ICE v. BMMC, Award, 23 Jan 2017

1.1.

This dispute comes before the single Arbitrator, Mr Jonathan Dingle FRSA ("The Tribunal"), following a Request for Arbitration made by the Claimant on 30th November 2015 pursuant to Sub-Clause 20.6 of contract No C8128-C-0104 for Civils and Earthworks entered into on 10th December 2012 ("the Contract"). The Respondent noted the Request for Arbitration and in January 2016 both Parties made representations on the appointment of the Tribunal.

1.2.

The Association of Arbitrators of Southern Africa proceeded to constitute the Tribunal on 4th February 2016 and the completion of that process was notified to the Parties that day. The Respondent's Response to the Request for Arbitration is dated 5th February 2016.

2.1.

In this Arbitration the Claimant, International Construction & Engineering (Seycelles) ("ICE", "the Claimant", "the Contractor"), is a company registered in the Republic of the Seychelles under Registration Number 113796 and is seated in Mahe. ICE is a construction firm specialising in civil and earthworks projects.

2.2.

Bea Mountain Mining Corporation ("BMMC", "the Respondent", "the Employer") is a company registered in Liberia under the Enterprise Code 050849007 and is seated in Monrovia. BMMC is a company engaged in the mining of gold deposits in Liberia.

2.3.

During this Arbitration, the Claimant has been represented so far as dealings with the Tribunal have been concerned by Chang Law of Los Angeles, assisted by co-counsel first from Cozen O'Connor of Philadelphia then from K&L Gates of New York. The Tribunal noted further co-counsel support from Viridian Law of London, Werksmans of Johannesburg, and Heritage Partners & Associates of Monrovia although the Tribunal did not hear directly from those firms.

2.4.

The Respondent has been represented by Norton Rose Fulbright LLP of London.

2.5.

At the Oral Hearing (see paragraph 6.1 below) the Claimant Contractor was represented by Mr Eric Chang of Chang Law, by Mr Martin Gusy of K&L Gates, and Mr Matthew Weldon of K&L Gates. Mr Gusy and Mr Weldon had originally been with Cozen O'Connor and transferred to K&L Gates during the litigation.

2.6.

The Respondent Employer was represented at the Oral Hearing by Mr Luke Wygas of counsel and by Mr Neil Q Miller of Norton Rose Fulbright together with other associates and team members.

2.7.

The Tribunal was throughout the proceedings, and in particular at the Oral Hearing, grateful to all counsel and representatives. The conduct of this Arbitration has been made much easier by the hard work and long hours of the legal teams.

2.8.

During the course of the Arbitration the following additional companies, not ultimately being a Party to the Arbitration, were referred to: Aureus Mining Inc ("Aureus"). Aureus is a company registered in Canada under number 776831 and seated in Toronto. At the relevant times it was common ground that Aureus owned 100% of the shares in Mano Gold Investments Limited, a British Virgin Islands company. This company in turn owned 100% of the shares in Mano Gold (Liberia) Limited, also a British Virgin Islands company. That company owned 100% of the shares in BMMC.

2.9.

Aureus was originally included in the Request for Arbitration as a Party but, as a result of the Award of Jurisdiction made by the Tribunal on 11th April 2016, having regard to the matters set out therein, as a matter of fact and law, Aureus was not found to be a proper Party over whom the Tribunal had jurisdiction. It is right to record that the Claimant invited the Tribunal to reconsider the Award on Jurisdiction but, for the reasons set out in the Decision dated 24th April 2016, the Award remained.

3.1.

The dispute between the parties concerned the Contract entered into between them on 10th December 2012 (Contract No C8128-C-0104 for Civils and Earthworks). This related to the construction of the New Liberty Gold Mine in Liberia.

3.2.

In 2011/2012 BMMC conducted a feasibility study for the New Liberty Gold Mine ("the NLGM") project in Liberia. BMMC instructed DRA Mineral Projects (Pty) Ltd ("DRA", "the Engineer") to act as the Engineer on the NLGM project. DRA, as the Engineer managed the contracts relevant to the construction of the NLGM project.

3.3.

On or about 6th July 2012, Raydar International (a predecessor in title of ICE) received tender documentation from BMMC for two contracts on the NLGM project, the Earthworks Contract and the Civils contract. ICE submitted a competitive tender for both the earthworks and civils contracts in August 2012 and entered into negotiations with BMMC on 28th August 2012. Both contracts were subsequently awarded to ICE.

3.4.

It was common ground that funding for the NLGM project was always tight. During negotiations BMMC made it clear to ICE that the progress of work was dependent upon its ability to raise capital, and formally notified ICE of this restriction in a letter dated 20th September 2012. By 12th November 2012, however, BMMC had raised $80 million in equity to fund the development of the NLGM project.

3.5.

The contract between the parties was signed on 10th December 2012 and came into effect on 17th December 2012 when the Early Works commenced. The contract was divided into Early Works and Remaining Works. Early Works were instructed under the contract, whilst the Remaining Works were released on 18th April 2013 under Addendum 4 agreed by the Parties.

3.6.

On 19th April 2013, BMMC's optimisation study conducted by DRA was released. It concluded that a revised site layout was needed for the NLGM project. This differed considerably from that of the original layout for which ICE has originally tendered. As a result, the parties renegotiated the contract and both agreed to Addendum 5. The accepted contract amount and the Bill of Quantities ("the BOQs") changed.

3.7.

During 2013/2014, the works did not progress to the contractual and commercial expectations of both ICE and BMMC. There were cash flow difficulties. Various significant changes to the contract were made including those in some 12 Addenda.

3.8.

Addendum 11 for example transferred the payment obligation for goods, services and in particular hired trucks and yellow machines provided by MonuRent (Liberia) Ltd, ("MonuRent") from ICE to BMMC. This came into effect on or about 7th March 2014. BMMC recouped these amounts from ICE's respective Certificates.

3.9.

The NLGM project fell behind. Meetings were held to try to agree a way forward and attempts to agree a timetable or schedule were made. Unsatisfied with progress, however, BMMC terminated the contract with ICE in September 2014.

3.10.

The project continued with new contractors, both using the initials CMC, and the NLGM project achieved its first gold on 29th May 2015.

3.11.

By its Request for Arbitration, and subsequent pleadings, ICE claimed for breach of contract under various provisions of the FIDIC Contract including (amongst others):

3.11.1 breach of Sub-Clause 1.9 – alleging significantly delayed drawings and instructions throughout the life of the NLGM project;

3.11.2 breach of Sub-Clause 3.1 – alleging that unreasonable design constraints were put on the Engineer in contravention of this clause;

3.11.3 breach of Sub-Clause 4.7 – alleging in outline that the as-built NLGM project was essentially a new project that had not been designed at the time ICE mobilised;

3.11.4 breach of Sub-Clauses 13.1 and 12.3 – alleging that the Respondent had an obligation to issue a variation order for changes to the scope of the works, including changes in quantities, qualities, characteristics, levels, dimensions, and changes to the sequence, timing, and execution of the works;

3.11.5 breach of Sub-Clause 13.8 – alleging entitlement to an adjustment of the price due to inflation;

3.11.6 breach of Sub-Clause 14.1 alleging that the Claimant was entitled to a Variation Order with an adjustment to the contract price to reflect the changes to the NLGM project as it evolved and not, as it argued the Respondent had done, to treat the NLGM project as a lump sum contract;

3.11.7 breach of Sub-Clause 14.8 alleging that the Claimant was entitled to an annual financing charge of 3.75% compounded monthly for late payments; and

3.11.8 breach of Sub-Clause 15.3 alleging that following termination the Respondent had an obligation (through its Engineer) to agree or determine amongst other things the value of the works, goods, and any other items due to the Claimant – but failed to do so.

3.12.

In addition, the Claimant contended that further to the breach of contract claim, or in the alternative, it was and is entitled recover under a theory of disruption and Quantum Meruit.

3.13.

By the date of the Oral Hearing, and at the risk of being simplistic, it is a reasonable summary to record that the Claimant's case had been developed and refined such that it amounted to what became known as the Variation Claim, the Wrongful Termination Claim, and the Quantum Meruit Claim.

3.14.

These all contained questions of breach, causation and quantum which were addressed in the pleadings, the evidence, and the submissions of the Parties.

3.15.

The Respondent denied each of these heads of claim, and advanced a contested counterclaim based on the advance payments made by BMMC to ICE before the Contract was terminated as well as payments to the CMC companies that completed the work. The Claimant disputed both liability for the counterclaim and the quantum claimed.

4.1.

Pursuant to the Contract, the Parties agreed (under amended FIDIC Red Book terms) that there was an Arbitration Agreement. This provided, amongst other things, that:

(f) the arbitral seat shall be in London, England;

(g) the language used in the arbitration proceedings shall be English;

(h) there shall be a sole arbitrator; and

(i) the governing law of the Arbitration Agreement is the law of South Africa.

4.2.

The Arbitration has been conducted in accordance with the Arbitration Agreement.

5.1.

This Arbitration has been subject to a significant number of applications and procedural disputes between the Parties. This has resulted in some twenty Procedural Orders, Decisions and Awards. Of these, probably the most important were:

5.1.1 15th February 2016 - First Procedural Order

5.1.2 17th March 2016 - Decision on the Respondent's Application of 16 March 2016 to vary the timetable

5.1.3 22nd March 2016 - Decision on the Respondent's Application for the Claimant to provide security for costs

5.1.4 6th April 2016 - Decision on the Claimant's Application for leave to serve a Sur-Reply

5.1.5 11th April 2016 - Decision on costs in the security for costs application

5.1.6 11th April 2016 - Decision on Disclosure

5.1.7 11th April 2016 – Award on Jurisdiction

5.1.8 24th April 2016 - Decision on Reconsideration of Award and Related Matters

5.1.9 19th May 2016 - Decision on Cost Submissions relating to Jurisdiction and Reconsideration

5.1.10 1st June 2016 - Decision on Timetabling and Further Request

5.1.11 7th July 2016 - Second Procedural Order

5.1.12 1st September 2016 - Decision on Redfern

5.1.13 2nd September 2016 - Decision on Disclosure

5.1.14 5th September 2016 - Decision on the Application to Order the Claimant to provide Further and Better Particulars

5.1.15 22nd September 2016 - Decision on Disclosure

5.1.16 26th September 2016 - Decision on the Exchange and Service of Witness Statements and Amended Timetable

5.1.17 29th September 2016 - Direction for an Additional Preliminary Hearing

5.1.18 8th October 2016 - Third Procedural Order

5.1.19 19th October 2016 - Decision after Additional Preliminary Hearing

5.2.

The Arbitration was conducted under the AOA(SA) Sixth Edition Rules found here http://arbitrationlaw.com/files/free_pdfs/SA%20Arbitration%20Rules%206th.pdf ("the Rules") and evidence was managed by agreement by adopting The IBA Rules on Taking of Evidence in International Arbitration (2010) found here.

6.1.

