delay occurred and derived the total cost thereof [... and then] divided the above total by the number of months and then by the number of days per month (30½) to ascertain an average daily figure."111

258.
He applied this average daily figure, sometimes also referred to daily rate, to the number of compensable days of delay for that claim. This approach continued to be applied by Mr Kennedy, with some refinements, throughout the arbitration until his Final Report. This approach is based on the assumption that the agreed critical delay affected all resources on site.
259.
Mr Taft explained his "bottom-up" approach as follows:

"... is the only way by which individual delays at specific locations can be properly assessed because one has to (in my opinion) start with the each [sic] specific delay event and establish what resources were impacted by it."112

260.
He also explained that

"... it is important to consider whether Entes’ time-related costs that form part of its claim are Project-wide time-related costs, or whether they attach to a particular part or section of the Project. It is clear that many of the delay issues impact a specific part of the Project, and even if such delays affect the Project critical path, if any individual delay impacts only a particular section or subsection of the Project then any P&M resources that are dedicated to another section or subsection of the Project will not be impacted by that specific delay; why would they be? I have therefore tried to apportion the P&M costs into the sub-sections of the Project so that a realistic assessment can be made of the impact of individual delays on the P&M resources."113

261.
Mr Kennedy replied to these explanations as follows:

"I do not agree with Mr Taft’s logic on this issue. All of the awarded 1043 days are for the project as a whole […] The extensions of time do not relate to sections or parts of the works but to the whole project and therefore in my view those entire time-related costs should be applied to all of the works in the periods in which they occur. To treat this time-related portion of the P&M costs any other way would be to deny they are in fact time-related and not section related."114

262.
On this basis, Mr Kennedy calculated monthly and daily rates which he applied to the periods of compensable delay. The rate, as applied in his Final Report, varied between US$32'763.48 per day for EOT 1 and US$13'697.94 for one of the periods in EOT 5. He multiplied that rate with the number of days of compensable delay during the period considered. Mr Taft’s method does not lead directly to daily rates for a given period, since he differentiates between sub-sections affected. Nevertheless, starting from the total amount assessed as delay costs for a particular cause in one of the EOT periods, he calculated what the daily rates would be. These vary between US$8'631.71 in EOT 1 to a daily rate between US$1'520.13 and US$3'904.22 in EOT 5.115
263.
The Tribunal considered that the delay which the Engineer identified is delay that affected the Project as a whole and delayed the completion date and thus is critical delay. Some of this critical delay was identified by the Engineer as compensable. In this arbitration, the Claimant contests the Engineer’s decision to treat some of the critical delay as non-compensable; but again, only critical delay is in issue.
264.
As a result of such critical delay, the resources engaged on the Project are required for a longer period. Due to the delay, the Contractor performs over a longer period the work for which he planned (and priced) 1'065 days. The Engineer accepted 1'043 days of critical delay. As a result, the Contractor’s resources were required for almost twice as long. It is the costs of these additional days, to the extent to which they are compensable, that have to be quantified and not just those which were directly impacted at a specific moment.
265.
It may be that, when a critical delay affects a particular section only, the other sections continue working or resources engaged on a delayed section may be shifted to other activities. Indeed, the issue was discussed from this perspective at the hearing in the context of the claim concerning Additional Works during the EOT 5 period. Mr Taft refers to this discussion and relies on it in support of his position.116 That work was performed at the end of the project on a section that had been completed and was already "under traffic" and some of the equipment was shifted for performing the additional work.117 In such a situation, it may well be that only specific sections which remain to be completed will have to be considered. Indeed, as will be seen when the quantification of compensable delay in EOT 5 is discussed, the daily rate applied is much lower than during earlier periods.
266.
In all these cases the delay requires that the Contractor remains longer on site. Its resources are therefore engaged for a longer period. Even if during the specific delay on the critical activities some activities continue to be performed, sooner or later the other sections also will be affected (during their performance or at their end); otherwise the delay would not be critical. In this manner all of the resources on the site are affected by delays to the completion date of the Project.
267.
The Tribunal concludes that during a given period of delay, the resources engaged on all activities or sections of the work must be considered when calculating the prolongation costs and not just those on the activities immediately affected by the delay.

8.3.5 Allocation in time

268.
For the reasons explained above, the duration of each of the periods of delay has been determined by the Engineer and is not in issue any longer. What remains to be determined is the precise period during which each of the delays occurred.
269.
As pointed out above, the Contractor’s costs varied over time. In order to determine correctly the costs affected, it is important to identify the relevant period to which a given period of compensable delay must be allocated.
270.
The periods during which the delay occurred have been quantified on the Claimant’s side by Mr Wiseman, to whom Mr Kennedy refers, and on the Respondent’s side by Mr Marshall to which Mr Taft refers. The experts do not always agree on the duration of that period nor do they always agree on the position of the delay period on the time line of the project, i.e. when exactly the delay period occurred.
271.
The Respondent’s experts, due to the "bottom-up approach" applied by them, seek to identify the specific activities affected by the identified cause and the duration for which they were affected. On occasions, they conclude that the delay is shorter than what the Engineer had determined. The conclusion cannot be admitted since the Engineer’s determination of the excusable delay has not been brought to arbitration by the Employer and the Contractor accepted during the arbitration the durations of delay determined by the Engineer.
272.
In each EOT the Contractor specified the relevant period for the EOT request as a whole and, with respect to some delays, a specific period during which individual delay events were effective. When the Engineer, in his response to an EOT or in his Determination, fixed the period of critical delay allocated to a specific cause, he often also gave indications with respect to the period during which the delay occurred.
273.
In each case in which it had to quantify prolongation costs resulting from critical delay, the Tribunal considered the relevant periods identified by the experts of both sides. Given the difference in method and the Tribunal’s decision, in favour of that adopted by the Claimant’s expert, the Tribunal’s allocation of delay to a specific period generally coincides with that of Mr Wiseman and Mr Kennedy.
274.
In a number of occasions the period identified by the Contractor or the Engineer is longer than the period of critical delay awarded by the Engineer. In these circumstances, the Claimant’s experts refer to the relevant period and determine the average daily cost during this period. This average daily cost is then applied, like a rate, to the number of compensable days in question.
275.
The Tribunal adopted the same method.

8.4 Cost categories

276.
In the Statement at Completion, the Contractor quantified the delay costs on the basis of four cost categories, viz. (i) Personnel Costs (subdivided in "Turkish Personnel" and "Local Personnel"), (ii) General Expenditures, (iii) Machinery Costs and (iv) Financial Costs. The Engineer started with the same categories but, because of his method of quantifying the claim, reduced the categories of quantified costs to costs for personnel and machinery. In the arbitration, the Claimant, through the report of Mr Kennedy, presented the claim again on the basis of these four categories, the costs being taken from the Claimant’s audited accounts.118
277.
In subsequent submissions and at the hearing, the Parties’ experts dealt with the quantification of the delay claims by reference to these categories, except that "Financial Costs" were no longer considered in the context of the delay costs. The terminology used for some of these costs, in particular that for the General Expenditures, varied occasionally. The Tribunal will examine the claim for prolongation costs by reference to these categories.

8.4.1 Personnel Costs

278.
In the Statement at Completion the Contractor presented tables showing for the time after the contractual completion date of 3 December 2002, on a month by month basis, the summary of its personnel cost records and based the personnel cost component of the claim on this summary.119 The Engineer stated in his Determination that he requested "returns of labors" but did not obtain them. Therefore he decided to quantify these costs on the basis of his own records. He "used his record kept in his file which is base material for the monthly Progress Report and applied Daywork rate submitted in the bid to the working days of each category of personnel".120 The Claimant objected to this method of quantification. The Tribunal has accepted that records of actual costs are to be preferred over rates such as the Daywork rates used by the Engineer.
279.
In the arbitration, the Claimant’s experts presented the local and Turkish personnel costs on the basis of the Contractor’s audited accounts. Attachments to Mr Kennedy’s first report contain tables with a month by month breakdown of these personnel costs.121 The numbers in these tables are used in the final quantification of the delay costs as contained in Mr Kennedy’s Final Report.122
280.
The Respondent and its experts were provided with the data backing up these tables, in the form of very voluminous files of the Contractor’s Monthly Reports of personnel and machinery, in the form of "a memory stick with 600Mb of information" consisting of these reports.123 The Respondent’s quantum expert confirmed that this "has enabled us to review the Turkish and Local personnel on the site on a month-by-month basis".
281.
Mr Taft states that "timesheets, payroll information etc have not been provided so I have not been able to check the monthly costs claimed by Entes/assessed by Mr Kennedy".124 However, the monthly records, as explained above, were taken from the Contractor’s audited accounts. Mr Taft does not give any indication which would raise doubts that the records are correct.
282.
Mr Taft used the monthly personnel accounts to apportion the personnel costs between "site wide, sectional or non-prelim". On the basis of this allocation, Mr Taft then proceeded "to split Mr Kennedy’s monthly costs into Section A, Section B, Site Wide and Non-prelims for Turkish and Local staff".125 He used this allocation for the purpose of his "bottom-up" method. The Tribunal has found that this method is not adequate for the quantification of the Project-wide delay which entitles the Contract to compensation of its additional costs.
283.
The Tribunal therefore accepts that the Contractor’s personnel costs have been properly documented and must be assessed on the basis of the records in the Monthly Reports. It uses the numbers in Appendix A to Mr Kennedy’s Final Report.

