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

Purpose

Implications

The purpose of Clause 20.7 is to provide a remedy when a party fails to comply with a decision of the DAB that has become final and binding. It allows the aggrieved party to directly refer the failure to arbitration.

If a party does not comply with a DAB’s decision and no notice of dissatisfaction has been filed, the other party can proceed directly to arbitration under Clause 20.6 Arbitration. This circumvents the need for amicable settlement procedures.

Primary Aspects

Expert Opinion

1. Final and Binding Decision: The DAB’s decision must have become final and binding.
2. Failure to Comply: One party has not adhered to the DAB’s decision.
3. Direct to Arbitration: The other party can directly refer the issue to arbitration.

Legal experts often see this clause as a mechanism to enforce DAB decisions. It is a way to ensure that both parties take DAB decisions seriously, knowing that non-compliance could lead to arbitration.

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Relevant Illustrations

Case Studies

Consider a scenario where a contractor fails to meet a deadline. The DAB rules in favor of the employer, but the contractor fails to comply. The employer can then proceed directly to arbitration under Clause 20.6.

In the case of “XYZ Corp. vs. ABC Ltd.”, ABC Ltd. failed to comply with a DAB decision, leading XYZ Corp. to invoke Clause 20.7. The arbitration panel upheld the DAB’s decision, adding legal costs to the final award.

Interaction with Other Clauses

• Sub-Clause 20.4 [Obtaining Dispute Adjudication Board’s Decision]: Specifies the DAB’s role in decision-making.
• Sub-Clause 20.5 [Amicable Settlement]: This clause does not apply when invoking Clause 20.7.
• Sub-Clause 20.6 [Arbitration]: This is the arbitration clause to which Clause 20.7 directly refers.

Checklists

Checklist for Proficient Execution and Deployment of Clause 20.7

Checklist for Assisting in Applying and Overseeing Clause 20.7

Checklist for Guiding and Monitoring Execution of Clause 20.7

Sample Letters

Letter for Initiating Arbitration Due to Non-Compliance

[Your Company]
[Your Address]
[Date]

[Recipient Company]
[Recipient Address]

Subject: Initiation of Arbitration Due to Non-Compliance with DAB’s Decision

Dear [Recipient’s Name],

Despite the final and binding decision issued by the DAB concerning [Specific Issue], your company has failed to comply. As per Clause 20.7, we are now invoking arbitration under Clause 20.6.

We await your immediate acknowledgment.

Yours sincerely,
[Your Name]
[Your Position]

Letter to Notify Arbitration Panel of Non-Compliance

[Your Company]
[Your Address]
[Date]

Arbitration Panel
[Address]

Subject: Non-Compliance with DAB’s Decision in Contract No. [Contract Number]

Dear Panel Members,

We write to bring to your attention the failure of [Other Party’s Name] to comply with the DAB’s decision regarding [Specific Issue], making this a matter for arbitration under Clause 20.7.

Yours sincerely,
[Your Name]
[Your Position]

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.