The Arbitration was conducted by way of an Oral Hearing under the Rules. The Oral Hearing was conducted over nine days, on 28, 29, 30 November 2016 and 1, 2, 5, 7, 8 and 9 December 2016 at the Chartered Institute for Arbitrators, 12 Bloomsbury Square, London, WC1A 2LP.

6.2.

By agreement final submissions / post-hearing briefs were deemed delivered on 4th January 2017.

7.1.

The Claimant provided three witness statements from, and called, Mr Joe Crane. Mr Crane was and is the CEO and Managing Director of ICE. It was noted in the course of testimony that Mr Ed Fisher, who was not called as a witness and did not provide a witness statement, also described himself in emails as the Managing Director of ICE. On the evidence, and accepting Mr Crane, as the Tribunal did, as an honest witness who did his best to assist the Tribunal, nothing turns on that terminology. Where the Tribunal has preferred the totality and weight of other witness evidence to that of Mr Crane, as in places it has done, that should not be taken as an adverse imputation on him, his reputation, or his integrity.

7.2.

It is right too to record that owing to errors in the Seychelles Registry documents Mr Crane's father was shown as the director and sole shareholder of ICE. The record was duly amended by an Order of the Chief Justice of the High Court of the Republic of the Seychelles dated 26th October 2016. Nothing turns on this difficulty that was properly raised by the Respondent and expeditiously resolved.

7.3.

The Claimant also called three expert witnesses serving with the permission of the Tribunal at different times various reports and supplements. Essentially their expert evidence was, in the case of Mr Patrick Kelly on delay, in the case of Mr Toshikazu Dezaki on causation, and in the case of Mr Mamas Stavrou on quantum.

7.4.

The Tribunal again found all three experts anxious to assist in accordance with their duty, the careful evidence of Mr Kelly illuminating and that of Mr Stavrou particularly considered. Where they have not been preferred it is no sleight on their expertise but a reflection of the underlying factual matrix on which they were engaged to provide opinions.

7.5.

The Respondent proofed and called a much greater range of witnesses from both its own ranks, those of the Engineer, DRA, and the Independent Quantity Surveyor. It was in addition intended to call a Mr Debar Allen by video link but in the end he was not called. His witness statement has been disregarded. So too has an unsigned statement in the name of Mr David Sandamela who was also not called. The Respondent's live witnesses were:

7.5.1 Mr Alistair Sutherland, now a Senior Project Planner with an unrelated new employer, who had until July 2016 worked for DRA as a project planner on the NLGM project.

7.5.2 Mr David Reading who was from 1st February 2011 until 15th July 2016 President and CEO of Aureus. He was also a director of the Respondent (BMMC) from 2nd March 2011 until 2016.

7.5.3 Mr Gawie van der Westhuizen, who was the Construction Manager for the NLGM project from January 2013 to August 2015. He was responsible for managing the construction at the mine on behalf of the Respondent.

7.5.4 Mr Paul Thompson who became the CFO of Aureus on 1st September 2011. He was also a director of the Respondent (BMMC) from 19th November 2012 a role that included overseeing the activities in Liberia including those at NLGM. He provided two witness statements.

7.5.5 Mr Marthinus Strydom who was and is the General Manager of Construction and Operations for the NLGM in Liberia on behalf of the Respondent. He held that appointment from August 2012. He was also a director of BMMC having been appointed on 19th November 2012.

7.5.6 Mr Philip Welchman who is a Senior Civil Project Engineer employed by DRA, the Engineer. He began work on the NLGM project in January 2012, during the pre-feasibility and definitive feasibility study phase.

7.5.7 Mr Robin Welsh who is a General Manager employed by DRA, the Engineer in Cape Town. He described DRA's operations in detail and its retention as the Engineer. He was able to identify DRA's staff and their roles. He made regular site visits to NLGM as well as attending meetings in various offices.

7.5.8 Mr Ross McGregor who was the Independent Quantity Surveyor on the NLGM project between July 2012 and September 2015. He worked alongside DRA but was employed by R&R having been with that company since 1995. He exhibited more than 20 years of industry experience.

7.5.9 Mr Van Aardt Cloete who is employed by DRA as a Quantity Surveyor. He joined DRA in 2010 and became a registered Quantity Surveyor in 2014, having in the past been in effect supervised professionally by, amongst others, Mr McGregor. Mr Cloete worked on the definitive feasibility stage and later as the Engineer's Quantity Surveyor amongst other things reviewing monthly payment applications and Site Variation Requests ("SVRs").

7.6.

The Tribunal should record that it found most of these witnesses to be unimpeachable. Where their evidence has not been preferred, or when it did not appear easily to withstand the robust questioning by the Claimant's counsel, that was not through any mendacity but generally the passage of time or the complexity of the context. Broadly, however, the Tribunal was in very great part assisted by their evidence.

7.7.

The Respondent provided two experts who were supportive of its case – both in respect of defending the claim and advancing the Counterclaim, and dealing with quantum. Mr Ewen Maclean dealt with delay and causation and Mr David Richards opined on causation and quantum. As with the Claimant's experts, there was a degree of overlap especially in responses to the Tribunal's questions that permitted useful insights.

7.8.

The experts provided joint statements in the three areas of delay, causation, and quantum. The Tribunal was grateful to all of the experts for their patience and care in answering questions, dealing with a very large volume of documents and electronic materials, and the skilled and detailed cross-examination.

8.1.

By the Contract of Earthworks and Civil Construction RFP number C8128-C-0104 dated 10th December 2012 the Claimant Contractor agreed to undertake certain earthworks and civils at the NLGM project and the Respondent Employer undertook to remunerate the Claimant for the same.

8.2.

The Contract was amended by the parties using Addenda, which were retroactively effective on the effective date of the contract:

8.2.1 Addendum 1, 25th March 2013

8.2.2 Addendum 2, 25 March 2013

8.2.3 Addendum 3, 17th May 2013

8.2.4 Addendum 4, 19th April 2013

8.2.5 Addendum 5, 9th August 2013

8.2.6 Addendum 6, 12th December 2013

8.2.7 Addendum 7, 12th December 2013

8.2.8 Addendum 8, 3rd February 2014

8.2.9 Addendum 9, 3rd February 2014

8.2.10 Addendum 10, 3rd February 2014

8.2.11 Addendum 11, 14th February 2014

8.2.12 Addendum 12, 24th May 2014

8.3.

The Governing Law of the Contract is South African Law. The Contract was a FIDIC 1999 Red Book contract amended in part by the Parties as set out in Section 2.

8.4.

Sub-Clause 1.1.6.9 of the Contract provides a definition of what constitutes a Variation. It states:

'Variation' means any change to the Works, which is instructed or approved as a variation under Clause 13 [Variations and Adjustments]'.

8.5.

Sub-Clause 13.1 of the Contract, as amended (underlined below) by the parties from the standard FIDIC clause states that:

Variations may be initiated by the Engineer at any time prior to issuing the Taking-Over Certificate for the Works, either by an instruction or by a request for the Contractor to submit a proposal.

The Contractor shall execute and be bound by each Variation, unless the Contractor promptly (but in any event within not more than 7 days unless otherwise agreed by the Engineer) gives notice to the Engineer stating (with supporting particulars) that the Contractor cannot readily obtain the Goods required for the Variation. Upon receiving this notice, the Engineer shall cancel, confirm or vary the instruction.

Each Variation may include:

(a) changes to the quantities of any item of work included in the Contract (however, such changes do not necessarily constitute a Variation),

(b) change to the quality and other characteristics of any item of work,

(c) changes to the levels, positions and/or dimensions of any part of Works,

(d) omission of any work, including where it is to be carried out by others,

(e) any additional work, Plant, Materials or services necessary for the Permanent Works, including any associated Tests on Completion, boreholes and other testing and exploratory work, or

(f) changes to the sequence or timing of the execution of the Works.

A Variation may comprise the omission of any work which is to be carried out by others. Without derogating from the foregoing, the Engineer may, by way of a Variation, where the Contractor is in default, omit any part of the Works. In such event the Engineer shall first give notice to the Contractor to make good the failure in accordance with Sub-Clause 15.1 [Notice to Correct]. Such omission may include any part of the Works which, in the opinion of the Engineer, should be omitted to allow the default to be remedied by the Contractor (whether by the reallocation of resources or otherwise) or by others.

The Contractor shall not make any alteration and/or modification of the Permanent Works. Unless and until the Engineer instructs or approves a Variation.

9.1.

The Claimant's case in respect of the three potential bases for an award is of course set out in the extensive pleadings. These have been carefully considered and analysed by the Tribunal in the light of the oral and written evidence, and a full scrutiny of the documents together with the submissions and the authorities.

9.2.

As the Parties would expect, it is only practicable in this Award to address in detail some of the various salient points that have guided the Tribunal to its conclusions. That should not be taken to mean that the other points were not considered in full, weighed and evaluated. They have been studied at considerable length throughout the hearing and in particular over the last 14 days. The Tribunal must, however, balance rigour with the need for a reasonable précis.

9.3.

It follows that it was helpful to find that the Claimant in its closing brief, summarised its Variation Claim in this way:

"9. In its simplest form, ICE's claim can be described as follows:

* Did BMMC instruct a Variation? The answer is Yes.

* Was that Variation very significant? The answer is Yes.

* Did ICE perform, and implement the significant Variation as instructed by BMMC? Yes.

* Should BMMC have consulted and negotiated with ICE on how to pay for that significant Variation? The answer is Yes.

* Should BMMC have agreed to re-rate the Contract Price to pay for the significant Variation? The answer is Yes.

* Did BMMC consult with ICE, and did BMMC re-rate the Contract Price? The Answer is No.

* Was ICE fairly paid for implementing this significant Variation? The Answer is No."

9.4.

This approach leads the Claimant vigorously to advance its Variation Claim. It contends that BMMC has admitted that the Project Redesign was a Variation. This basic but crucial fact is not in contention; it is the foundation and starting point of ICE's Variation Claim. The Claimant argues that when an Employer issues a Variation instruction, this immediately triggers a contractual obligation to consult with ICE and value the upcoming Variation works, via Sub-clauses 13.3, 12.3, and 3.5. This obligation to consult, negotiate and agree the payment for a Variation is, the Claimant asserts, the contractual counterpart of the Employer's right to change the Works via Variation. When the matter is put that way, it allows the Claimant to say that BMMC has failed to address its contractual obligation to evaluate the Variation.

9.5.

The Claimant says that BMMC cannot (and does not) deny that it has such an obligation. In its pleadings and testimony to date, BMMC cannot, says the Claimant, prove that it engaged such a consultation and negotiation with ICE – because it failed to do so. The Variation mechanism sets out a clear and straightforward duty for the Employer (through its Engineer) to consult with the Contractor and agree on how to pay for the instructed Variation. Failing agreement, the Claimant says that the Engineer must proceed with a fair determination via the process set out at Sub-Clause 3.5. This obligation is so fundamental, says the Claimant, that BMMC's own expert stated that, in his experience, such meetings occur "invariably."

9.6.