8.4.2 Plant and Machinery Costs

284.
The Statement at Completion also contained a "List of Machinery on Site According to Monthly Reports", showing for each month from December 2002 to October 2005 the number of each item of machinery. Another table showed the monthly costs of the machinery in the list and further documents supported the value shown in the table for the principle items of machinery.126 On this basis, the Contractor calculated the monthly machinery costs for this period, reaching a total of US$16'635'952.50.127
285.
The Engineer examined the monthly costs of machinery which the Contractor had indicated and compared them to "the Contractor’s submitted rates quoted from other countries"; he found that only a few items of such other rates were lower than those indicated by the Contractor in the table with the monthly machinery costs. Nevertheless, the Engineer did not use these monthly machinery costs but relied on the Daywork rates in the Contract. Only where no Daywork rates were available, did the Engineer use the monthly costs in the Contractor’s table, increasing them by 27.5% "to absorb overheads (General Expenditures and Financial Costs)...". The resulting rates were applied by the Engineer to a number of compensable days of delay and the Engineer’s estimate of the "number of days/machine that worked each month".
286.
Table 3, attached to the Engineer’s Determination, shows for the claimed items of machinery the "Entes SaC Rate $/month", i.e. the monthly costs identified in the aforementioned table in the Statement at Completion and an "Adjusted SaC (Entes Rate)", i.e. the corresponding cost based daily rate with the 27.5% mark-up. For those items of machinery for which the Engineer had identified a Daywork rate, that rate also was identified in Table 3. In nearly all cases, the Daywork rates are below the rates based on the Contractor’s cost based rates. In most cases, the difference is substantial. For instance, for the Caterpillars D9N and D9R the Daywork rates are US$40 while the cost based rates are US$510; similarly the relationship between the rates for the Caterpillar D8N is 40 to 425, the Dynapac F14 is 40 to 340, the Mercedes Jeep is 8 to 63, the Tractor 8 to 63. While the difference is less striking with respect to some other items (e.g. the Komatsu bulldozer is 40 to 255, the Komazu loader is 40 to 212 and the Dynapac CC42 DD 40 to 76; and for some of the items identified as "Russian" the Daywork rate comes close to the Contractor’s cost based rate), it is evident from Table 3 that the Daywork rates used by the Engineer for quantifying the Contractor’s machinery costs are far from reflecting the costs identified by the Contractor and verified by the Engineer.
287.
The Tribunal has accepted that for the quantification of the claim for prolongation costs, the Daywork rates are not a suitable basis. This is all the more the case when the Daywork rates are far from expressing the costs for which the Contractor is entitled to be compensated.
288.
In the arbitration, the Mr Kennedy presented in his first report tables showing, on a monthly basis over the period from January 2000 to October 2005, the items of machinery present on site and, on that basis, the machinery rates for each month during this period.128 He explained that these rates had been calculated by the Contractor from actual rates charged by equipment lessors, the Employer, the Road and Maintenance Department, the Employer, Subcontractors as well as actual rates "that the Contractor has paid in other countries since he could not timely remove his own equipment from Kyrgyzstan" and the "value of similar equipment" calculated "proportionately".129
289.
Mr Kennedy concluded that the rates in these tables "were the rates in common use in Kyrgyzstan between all the relevant players in the market and were the costs the Contractor was actually charged for hired P&M or which he received for his own P&M".130
290.
Prompted by comments in Mr Taft’s report, Mr Kennedy made corrections in the monthly machinery costs.131 The revised numbers were used by Mr Kennedy in his final quantification of the prolongation costs.132
291.
Mr Taft questioned the Contractor’s and Mr Kennedy’s quantification of the machinery costs on a number of grounds. One of these grounds concerns the "bottom-up" approach of Mr Taft who takes the position that "compensability must start with the actual individual delays (number of days in individual situations/locations) and what resources were specifically caused to be on the Project longer. If any P&M was forced to be standing idle waiting for work it could become a time-related resource and a valid part of this claim."133 According to this position "P&M is only valid as part of a prolongation claim if it is shown to be time-related and impacted by the specific delay forming the subject of this claim".134
292.
The Tribunal has rejected this position. For the reason explained, the Tribunal is of the view that all of the P&M on site during the delay period must be considered, whether at that particular point in time a particular item of equipment, is idle in the workshop or working.
293.
Mr Taft also took a different approach to the quantification of the machinery cost: Mr Taft accepts the rates in the tables used by Mr Kennedy; but he describes them as "market rates". In order to extract the actual costs of the Contractor, Mr Taft makes a number of deductions. He concludes that, in his opinion, "the likely costs will be between 40% and 90% of the 'market rates’ so I have allowed an average of 65% of the rates allowed in Entes’ claim for non-winter periods".135
294.
Mr Taft’s reductions in part are based on the statement that in his experience "the actual costs of plant owned by a contractor are less than the equivalent costs of hiring such plant from external suppliers".136 He disagrees with Mr Kennedy’s assumption that "external equipment hire rates are appropriate for plant owned by the Contractor". He points out in particular that hire rates must be expected to include an element of profit and concludes that, using hire rates as the basis for quantifying the Contractor’s costs and applying them even to the Contractor’s own P&M would mean that compensation would include a profit element. Referring to Clause 1.1(g) (i) GC Mr Taft points out that such a profit element may not be included in calculations based on cost. Indeed, this provision defines costs as follows:

"'cost' means all expenditure properly incurred or to be incurred, whether on or off the Site, including overhead and other charges properly allocable thereto but does not include any allowance for profit."

295.
The Tribunal noted that the Engineer accepted the valuation of the Contractor’s P&M cost and used the resulting rates in all cases for which no Daywork rates were available.137 Indeed, the Engineer was best placed to verify the Contractor’s statement that these rates reflected the market conditions in Kyrgyzstan. The Tribunal has considered Mr Taft’s objections to the use of these rates, in particular his opinion that the Contractor’s "likely cost will be between 40% and 90% of the 'market rates'". This opinion has not been substantiated by any evidence. In any event, even if Mr Taft’s opinion were correct and the Contractor’s costs would be so much cheaper than the market rates, he would suffer a substantial loss from having to keep his P&M on site rather than renting it out. The Tribunal therefore accepts the rates used by the Contractor and the Claimant’s experts. However, it must make one exception.
296.
Mr Taft rightly points out that the rates used by the Contractor, being market rates, must include an element of overheads and profit. With respect to the profit element, Mr Taft referred to Clause 1.1(g) (i) GC which excludes profit from the definition of cost. Insofar as the Contractor used rented equipment, the overheads and profit of the lessor included in the rent are part of the Contractor’s costs and must be compensated. The situation is different with respect to the Contractor’s own P&M. Using market rates for compensating the Contractor for his P&M costs would allow the contractor to recover the overhead and profit element in these rates. The Tribunal therefore decides that, to the extent the Contractor used his own P&M, a deduction must be made to exclude any profit margin which may be included in the leased or market rates.
297.
Concerning the overhead element in the market rates, the Claimant seeks, as a separate item in the quantification of the prolongation costs, compensation for general overheads. The Tribunal has considered this item of the claim and found it admissible; it awards it in a separate quantification.138 To the extent to which leased or market rates also include an item for general overheads, this item too, must be excluded when quantifying the Contractor’s own P&M so as to avoid double compensation.
298.
The Tribunal, therefore, must determine the relative value of the P&M owned by the Contractor and the allowance for overheads and profit included in the leased or market rates.
299.
Concerning the Contractor’s own P&M, the evidence produced shows that some of the P&M on which the quantification is based was owned by the Contractor and some was leased. This is evidenced by a large number of contracts and other documents attached to the Statement at Completion showing the rental and other details of the P&M on site.139 The Engineer had at his disposal a "List of Machinery on Site according to Monthly Reports" and a "Schedule (II) Major Items of Construction Plan submitted with Bid wherein year of manufacture, new of leased, owned or leased, and estimated CIF value are included".140 On the basis of the available documentation, the Engineer produced Table 3 of his Determination, which indicates for some items but by far not all, either "owned" or "leased".141 Mr Kennedy’s first report contains tables showing on a monthly basis the items of machinery on site, identifying these items by type, value, number of items per type and distinguishing between "Entes" and Rental".142 There is therefore contemporary evidence which would have allowed the Parties and their experts to identify the proportion of leased and owned P&M.
300.
Mr Taft, as mentioned above, insists on the difference between "externally hired plant" and "plant owned by the Contractor".143 He opines that the market and external hire rates include a margin for overheads and profit for the plant hire company in the "region of 10%".144 Mr Taft then states:

