🔍 Deep Dive: Failure to Comply with DAB/DAAB’s Decision

FIDIC 1999 – Sub-Clause 20.7 vs. FIDIC 2017 – Sub-Clause 21.7

1️⃣ Purpose of the Clause

Let’s start with the why behind these clauses.

Picture this: The DAB (or DAAB) issues a decision. It may not be the final word—it could still be disputed through arbitration—but until that happens, both parties are expected to comply with the decision immediately. What if one party just… ignores it?

These clauses step in to say: “Hold on—you can’t just sit on your hands.” Even if you’ve submitted a Notice of Dissatisfaction (NoD) because you don’t like the decision, you still have to follow it.

🔍 Why is this important?
The whole DAB/DAAB system is designed to keep projects moving—not get bogged down in endless legal fights. By making decisions “binding (but not final),” FIDIC is saying: “Deal with it now, argue later.”

So both Sub-Clause 20.7 (1999) and 21.7 (2017) are there to:

• Enforce discipline around DAB/DAAB decisions.
• Prevent one party from using non-compliance as a delay tactic.
• Ensure the other party can go to arbitration right away to enforce the decision—no need to wait or talk it out further.

✍️ Bottom line? Even a contested DAB/DAAB decision must be complied with until it’s overturned by arbitration. These clauses make sure of that.

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2️⃣ Breakdown of the Clauses

Let’s now dissect the language and mechanics of each clause.

🧠 It’s more refined, but the message is the same: “Obey now, dispute later.”

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🔄 Comparison Table: Key Differences – FIDIC 1999 vs FIDIC 2017

Aspect	FIDIC 1999 – Sub-Clause 20.7	FIDIC 2017 – Sub-Clause 21.7
Board Name	Dispute Adjudication Board (DAB)	Dispute Avoidance/Adjudication Board (DAAB)
Title	Failure to Comply with DAB’s Decision	Failure to Comply with DAAB’s Decision
Scope of Decision	Focus on binding decisions, whether final or not	Same principle, but uses clearer terminology and structured references
Trigger for Arbitration	If a party fails to comply with the DAB decision, the other party can refer that failure directly to arbitration under Sub-Clause 20.6	Same mechanism—non-compliance can be referred directly to arbitration under Sub-Clause 21.6
Bypass Amicable Settlement?	Yes – allows bypassing Sub-Clause 20.5 (Amicable Settlement)	Yes – allows bypassing Sub-Clause 21.5 (Amicable Settlement), clearly stated
Language Precision	Concise but more open to interpretation	More structured and detailed; clearly links to related sub-clauses (21.4.3, 21.5, 21.6)
Clarity on “Binding”	Implied through reference in 20.4	Explicit reference to binding nature in 21.4.3 enhances understanding
Cross-Referencing Strength	Less explicit; relies on reader understanding clause relationships	Stronger integration; the clause structure guides the user clearly through the process
Practical Enforcement Path	Strong enforcement but may need clarification through interpretation	Strong and better-structured enforcement, with less room for misinterpretation
Evolution Insight	First formal step in enforcing DAB decisions pre-finality	Evolution to a proactive dispute-avoidance tool while maintaining enforcement rights

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3️⃣ Key Interpretations and Implications

Now let’s unpack what these clauses really mean on a project.

🚨 Binding vs. Final—what’s the difference?

A lot of people get this wrong, so let’s clear it up:

• A binding decision means you must follow it now.
• A final decision means it can’t be changed later.

DAB/DAAB decisions are immediately binding, but they become final only if no Notice of Dissatisfaction is filed.

👉 So even if a party says, “We’re going to challenge this,” they still have to comply in the meantime. If they don’t, these clauses let the other side drag them into arbitration and get enforcement.

✅ Why does this matter?

Because it avoids a common tactic: “We don’t like the decision, so we’re not going to pay until arbitration is done.” That could take months—or years.

With these clauses, you can say: “Nope. We’re going to arbitration now—just to enforce this non-compliance.”