The Claimant maintains that the "record is clear" that Mr. Strydom unequivocally denied ICE's request to evaluate the Project Redesign Variation. The record is equally clear, the Claimant submits, that BMMC "did not have sufficient funding to pay for the Variation" and also shows that "BMMC further breached by interfering with the valuation process, which should have been performed by the Engineer (DRA) in its capacity as an impartial and independent Contract Administrator."

9.7.

On this basis, the Claimant submits BMMC has breached its Variation obligation to consult, negotiate and value the Variation instruction relative to the project redesign. The contractual obligation is, the Claimant says, "incontestable". BMMC's defence that ICE's Variation claim was agreed and incorporated into Addendum 5/BOQ9 is, in the Claimant's submission, "not credible, and unavailing."

9.8.

The Claimant asserts that the consequence of BMMC's failure to value the Variation is that ICE was deprived of its contractual right to consult with DRA and negotiate a re-rate of the BOQ rates and prices and the overall Contract Price. This, the Tribunal finds, is a bold assertion given the narrative that emerges from all the evidence.

9.9.

The Claimant asserts BMMC itself explicitly recognises this obligation when it states in its skeleton argument that "if the Employer instructs a Variation and does not seek to then determine the cost impact of that Variation, the Employer should continue to be liable for that potential cost impact." The key there, however, the Tribunal notes, would be the absence of any, or any adequate, determination.

9.10.

The consultation and negotiation should, the Claimant insists, have occurred immediately upon issuance of the Variation instruction. This should have occurred, at the latest, on 31st January 2013 (when Mr. Fisher e-mailed DRA regarding the impact of the Project Redesign). The Claimant refers to the date that the consultation and negotiation should, it says, have occurred as "Day 1."

9.11.

For the reasons that emerge below, the Tribunal, whilst finding that the redesign of the project, most notably in respect of the MCDC, the TSF, and the plant site, amounted to a Variation, is wholly unsatisfied that there was not, as the Claimant alleges, a proper and agreed determination between the Parties.

9.12.

The Claimant says that ICE's damages are expressed as a failure by BMMC/DRA to renegotiate the BOQ rates and prices and Contract Price on Day 1. ICE claims that BMMC failed to do so immediately upon issuance of the Variation, and again when it refused ICE's Variation claim in 2014. These points are considered below.

9.13.

The Claimant says that its remedy under the Variation mechanism is a straightforward re-rate of the Contract Price as set out in Sub-Clause 12.3(b). Sub-Clause 12.3(b) is said to envisage a re-rate as applied on Day 1. It is a prospective, forward-looking re-pricing of the Contract Price based on the anticipated difficulties of the varied Works to be implemented. BMMC's refusal to engage in a Day 1 negotiation and re-rate does not abrogate its contractual obligation; the fact that the re-rate is now being performed retrospectively is irrelevant.

9.14.

The Claimant argues that "the plain language of the Variation mechanism" does not state that a re-rate must factor in actual disruption, delay, or other losses. In short, a re-rate pursuant to Sub-Clause 12.3(b) is undertaken as a "Day 1" exercise. It applies relevant rates or prices in the Contract that the Parties would have agreed to, had BMMC/DRA properly consulted ICE on Day 1. It does not require determining actual disruption, delay, or inefficiency. The Claimant argues that the new relevant rates or prices can be derived from the Section 5 equipment schedule rates. These are contractually agreed and bargained for rates and prices for equipment.

9.15.

The Claimant invites the Tribunal to perform the evaluation and re-rate process which BMMC "refused to undertake", by applying Section 5 rates to achieve a prospective, Day 1 re-rate of the Contract Price. Such a re-rating would achieve the consultation and re-rating process which BMMC/DRA failed to do. It is, says the Claimant, the appropriate remedy for BMMC's breach of its obligation to consult with ICE on Day 1 and agree on a price for the Variation.

9.16.

The Claimant complains that BMMC seeks to distract attention from this "clear obligation" by attempting to "re-qualify" ICE's claim as a claim for disruption and/or delay. BMMC does so in order to "set up a legal straw man that it can defeat with its 20.1 time-bar argument and its argument that ICE cannot bring a global claim."

9.17.

This, the Claimant says, is a "red herring defence". The Claimant maintains that since 2012, ICE has consistently claimed that it is owed a Variation re-rate under Clauses 12 and 13. It never brought a delay or disruption claim, and never presented a total loss or global claim.

9.18.

It is worth pausing for the Tribunal to record that this is, of course, correct. The Claimant did not use the contractual mechanism for a delay or disruption claim. This was a process that under Sub-Clause 20.1 of the Contract which both Parties agree should have been the subject of a notice to the Engineer "as soon as practicable" and not later than 28 days after the Contractor became aware, or should have become aware, of the event or circumstances. The lack of such a claim, or the decision not to advance such a claim at the time, or at all, does not, the Tribunal finds, mean that the Claimant now inevitably has a Variation Claim. There may be many reasons why a delay and disruption claim was not advanced within the strict time limit.

9.19.

It follows that the Claimant seeks to demonstrate that the NLGM project redesign was a significant and material Variation, such that ICE was entitled to a Day 1 BOQ re-rate under Sub-Clause 12.3(b). It is ICE's case that on Day 1, had the Parties consulted as per Sub-clauses 12.3 and 3.5, they would have anticipated that the Redesign Variation would be sufficiently material that the original BOQ rates and prices would no longer apply, and as a result, they would have negotiated new rates or prices to reflect the anticipated material changes to the Site Design.

9.20.

Such assertions contain a number of bold leaps of reasoning. These continue when the Claimant focuses on what it calls the "anticipated materiality of the Site Redesign on Day 1" which it says can "be easily proven" with the benefit of the Project record: the best evidence of whether the Parties would have agreed on Day 1 that the Variation would be significant and material is to look at the Project record and show that, in fact, the Redesign did cause significant and material impact to ICE.

9.21.

The Claimant says that establishing the Day 1 anticipated materiality of the Variation by demonstrating negative impact to ICE is not the same as bringing a belated and out of time claim for delay or disruption. The Claimant says the results of the impact of the Variation demonstrate the materiality of BMMC's decision to change the Project layout, and thus ICE's entitlement to a Variation re-rate.

9.22.

The Claimant complains that BMMC either misunderstands or purposely confuses this distinction. The quantum of the two entitlements are entirely different. A Variation re-rate undertakes a re-pricing of the Contract Price and BOQ by abandoning the original BOQ rates or prices which are no longer applicable, and applying new rates or prices in order to grant an uplift for the Variation's material change in scope. In contrast a delay or disruption claim seeks to recover for actual losses incurred as a result of a delay event or a disruption event caused by the Employer. The nature of the remedies are, it is agreed, entirely different.

9.23.

Pausing, the latter points are something that the Parties do not appear to differ much upon. They are different contractual claims and arise in a different way, with different quantification processes. But, the fact that they differ cannot mean, it seems to the Tribunal, that there is automatically a Variation Claim because the required Sub-Clause 20.1 notice was not given. The Claimant does not advance that claim in those simplistic terms, but the Respondent has indeed sought to make the point.

9.24.

The Claimant contends that BMMC breached its obligation under the Variation mechanism because it instructed a Variation, but then failed to follow through and perform its contractual obligation to consult, negotiate and agree on the evaluation of that Variation. In short, BMMC breached because it issued a Variation, but then immediately decided to put the Contract "in the bottom drawer."

9.24.

The Claimant refers the Tribunal to Sub-Clause 13.1 in the (unamended) FIDIC Red Book:

"Variations may be initiated by the Engineer at any time prior to issuing the Taking-Over Certificate for the Works, either by an instruction or by a request for the Contractor to submit a proposal. The Contractor shall execute and be bound by each Variation, unless the Contractor promptly gives notice to the Engineer stating (with supporting particulars) that the Contractor cannot readily obtain the Goods required for the Variation. Upon receiving this notice, the Engineer shall cancel, confirm or vary the instruction."

9.25.

The Claimant asserts, in part relying on some of the testimony of Mr Richards, says that the legal qualification of the Site Redesign as a Variation is "obvious and non-controversial". As will become clear, the Tribunal is not persuaded that it is "obvious and non-controversial". The Claimant asserts that the Respondent, in the opening of its case in the Oral Hearing admitted that there was a Variation (by which is meant the contractual term of art). The Claimant says that "BMMC's Opening Statement further confirms that BMMC agrees that a Variation was instructed – but that it had valued the Variation and/or that ICE's claim is actually a global claim. BMMC Opening Tr. Day 1, 68:15-70:25."

9.26.

The Tribunal has the advantage of an excellent Transcript and from this it appears that Mr Wygas, counsel for the Respondent, actually said:

4 There's no dispute here that the contract that was

5 signed was for one thing and what was built was different.

6 That's absolutely agreed. And it's absolutely agreed that

7 that can be termed as a variation. The issue is what does

8 that mean in -- what do the rest of the clauses of the

9 contract mean in those circumstances?

10 And there are two fundamental flaws with ICE's

11 claim in this regard. The first is that irrespective of

12 whether ICE say there was no agreement as to the variation

13 in the addenda, they can't get away from the fact that there

14 was a determination. And what Mr Chang carefully did, as he

15 went through the contract, is he carefully side stepped what

16 clause 3.5 actually says.

17 And if we go to clause 3.5 to the contract. I'm

18 using the composite contract. The reference for that, for

19 your note, is C4, tab 26, page 1090.

20 What that says is -- there are two paragraphs in

21 clause 3.5. And the second:

22 "The engineer shall give notice to both parties of

23 each agreement or determination with supporting particulars.

24 Each party shall give effect to each agreement or

25 determination unless or until revised under clause 20."

70 :1 So what that shows is whether ICE manages to

2 establish that BoQ 9, for some reason which escapes BMMC,

3 agreed an awful lot of things but managed to carve out the

4 variation, what BoQ 9 undoubtedly did is it determined the

5 price for, for example, excavation.

6 If ICE considered that that price was

7 inappropriate, it goes to the contract, it says: the price

8 has been determined. The rate has been determined. That's

9 under clause 12. Clause 12 says I go to 3.5. 3.5 says if

10 I don't like it I bring a claim under clause 20.1.

11 Mr Chang has decided to ignore that entirely. And

12 he's not dealt with it in his opening at all. That's

13 despite the fact that that, along with a number of other

14 things, BMMC has been, in my submission, very helpful in its

15 opening in candidly saying: these are the real issues. And

16 if we want to assist in getting to the truth of this matter,

17 these are questions that need to be answered. That was one

18 question that was put to ICE in the opening. And they've

19 decided not to answer it. Clearly, sir, you will draw the

20 appropriate conclusion from Mr Chang's decision on (that point).

9.27.

In the Respondent's skeleton argument, it had said:

135 Purely as a matter of contractual construction (regardless of contrary evidence), if ICE could say that:

a) BMMC/DRA ordered a Variation,

b) that the Variation required a change in the rates ultimately agreed under the Contract (which would include an addition of appropriate rates),

c) that the change in rates was never determined or agreed, and

d) that the change in rates being requested by ICE was the appropriate rate to do the works without any disruption caused by BMMC, then ICE may have a claim.