"Given the 10% for profit that I consider should be excluded from 'market rates', without further details from Entes, in my opinion the likely costs will be between 40% and 90% of the 'market rates’ so I have allowed an average of 65% (i.e. a deduction of 35%) of the rates allowed in Entes’ claim for non-winter periods".145

301.
The evidence produced would have allowed Mr Taft to identify the items of P&M owned by the Contractor, to which the exclusion of 10% had to be applied. The detailed tables produced by Mr Kennedy would have permitted to identify these items one by one and calculate their value.146 He has not done so. The percentages of "the likely costs" are unsubstantiated and obviously lead to a deduction exceeding that for overheads and profit.
302.
In the absence of any other information provided by Mr Taft, the Parties and the other experts, the Tribunal must fix the proportion of the Contractor’s owned P&M. It does so on the basis of Mr Kennedy’s corrected "List of Machinery on Site according to Monthly Reports", attached to his last report. This List shows over the period from January 2000 to April 2004 a total of items/month of 15'784 of which 13'368 are identified as "Entes" and 2'419 as "Rental". The proportion of owned items of Machinery is therefore 84.7%. The Tribunal accepts that this proportion, calculated on the basis of items of equipment, also represents the proportion in the value of the equipment.
303.
It follows that 84.7% of the P&M for which the Contractor claims prolongations costs were owned by the Contractor; their valuation at market or rental rates includes overheads and profit which must be excluded.
304.
Mr Taft estimated the margin for "overhead and profit for the plant hire company" was "in the region of 10".147 This estimate remained uncontested. In particular Mr Kennedy defends the use of rates applied by the Contractor by opining that they are "in common use in Kyrgyzstan";148 but he does not respond to Mr Taft’s argument that market rates include a profit element which is excluded under the Contract.
305.
The total value of P&M in the Contractor’s claim, as quantified in Mr Kennedy’s latest table, is US$ 37'527'009.149 According to the above determination 84.7% thereof are the Contractor’s own P&M, i.e. US$31'785'377; this amount contains US$3'178'538 for overhead and profit, corresponding over the total of the 2'108 days on average to US$1'508 per day.
306.
In quantifying the P&M component of the prolongation costs, the Tribunal therefore relied on the P&M rates in the Statement at Completion, as corrected by Mr Kennedy and applied by him in his Final Report and deducted from these rates US$1'508 per day.

8.4.3 General Expenditures/Preliminaries

307.
The Contractor’s claim for delay costs, as presented in the Statement at Completion, included an item described as "General Expenditures" in a total amount of US$ 4'499'851.03 and "Financial Costs" in a total of US$449'959.04. The Engineer used a different approach in his Determination to the quantification of these costs. He quantified compensable delays on the basis of Daywork rates and stated that General Expenditures and Financial Costs were "included as overheads in Daywork Rate".150
308.
In support of the claim in the Statement of Claim, Mr Kennedy dealt with these cost items under the heading of General Expenditures, but also used the term Preliminaries. He produced tables151 in which the "Kyrgyzstan Site General Expenditures" were presented on a monthly basis from January 2000 to December 2005, distinguishing between:

• Toktogul Site Direct General Expenditures;

• Toktogul Site Indirect General Expenditures;

• Karakul Site Indirect General Expenditures; and

• Bishkek Office Direct General Expenditures.

309.
He explained that the costs in these tables were taken from the Contractor’s audited accounts.152
310.
Mr Taft objected that he had not been able to verify whether the claimed costs had actually been incurred.153 He questioned Mr Kennedy’s terminology in particular with respect to the distinction between "site direct" and "site indirect".154 Mr Taft also required that the claimed preliminaries had to be allocated to sections of the Project affected by the compensable event;155 and that the costs were properly allocated to the different cost categories.156
311.
Concerning the evidence for the costs, print outs of the supporting documents were provided to Mr Taft as he confirmed in his final report:

"With regards to general expenditure, I received a copy of a printout of Entes’ Project Accounts at the Hearing and I have had the headings translated from Turkish to English so that I could check the monthly totals for "indirect" and "Direct" expenses. I am now in a position to confirm that the monthly totals in Mr Kennedy’s Report for General Expenditures (his Appendix A1/17) are the correct totals from Entes’ Accounts printout."157

312.
Mr Taft did, however, raise doubts as to the allocation of cost to different categories. In particular, he pointed out that he was not able "to see 'behind' these accounts to determine what is precisely included and how the currency has been converted".158 He confirmed that he had been able to see "the individual monthly costs for each sub-category of General Expenses". He did not agree "that all the sub-items claimed were in fact time-related site overhead expenses that should form part of a claim for prolongation costs."159 In order to develop this objection, Mr Taft analysed the different General Expenses cost items and determined those which he accepted as time related and thus eligible for a claim as compensation costs and those items with respect to which he contested, fully or in part, that they were time-related.160 He presented the results of this exercise in Appendices B1 and B2 of his Final Report in the form of a spread sheet which shows the rating, between 0 and 100%, and the resulting cost difference between the amounts claimed as General Expenses. Appendix B1 shows a difference between the amount claimed and Mr Taft’s assessment of 35.1%.
313.
For many of the items so identified as not time-related nothing or only insignificant amounts are claimedI. They can be disregarded for the decision of the Tribunal. The items for which the difference between the claim and Mr Taft’s assessment is significant are:

• Machine Repairs/Maintenance 50% allowed by Mr Taft;

• Transportation 50% allowed by Mr Taft;

• Transportation of workers 50% allowed by Mr Taft; and

• Food 50% allowed by Mr Taft.

314.
Mr Taft explained his choice with respect to these items that

"... for transportation and food, I have assessed these to be 50% time-related site overheads because the transport could be of plant, materials or workers (not just site supervision staff) in which case these costs could vary as a function of volume of volume of work not simply time. On food, the costs seem to be very high and could therefore be for workers as well as site supervision staff; therefore these costs cold also vary as a function of work volume rather than time only."161

315.
Mr Kennedy replied:

"In principle I agree with Mr Taft’s approach. However, Mr Taft has reduced the machine repairs and maintenance to 50%. I believe these machines within the General Items are for Engineers’ cars, buses, etc. and as such are in my view 100% time related. Similarly transportation is in my view entirely time related. Hospitability and entertainment are other items I regularly allow as time related since only those costs incurred in the overrun period are claimed as ongoing expenditures necessitated by the prolongation of the project."162

316.
Mr Kennedy explained with respect to terminology and classification of cost items that the allocation "with Turkish contractors does not necessarily follow protocols which Mr Taft has experienced previously"; he provided a table that showed the allocation applied in the present case.163
317.
The Tribunal notes that it is not contested that the Site General Expenditures must be included in the costs of compensable delay: the Engineer included them by using Daywork Rates; the Parties’ experts, having rejected the quantification on the basis of Daywork Rates, accept as a matter of principle that they must be included in the compensable costs. The Tribunal shares this view; these costs are typical of the costs which a contractor must bear when the works are delayed. The questions that remain concern the exact amount of these costs and the classification as General Expenditures.
318.
The Tribunal has rejected Mr Taft’s position according to which delay costs can only be compensated if a link is shown to the specific compensable delay event. Since the delay affected the completion of the entire project, all costs of delay must be included in the quantification of the costs caused by compensable delay. This also applies to the General Expenditures. The allocation of these expenditures to certain parts of the works, as attempted by Mr Taft, therefore is not relevant for determining the General Expenditures during a given period of compensable delay.
319.
With respect to the classification of the various items of costs, the Tribunal noted that differences may exist as to the category in which a certain cost item should be recorded. What is relevant are the criteria for the decision which the Tribunal has to make. In this respect, the decisive question is whether a particular item of cost incurred during a period of compensable delay falls into a category of costs which the Contractor had to support as a result to the delay. The objections which Mr Taft had raised in this respect may have their origin, at least in part, in his bottom-up approach. In that approach, it may be of importance whether a certain cost item relates to a specific activity which is delayed. In the case of a general delay of the project as a whole, this allocation loses its importance. In such a situation it is immaterial whether the costs for food concern site supervision staff or productive workers, or both. The two categories of personnel are affected by the delay and the costs for both must be compensated. The question whether this is done as part of General Expenditures or as part of personnel costs is, at best, of secondary importance.
320.
In view of these considerations, the Tribunal accepts the quantification of the General Expenditures as contained in Mr Kennedy’s Final Report.