⚖️ Legal Implications:

• The non-compliant party risks being hit with an enforceable arbitral award for ignoring a DAAB/DAB decision.
• The compliant party gets a faster path to real remedies, not just paper decisions.

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4️⃣ Cross-Referencing with Other Clauses

Cross-referencing is like seeing how all the puzzle pieces connect. These clauses don’t exist in isolation—they rely on the foundation laid by others.

🔄 In FIDIC 1999:

Let’s walk through the three most important ones:

1. Sub-Clause 20.4 – “Obtaining Dispute Adjudication Board’s Decision”:
   This is where the parties formally get a decision from the DAB. It states clearly that the decision is binding unless revised in arbitration. It’s the prelude to 20.7. Without this, 20.7 wouldn’t even activate.
2. Sub-Clause 20.5 – “Amicable Settlement”:
   Usually, before going to arbitration, you have to try to settle things amicably. But 20.7 says: “Skip this step” if the issue is failure to comply. That makes 20.7 a powerful enforcement shortcut.
3. Sub-Clause 20.6 – “Arbitration”:
   This is where you go if someone isn’t playing fair. 20.7 links directly to 20.6, enabling arbitration without delay. It’s the hammer you use when the carrot of voluntary compliance doesn’t work.

🔄 In FIDIC 2017:

Now let’s see how it plays out in the updated version:

1. Sub-Clause 21.4.3 – “The DAAB’s Decision is Binding”:
   Here, FIDIC reinforces that even if a party disagrees, the DAAB’s ruling must be followed unless and until it’s changed through arbitration. This underpins the entire enforcement idea of 21.7.
2. Sub-Clause 21.5 – “Amicable Settlement”:
   As with 1999, normally you need to have a sit-down before escalating. But again, 21.7 is the escape hatch—because you don’t want a party ignoring a DAAB decision to stall during “settlement talks.”
3. Sub-Clause 21.6 – “Arbitration”:
   This is the enforcement tool. If someone ignores a binding DAAB decision, 21.7 lets you invoke 21.6 right away.

📌 In short: these clauses create a workflow. One clause leads to the next, with 20.7 or 21.7 acting as the bridge from DAB/DAAB decisions to enforcement.

So there’s a logical flow:
Binding Decision → Non-compliance → Skip Settlement → Straight to Arbitration 🚀

5️⃣ What-If Scenarios

Let’s bring this to life with some real-world hypotheticals.

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🤔 What if the Employer refuses to pay a DAAB-ordered amount, but says they issued a NoD—so they’re not bound to pay?

Wrong.

Both FIDIC versions say: Even with a NoD, the decision is binding.
So the Contractor can take them straight to arbitration under 20.7 (1999) or 21.7 (2017).

👉 No “waiting out” the decision just because it’s under challenge.

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🤔 What if the Contractor partially complies with the DAB’s decision—say, pays half—can the Employer still trigger 20.7 or 21.7?

Yes.

Partial compliance still counts as non-compliance. The other party can go to arbitration for the balance. These clauses aren’t about “some effort”—they’re about full, prompt compliance.

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🤔 Can the failure to comply be combined with other claims in arbitration?

Yes—but these sub-clauses even allow just the failure itself to be referred, as a standalone dispute.

This is helpful if you want to zero in on the non-compliance and get fast enforcement without entangling it in bigger disputes.

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6️⃣ Suggestions for Clarity and Improvement

Let’s be honest—while both Sub-Clause 20.7 and 21.7 do their job well, there’s still room to make things clearer and more foolproof. Let’s talk practical improvements.

✅ 1. Define “binding” more plainly
While legally accurate, the term “binding but not final” can confuse even seasoned contract managers. How about adding a simple clarification like:

“A DAAB decision is considered binding unless and until overturned by arbitral award.”

This one-liner would help eliminate loads of confusion on-site and during correspondence.

✅ 2. Spell out consequences for non-compliance
Right now, the clause says you can go to arbitration, but it doesn’t spell out consequences. It would help to add that the failing party may be liable for:

• Interest on unpaid amounts.
• Arbitration costs (if they lose).
• Possible reputational impacts or termination risks (if repeated).

