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Ad Hoc Award  HUNTINGTON INGALLS INCORPORATED (USA) (CLAIMANT) /v THE MINISTRY OF DEFENSE OF THE BOLIVARIAN REPUBLIC OF VENEZUELA (VENEZUELA) (RESPONDENT), 19th February 2018

Title
Ad Hoc Award  HUNTINGTON INGALLS INCORPORATED (USA) (CLAIMANT) /v THE MINISTRY OF DEFENSE OF THE BOLIVARIAN REPUBLIC OF VENEZUELA (VENEZUELA) (RESPONDENT), 19th February 2018
Table of Contents
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140. Clause 59, in turn, states that:
FINAL PROVISIONS
FIFTY-NINTH: If during the execution of this Contract it is decided to do additional work, repairs, services, supplies and tests not included in “THE SPECIFICATIONS” which are considered absolutely necessary to fulfill the purpose of this Contract and that are not included in the agreed total price, “THE CONTRACTOR” and “THE MINISTRY” shall determine by mutual agreement the work and prices of the work and how these will influence the delivery deadlines and shall sign the supplemental agreements as needed, with the [prior] approval of the General Controller’s Office of the National Armed Forces. Any supplemental agreement or agreements signed by the contracting parties shall become a part of this contractual document. Their terms and conditions shall be applicable to their whole content as if such agreements were reproduced in this document, except when otherwise stated. Including payment conditions, they must be determined prior to the signing of the “Certificate of Final Acceptance” of “THE SHIPS” under this Contract.

141. In the interest of a complete analysis of the contractual provisions, the Arbitral Tribunal also transcribes Clause 56, which states that:
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FIFTY-SIXTH: It is hereby understood that if “THE CONTRACTOR”
were to do any work without previously presenting the appropriate quotation to be analyzed and then approved by “THE MINISTRY”, these costs will not be recognized by “THE MINISTRY”. (…)
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(64) REA-40 – Force Majeure

844. During Claimant’s performance of the Contract, several force majeure events affected the shipyard. These events included: (i) import/export
license delays, (ii) Hurricane Georges, (iii) labor strike, and (iv) Tropical Storms Hanna and Isidore and Hurricane Lili.
845. With respect to those events, the Ministry initially denied Claimant’s entitled relief to schedule extension. Claimant incurred administrative costs
in order to respond to the Ministry’s improper denial of Claimant’s entitled relief. Claimant also incurred additional costs in moving F-22 to protected areas and for other actions required to secure the Frigate against Tropical Storm Isidore in September 2000, Tropical Storm Hanna in September 2002, and Hurricane Lili in October 2002. Claimant claims a credit of US$ 6,765 before computing interest accruing thereon.
846. In Annex A, the Ministry asserts that this claim was discussed during several meetings held with Claimant. The Ministry states that, due to the force majeure nature of the events, neither Party is held liable for any damages that may arise therefrom. The Ministry’s understanding is based on the legal opinion of the Legal Department of the Army, and its content was timely communicated to Claimant.
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847. The Ministry further avers that it granted Claimant an extension of 150 days with respect to the term for the redelivery of the Frigates, and such
costs, as claimed by Claimant, do not fall within the expenses contemplated by Clause 8, Second Paragraph of the Contract, nor has Claimant complied with the requirements provided therein.

Decision by the Arbitral Tribunal

848. The force majeure events that occurred and affected the area where the shipyard is located gave rise to an extension of 150 days, as asserted
by the Ministry and not challenged by Claimant. This claim relates to alleged administrative costs that Claimant had to incur to obtain the extension,
which was originally denied by the Ministry. On the other hand, this claim also contemplates the costs incurred in moving Frigates to protected areas.
As far as those are concerned, the Frigates were under the custody of Claimant, and Claimant had to take the action deemed necessary to protect
them. The Arbitral Tribunal finds that such claim fails to comply with the requirements under Clause 59.
849. Hence, the Arbitral Tribunal dismisses this claim.
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Referring Principles

Catchwords:

force, majeure
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