8.4.4 General or Head Office Overheads

321.
The Claimant seeks, as part of the claim for EOT No 5, payment of an amount of US$ 2'626'138.40 for its Head Office Overhead. Details of this claim were presented in Mr Kennedy’s First Report. Mr Kennedy listed but did not quantify a number of cost items of a general nature that he considered in addition to the "directly incurred costs of delay".164 He also stated that he had taken from the audited accounts the percentage of head office overheads for the years 2000 to 2005 and indicated them as follows:

2000 5.00 %;

2001 4.32%;

2002 5.71%;

2003 10.37%;

2004 2.81%; and

2005 5.78%.

322.
He calculated the average rate over this period as 5.66%.165 In his second report, Mr Kennedy provided a table showing the amounts of various items of overhead costs for each of the six years.166 He also corrected the value for 2004, increasing it from 2.81% to 7.34%.167 This increase brought the average rate to 6.42%,168 adding that this percentage was his "experience of such matters what I would expect within the industry".169
323.
Mr Kennedy also provided a list of 25 "tenders returned or declined by the Contractor during the Years from 2003 to 2005", implying that, if its resources had not been tied up in Kyrgyzstan on the present Project, the Claimant could have concluded other contracts which would have made contributions to the company’s overheads and thus preserved an overhead rate at the level of the average just mentioned. With his second report, Mr Kennedy provided a list of 21 projects showing details concerning each of the projects, including their value, ranging from US$10 million to US$250 million.170
324.
In order to calculate the amount of overhead contribution to which, in his opinion, the Claimant is entitled, Mr Kennedy relied on Mr Wiseman’s determination concerning the responsibility of the overall time extension of 1'043 days which the Engineer had granted. According to Mr Wiseman, 808 days thereof were the responsibility of the Employer, of which 672 days for delays in the five EOT claims and 136 for winter shutdown periods; an additional period of 136 days were allocated to delay attributed to joint responsibility.171
325.
On the basis of these assumptions Mr Kennedy calculated the loss of overhead contribution by using the Emden formula, a method recommended by a reputed English publication.172 According to this formula the daily general overhead cost is obtained by dividing the contract sum (US$41'768'448) by the contract period (1'965 days) and multiplied by the overhead percentage determined.173 On this basis Mr Kennedy applied a daily rate of US$2'517.87.174
326.
The principle that general overhead costs may be claimed and that they may be calculated by using the Emden formula is not really contested. Mr Taft’s objections concern essentially the failing evidence for (i) the Claimant’s overhead costs during the years in question175 and for (ii) the "missed tenders".176 Relying on the amount of overhead costs in 2004 prior to the correction of this value by Mr Kennedy, Mr Taft opines that the percentage for this year would be more representative and proposes a value of 2.39%., leading to a daily rate of US$937.33.177
327.
Mr Taft also raises the "potential duplication of costs between prolongation costs and the Claimant’s head office overheads claim"178 and questions whether, in the absence of the delays for which extensions were granted, the Contractor would have finished in time.179 Finally, Mr Taft points out that the period must be determined which "might have caused a lost contribution to Entes’ overheads"; he objects to the manner in which Mr Kennedy treated non-compensable periods and periods of joint responsibility.180
328.
The Tribunal has examined the costs listed in the table presented by Mr Kennedy with his second report. Subject to the possible duplication, which shall be considered below, it is uncontested that these costs can be taken as general overheads. The Tribunal has no reason to question Mr Kennedy’s statement that the costs in that table were taken from the Claimant’s audited accounts. On this basis the average rate for the Claimant’s general overheads during the relevant period would be 6.42%, corresponding to US$2'517.87 per day.181 In the circumstances, the Tribunal considers this daily rate as adequately documented and proven.
329.
Concerning Mr Taft’s argument about possible overlap, the Tribunal noted that indeed there are a number of items which appear both in the table showing the Claimant’s general overheads for the years 2000 to 2005 and in the project specific General Expenditures or Preliminaries. Mr Taft listed the cost items which he considered relevant as follows:

• Portage and transportation;

• Maintenance and repair of machines inventory stock;

• Vehicles fuel expenses;

• Vehicles maintenance repair expenses; and

• Vehicles depreciation.182

330.
These items appear with the same or very similar descriptions both in the table with the General Overheads183 and in the Direct General Expenditures.184 The Tribunal has not seen a satisfactory answer from Mr Kennedy to the argument of possible overlap. It accepts, therefore, that a substantial part of the listed items in the General Overheads are duplicative of the costs which are taken into account under the heading of General Expenditures. Therefore, the Tribunal makes a deduction from the General Overheads rate which it accepted above in principle.
331.
In the list presented as Attachment 9 to Mr Kennedy’s Reply Report, the value for the cost items listed compared to the Contractor’s total overheads during the years 2000 to 2005 varies between around 5 and 8 %. Assuming that a major part of these items are already included in the project General Expenditures, the Tribunal reduces the daily rate for General Overheads from US$2'517.87 to US$2'350 which corresponds to an overhead rate of some 6%.
332.
Mr Taft explained:

"For the purposes of this assessment I cannot reach a firm position on the quantum of the head office overheads on the basis of the information provided. In my opinion, whilst it is possible that Entes overheads could be as high as 5 - 6% I know of many contractors which are able to operate at much lower levels of overhead in the region of 2 - 3 %."185

333.
Mr Kennedy commented the rate of 2.39% proposed by Mr Taft by stating:

"I have never in my long experience of successful international contractors seen Head Office overheads at a level of 2.39% as suggested by Mr Taft. Anywhere from 5% to 10% is what I have encountered and this fluctuates depending upon international and domestic economies, etc. Therefor, 6.42% would in my view be within the compass of my expectations."186

334.
It follows that the overhead rate of about 6% accepted by the Tribunal is within the range considered by both experts.
335.
As to Mr Taft’s objection concerning the "missed contracts" or "missed tenders", the Tribunal notes that the matter is speculative by its very nature. A claim for lost contribution is based on the assumption that, in the absence of the delay, the contractor would have been able to use its resources for work on other projects. In the ordinary course of business, where a contractor regularly achieves general overhead rates in a given ratio, this assumption may be taken as supported, without there being a need for establishing proof for contracts that would have been concluded in the absence of the delay on the project in question. The Tribunal therefore accepts the assumption made with respect to "missed contracts".
336.
In view of these considerations, the Tribunal accepts for General or Head Office Overheads the daily rate of US$2'350.
337.
The Claimant and Mr Kennedy apply this rate to the full period of excusable delay of 1'043 days, allowing only for the possibility of a deduction of 50% with respect to the period of "delay of joint responsibility".187 The Tribunal is of the view that general overheads are part of the Contractor’s prolongation costs. The Claimant is entitled to be paid for such costs only to the extent to which it demonstrates entitlement to compensation. It follows that general overhead costs are allowed only for days of delay which the Tribunal finds to be compensable.

8.4.5 Prolongation costs in cases where the delay is caused by variations

338.
As explained above,188 prolongation costs due to additional works are compensable. The difference between the Parties and their experts concerns the manner in which these costs are compensated.
339.
In the claim for prolongation costs, as presented in the Statement at Completion, the Contractor quantified the claimed costs globally for the entire period of prolongation beyond the original contract period. In other words, during the initial phase the Contractor did not address specifically the quantification of each of the causes for delay on which he relied.
340.
An analysis of the different causes for delay identifying the number of days attributable to each of the causes was first introduced by the Engineer in his Determination. In Table 2 attached to this determination, the Engineer identified for each EOT claim the causes for delay which he considered and attributed to each of them a number of days, distinguishing between compensable and noncompensable. Delay attributed to variations was classified as noncompensable; the Engineer stated that "varied works do not qualify for time related financial compensation". The Engineer explained that the Contractor is compensated for the varied work by the contractual rates and prices. If he seeks additional compensation, the Contractor must give notice under Clause 6.4 and Clause 52.2 GCC "of his intention to vary a rate or price". The Engineer added:

"... where an increased amount of work justifies an extension of time, the Engineer has to consider whether the increased amount has rendered the Contract rate inapplicable. The nature of the work does not have to change, but if the overheads during the extended period exceed the overheads covered by the additional volume of work, the rate for the work is no longer applicable and should be adjusted."189