🚨 Highlighting consequences raises the stakes and encourages early compliance.

✅ 3. Add practical examples or visual timelines
Many users would love a one-page timeline that shows this process:

1. DAAB issues decision ➡️
2. NoD issued (optional) ➡️
3. Decision still binding ➡️
4. Non-compliance occurs ➡️
5. Other party initiates arbitration

Visuals = Less confusion. Especially helpful in international teams.

✅ 4. Consider interim measures in arbitration
Suggest adding a note that parties may seek interim relief or enforcement orders from arbitral tribunals or courts if the non-compliance causes financial stress.

✅ 5. Guidance note in the Particular Conditions
Even a short reminder for the parties to treat DAAB decisions seriously could go a long way:

“Non-compliance with a DAAB decision, even during dispute, may be referred immediately to arbitration under Sub-Clause 21.7.”

🔧 These tweaks won’t change the core mechanism—but they will make it clearer, easier, and more enforceable.

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7️⃣ Final Takeaways

Let’s wrap up the key points you should walk away with:

✅ Compliance is not optional: Even a disputed DAB/DAAB decision must be followed.

✅ NoD ≠ Get-out-of-jail-free card: Filing a Notice of Dissatisfaction doesn’t suspend your obligation.

✅ Enforcement is fast-tracked: Both FIDIC 1999 and 2017 allow arbitration immediately if there’s non-compliance.

✅ 2017 brings polish: It clarifies language and tightens the process, but the essence remains the same.

✅ Room for clarity: Simple language, visual guides, and reminders can greatly help real-world contract users.

So if you’re drafting or managing a FIDIC contract, always remember:

🔊 “Bind now, battle later.”

Would you like me to pull the full text of these two clauses for your reference or summarize how this might look in a real dispute resolution strategy?

✅ Compliance and Enforcement Checklist for Sub-Clause 20.7 (1999) / 21.7 (2017)

Step	Action Required	Who Takes Action	Key Reference (1999)	Key Reference (2017)	Notes / Tips
1️⃣	DAB/DAAB issues decision	DAB/DAAB	Sub-Clause 20.4	Sub-Clause 21.4.3	Decision must be in writing and reasoned.
2️⃣	Check if NoD is filed	Both Parties	Sub-Clause 20.4	Sub-Clause 21.4.4	A NoD doesn’t stop compliance obligation.
3️⃣	Comply with decision	Party receiving unfavorable decision	Sub-Clause 20.4	Sub-Clause 21.4.3	Decision is binding even if NoD is filed.
4️⃣	Identify non-compliance	Aggrieved Party	Sub-Clause 20.7	Sub-Clause 21.7	Must be clear that decision was not honored.
5️⃣	Skip amicable settlement	Aggrieved Party	Sub-Clause 20.5 (bypassed)	Sub-Clause 21.5 (bypassed)	These clauses allow direct arbitration.
6️⃣	Refer dispute to arbitration	Aggrieved Party	Sub-Clause 20.6	Sub-Clause 21.6	May be limited to enforcement of the decision.
7️⃣	Consider interim relief (optional)	Aggrieved Party	(Tribunal procedures)	(Tribunal procedures)	May help if urgent enforcement is needed.

📄 Sample Letter

📄 Sample Letter 1: Notification of Non-Compliance with DAB/DAAB Decision

(Issued by a party seeking enforcement before arbitration)

Subject: Notification of Non-Compliance with DAB/DAAB Decision – [Contract Reference No.]

Dear [Contract Counterpart’s Name],

We refer to the decision issued by the [Dispute Adjudication Board / Dispute Avoidance and Adjudication Board] dated [insert date], in respect of the dispute referenced as “[insert dispute title/number].”

As per the said decision, [you were required to pay the amount of USD XX or perform XYZ action] within [insert number of days] from the date of the decision. To date, we have not received payment / confirmation of compliance.

Kindly be reminded that under Sub-Clause 20.7 of the FIDIC Yellow Book 1999 / Sub-Clause 21.7 of the FIDIC Yellow Book 2017, this decision is binding on the parties, notwithstanding any Notice of Dissatisfaction.