136 ICE can only succeed on the first one of the four criteria set out above; that obviously means that ICE's claim fails.

9.28.

The Claimant contends that once an instruction qualifies as a Variation, there is a clear obligation to evaluate the Variation in accordance with Clause 12. Crucially, it says, this valuation must proceed immediately, with no intermediate step – notably, it is not necessary to proceed via a Sub-Clause 20.1 Claim. On this point, the Claimant asserts that BMMC's own expert was in agreement. It says that Mr. Richards testified that design changes (late Drawings) qualified as Variations, and should be evaluated under Sub-clause 12.3 and 3.5.8. The Claimant refers to the Transcript Day 9 at folio 93 lines 2 to 24.

9.29.

The Tribunal again has the advantage of that folio. It reads:

2 Q. That's okay. I don't think that changes my next

3 question, which is that if -- if a -- if such a variation --

4 design information is -- design information is issued after

5 commencement of work, and it is -- the -- excuse me, the

6 employer, as you state, is entitled to do so because of

7 13.1(c), if that variation occurs at the outset of the

8 project then, at clause 13.3, each -- that variation would

9 then be valued under clause 12; correct?

10 A. If the design information constitutes a variation,

11 that's correct.

12 Q. Okay. Thank you. And under sub-clause 12.3, if

13 that variation, assuming it is a variation, if the drawing

14 counts as a variation, if that -- under sub-clause 12.3, if

15 that variation is issued it is then evaluated using the

16 determination procedure at 3.5; correct?

17 A. Well, it's, first of all, valued in accordance with

18 clause 12.3. And if there is disagreement then it goes to

19 determination in accordance with clause 3.5.

20 Q. Okay. So there is -- but there is a -- there would

21 be a meeting between the engineer and the contractor to

22 agree on that variation, whether there's a re-rate or not or

23 a reprice or not?

24 A. In my experience, invariably.

9.30.

The Claimant contends that BMMC clearly failed to enter the process. The Claimant contends that BMMC "does not (and cannot) deny that Mr. Strydom explicitly rejected" what it calls Mr. Fisher's 21st December 2012 and 31st January 2013 notices that ICE was entitled to recover for the anticipated cost impact of the Variation. These are potentially important emails and are found at [D15/5148] and [D16/5510] respectively. They must be set out in detail to address the points raised.

9.31.

The first email included a passage relating to the proposed new plant site:

"…Have you considered the additional costs of this work in your cost matrix due to access/contours and potential engineering. Just want to be sure you are considering everything."

9.32.

This appears to be the extent that this email is said to be a Contractor's notice.

9.33.

The second page reference is to a thread of emails beginning at [D16/5511]. Mr Fisher began on 31st January 2013 at 04:02PM by writing, having dealt with a drawing register point (his capitals):

"Nice job on the register, BUT WE STILL NEED A COST IMPLICATION SECTION AND REVIEW IMMEDIATELY UPON RECEIPT OF ANY DRAWINGS.

Please note that if the actual plant is built on the hillside we need to review all cost with the client (Owen) as there will surely have cost impacts to the unit rates as the original proposal was building on a flat area, also we do not have geo tech reports for anything other than the original areas of work….

Please add this section. If there is cost implication then you would send out a VARIANCE REQUEST PROPOSAL, ONCE APPROVED IT IS FOLLOWED BY AN ACTUAL VARIANCE. These are logged and filed in the Variance files.

THIS DRAWING HAS NO IMPLICATIONS".

9.34.

The Tribunal finds it difficult to construe or interpret this email as a Contractor's Variation Notice or a claim under the requirements of the Contract, or at all. It appears rather to be an initiation of a discussion of how future drawings might be handled, logged and filed, potentially giving rise to what Mr Fisher (who did not give evidence) terms a Variance Request Proposal.

9.35.

This email was met by a reply by Mr Strydom at 2:24PM on 31st January 2013 local time (there are numerous differences with email settings and nothing turns on this). The reply is forthright:

"Don't you dare pull this shit with me… I will give the whole lot of you a variation order you will not like… the marching kind…

Jo, we will discuss this tomorrow, e-mail no good…"

9.36.

The reference to "Jo" is to Mr Crane.

9.37.

Mr Fisher elected to reply at 9:30AM on 31st January 2013. He told Mr Strydom that he could not:

"…assume you can change the scope and not have cost associated Up or Down. NOTHING HAS CHANGED TO DATE, But I am aware of the proposed plant location and it is certainly a topic of discussion.

I can help with this.

We are on your team Thinus, I think you know that, nobody wants variations and we hope there are none."

9.38.

This again the Tribunal finds difficult to interpret in the manner that the Claimant appears to advance. On the contrary, this email appears expressly to concede that there were no grounds for a Variation Order and further that ICE, as represented by Mr Fisher, did not want variations and hoped there would be none. To the extent that the Claimant relies on this as a Variation Notice within the meaning of the Contract, the Tribunal rejects that interpretation.

9.39.

The Claimant asserts that "despite the fact that the Project Redesign Variation had been instructed, Mr. Strydom's 31 January 2013 e-mail (set out above) amounts to an express refusal to evaluate that Variation. BMMC has not (and cannot) deny that it refused to evaluate the Variation." As a result, says the Claimant, BMMC's refusal is an express breach of Sub-clause 13.3.

9.40.

In context, both at January 2013 and later, the Tribunal does not share this interpretation of the email nor can it find the breach contended for by the Claimant.

9.41.

The Claimant also contends that the emails of 21st December 2012 and 31st January 2013 should have triggered the Engineer to proceed to a valuation in accordance with Sub-Clauses 12.3 and 3.5. It is said that the Respondent as the Employer improperly interfered with the role of the Engineer by forwarding the 31st January 2013 email to DRA and saying that he was dealing with the situation.

9.42.

Having read the Transcript of the cross-examination on these points of Mr Strydom by the Claimant's counsel, the Tribunal is far from satisfied that this amounted to improper interference. Mr Strydom was robust but authentic. He said:

"Now, if Mr Fisher really wanted a variation, he should have picked up the phone and called me and said: Thinus, I'm in trouble or: we're in trouble, because we were in it together. Remember, I had a lot riding on this. I was the flag bearer for ICE. I was the one who said to my guys: look, these guys can do the job. If Ed had rang me up and said: look, this is what we've got to do. I need your help. I would have helped, sir, because my reputation was also at stake."

9.43.

Even if the Tribunal were wrong, and there was a substantive request for a Variation Order or a Contractor's Notice contained in the emails of Mr Fisher, then the actions of Mr Strydom, who was an impressive witness of candour, were nothing more than normally to be expected of a person in his role keeping the Engineer "in the loop".

9.44.

In the circumstances, the Tribunal rejects Claimant's submissions based on this evidence in respect of the Variation Claim. Mr Strydom's words, the Tribunal finds, do not affirm that there was in January 2013 a valid Variation Claim being made. Neither the Claimant's submissions, nor the careful perusal of thousands of documents, support the proposition. Mr Crane's evidence on the point was inconsistent. In his witness statement he suggested that the email was 'threatening' and the Respondent was non-responsive. At the Oral Hearing, however, Mr Crane testified that the words used did not have an impact on him. He said:

'That e-mail from the 31st, you know, we talked about the intimidation part. We're not talking about the language. I've used worse language that. I was in the army and I've been in West Africa for years. It's not the language; it's the fact that we understood that if we were going to make a ruckus about what we believed we were owed at the time, that all of us were going home.

9.45.

The Tribunal's attention was further caught by Mr Fisher's subsequent email sent on 4th February 2013 which said that:

'I do not want to get trapped into this our schedule is based on the ORIGINAL project NOT the revisions and each revision, despite what Thinus thinks WILL get a review and costed'.

9.46.

The Tribunal is satisfied that Mr Fisher for the Claimant felt unrestricted by Mr Strydom's email to initiate a Variation Claim, if he thought it fit to do so, or to seek alternative means and claims for payment, should they become necessary. The mechanisms ultimately chosen, used, and accepted by ICE were the Addenda and the associated BOQs. The Tribunal is also satisfied that ICE and BMMC adopted the approach they did with eyes open. Certainly until the awarding of the contract for the plant site elsewhere, it was in the Parties' common wider interests to follow this route.

9.47.

The Claimant contends that applying 12.3(b)(iii), no specified rates or prices in the BOQ were appropriate because the As-Built Project was "not of similar character" and was "not executed under similar conditions" as envisaged in the Contract. The As-Built Project cannot, the Claimant submits, be said to be of similar character as the As-Planned, something which the Claimant says that BMMC itself contemporaneously admitted in an email with DRA on 28th March 2014.

9.48.

The Claimant also submits that the As-Built was not executed under similar conditions as originally envisaged, as demonstrated by the materially delayed Design and Drawings and what the Claimant has termed the Project Slow Down. Again, these changed conditions were, it says, contemporaneously admitted by BMMC.

9.49.

The Tribunal has carefully considered the email to Mr Welchman of DRA on 28th March 2014 sent by Mr van der Westhuizen. It says, so far as is relevant:

"We need to talk about a substantial ICE claim, ICE priced this job based on the original logistical layout of the site. After this was done, the layout and the position of the plant, TSF and Camp David changed. Due to this, a couple of facts came into play of which one is the transport of people to site which was never estimated for. The second thing is that we now need more supervision because of the distance between sites due to the revised plant, TSF and Camp David allocations. All of this had a cost impact and needs to be looked at seriously if we want to assist ICE with the current financial dilemma they are in. It is all valid and a reality.

9.50.

In its submissions to the Tribunal, at paragraph 96, the Claimant submitted that:

96. Mr. van der Westhuizen's spontaneous statement during the Project amounts to an admission, and succinctly sums up ICE's variation claim:

9.51.

It then quoted the email referred to in paragraph 9.49 in these terms:

"We need to talk about a substantial ICE Claim. ICE priced this job based on the original logistical layout of the site. After this was done, the layout and position of the plant, TSF and Camp David changed…All this had a cost impact and needs to be looked at seriously if we want to assist ICE with the current financial dilemma they are in. It is all valid and [a] reality."

9.52.

It seems to the Tribunal that the Claimant has in its submissions edited the email in a regrettable manner. There are crucial words omitted. The Tribunal finds that Mr van der Westhuizen limited his assessment of a potentially valid claim to transport and supervision. In oral evidence the Tribunal heard that these were relatively modest costs. The Claimant cannot properly use the email in the way it seems to intend and the Tribunal rejects the broader importance asserted.

9.53.

These criticisms of the Claimant's case apart, it is accepted by the Tribunal and indeed the Respondent that there was a Variation of the original design and scope of the Contract. The NLGM project plainly developed in 2013 in a different way to that conceived in 2012. ICE was entitled to be paid for the changes and additional work and costs it incurred. It could have made a Variation Claim. It did not do so. There were other mechanisms in place for payment under the Contract and, as the Tribunal has found, ICE did not adopt the route of making a claim for a Variation at the time.

9.54.