341.
This position of the Engineer is contested by the Claimant. It raises two issues: first, have the contractual notice requirements been respected and, if not, what are the consequences; and second, if the Contractor is entitled to claim compensation, does the compensation take the form of a modified or new rate for the varied work or is it calculated in the same manner as the compensation for prolongation costs on other grounds.
342.
Concerning the first of these issues, the notice requirement, Clause 6.4 GCC concerns claims for delay resulting from the Engineer’s failure or inability to issue in due time "any drawing or instruction". This is not the issue here, where the effect of variations on the duration of the works is the basis of the claim.
343.
Clause 52.2 GCC, the other provision on which the Engineer relied, concerns the rates to be applied to varied work. The second paragraph of this clause requires the Contractor to give notice "of his intention to claim extra payment or a varied rate or price". However, this requirement applies in the context of the valuation of varied work on the basis of contractual rates or prices or their modification. The passage states expressly that "no varied work... shall be valued under Sub-Clause 52.1 or under this Sub-Clause unless" the specified notice requirement is met. However, the claim which the Contractor is making here does not concern the valuation of the variations at contractual or other rates. It concerns the question whether the variation caused delay and whether this delay entitles the Contractor to compensation of the resulting costs. The claim for prolongation costs is of a nature different from that concerning the valuation of the variation itself. The notice requirements in this respect are those of claims in general, as they have been considered above. The claims for prolongation costs caused by variations are not precluded by Sub-Clause 52.2 and are admissible, subject to the condition that can be verified by contemporary records.
344.
The second objection of the Engineer concerns the valuation of the claims for the Contractor’s prolongation costs. The Engineer’s position rests on the assumption that the Contractor is fully compensated for a variation by the application of the contractual rates and prices and possibly modified or newly fixed rates and prices. This is clearly wrong. The rates and prices are fixed for the actual performance of the works, including variations. Site overheads are paid for under a separate bill, named "General items". At the hearing the question was discussed whether the quantification of the variations included an amount for these general items. At the end of this discussion, all experts agreed that the quantification included "only the work items" and not the General Items.190
345.
In other words, the rates and prices which were applied for the valuation of the variations did not include any payment for site overheads and general overheads. When a variation causes delay which prolongs the contract period, the Contractor has to bear additional costs for site overheads and general overheads. These costs are not included in the rates and prices; indeed, it would be quite irrational to do so, because the prolongation costs do not depend on the work itself but on the time of its performance. Depending on the time when the variation is performed, no delay at all may be caused and hence no prolongation costs.
346.
The Engineer seems to have understood the issue at least in part. In the quoted passage, he recognises that the timing of the performance may affect the "overheads during the extended period"; but he seemed to have believed that the consequences can be settled simply by adjusting the rate, which obviously is not the case.
347.
Mr Taft recognises that the prolongation caused by variations does cause additional costs but, in one of the alternatives which he considers, he is of the opinion that the prolongation caused by variations should be treated differently from all other prolongations. While such other prolongations should be assessed on the basis of costs, the valuation of prolongation caused by variations should be based on Clause 52 "which refers to the Contract BQ".191 He refers to "General Items (Preliminaries) set out in the Contract BQ" and to "rates for certain types of plant/machinery and labour". By reference to Bill 01 General Provisions, Mr Taft assigned to each item a percentage to reflect the extent to which he considered it time related. In this manner he reduced the total of US$5'620'568.79 of this bill to US$3'636'225.61 and divided this reduced amount by the original contract period of 1'065 days, producing a daily rate of US$3'414.30. Mr Taft used this rate for an alternative quantification of the prolongation costs for additional works in EOT 3 and EOT 5.192
348.
However, as a principal method of valuation, for these prolongation costs based on variations, Mr Taft did not use the rate derived from the BQ. Instead he used the monthly costs during the period indicated as relevant by Mr Marshall, according to the method discussed above. This method required that specifically P&M costs be shown to be "time related and impacted by the specific delays forming the subject of this claim",193 an approach which the Tribunal has rejected. On this basis, Mr Taft reached a daily rate higher than that derived from the BOQ and which he indicated as US$4'967.67 for EOT 3 and a rate varying between US$1'520.13 and US$2'664.99 for EOT 5.194
349.
Mr Kennedy treats the prolongation costs caused by variations in the same manner as any other prolongation cost, except that he makes an allowance described as "abatement". For this purpose Mr Kennedy considers that, in the cases where the prolongation was caused by additional works, the Contractor used productively the resources engaged in these additional works and was paid for them under the Contract. Mr Kennedy looks "at any value earned by P&M in the relevant period(s)", noting the Contractor was paid for this additional work at contract rates. He sees, in this payment, remuneration for the use of P&M which otherwise would have been idle during the critical delay periods.
350.
In order to calculate the "abatement", Mr Kennedy considers the total value of variations ordered and paid, identifying the P&M part in this amount and removing purely time related costs, Mr Kennedy calculated a daily rate of US$831 which he deducted from the P&M costs to make allowance for the value earned during the prolongation period through the payment for the variations.195
351.
The Tribunal finds that prolongation caused by variations causes costs which are not covered by the rates and prices used for the valuation of the variations themselves. This has been established clearly at the hearing, as just pointed out. These costs do not consist simply in the prolongation of the General Items, as the alternative quantification of Mr Taft assumes. They include in particular the cost for P&M which must remain for a longer period on site to produce the same work for the same remuneration. Therefore, the Tribunal does not accept, as explained above, the position of Mr Taft that the prolongation costs should be limited to the specific section of the work directly affected. All of the costs during the relevant prolongation period must be considered. However, allowance must be made for the compensation which the Contractor received through the payments for the variation. The Tribunal accepts therefore that, as a matter of principle, the allowance for the compensation earned through the variation payments (the "abatement", as described by Mr Kennedy) must be made.
352.
As to the quantum of the abatement, the Respondent’s experts have contested the principle by relying on the "bottom up" method, but not specifically the calculation presented by Mr Kennedy. The Tribunal, therefore, accepts the approach to the quantification of the "abatement" by Mr Kennedy,196 subject to some modifications. Mr Kennedy identified the total of Additional Works executed and paid under the Contract at US$2'496'064. He assumes that 45% of this amount is the P&M component of these payments for additional works. He deducts an amount for the part of P&M which was "purely time related and not capable of earning any value (such as engineer’s cars, workers transport, generators, etc.), which the experts agree at 22.6% of the P&M". He divides the resulting amount by 1'043, the number of days in the extended period. The result is the amount which, according to Mr Kennedy, the Contractor earned on average per day by the contractual payments for the additional work.
353.
While accepting, in principle, Mr Kennedy’s calculation, the Tribunal does not see the justification of considering only the P&M value: the costs which Mr Kennedy and the Tribunal use for quantifying the prolongation costs are not limited to the Contractor’s P&M costs, they also include "Actual Prelims", "Personnel (Turkish)" and "Personnel (Local)". While the "Prelims", entitled also "General Provisions", are a separate lump sum item in the BOQ, which is not paid through the rates and prices for the work actually performed, the personnel costs were remunerated by the payments for the additional work. Therefore the Tribunal takes account not only of the P&M value paid through the additional works but also the personnel value.
354.
The total costs of the Contractor, as recorded in Mr Kennedy’s corrected table is US$58'660'497. "Actual Prelims" (US$10'119'259) form 17.25% of this total. The remaining 82.75%, consisting of P&M and Turkish and local Personnel, represent the part of the Contractor’s costs for which he earned revenue through the payments for additional work. It is this percentage which must be applied to the actual revenue from additional work (US$2'496'064), producing the sum of US$2'065'493. The Tribunal sees no justification for deducting from this sum another 22.6% for P&M not earning value. The calculated amount is the total revenue earned by the Contractor for the resources on site during periods of critical delay and for which prolongation costs are claimed.
355.
The Tribunal therefore bases the calculation of the "abatement" on the total amount of US$2'065'493 and divides it by 1'043, the number of days in the extended period, producing an average daily abatement of US$1'980 to be applied to those daily costs for which compensation is awarded as prolongation costs attributed to delay due to additional work.

8.4.6 Summary: the Tribunal’s approach to quantifying the prolongation costs

356.
For the reasons set out in the preceding sections, the Tribunal examines the claim for prolongation costs by reference to each EOT and the grounds for time extension accepted by the Engineer in each of them. It determines for each of the grounds which the Engineer classified as non-compensable, whether this classification is justified or must be changed to compensable.
357.
For each of the delay periods which the Engineer had classified as compensable or for which the Tribunal reached this conclusion, the prolongation costs are then determined by reference to the Contractor’s costs during the relevant period, quantified as described above. In this respect, the Tribunal takes as starting point the position of the Parties’ experts as recorded in the Joint Expert Report, as subsequently corrected in the case of Mr Kennedy, considering also any relevant subsequent corrections, the Parties’ Post-Hearing Briefs as well as the Parties’ other submissions and expert reports.