We hereby urge you to comply with the decision without further delay. Should compliance not be confirmed by [insert deadline—e.g., within 7 days], we reserve the right to initiate arbitration under Sub-Clause 20.6 / 21.6, without further reference to amicable settlement.

We trust that this matter can be resolved promptly to avoid unnecessary escalation.

Yours faithfully,
[Your Name]
[Your Position]
[Company Name]
[Contact Details]

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📄 Sample Letter 2: Notice of Intention to Refer to Arbitration

(Issued after non-compliance persists)

Subject: Notice of Intention to Refer Failure to Comply with DAAB/DAB Decision to Arbitration

Dear [Contract Counterpart’s Name],

Despite our letter dated [insert date], you have not complied with the decision issued by the [DAB/DAAB] on [insert date], requiring you to [describe the obligation—e.g., pay $XYZ].

Pursuant to Sub-Clause 20.7 / 21.7, we hereby notify you of our intention to refer this specific failure to comply with the DAB/DAAB’s decision to arbitration under Sub-Clause 20.6 / 21.6 of the Contract.

Please be advised that this referral will be made without any further delay and without pursuing the amicable settlement process, as expressly permitted by the Contract.

We remain open to receiving confirmation of immediate compliance, in which case arbitration may be avoided.

Yours sincerely,
[Your Name]
[Your Position]
[Company Name]
[Contact Details]

Flowchart for Clause 20.7 “Failure to Comply with Dispute Adjudication Board’s Decision”

Detailed Explanation of the Flowchart

1. Start: DAB Decision Issued
   • Overview: The process begins when the Dispute Adjudication Board (DAB) issues a decision regarding a dispute between the parties.
   • Importance: This step marks the DAB’s intervention in resolving the dispute.
2. Check for Notice of Dissatisfaction
   • Overview: It is checked whether either party has issued a notice of dissatisfaction with the DAB’s decision within the stipulated period.
   • Decision Points:
     • No Notice Given: Proceed to confirm if the DAB decision becomes final and binding.
     • Notice Given: The process ends, as the dissatisfaction notice leads to further dispute resolution steps.
3. DAB Decision Becomes Final and Binding
   • Overview: If no notice of dissatisfaction is given, the DAB’s decision becomes final and binding on both parties.
   • Importance: This step solidifies the DAB’s decision as the conclusive resolution to the dispute.
4. Check Party Compliance with DAB Decision
   • Overview: Assess whether both parties are complying with the now final and binding DAB decision.
   • Decision Points:
     • Non-Compliance: If a party fails to comply with the DAB’s decision, the other party may refer the failure to arbitration.
     • Compliance: The process ends if both parties comply with the decision.
5. Refer to Arbitration under Clause 20.6
   • Overview: In case of non-compliance, the compliant party refers the issue to arbitration as per Clause 20.6.
   • Importance: This step ensures that the non-compliant party is held accountable, and the dispute can be further resolved through arbitration.
6. Arbitration Proceeds
   • Overview: The arbitration process is initiated to address the failure to comply with the DAB’s decision.
   • Importance: Arbitration provides a formal and binding resolution to the non-compliance issue.
7. End of Arbitration Process
   • Overview: The arbitration process concludes, ideally resolving the non-compliance issue.
   • Importance: This marks the final resolution of the dispute, either through compliance or through a binding arbitration decision.

FAQs for Clause 20.7 Failure to Comply with Dispute Adjudication Board’s Decision

1. What triggers Clause 20.7?

Clause 20.7 is triggered when a party fails to comply with a DAB decision that has become final and binding.

2. What can the other party do in such a case?

The other party can refer the failure itself to arbitration under Clause 20.6.

3. Are there any prerequisites for invoking Clause 20.7?

Yes, neither party has given a notice of dissatisfaction within the period stated in Sub-Clause 20.4, and the DAB’s related decision has become final and binding.

4. Can a party bring new evidence or arguments during the arbitration?

Yes, neither party is limited to the evidence or arguments previously put before the DAB.