Instead, the Tribunal finds on the evidence that ICE perhaps to assist BMMC in its own fund-raising difficulties (in the expectation that such cooperation would win for it the lucrative plant contract at NLGM, as well as later contracts elsewhere in Liberia), chose to follow the BOQ and Addenda route. These resulted in payments being made, including advance payments. Having accepted this mechanism, and not, on the evidence before the Tribunal, having made a Variation Claim nor reserved its rights in any way, the Claimant proceeded with the work. It did not present a Sub-Clause 20.1 Claim as it might have done. It affirmed the Contract and the Addenda.

9.55.

This, the Claimant says, should not proscribe its present Variation Claim. The two are different animals. The Variation Claim can still be brought.

9.56.

This approach does not attract the Tribunal. To the Tribunal's mind, in the context of all the evidence and in all the circumstances of the NLGM project, and the dealings between the Parties, the more attractive point is that made by the Respondent.

9.57.

It accepts that in theory a claim for a Variation is one which is not time barred, but contends, persuasively, that such a claim is one which cannot by definition include claims for delay or disruption. Although a claim for a Variation is not time barred, once there has been a determination of the elements of that potential claim, any later challenge to the determination falls under Sub-Clause 20.1 of the Contract. The Respondent therefore suggests that ICE seeks to advance two propositions:

9.57.1 that due to Mr Strydom's alleged refusal to deal with the "so called" Variation on 31 January 2013 [D16/5517], ICE was entitled to delay bringing its claim for a Variation and all the alleged delay and disruption which went with it; and

9.57.2 under the Contract it was DRA's or BMMC's obligation to re-rate the Contract (i.e. price the Variation) which ICE alleges that DRA or BMMC failed to do so: on that basis ICE was entitled to wait until this Arbitration to bring its claim.

9.58.

The Respondent submits that neither of those propositions is or can on the evidence or the proper interpretation of the Contract be correct. The evidence did not support the fact that ICE delayed bringing its claim on account of Mr Strydom's email. Further, even if ICE was intimidated by Mr Strydom's email, that did not explain why it did not bring the elements of its claim which did not relate to the change in the layout, for example the alleged delays to the drawings of the CIL Tanks. Further, the Contract (as relied on by Mr Stavrou), does not support the second proposition.

9.59.

The Respondent says that because ICE's case is emphatically one for a Variation it is helpful in that it provides definition to the claim – but that definition is fatal to ICE's case. That is because ICE has to prove breach, causation and loss in relation to the alleged Variation Claim. It is the Respondent's case that despite ICE's best efforts, it was unable to prove any of these elements. The Parties agree that there cannot be a claim for delay and disruption – and there is none – under Sub-Clause 20.1 because of the time limits. Any delay to drawings is a claim, says the Respondent, under Sub-Clause 1.9 and it is also barred. The Tribunal accepts all of these points.

9.60.

The Tribunal finds that, in the context of the dealings between the Parties in 2013 and 2014, BOQ9 and the subsequent agreements took into account the NLGM project redesign and thereby the Variation to the Contract. Part of the Variation relates to extra time to complete the works which was allowed for in the extra Preliminary and Generals agreed in BOQ9. Thereafter ICE's claim is one to "re-rate" the contract rates. The Tribunal is satisfied, to the required standard, that on all the evidence surrounding the BOQ process, both lay and expert, and in particular BOQ9, that when ICE agreed the BOQs it agreed the rates at which it was willing to perform the works.

9.61.

For example, Mr Fisher's email of 4 February 2013 [D20/6613] set out at paragraph 9.45 above, indicated that ICE were happy to negotiate changes to the Contract Price. Further the evidence of the negotiations regarding the BOQs (and SVRs) and particularly BOQ9 shows that there were changes in the rates and therefore the Contract Price. Mr Crane was cross examined and gave evidence to that effect:

Q. Mr Fisher is saying is: due to these changes, we – that will cost BMMC, quite understandably?

A. Yes, sir.

Q. And we will cost those changes?

A. Yes, sir. That's right.

Q. And the way you cost those changes is by renegotiating the BoQ?

A. That's right.

9.62.

Mr Welsh also gave evidence to that effect.

Q. So is it your understanding at the time that because the quantities could not be relied on due to the redesign that you were updating the BoQ, submitting that to Aureus and then going to be issuing that to ICE?

A. That is correct.

Q. Just to recap, in February 2013 you have already understood – or even January, really – no, February 2013, given the schedule being pushed out, you asked ICE to put together a Ps and Gs package for the additional time, and at around the same time you understood that the quantities were decreasing and you were putting together a new BoQ to reflect the decrease in quantities which you were going to issue to Aureus, and there was nothing controversial about that?

A. No. There's nothing controversial. There should be nothing contested about that. The discussions on site and indeed via email between my team on site, my team in the design office, under Philip's guidance, and between ICE as the contractor on site, everybody was kept fully in the loop as to what the changes were and what the change in philosophy of the design was and what the likely outcome was of the revised quantities. Just to go back to one of your comments about reduced quantities. Some of the quantities were reduced and others were increased. There's a swings-and-roundabouts effect from the design change.

9.63.

The Tribunal therefore finds that the Addenda set out what was agreed. For example, Addendum 12 (agreed on 7th May 2014) records that the Contract Price was $39,091,115.73. The common oral evidence was that the Contract Price is the sum of the products of the rates and the quantities with the addition of the Preliminary and Generals. It follows that the Tribunal, in the context of this Contract, its formation and execution, prefers the Respondent's submissions that by agreeing the Contract Price ICE was agreeing the rates to be used. It must have been the case, and Mr Crane did not dispute to any effect, that the Contract Price in Addendum 12 was agreed in full knowledge of the change in site layout.

9.64.

The Tribunal is satisfied on the evidence, and by a careful reconsideration of the document trail, that the Addenda, as agreed, included everything. The Claimant submits that the Addenda were in some way incomplete. The Respondent submits that if the Addenda were drafted in the way suggested by ICE, then they would have to have listed each item upon which the Parties agreed. The Tribunal prefers the evidence and submissions of the Respondent: it follows that the Tribunal finds that the Addenda were drafted to include everything. That is reflected in how they were drafted. The Tribunal is not satisfied that there were any material or relevant delays in providing drawings, and it prefers the expert evidence from the Respondent in this regard. If the Tribunal were wrong on delayed drawings, then the Tribunal is not persuaded that there was, on the evidence, any causation. And even if the Tribunal were again wrong, and there was some delay or disruption, the Claimant had the Sub-Clause 20.1 remedy available to it, which it did not take.

9.65.

The Tribunal accordingly dismisses the Variation Claim finding neither breach of the Contract nor causation in law or on the facts.

9.66.

The Claimant's case is summarised in its Post Hearing Brief as being that "the record and testimony show that BMMC's termination of ICE was wrongful". The Claimant says that BMMC did not have sufficient grounds to terminate ICE. BMMC, says the Claimant, wrongfully terminated based on unjustified Notices to Correct and a false assertion of abandonment.

9.67.

The Claimant draws attention to BMMC's second Termination Notice [D61/17467] dated 8th August 2014 which listed a number of "purported" Notices to Correct. The Claimant denies that the correspondence or the evidence support or justifies BMMC's termination of the Contract.

9.68.

The Claimant advances the expert evidence of Mr Kelly and seeks to persuade the Tribunal that the analysis of Mr Maclean is flawed. Whilst Mr Kelly was, as the Tribunal has said, an engaging witness he was ultimately of limited assistance on the points central to this part of the Claimant's case.

9.69.

Indeed overall, to the extent that the Claimant relies on delays to drawings and a failure, on the Respondent's part, to provide a workable schedule, the Tribunal is unsatisfied and prefers BMMC's evidence. There is no credible evidence that any such delay was causative and prejudiced the Claimant's position. Nor, the Tribunal finds, on a careful analysis of emails, minutes, records, and the oral evidence it heard, was there a "project slow down" that had any, or any material, effect on ICE.

9.70.

The Termination Notice cited failure to comply with five Notices to Correct. The first, however, is abandoned by the Respondent as a ground as the letter did not state that it was a Notice to Correct. The second Notice to Correct is at [D58/16565]. This clearly states that it is a Notice to Correct and requires ICE to provide an "updated schedule that ensures timely handover to Group 5" by 30 May 2014. The Respondent's case here is that ICE never managed to issue an updated schedule which provided for a timely handover to Group 5.

9.71.

The closest ICE could say that it got would be in relation to the Recovery Schedule issued on 19th June 2014: the Respondent says that that slipped the Time to Complete and so would not provide a timely handover to Group 5. On the basis of this Notice to Correct, says the Respondent, BMMC was entitled to terminate the Contract.

9.72.

The third and fourth letters initially relied upon by BMMC, like the first, also do not state that it is a Notice to Correct and therefore BMMC does not rely on them. The final Notice to Correct at [D60/16980] is said by the Respondent to be effective. This Notice to Correct alleges that ICE has abandoned site and also highlights concerns with the Mill and elution area In relation to the Mill and elution area the Notice to Correct required ICE to inform DRA how it intended to deal with these matters within seven days. ICE failed to do so and therefore, says the Respondent, BMMC was entitled to terminate on the basis of this Notice to Correct.

9.73.

Abandonment of Site is also relied upon. The final Notice to Correct sets out a table which illustrates the level of absenteeism on site in respect of ICE's staff. By 6th July 2014 the total absenteeism rate had increased beyond 75%. No solution was put in place by ICE in relation to absenteeism. On 8th July 2014 two of ICE's senior managers resigned [D60/16947] and on 9th July 2014 DRA reported that only the Mud Hut sub-contractor was on site the day before. [D60/16968]

9.74.

On 17th July 2014 Mr Strydom reported that Mr Fisher had been arrested on account of ICE not paying its creditors, but had then fled the country. Mr Crane was not in Liberia at this point in time having left for the birth of his daughter. The Respondent accepts this as the reason why Mr Crane left the site, but observes that Mr Crane chose not to return to the site. It submits that it is not surprising that Mr Crane did not return to the site as that would involve him entering Liberia and facing the risk of being arrested, as Mr Fisher had been.

9.75.

Mr Crane was willing, it is said, to have meetings in South Africa, but the Respondent submits that meetings in South Africa are far from the same as attending site. Despite Mr Crane's evidence, it seems very unlikely that he would return to Liberia. The Respondent's case is that without Mr Fisher or Mr Crane on site, ICE effectively abandoned the Project.

9.76.

This is because without one of Mr Fisher or Mr Crane it was not possible for ICE's workforce to work effectively. It contends that it was not necessary for ICE to have entirely left site for it to be deemed under the Contract to have abandoned the Project. The Respondent says that ICE's senior management had left site and ICE's office in Monrovia had been closed. This meant that anyone who was left on site was entirely impotent to carry out the Works. It would, submits the Respondent, be an entirely misconceived interpretation of the Contract to assume that ICE could only "abandon" the Project if it left the site and took away all its equipment.

9.77.

Alternatively, submits the Respondent, it can rely on the fact that ICE "plainly demonstrated that [it] did not intend to continue to perform its obligations under the Contract." The evidence shows, says the Respondent, that ICE had no intention to continue performing its obligations under the Contract. On that basis BMMC was entitled to terminate the Contract.