8.5 Costs related to EOT 1

8.5.1 The claim, its components and evolution

358.
The Claimant seeks prolongation costs with respect to its Extension of Time Claim No 1 for three causes of delay considered by the Engineer in its Determination:

• US$ 1'638'173.83 (alternatively 1'477'293.55) for 50 days of Design Delay;

• US$ 1'049'697.00 (alternatively 947'590.71) for 33 days of Additional Works Delay; and

• US$ 3'111'729.88 for 107 days of Winter Break.197

359.
The Claimant makes allowance separately for the amount certified by the Engineer and paid by the Employer which included compensation for 50 days of Design Delay in an amount not specified for this cause of delay.
360.
The Respondent denies that the Claimant is entitled to any additional payment.198 In the Rejoinder the Respondent also argued that it had no obligation to provide any design to the Claimant.199
361.
The claim was first presented in the "Interim Extension of Time Claim" of 25 July 2002 in which the Contractor sought an extension of time by 469 days, reserving its "right to submit financial claims related to the delays caused to the completion of the project due to reasons beyond his control". The causes of the delay on which the Contractor relied were:

• Changes in designs, requirements to do design and produce drawings and lack of design information which has caused delays to the completion of Works;

• Changes in Alignment and other Works which resulted in increase in the quantities of Works and thus caused the delays due to additional works instructed to the Contractor;

• Unforeseeable crisis in the supply of petroleum products;

• Exceptionally adverse climatic conditions; and

• Serious delays in payments to the Contractor against his approved Monthly Payment Certificates.200

362.
Following correspondence and meetings, the Engineer, in its decision of 17 September 2002, granted 83 days, of which 50 days for design delays and 33 days for delay due to additional works. In this decision, the Engineer reported that the "methodology of determination was explained to the Contractor and the Employer in meetings of 16/09/02 and on 17/09/02 held in JOC office in Bishkek. In the absence of a logical clarification by the Contractor as to why the Engineer determination of the EOT should be varied, the Engineer confirms his determination of the Contractor’s entitlement of EOT for the Interim Claim to be 83 days".201
363.
The Contractor sought compensation for the delay presented in EOT 1 as part of the Costs due to Extension of time included in the Statement at Completion. In his Determination of 18 May 2005, the Engineer:

• granted 50 days of compensable delay due to « design delay ».202 Since the quantum of the compensation was stated only for the total of the compensable delay, the amount certified by the Engineer for this specific period cannot be determined with precision. It can be estimated at some US$400'000;203 and

• 33 days and 107 days as excusable but non-compensable for Additional Works and Winter Break, respectively.204

364.
Table 2 at the Engineer’s Determination also includes 29 days as "Excusable Delay" for "adverse climatic conditions", but does not allocate these days to the compensable or non-compensable delay. The experts agree that this "appears to be an erroneous entry".205 In any event, no claim is made with respect to these 29 days.
365.
The Claimant accepts the duration of the delay attributed to each of the three causes for which the Engineer granted an extension of time and the number of days accepted by the Engineer. The dispute therefore concerns (i) the costs attributed to the 50 days of compensable "design delay and the entitlement to and the quantum of the compensation for (ii) 33 days for additional works and (iii) 107 days for Winter Break.

8.5.2 The 50 days of design delay

366.
In the EOT 1 claim, the Contractor relied on "changes in design, requirement to do design and produce drawings and lack of design information which has caused delays to the completion of Works" and quantified this delay as 174 days.206 Contrary to the Respondent’s argument, design information had to be provided by the Employer through the Engineer.207 The Engineer did not contest that such an obligation existed and accepted that delay occurred. He quantified it "taking 21 days as average expected duration for a single case of approval". On this basis, he quantified the delay caused by the design related issues at 50 days.208
367.
In his Determination, the Engineer accepted that this delay was compensable. The Engineer explained:

"There were numerous design changes during this period, which affected the progress of work and made the Contractor to suffer additional cost due to delays in approval."209

368.
The Engineer’s decision was not contested by the Employer. In this respect the decision it has become binding. Objections to the compensability of this period of delay raised by the Respondent in the arbitration210 are in contradiction with this clear statement of the Engineer which remained uncontested at the time. In any event, the Respondent quotes the Report of its own experts stating that "Mr Marshall holds that the Engineer made a right decision in specifying 50 days as a compensable delay".211
369.
The Experts agree both with the number of days and with the conclusion that the delay is compensable.212 The Tribunal confirms this conclusion and finds that the design delay is compensable.
370.
The remaining difference concerns the valuation of the costs caused by this delay.
371.
The Engineer did not value specifically the 50 days in EOT 1; the experts were unable to determine the costs allowed by the Engineer for this period.213 Based on the Engineer’s overall valuation for the entire period of 153 days of compensable delay, in the order of US$ 1'16 million, the costs for the 50 days in EOT 1, as explained above, proportionately are around US$400'000.
372.
At the hearing the experts agreed that the correct valuation of the costs resulting from the 50 days of delay is higher than this amount;214 but the experts did not agree on the correct valuation. In their post-hearing consultations and submissions, the experts presented the following values: Mr Kennedy: US$ 1'477'293.55 and Mr Taft US$431'585.64.215
373.
In his final report of 18 January 2012, Mr Kennedy refers to Mr Wiseman’s report of 19 December 2011 and increases the quantification to US$1'638'173.83. In Addendum 1 of 20 January 2012 to Mr Taft’s Report, the quantification is reduced to US$ 425'067.27. Based on the valuation of Mr Kennedy, the Claimant seeks US$1'638'173.83; alternatively US$ 1'477'293.55.216
374.
Applying the method of quantification and the applicable values, the Tribunal must first determine the reference period during which the compensable delay occurred and which will have to be considered for the quantification of the costs of this delay.
375.
Mr Kennedy, the Claimant’s quantum expert, initially situated the delay for EOT 1 at the time immediately after the contractual completion date, i.e. from 3 December 2002 to 11 June 2003,217 as identified in the Engineer’s Determination for EOT 1.218 This is the period by reference to which the design delay claim is quantified by him in the Joint Expert Report. Following this report, Mr Kennedy reconsidered the reference period. Based on analysis in his earlier reports, Mr Wiseman situated the period during which the design driven delay occurred from 1 March to 15 December 2000 and 1 April to 31 May 2001.219 It is by reference to this modified period that Mr Kennedy recalculated the delay costs: applying a daily rate of US$32'763.48 to the 50 days of delay he reached a total of US$1'638'173.83.220
376.
Mr Taft, relying on Mr Marshall’s calculations, took as reference a period of 50 days from 1 March until 19 April 2000.221 By the adjustments proposed in his Addendum, Mr Marshall sought to correct some errors identified by him.222
377.
When determining the correct reference period, the Tribunal considered that generally design must precede the construction so that delay related to the design is likely to affect the Project at an early phase. However, the design driven delay occurred over a prolonged period. The reports of Mr Wiseman rely on a large number of examples where design driven delay occurred during the first year of the work and beyond.223 Indeed, the Engineer, when considering this item of the claim, in the passage quoted above, explained that there "were numerous design changes during this period which affected the progress of work"; he also referred to delays in approvals.224
378.
Mr Marshall identified the delays which occurred to the "clause 14 programme" and identified substantial delays in different subsections and considered sub-section 5 as the most relevant. With respect to this sub-section he stated that the "design for the bulk of the volume was not released until 22 September 2000".225
379.
All of this shows that, in the circumstances considered here, the delay was not restricted to the initial period from 1 March to 19 April 2000, as assumed by the Respondent’s experts; it was spread over a longer period. The only other quantification of this period is that by Mr Wiseman, who concluded that the design delay affected the project during the period starting 1 March to 15 December 2000 and 1 April to 31 May 2001. The Tribunal accepts this as the reference period.
380.
The Contractors costs during this period have been quantified by Mr Kennedy on average at US$ 32'763.48 per day. The Tribunal has accepted the basis for this quantification, except that the daily rate of the P&M costs claimed by the Contractor must be reduced by US$1'508. Therefore, the rate to which the Claimant is entitled for the 50 days of design delay is US$31'255.48. The costs attributable to the 50 days of compensable design driven delay therefore amount to US$1'562'774.

