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You may weave a web but one agreement can do the job. ICC Award dealing with VOs claims arising from the construction of a Wind Farm.

Friday, January 13, 2017

This ICC arbitration was based on an arbitration clause included in a BoP agreement for supply of civil and electrical works and equipment ,( the Project Agreement) of a Wind Farm in Northern Greece.

An ICC One-Member Arbitral Tribunal had to deal both with procedural and substantive issues.

Procedural issues concerned the Arbitral Tribunal’s jurisdiction based on Claimant’s decision to file Request for Joinder against employer’s mother company. The mother company was not a party to the Project Agreement but had concluded a one-off guarantee agreement (the Guarantee Agreement) with Claimant during the execution of the project to provide bridge-finance. The mother company was also party to a subsequent Private Agreement regulating certain disputes which had arisen in the meantime. The mother company, as additional party to the arbitration proceedings, contested the jurisdiction of the Arbitral Tribunal On the procedural issue, the Arbitral Tribunal took a common sense approach with reference to the actual wording of the (amended) arbitration clause itself, where, by definition proper, the mother company was included in the definition of the term “Party”, which is bound by the arbitration clause. In the words of the Arbitral Tribunal, the parties “weaved a web around the Project Agreement and the Guarantee Agreement, intertwining the three agreements into a single inextricable contractual nexus”.

On the substantive issues, Claimant raised a number of claims arising mainly out of variation orders (VOs), under circumstances where there no formal VO had been issued by the employer beforehand. The Arbitral Tribunal held, “Where there is agreement on a variation or where the parties have followed a procedure equivalent to such an agreement, there must be no need for a further agreement specific to the application of Article 17.1(Variation Orders) … One agreement can do the job”, upholding Claimant’s point that the parties had in fact and in effect agreed to exceed the monetary limitation of the Project Agreement through their exchange of correspondence relating to the VOs. The Tribunal awarded damages to Claimant against Respondent and Additional Party.

Gregory Pelecanos, Senior Partner, Panayiotes Yiannakis Senior Associate and, Alexander Rammos Associate at Ballas, Pelecanos & Associates LPC, argued for Claimant.