9.78.

The Claimant argues, with some force, that if it had abandoned the Site then the contemporaneous reports would show that. For the Respondent, Mr van der Westhuizen gave what the Tribunal found was unsatisfactory evidence as to why the reports he drafted always showed progress, rather than reporting the "warts and all".

9.79.

That is not to condemn Mr van der Westhuizen but it was clear that there were a range of pressures on him, not just from ICE, in relation to the performance of the Contract and more importantly progress towards first gold.

9.80.

The Respondent also relies on Sub-Clause 15.2 (g) of the Contract at [C4/26/1128] which it says meant that BMMC was entitled to terminate the Contract if ICE:

…performs the Works such [that] in the reasonable opinion of the Employer the Contractor will not complete the Works by the time stipulated by the Contract.

9.81.

The Respondent contends that the date pleaded by the Parties for completion is agreed as 19th August 2014. There is, of course, the question of the "Recovery Schedule" issued on 19th June 2014 by DRA with a completion date of 15th December 2014.

9.82.

The Respondent submits that the Tribunal should disregard the latter date as it is unpleaded. Whilst there is force in the argument that the pleaded dates should fix the Parties, the Tribunal finds that there would be a degree of unreality about so doing if the evidence was clear. It therefore takes, for this point, the later date. In that event, says the Respondent, whether the Time to Complete was 19th August 2014 or 15th December 2014, is immaterial - BMMC was entitled to terminate the Contract on the basis of Sub-Clause 15.2 (g). This is because ICE were not going to complete before mid-January 2015 even if they had returned to site en masse with funds sufficient to pay their staff and management capable of supervising the project.

9.83.

The Claimant's expert Mr Kelly accepted in cross-examination that he could provide no opinion on when ICE would have completed the Works. His counterpart Mr Maclean did provide an opinion on when ICE would have completed the Works. This is set out in Figure 7 in Annex 3 to Mr Maclean's supplemental report. [E5/9/1192] At 1st August 2014 Mr Maclean considered that the Works would likely be completed by 20th January 2015. The Respondent submits that there is no reason not to accept this evidence and it is the only evidence before the Tribunal as to when ICE would have completed the Works. It follows says the Respondent that there is no reason to find that the termination under Sub-Clause 15.2 (g) was invalid.

9.84.

The Claimant contends that the consequence of the Parties' agreement and adoption of the June Recovery Schedule is that as at 19th June 2014, the Parties explicitly agreed and worked to a new completion date of 15 December 2014.

9.85.

The Claimant says that BMMC's entire defence on the ICE's delay relies on the 19th August 2014 completion date, which it has repeatedly insisted was a "contractual" date because the Parties agreed to it. BMMC cannot now deny that the Parties further agreed to a new 15th December 2014 completion date, and that this date, too, is "contractual." Thus, says the Claimant, the legal consequence of this is that as at termination on 8th August 2014, ICE could not be delayed, according to the June Recovery Schedule. The further legal consequence is that BMMC's termination of ICE for delay was wrongful.

9.86.

The Claimant further submits that BMMC cannot argue that it had other reasons for terminating ICE. First, delay was the major reason for termination. Second, internal DRA communications "clearly show that as of end of July, DRA recognised that ICE had not defaulted" and that BMMC/DRA had no grounds to terminate ICE:

"Carla and I [DRA] had a rather long conversation about this. The fact of the matter is that ICE have not yet defaulted, so whichever way you look at it, there is NO remedy in the contract that can possibly address an anticipatory breach or default."

9.87.

Thus, says the Claimant, ICE's termination on 8 August 2014 was wrongful. BMMC had no grounds to terminate ICE based on delay, because it had not performed a delay analysis; because the schedules BMMC relied on were seriously flawed; because in any event, the Parties had agreed to a new completion date of 15 December 2014; and because DRA recognized that ICE had not otherwise defaulted.

9.88.

The Claimant submits that as relates to ICE's Variation claim, it is irrelevant whether BMMC's termination was wrongful or not. However, wrongful termination is a breach of contract which does entitle ICE to the benefit of the bargain, and thus to recover its lost profits on the unperformed portion of the Works.

9.89.

Further, ICE is entitled to recover its Free Issue Items, which had been provided to BMMC under a specific condition that the Contract would not be cancelled.

9.90.

Termination is dealt with under Clause 15 of FIDIC and the Contract. Sub-Clause 15.1 which deals with Notice to Correct states, so far as is material:

If the Contractor fails to carry out any obligation under the Contract, the Engineer may by notice require the Contractor to make good the failure and to remedy it within a specified reasonable time.

9.91.

Sub-Clause 15.2, of the Contract, as amended by the Parties deals with the entitlement and grounds for termination, the relevant parts are as follows:

The Employer shall be entitled to terminate the Contract if the Contractor:

(a) fails to comply with Sub-Clause 4.2 [Performance Security] or with a notice under Sub-Clause 15.1 [Notice to Correct].

(b) abandons the Works or otherwise plainly demonstrates the intention not to continue performance of his obligations under the Contract.

(c) without reasonable excuse fails:

(i) to proceed with the Works in accordance with Clause 8 [Commencement. Delays and Suspension], or

(ii) to comply with a notice issued under Sub-Clause 7.5 [Rejection] or Sub-Clause 7.6 [Remedial Work], within 28 days after receiving it….

(g) the Contractor does not proceed in the performance of the Contract in a timely manner or performs the Works such in the reasonable opinion of the Employer the Contractor will not complete the Works by the time stipulated by the Contract.

(h) the Contractor fails to achieve a Key Date Milestone;

In any of these events or circumstances, the Employer may (unless the Contractor provides a rectification plan to the Employer that demonstrates the Contractor's failures are capable of remedy and are remedied by the Contractor within twenty (20) days of notification and the Employer is satisfied that a Taking- Over Certificate for the Works is likely to have occurred before the Longstop Date then), upon giving 28 days' notice to the Contractor, terminate the Contract and expel the Contractor from the Site. However, in the case of sub-paragraph (e) or (f), the Employer may by notice terminate the Contract immediately.

9.92.

The Tribunal has no hesitation in concluding that the Respondent was entitled to terminate the Contract with ICE and had sufficient grounds for doing so under the Contract. Whilst three of the Notices were defective, the others were not. They were not complied with and the remedies are clear.

9.93.

If that had not been sufficient, the Tribunal finds that for all practical purposes the NLGM project site had been abandoned by ICE. The evidence before the Tribunal, both in the documents and from the oral testimony was one of chaos and collapse.

9.94.

The Tribunal has little doubt that had Mr Crane himself been able to return to Liberia, not face arrest, and galvanise staff on a near permanent basis, after the disappearance of Mr Fisher, there may have been progress. But on the balance of probabilities this would not have happened. The Tribunal heard evidence of the various relationships in Liberia, and of the debts and repossessions that were about to take place. Whilst the Claimant's submissions in its Skeleton Argument on the difficulties generally of establishing abandonment in this instance, the combination of circumstances are such that a finding is wholly justified.

9.95.

Even if the Tribunal were wrong in its analysis of the first two grounds, it is also satisfied that the Sub-Clause 15(g) is made out on the facts, the oral evidence, and the preferred expert evidence. The Sub-Clause permits termination if:

(g) the Contractor does not proceed in the performance of the Contract in a timely manner or performs the Works such in the reasonable opinion of the Employer the Contractor will not complete the Works by the time stipulated by the Contract.

9.96.

The test is the reasonable opinion of the Employer. The case law such as it is assists the Respondent and even if it is right that the contractual completion date is 15th December 2014 rather than 19th August 2014 the Tribunal finds that it would have been the reasonable opinion of any Employer that the Contractor would not complete the works by that date. The situation was, on the balance of probabilities, hopeless and of ICE's making; the Respondent was properly entitled to terminate.

9.97.

Accordingly, the Wrongful Termination Claim fails.

9.98.

The final part of the Claimant's claim that the Tribunal needs to consider is the argument for a Quantum Meruit. The Tribunal has had the benefit of much case law, and submissions, opening and closing, on the subject. The Respondent writes in an email dated 6th January 2017 (so far as is material) that:

The Claimant (specifically at paragraphs 564 to 568 of its written closings) relies on the case of Fiona Trust. The Respondent simply states that Fiona Trust does not assist the Claimant for the reasons which the Claimant made clear in its oral opening (see pages 90 to 91 and 93 to 96 of the transcript for day 1 of the hearing). Put succinctly this is because the way the Claimant seeks to rely on quantum meruit is as a cause of action in restitution, which is not something which arises out of the Contract.

9.99.

Because, for the reasons set out below, and given the approach taken at the start of the Oral Hearing and that the Tribunal was already familiar with Fiona Trust [2007] UKHL 40 it has not invited the suggested further submissions. The Tribunal has accordingly carefully considered both Parties' submissions on Quantum Meruit in the context of the Contract and the prevailing law.

9.100.

The Claimant maintains that it is entitled to a Quantum Meruit on the work done. It argues innovatively, against the background of Fiona Trust, invoking South African and Liberian law, as well as English and United States principles. In particular it adopts the "cardinal change" principle.

9.101.

There is important case law from South Africa that does not appear to have found its way into the Claimant's submissions. In BK Tooling (Pty) Ltd v Scope Precision Engineering (Pty) Ltd (1979) (1) SA 391 the appellate court held that the term quantum meruit or its equivalents should be avoided in South African law. An award was made under what was said to be the doctrine of a reduced contract price.

9.102.

The Claimant also cites the older case of Alfred McAlpine & Son (Pty) Ltd v Transvaal Provincial Administration (1974) 3 SA 506 (A) which concerned the construction of the Pretoria to Bronkhorstspruit Road back in the early 1970s. McAlpine had undertaken to build a double freeway but, because of the many variations and alternations to the original agreement, McAlpine claimed that that agreement had fallen away and that a tacit agreement had been brought about by conduct. It claimed it was entitled to remuneration at a fair and reasonable rate for all the work done on a quantum meruit basis. McAlpine's claims on this basis failed, in part, because throughout the operation of the contract it had abided the terms of the contract and, only when the contract was at an end, did it attempt to claim on the basis of the tacit agreement. It appears that McAlpine's rates for this contract were uneconomic and it sought to avoid the contract and seek compensation through the common law route.

9.103.

The Claimant's citing of the case draws on the obiter passage, emerging from Lord Cairns' opinion in Thorn v Meyer in 1876. The passage cited is that

"[a] contract to do a specified work for an agreed price can from its very beginning be so altered by the owner and carried out by the contractor that it can be said that for the original contract there was tacitly substituted a new agreement in terms whereof the contractor was entitled to reasonable remuneration for the work."

9.104.

To the extent that this is good law in South Africa, then in the Tribunal's view this type of argument is unlikely to succeed in that jurisdiction where there is a contractual agreement in place between the parties; where rates or prices are agreed, and where the parties by their conduct have generally abided by the terms of the contract.

9.105.