8.5.3 The 33 days of delay due to additional works

381.
The delays for which the Contractor claimed in EOT 1 included "Changes in Alignment and other Works which resulted increase [sic] in the quantities of Works and thus caused the delays due to additional works instructed to the Contractor".226 In its decision of 17 September 2002 the Engineer took position as follows:

"The claim for delay due to additional works by the Contractor comprised 195 days for earthworks and 100 days for bridgeworks. The Engineer determined that these two events to be not located on a single critical path. The Engineer assessed the Contractor’s entitlement for the additional earthworks to be 33 days, taking into account of quantities of works agreed during contract negotiations... "227

382.
In the Statement at Completion the Contractor referred to the delays relied on in the EOTs and the extension of the completion date to claim the prolongation costs.228 The Engineer denied the claim, classifying the 33 days of extension as non-compensable.
383.
The Tribunal has found that delays caused by additional works are compensable.229
384.
With respect to the quantification, Mr Kennedy identifies the reference period as from March 2000 to June 2001230 and calculates the average daily costs during this period as US$32'640. After deducting US$831 as "abatement",231 a daily rate of US$31'809 was reached. On that basis, Mr Kennedy calculates the claim at US$1'049'697. Mr Taft does not provide any quantification of this claim, stating that he understands the claim "to be agreed as not compensable at the start of the Hearing on 19 October 2011".232 The Tribunal is not aware of any such agreement, which would have been contrary to the Experts Consultation Table which shows the claim as being compensable. The Claimant continued to pursue the claim in its Post Hearing Brief and the Respondent did not rely on an agreement to treat the delay as non-compensable. The Tribunal proceeds with the quantification of this claim.
385.
For the reasons explained above when considering the quantification of the claim for prolongation costs, the Tribunal accepts Mr Kennedy’s quantification, subject to (i) the reduction of the P&M costs to exclude overheads and profit with respect to the Contractor’s own P&M and (ii) in cases where the claim concerns additional work, an abatement of US$ US$1'980, instead of US$831, as quantified by Mr Kennedy. On this basis, the Tribunal reduces the daily rate calculated by Mr Kennedy by US$1'508 and US$ 1'149 to US$ 29'152. The costs attributable to the 33 days of compensable delay attributed to additional work therefore amounts to US$ 962'016.
386.
The total amount awarded in relation to EOT 1 is US$2'524'790. The 107 days for Winter Break shall be discussed separately below.

8.6 Costs relating to EOT 2

387.
The Claimant seeks prolongation costs with respect to its Extension of Time Claim No 2 for 61 days of Additional Works delay in an amount of US$2'150'380.54 (alternatively US$1'210'889.65).233 The Respondent denies the Claim, relying on the Engineer’s decision.234
388.
In EOT claim No 2 of 20 March 2003, the Contractor listed a number of causes to which the delay was attributed and claimed an overall extension of time. These causes included "Additional Works (Variations & New Design)" and "Additional Work (Landslides)"; these claims (described as "additional works and quantities") were quantified as 61 days. The claim stated expressly that the Contractor "also reserves his rights to submit financial claims related to the delays caused to the completion of the project due to reasons beyond his control".235
389.
The total number of days claimed under EOT 2 varies in the documents produced: at one page the total is indicated as 144 days, at another page the claims add up to 148 days. In a letter of 26 March 2003, responding to queries of the Engineer of 11 March 2003, the Contractor identifies the duration claimed for each of the causes relied on in EOT 2 as follows:

• 63 days attributed to "the Employer’s failure to relocate the utilities";

• 61 days attributed to "additional works instructed to the Contractor";

• 17 days attributed to "the approval of epoxy material"; and

• 11 days attributed to "exceptionally adverse weather conditions".

390.
These numbers, adding up to 152 days, are confirmed in a subsequent letter of 8 April 2003. However, the number of days claimed for additional works is consistently 61 days.236
391.
It appears that in 28 April 2003, the Contractor terminated the Contract. The following negotiations were concluded on 15 May 2003 by the conclusion of Addendum No 1 to the Contract which contained the following provision:

"1. The Employer, after evaluating and honouring the requests of the Contractor for Extension of Time 'EOT No.2' for the completion of the Project under Clause 44.1 of the Conditions of Contract, and also taking into consideration the delays in the commencement of Works in relevant actions, hereby accepts:

a) To grant to the Contractor the 152 days of EOT requested under EOT No. 2.

b) To revise the relevant articles in Appendix to Bid of the Contract, regarding the Article 47.1 as follows..."

392.
The remaining provisions of this Addendum concern payment and related matters.
393.
Shortly thereafter and "further to Addendum No 1", on 23 May 2003, the Parties concluded Addendum No 2 which contains the following provisions:

"Bearing in mind the good will of the Contractor and the successful completion of the Project, the Contractor agrees not to claim any compensation for the cost incurred by him during the negotiations period and the works suspension periods which is between 17/05/2003 - 23/05/2003.

The Contractor shall not claim any additional extension of time for adverse climatic conditions that may take place during the 152 days granted by the Employer subject to the employer giving his decision by 22nd of June 2003 for the land slides that happened throughout the project.

The Contractor has agreed to revoke the notification of termination of his employment under the conditions of Contract dated 28 April 2003. The above notification has become invalid upon singing of this Addendum #2."

394.
As in the case of other EOT claims, the Contractor included this time extension in the claim for prolongation costs presented as part of the Statement at Completion. In his Determination, the Engineer addressed this claim together with EOT 3 and stated the following:

"EOT 2 and EOT 3 were not granted by the Engineer following contractual procedures. These were granted as part of negotiations between the two contracted parties as part of Addenda to Contract. The Engineer witnessed these Addenda, however, he was not a negotiating party.

The Engineer determines to award zero compensable days against EOT 2 for the following reasons:

Relocation of utilities 63 days

EOT No 2 for 152 days was granted by the Employer as part of Addendum No 1 to Contract. This does not mean that such time is compensable. The Engineer always maintained that the Contractor’s claim was not reasonable and the delays due to relocation of utilities did not lie on the critical path of the Contractor’s activities and hence did not impact on the Contractor’s resources utilisation.... "237

395.
A similar explanation is given with respect to the 17 days attributed to the late approval of epoxy material. In this respect, the Engineer stated that he "always maintained that the Contractor’s claim was not reasonable and the delay due to epoxy was the Contractor’s fault".238 There are no explanations with respect to the other causes to which the Contractor had attributed the delay, in particular the 61 days claimed for additional works are not discussed. Nevertheless, Table 2, in which the Engineer recorded his conclusions about the extension of time, records all 152 days of extension, as quantified above, including 61 days for additional works; 7 days for Work suspension by the Contractor are added, bringing the total to 159 days.
396.
The Claimant argues that the 61 days recorded as additional work must be compensable on the grounds which have been considered above and which the Tribunal has accepted. However, this extension is not the result of an assessment by the Engineer and therefore cannot be taken at face value. The fact that the Employer agreed to an extension of time which was calculated by reference to a claim that included this period, in itself is not conclusive. The agreement on this extension was reached as a settlement covering a number of contested issues and may not be taken ipso facto as an acceptance by the Employer that the Contractor suffered 61 days critical delay due to additional works.
397.
It is true that in the Addendum, the Contractor renounced only to specifically identified claims; the prolongation costs related to EOT 2 were not included. One may conclude from this fact that in Addendum No 1 the Contractor did not renounce the claims for financial compensation which he reserved when submitting EOT 2. While this may have kept alive any claims for compensation which the Contractor may have had, it does not suffice to establish that during the time indicated and for the reasons alleged by the Claimant, the Contractor suffered 61 days of critical delay. In the absence of any assessment by the Engineer, the Claimant would have to establish in this arbitration the reality of the delay and its criticality.
398.
The Tribunal has examined the evidence produced by the Claimant in this respect and was unable to conclude that 61 days of critical delay occurred due to additional works. Mr Wiseman, the Claimant’s delay expert himself was unable to provide this evidence. He refers to "the undisputed period of 61 days";239 but, in the circumstances, this is not the required evidence: the 61 days are part of the background of a settlement to which the Employer agreed but there is no agreement establishing that they constitute critical delay. And it is only if it were established that 61 days critical delay were caused by additional works that the Tribunal could consider awarding the related prolongation costs. In this respect, Mr Wiseman stated candidly:

"Neither the Contractor’s Interim Claim No 2, nor the Engineer’s responses contain sufficient details on which I could base a review of cause and effect. In the absence of such details, I have only undertaken a limited review of the facts available upon which I provide a conditional opinion. I invite the tribunal to consider whether or not a more detailed review is required of these matters and await further instructions on this matter."240

399.
It is obviously not for the Tribunal to give instructions to Mr Wiseman how to conduct his analysis. What becomes clear from this report of the Claimant’s expert is that the evidence available to him is insufficient to establish that during the EOT 2 period, 61 days of critical delay occurred due to the additional works on which the Claimant relies. The Tribunal takes this as the demonstration that this claim cannot be "verified by contemporary records", as required by Clause 53.5 GC and has not been established.
400.
The claim for prolongation costs based on EOT 2 is rejected.

8.7 Costs relating to EOT 3

8.7.1 The claim and its history

401.
The Claimant seeks prolongation costs with respect to its Extension of Time Claim No 3 for four causes of delay:

• US$491'898.11 (alternatively US$310'224.81) for 15 days delay attributed to the relocation of utilities;

• US$ 5'010'393.30 (alternatively US$3'148'622.40 or US$3'275'357.25) for 165 days delay attributed to additional works;

• US$2'805'132.47 for 119 days delay attributed to Winter Breaks; and

• US$1'091'895.53 (alternatively US$1'385'670.81) for 35 or 67 days delay attributed to Lost Days.241

402.
The Claimant makes allowance for the compensation certified by the Engineer and paid by the Employer for costs of 15 days of delay attributed to the relocation of utilities at an amount below that claimed.
403.
The Respondent relies on the Engineer’s decision and denies that any payment beyond the amount certified and paid is due.242
404.
EOT 3 claim was presented to the Engineer with copy to the Employer on 31 October 2003. The claim covers the period from 1 April to 15 October 2003 and a subsequent Winter Period. The causes of delay and their quantification were presented as follows:

• 41 working days attributed to "Lost 'Working Days'";

• 150 working days attributed to Design issues-instructions (Section 9 and others);

• 15 working days attributed to "Relocation of utilities in the vicinity of road"; and

• 180 working days attributed to "Additional Works".

405.
The claim document added:

"The Contractor accepts that the above delays have run concurrently. Therefore the net effect of above delays is 180 working days."

406.
The Contractor expressly reserved "his right to submit financial claims related to the delays caused to the completion of the project due to reasons beyond his control".243
407.
One and a half months after the filing of this claim, on 15 December 2003, the Parties concluded Addenda No 3 and No 4 to the Contract. The former regulated a number of payment issues and matters concerning the "Winter Maintenance Period". In Addendum No 4, the Parties recorded the desire of the Employer to add various "safety-related and structural works" and the Contractor’s proposal concerning the performance of these works, as they were set out in a list attached to the Addendum entitled "Proposed Essential Works". The Addendum sets out the terms for the performance of these works and contains the following provision:

"6. The Employer agrees and grants an Extension of Time of 180 days against the Contractor’s EOT Claim No 3 for the completion of the Project. The Contractor shall not only complete the items in the original scope of works but also complete the 'PROPOSED ESSENTIAL WORKS" within the times stated above; however the Contractor will try to complete all the Works as soon as possible."

408.
No mention is made of the financial consequences of the extension of time granted; but clause 10 of the addendum provides that "all other terms and conditions in the original Contract and Addendum Nos 1, 2 and 3 to the Contract already signed between the Employer and the Contractor shall remain effective and unchanged".
409.
The financial costs related to the EOT 3 claim were claimed in the Statement at Completion. The Engineer’s Determination contains the sentence quoted above according to which "EOT 2 and EOT 3 were not granted by the Engineer following contractual procedures" but in the Addenda.244 However, contrary to what he did with respect to EOT 2, where he declared two of the claim items as "not reasonable", he took position with respect to at least one item of the EOT 3 claim: he accepted 15 days delay attributed to Relocation of utilities as compensable. With respect to the remainder of the delay claimed in EOT 3, 165 days for Additional works, the Engineer classified them in Table 2 as excusable but non-compensable. He did not explain whether this classification was reached because of the Engineer’s belief that the prolongation costs of additional works, in principle, are paid through the rates and prices in the Contract or whether he was of the view that delay was not critical and therefore, as a matter of principle, did not justify and compensation of prolongation costs. Table 2 also classified as non-compensable 119 day for the winter break from 5 December 2003 to 2 April 2004, and 67 days as "Lost days (rested on Sundays and public holidays during the claim period of EOT 1 to EOT 4)".
410.
At the hearing, the experts considered the Engineer’s decision concerning the 180 days of excusable delay, allocating 15 days of compensable delay to the relocation of utilities and 165 days to additional works. Mr Wiseman opined that, in his belief, "the engineer has made the 165 and 15 fit the 180".245 In other words, "take the 180 days which are agreed and allocate them to these two causes".246 This may well be the case. The Tribunal therefore considers these two items of the claim together.

8.7.2 The 180 days attributable to Addendum No 4

411.
EOT 4 claim was for a number of causes; but the Contractor recognised their concurrency and claimed only for a total of 180 days. This claim was accepted in full by Addendum No 4.
412.
The Tribunal considered first whether Addendum No 4, when granting the 180 extension requested by the Contractor in EOT 3, settled the consequences of this delay in their entirety or whether the prolongation costs remained still open. The Contractor had reserved the prolongation costs when making the EOT claim. These costs and the reservation of the cost claim are not mentioned in the addendum. Mr Ozkoseoglu testified that during the negotiations relating to the EOTs, "the subject of compensability was never raised".247 The text of Addendum No 3 and the passages quoted above show that, when the Parties wished to exclude claims, they did so expressly. A particularly important consideration relates to the Engineer’s decision to classify one component of this claim as "compensable", including the cost of 15 days of delay attributed to relocation of utilities in the amount certified and paid by the Engineer. This certification and payment are clear evidence against the assumption that all claims relating to EOT 3 had been finally settled by Addendum No 4. The Claimant nevertheless must establish entitlement and quantum.
413.
Contrary to EOT claims 1, 4 and 5, the extensions granted pursuant to EOT claims 2 and 3 were not made on the basis of the Engineer’s determination but by agreement of the Parties. As explained in the context of the claim for EOT claim 2, the Tribunal therefore does not take the time shown in the Engineer’s Table 2 as establishing in a conclusive manner that, with respect to these two claims, the Contractor suffered critical delay during the periods indicated in that table. Criticality and cause remain to be established.
414.
When considering the Engineer’s position concerning EOT 3 one notes two substantial differences in comparison with EOT 2: first, the Engineer did not make any reservation as to the reasonableness of the Contractor’s claim. Second, the Engineer classified 15 days as compensable and included this in his overall valuation; in other words it treated this period as part of the critical delay which the Contractor suffered. With respect to this decision, the Engineer cannot rely on Addendum No 4 as an agreement by the Parties. It is his own decision; the Parties had not considered this matter.
415.
Since the Engineer made a decision about part of the EOT 3 claim, it would seem likely that he also examined the remaining 165 days of this claim. The absence of any doubts expressed by the Engineer may be an indication that he considered this delay as critical. The experts have examined the evidence produced and concluded that these days related to the delay in 2003 caused by the design issues which were resolved by Addendum No 1 of 15 May 2001 and No 2 of 23 May 2003. Prior to this addendum, the Contractor had performed some of the design which the Employer had to provide. Addenda No 1 and No 2 provided payment for this design and awarded additional payment for further design work which the Contractor accepted to perform. Mr Wiseman explained at the hearing:

"The delay arises within 2003 specifically as a result of the design delays which arise from addendum 1, which covers the additional design work that the Claimant was required to assist with developing the design248 for both road alignment and slope stabilisation..."

416.
In his final report, Mr Wiseman specified the period as being situated between 17 April and 15 October 2003.249 Mr Marshall accepted that the delay was

"a design delay in 2003 of an unknown period which occurred between, I think, 1 April and December 2003".250

417.
He confirmed it shortly thereafter:

"The 165 that the engineer was compensable [ recte: noncompensable ], that was design delay. The 15 days was utility delay."251

418.
After the hearing, Mr Marshall confirmed that this had been his opinion but he "retracted" it "as the evidence points the other way". He then attributed the delay to "additional/varied work". The evidence he relies on is the fact that the Engineer treated the delay as non-compensable. This is because, according to the Engineer, delay caused by varied work are non-compensable and delay resulting from design delay was compensable.252
419.
Mr Wiseman accepts the full period of 165 days as critical.253 Mr Marshall finds it probable that the additional works affecting the earthworks progress (which he considers to be the cause for the delay) "would have caused some critical delay".254 Mr Taft opines that the "Additional Works delay of 165 days identified as not compensable by the Engineer has been reviewed by Mr Marshall and is considered to have impacted section 9 and is therefore to have been critical to Section B and probably to the Project."255
420.
The Tribunal has considered these opinions which coincide inasmuch as they at least prove that some critical delay occurred in 2003. It has also considered that, following the agreement settling the difference about the design issues, the Contractor had to provide additional design work which preceded the related construction and present this design work in EOT 3 as one of the principal causes for the delay. The Tribunal is satisfied that this delay was critical and in the order of 165 days. It does not consider the explanation which Mr Marshall gave for his change of mind to be convincing. It may well be that, when in December 2003 the Parties, and in May 2006 the Engineer, considered the delay and accepted a total of 180 days and, as far as the Engineer is concerned, 165 days of "additional works", some delay attributable to the additional works was also taken into account. Since there is no indication that a detailed delay analysis was performed, the Tribunal is not concerned by the apparent lack of precision in the terminology and the attribution by the Parties.