The Claimant says that the leading South African case on quantum meruit is Middleton v Carr, pursuant to which a court will imply a reasonable remuneration where an otherwise valid contract does not contain terms sufficient to fix the remuneration of the party who renders services. The Respondent distinguishes Middleton, and argues that in this case the Contract had specific payment terms, including FIDIC Clauses 12 and 13.

9.106.

This the Claimant says is a case of the Respondent seeking to have it "both ways". If it is the case that the Variation mechanism does not apply (the alternative argument the Claimant presents here), then the Contract payment terms would no longer be sufficient to fix ICE's remuneration for services rendered above and beyond the original As-Planned Contract Scope. In such a case, South African principles of quantum meruit would imply a reasonable remuneration, the Claimant says, as the court did in Middleton.

9.107.

The Claimant says that reading Angath and similar cases together with Laidlaw, "it is clear that the existence of an agreement is not the operative fact; rather, courts focus on whether services were rendered and reasonable remuneration for those services."

9.108.

The Tribunal does not accept this proposition. Neither the courts in South Africa nor indeed any other jurisdiction possibly relevant to the instant case, seek in ordinary circumstances to usurp the rights of parties to determine through contractual mechanisms what remuneration will be paid. The difficulty with the Claimant's approach to the application of the case law to the instant facts is that a determination of remuneration took place through the BOQ and Addendum process throughout the life of the Contract. This resulted, as the Tribunal has found, in agreements between the Parties as to the appropriate remuneration for the redesigned NLGM project.

9.109.

In those circumstances, the right to a quantum meruit, if it exists at all, does not enter into the equation.

9.110.

Thus where the Claimant cites Chamotte it is for the proposition that where a contract provides for negotiated price adjustments in case of increased quantities, but does not specify rates, and where the parties fail to negotiate a price, a court will entitle the contractor to receive reasonable remuneration for services rendered. On the facts this does not assist the Claimant.

9.111.

So too where the Claimant cites, Compagnie Interafricaine it is to illustrate how South African courts use reasonable remuneration to calculate additional work done under a changed scope. The Claimant says that Compagnie Interafricaine is instructive because in that case, the Court specifically stated that even though the contract's variation clause did not apply (to situations of additional work due to unforeseen circumstances), the contractor could still recover reasonable remuneration for the work performed. In awarding such reasonable remuneration, the Court cited two quantum meruit cases, including Angath and Middleton v. Carr.

9.112.

Again, on the facts that the Tribunal finds proven in this case, and the proper reading of the BOQs and the Addenda, the propositions so claimed do not assist the Claimant given that there was a proper determination under the Contract.

9.113.

It is apparent, therefore, that the case law can and should be distinguished from the instant case. The Tribunal is also wholly unpersuaded by the notion that this is a case to which "cardinal change" theory can be applied in the instant case, both on the law and on the facts. The Claimant's first difficulty is in trying to import the doctrine to a private law case not involving government contracts. But even were that not the case then it then becomes enmeshed in the difficulty that the cardinal change pleaded is the alteration of the Contract beyond its original scope.

9.114.

The Tribunal has accepted that the Contract was always, as the Respondent contends, intended from the outset to be amended, and the evidence is clear that the Claimant knew and agreed to this process. There are some 12 Addenda (set out at paragraph 8.2 above) and 14 BOQs that were at different times agreed to reflect the changes.

9.115.

The Tribunal does not find nor accept that any differences between the works carried out to those set out, for example, in BOQ 14 amounted to a cardinal change. The Tribunal prefers the Respondent's answer to paragraph 357 of the Amended Statement of Claim which is contained in paragraph 296 of the Respondent's Opening.

9.116.

Overall, the Tribunal is wholly unpersuaded that a quantum meruit claim has any relevance, legs, or legal standing whether as advanced by the Claimant, or at all. The burden of proof is on the Claimant and it has failed to satisfy the Tribunal that this remedy is relevant or tenable. The Tribunal understands why it was advanced but the level of industry associated with it does not increase its attraction or merits.

9.117.

Accordingly, the Quantum Meruit claim also fails.

9.118.

In the circumstances, the Claimant's claim is dismissed. Notwithstanding the restrictions on an appeal, the Tribunal has for completeness briefly addressed the quantum of the Claimant's case in Section 11.

10.1.

The Respondent's Defence and its counterclaim are also set out in extensive pleadings and, like the Claimant's, these have been carefully considered and analysed by the Tribunal in the light of the oral and written evidence, and a full scrutiny of the documents. As with the Claimant's case and submissions, it is only practicable to address a selection of the points that have guided the Tribunal to its conclusions. That should not be taken to mean that the others were not considered, weighed and evaluated. They have been examined at considerable length in particular over the last 14 days.

10.2.

In its Opening, the Respondent contended that it brings a "very simple counterclaim" based on two matters:

10.2.1 BMMC was entitled to terminate the Contract on account of ICE's breaches; and

10.2.2 on account of ICE's breaches of Contract BMMC is entitled to recover the increased costs which it had to pay to complete the Works.

10.3.

To calculate those increased costs BMMC has taken what it spent under the Contract whilst ICE was on site (which includes payments to ICE for works it carried out and payments made on behalf of ICE, as agreed via variations to the Contract). It then adds to that figure the amounts advanced to ICE for materials, equipment and supplies which it was unable to recover before ICE's contract was terminated) and the cost it spent on completing the Works after the Contract was terminated to produce a total figure for the amount spent by BMMC on carrying out the Works.

10.4.

BMMC then compares that to the final Contract Price of USD $39,317,755.94. This results in BMMC's counterclaim of approximately USD $11,000,000. The costs to complete the Works claimed by BMMC includes the cost of remedying the problems with the spillway as the spillway only failed, says the Respondent, on account of ICE's failure to carry out its works properly.

10.4.

The Respondent submits that, overall, the evidence at the hearing went to further support BMMC's case. The quantum of the sums claimed is agreed between the parties, except for one item, the CMC additional costs (there is a difference between the experts of $134,548.63). The other difference between the experts is how the sum of $719,169.74, which related to how materials should be dealt with. That is a matter of liability not a matter of quantum.

10.5.

Therefore, says the Respondent, the real question is how to assess quantum. BMMC considered that the best way to present the issue of quantum was to first consider what sums would be payable to BMMC if the termination was unlawful and then secondly, what further sums would also be payable to BMMC if the termination was lawful (which it was). Clearly on the basis that the termination was lawful BMMC would recover all sums.

10.6.

The Tribunal having found that the Claimant's claims fail, and in particular that there were proper and lawful grounds for the termination of the Contract, it follows that the Respondent is entitled to succeed on its Counterclaim.

10.7.

The Tribunal takes the question of the quantum of the Counterclaim in short order. The Tribunal on balance prefers in this instance the approach of Mr Stavrou and should allow the materials in Certificate 21 but not the Spillway Costs which the Tribunal accepts do not fall to be recovered from ICE – see in particular [D26/8166].

10.8.

This would present a figure of USD $9,913,902.63.

10.9.

The Tribunal is also satisfied that there is a proper reduction to be made under Addendum 11 for the cost of ICE retained equipment. It was retained as collateral for BMMC's advance and direct payments to ICE. Those amounts are entirely comprised within BMMC's Pre-Termination Counterclaim costs.

10.10.

The joint statement puts this sum at $3,241,713.43. The net sum due to the Respondent from the Claimant under the Counterclaim is accordingly $6,672,189.20 plus interest. This in turn is calculated at 2% and reaches $318,437.08 to 23rd January 2017. The grand total due is accordingly $6,990,626.28.

11.1.

For completeness, the Tribunal should indicate which of the scenarios it would have adopted to calculate the quantum of the Claimant's claim had it preferred the Claimant's case. The Tribunal has been assisted by the joint work of the experts and the various scenarios provided.

11.2.

On the balance of probabilities, and after a proportionate but considered analysis of the expert evidence, and careful review of the submissions, the Tribunal would in each of the scenarios have preferred the Valuation 4 methodology. Thus, were there both a Variation Claim and Wrongful Termination, the Claimant would have been entitled to a net sum of $15,528,110.29 plus interest.

11.3.

If there had been a Variation Claim but no Wrongful Termination the net sum due would have been $9,170,451.95 plus interest.

12.1.

Having completed the work in relation to the substantive claims, and found in favour of the Respondent in the sum of $6,990,626.28 inclusive of interest as set out above, the Tribunal for the first time has considered the submissions on costs. The Tribunal is invited to deal with the principle and quantum of costs, and is experienced in this field, as a barrister and as an arbitrator.

12.2.

The starting point for determining the position in respect of costs are SAOA(SA) Rules which state at Rule 39:

39 Award of Costs

39.1 Unless the arbitration agreement otherwise provides, or the parties otherwise agree, the award of costs shall be at the discretion of the Arbitrator who may direct the costs to be taxed, alternatively, may himself settle the costs.

39.2 If the Arbitrator settles the costs he shall be entitled to employ the services of a professional taxing consultant to assist him in determining the amount of such costs to be awarded. However, in determining such costs the Arbitrator shall also be guided by the provisions of Rules 39.4 and 39.9.

39.3 In the event of the Arbitrator employing the services of a professional taxing consultant, the costs thereof shall be costs in the cause subject to the Arbitrator's directive as to costs in his final award.

39.4 Disbursements made by a successful party to his representative in the proceedings shall be recoverable by way of an Award of costs on a scale to be agreed between the parties, or if not so agreed, to be determined by the Arbitrator who may, in his sole discretion, direct that such costs shall be taxed in accordance with Section 35 of the Arbitration Act.

39.5 If the parties agree that the costs be taxed by the Taxing Master of the Court and the Taxing Master refuses or is unable to tax such costs, then the matter shall revert to the Arbitrator who shall either refer the costs to be taxed by such professional taxing service as may be agreed or, in the absence of agreement, as he may himself appoint, or make an award of such costs as he deems reasonable in the circumstances.

39.6 The Arbitrator may direct that recoverable costs of the arbitration, or any part of the arbitral proceedings, should be limited to a specified amount and/or duration of the hearing and/or in any other appropriate manner.

39.7 Any directive made by the Arbitrator under Rule 39.6 may be varied at any stage provided that a direction for the limitation of costs or any variation thereof must be made sufficiently in advance of the incurring of costs or the taking of steps to which it relates for the limitation to be taken into account.

39.8 The Arbitrator shall not exercise his powers under Rules 39.6 and 39.7 without affording the parties an opportunity to make submissions to him thereon.

39.9 Nothing herein contained shall be construed as compelling the Arbitrator to use any tariff such as that contained in the Rules of the Supreme Court in making an award in relation to the amount of recoverable costs, unless the parties otherwise agree

12.3.

The Claimant says, as paragraph 597 of its Post-Hearing Brief:

597. The Tribunal has jurisdiction to award costs in relation to the arbitration, and in allocating costs, the Tribunal should apply the prevailing party, or loser pays, principles.

12.4.

The Claimant continues:

604. Pursuant to sec 59 of the 1996 Act, "costs of the arbitration" include:

(a) the arbitrators' fees and expenses (including any VAT charges),

(b) the fees and expenses of any arbitral institutions concerned, and

(c) the legal or other costs of the parties.

605. Generally, any costs of or incidental to any proceedings to determine the amount of the recoverable costs of the arbitration are also covered as "costs of the arbitration" under sec 59(c) of the 1996 Act, including pre-arbitration costs or costs of investigation, lawyers' fees, expert witness fees and expenses, transcriber charges, travel, accommodation, photocopying and other incidental expenses, as well as hearing venue expenses.

12.5.

The Claimant accepts the Tribunal's jurisdiction to deal with the issue of costs, and the discretion that the Tribunal is given under the Rules. The Claimant then deals with a number of specific instances during the course of this matter where the normal principle of "loser pays" might or, as the Claimant says should, be varied. The Tribunal returns to these below.

12.6.

The Claimant's costs, had it been entitled to them from the Respondent, and taking into account the various interlocutory matters, were put at $3,165,503.87. Using an exchange rate of £1 = $1.24 this equates to approximately (and for the purposes of comparison) £2,552,825.60. In addition, the Claimant claimed interest on its costs at 10.5%. The Tribunal finds this sum helpful in dealing with the Respondent's claim for costs.

12.7.

The Respondent, in its submissions says that the Claimant and the Respondent have agreed that it is appropriate that costs are dealt with as follows:

a) Costs of the Claim

b) Costs of the Counterclaim

c) Aureus' Application to Contest Jurisdiction and Claimant's Application for Reconsideration of Jurisdiction Award

d) Respondent's Application for Extension of Time for Service of Witness Statements

e) Claimant's Application for Further Expert Report on Quantum

f) Claimant's Withdrawal of Allegations of Fraud

12.8.

The Respondent reminds the Tribunal that the costs of the Respondent's application for security for costs were dealt with by the Tribunal in its decision of 11th April 2016. Both Parties were [A3/729] ordered to bear their own costs of the application.

12.9.

Like the Claimant, the Respondent submits that the costs of the claim and counterclaim should follow the event in the usual manner (see section 61(2) Arbitration Act 1996) - and that BMMC should following the Award in its favour be awarded its costs in full.

12.10.

The Tribunal agrees with both Parties: the starting point is that, save where it is appropriate to make exceptions, the Claimant will pay the Respondent's costs.

12.11.

In relation to (c), the costs of dealing with Jurisdiction, in its decision dated 19th May 2016 [A3/18/762] the Tribunal ordered that costs of "Issue 1" be reserved until the final award. The Respondent now submits that costs should follow the event in the usual way in relation to the costs of jurisdiction on both "Issue 1" and "Issue 2" (which related to the fraud allegations which have been withdrawn by the Claimant, the costs of which are dealt with below). The Respondent relies on its previous submissions as to the costs of "Issue 1" in this respect [F1/7/107].

12.12.

The Claimant submits that even though (1) Aureus Mining, Inc. and (2) BMMC prevailed on the jurisdictional challenge, Aureus and BMMC should bear their own costs in relation to Respondents' Application for a Ruling on Substantive Jurisdiction, and the subsequent submissions relating to Claimant's submission for reconsideration. The Claimant applies similar reasoning to that which prevailed in respect of the Security for Costs application.

12.13.

The Tribunal has re-read the Award on Jurisdiction and the background. It has carefully considered the Claimant's submissions and the reasons for reserving the question of costs until this point. They do not assist the Claimant and the position with the Security for Costs application was entirely different.

12.14.

In the Tribunal's view the position with regard to Aureus was clear and remains so: the Claimant took a decision to seek to bring Aureus into the Arbitration and the reasons are perhaps understandable in a commercial context, particularly looking at the offers that the Claimant made to settle the dispute. But it lost the point and costs shall, there being no fraud allegations or other points, follow the event.

12.15.

In respect of (d), the Respondent's application for an extension of time for service of its witness statements, the Respondent was granted its application [A3/26/871]. It submits that that the appropriate order in such circumstances is for each party to bear its own costs of the application. The Respondent has therefore deducted these costs from its costs of the Claim and Counterclaim.

12.16.

In contrast, the Claimant says that Thus, although Respondent ultimately "prevailed" upon its request for the extension of time to file the witnesses statements, an application filed the same day that all of the witness statements were originally due, in the circumstances the award of costs to Claimant arising out of the application for an extension of time for Respondent to file its witness statements is warranted and just.

12.17.

The Tribunal has re-visited the details of this Application and noted the concerns it had with the Respondent's handling of the witness statement issue. The Tribunal took the view that any prejudice to the Claimant could be dealt with in costs. The Claimant has not demonstrated any particular prejudice but it is right that the Claimant was put to extra expense at a late stage.

12.18.

Balancing the submissions, and the evidence, the Tribunal orders that the Respondent will therefore not only bear its own costs, but the Claimant's costs of this discrete Application will be set-off against the total award of costs.

12.19.

As for (e) the Respondent says that the Claimant's last minute request for permission to serve an additional supplemental report from Mr Stavrou on quantum, which succeeded, severely prejudiced it given the timing of the request which was immediately before the hearing was about to commence and therefore when the Respondent was very busy, including with its experts, engaged in hearing preparation. The Respondent had to make time (in what was already a very tight timetable) to review the further supplemental report, consider its analysis and conclusions and then for the Respondent's quantum expert, Mr Richards, to meet again with Mr Stavrou to prepare a second joint statement which took considerable time.

12.20.

Given this prejudice, the Respondent's submits that the Claimant should bear all of the Respondent's costs of dealing with the further expert evidence on quantum in any event. These costs are set out in the Respondent's Schedule of Costs.

12.21.

The Claimant says that the need for Mr. Stavrou's further supplemental report of 21st November 2016 was created by Respondent's own strategy, or simply the unfortunate circumstances again that it faced relating to the restructuring of Aureus' ownership / difficulty communicating with witnesses. The need for Mr. Stavrou's further supplemental report was needed because Mr. Richards issued an incomplete responsive report on 29th July 2016, and only issued his full, complete report as the supplemental report of 17th October 2016. The Claimant submits that "Needless to say, this approach is improper", and the costs then associated with the application for Mr. Stavrou's further supplemental report and the need and production for his further supplemental report cannot be put at the feet of the Claimant. These costs should, in any outcome, be taxed to Respondent.

12.22.

The Tribunal disagrees. Having had the benefit of listening carefully to the Parties, and to the experts, and considered the submissions, chronology, directions, and orders, the proper approach is for the costs of this Application to be costs in the case, which in the event means that the Claimant shall pay the Respondents costs in this respect as part of the overall Award on Costs.

12.23.

In respect of (f), the Respondent submits the Claimant has pursued unsubstantiated allegations of fraud against the Respondent throughout these proceedings, notwithstanding the absence of any credible evidence in respect of those allegations. Accepting, finally, that the allegations were doomed to failure, the Claimant agreed at the close of the hearing to withdraw the allegations [8/3/3-4]. The Respondent unsurprisingly submits that in accordance with the usual course, all of the Respondent's of dealing with the elements of the claim which the Claimant has chosen not to pursue should be for the Claimant's account.

12.24.

The Claimant contends that this is wrong. The application for summary judgment on the fraud allegations was misconceived and was not even admissible as and when asserted, and was without merit in any event.

12.25.

The Claimant invites the Tribunal to order that Respondent bear its own costs related to the application for summary disposition of Claimant's fraud claims.

12.26.

The Tribunal disagrees. Allegations of fraud are serious an, if raised by a party and subsequently abandoned, will have costs consequences unless there is a particular or unusual argument to the contrary. Whilst the Claimant makes some headway with the costs of the summary application overall its position is poor. The costs of the fraud allegations shall be costs in the case which means that the Claimant wil bear them in any event.

12.27.

The Respondent claims costs in the sum of £2,829,614.31 as follows:

#	Head	Sum (£)
(a)	Costs of the Claim	2,563,645.43
(b)	Costs of the Counterclaim	124,844.94
(c)	Jurisdiction	71,447.55
(d)	Witness Statements	11,579.50
(e)	Quantum Expert	9,282.00
(f)	Fraud	48,814.89
	TOTAL	2,829,614.31

12.28.

This is some £275,000 more than the Claimant's costs, or around 10% greater.

12.29.

The Tribunal is mindful of the proper approach in a matter of this complexity, and of the need to be careful to apply the discretion granted under the Rules. The final figure claimed is in the view of the Tribunal somewhat higher than might be expected but it is neither disproportionate in itself nor when compared with the Claimant's claim.

12.30.

Taking into account items that do not, on examination of the Statement of Costs, appear on first reading to be properly recoverable as against the Claimant (having regard to the witness difficulties in particular, and the hours claimed) and the findings that are made by the Tribunal above, the Tribunal orders that the Claimant to pay the Respondent's costs in the assessed sum, after the set-off, of £2,700,000.00.

12.31.

BMMC claims 2% interest on its costs from the date of the award. The Tribunal considers that this is a reasonable claim both for costs and damages.

13.1.

In addition to the Tribunal's thanks to the counsel and legal representatives already set out above, the Tribunal wishes to record its thanks to the Transcribers and, in particular, to its Assistants during the Oral Hearing, Dr Christy Burzio, Ms Aish Rao and Ms Zoey Dee White.

ACCORDINGLY THE TRIBUNAL MAKES AND PUBLISHES THIS AWARD AND DIRECTS AS FOLLOWS:

(1) That the Claimant Contractor's Claim is dismissed.

(2) That the Claimant Contractor forthwith pays to the Respondent Employer damages in the Counterclaim in the sum of USD $6,990,626.28 (six million nine hundred and ninety thousand six hundred and twenty six US dollars and twenty eight US cents) together with compound interest thereon, at quarterly rests, at the rate of 2% (two rd percent) from 23 January 2017 until the date of the full payment of the damages.

(3) That the Claimant Contractor forthwith pays to the Respondent Employer the legal and other costs in this Arbitration in the assessed sum of GBP £2,700,000.00 (two million seven hundred thousand pounds sterling) together with compound interest rd thereon, at quarterly rests, at the rate of 2% (two percent) from 23 January 2017 until the date of the full payment of the costs.

ICE v. BMMC

Documents of the case

Lawyers, other representatives, expert(s), tribunal’s secretary

Award

1. ARBITRATION

2. THE PARTIES

3. THE DISPUTE

4. ARBITRATION AGREEMENT, SEAT OF ARBITRATION AND GOVERNING LAW

5. PROCEDURAL HISTORY

6. CONDUCT OF THE ARBITRATION

7. WITNESS STATEMENTS AND TESTIMONY OF WITNESSES

8. THE CONTRACTUAL POSITION

9. THE CLAIMANT'S CLAIM

The Variation Claim

The Wrongful Termination Claim

The Quantum Meruit Claim

The Claimant's Claims - Conclusion

10. THE RESPONDENT'S COUNTERCLAIM

11. THE QUANTUM OF THE CLAIMANT'S CLAIM

12. COSTS

13. ACKNOWLEDGEMENTS

14. THE AWARD

Instantly access the most relevant case law, treaties and doctrine.