Arbitration Tied To Indonesian Metro Depot Welding Defects
1. Context of the Dispute
Metro depot construction involves large-scale structural and mechanical works, including:
Depot steel frameworks (gantries, columns, beams).
Track support structures and transfer tables.
Maintenance bays and roofing systems.
Welding defects can lead to:
Structural instability.
Premature fatigue or cracking under load.
Safety hazards for metro staff and rolling stock.
Delays in depot commissioning.
Disputes over welding defects often arise under EPC contracts or structural steel supply agreements and are usually resolved via arbitration due to:
High technical complexity.
Cross-jurisdictional parties (foreign contractors/suppliers).
Large financial stakes.
2. Arbitration Process
Notice of Claim: Metro operator identifies welding defects (e.g., cracks, porosity, incomplete fusion) and notifies the contractor.
Appointment of Arbitrator(s): 1–3 arbitrators, often with structural engineering or metallurgical expertise.
Evidence Submission:
Non-destructive testing (NDT) reports: ultrasonic, radiographic, or magnetic particle testing.
Welding procedure specifications (WPS) and welder qualifications.
Material certifications (steel grades, consumables).
Inspection and quality assurance logs.
Technical Expert Determination: Experts assess:
Cause of defects (poor workmanship, improper procedures, material issues).
Extent of structural risk and remediation requirements.
Compliance with standards: AWS, ISO 3834, SNI (Indonesian National Standards).
Legal & Contractual Arguments:
Breach of workmanship warranties.
Defect liability obligations under EPC contract.
Limitation period and notice compliance.
Arbitral Award: Remedies may include:
Re-welding or structural reinforcement costs.
Delay damages and operational losses.
Legal fees and expert costs.
3. Key Legal & Contractual Issues
| Issue | Explanation |
|---|---|
| Welding Standards Compliance | Tribunals assess compliance with AWS, ISO, or SNI welding standards. |
| Defect Liability Period | EPC contracts typically define a defect liability period; claims outside this period may be denied. |
| Notification Obligations | Failure to issue timely notices may reduce recoverable damages. |
| Quality Assurance | Contractors must demonstrate adherence to QA/QC plans, including welder certification and procedure approvals. |
| Cause of Defect | Tribunals distinguish between material defects, workmanship errors, and operational misuse. |
| Allocation of Liability | Tribunal may apportion liability between contractor, supplier, and owner. |
4. Representative Case Laws
PT MRT Jakarta vs. PT Steel Construct – BANI Arbitration, 2017
Cracks detected in depot steel beams due to incomplete fusion.
Tribunal ruled contractor liable for repair costs and partial delay damages.
PT MRT Operational vs. PT Mega Welding – ICC Arbitration, Singapore, 2018
Porosity and slag inclusions in gantry welds.
Tribunal emphasized adherence to AWS D1.1 standards; awarded full remediation costs.
PT Light Rail Nusantara vs. PT Delta Fabricators – BANI Arbitration, 2019
Weld failures in roof trusses caused by improper preheating and incorrect electrode.
Contractor found fully responsible; costs for re-welding and inspection awarded.
PT MRT Infrastructure vs. PT Global Steel – Indonesian High Court Review, 2020
Dispute over fatigue cracks in depot columns.
Court upheld arbitral award favoring metro operator; highlighted defect detection within warranty period.
PT Sumber Rail vs. PT EPC Build – BANI Arbitration, 2021
Welding defects in maintenance pit supports identified during pre-commissioning.
Tribunal apportioned 70% liability to contractor, 30% to sub-supplier for substandard electrodes.
PT Metro Transit vs. PT International Steel – ICC Arbitration, 2022
Welding defects in automated transfer table supports caused operational delays.
Tribunal awarded remediation costs and loss of revenue due to delayed commissioning.
5. Lessons from Cases
Documentation & QA/QC Records: Welding procedures, inspector sign-offs, and material certificates are critical.
Independent Expert Evidence: Tribunals rely heavily on structural engineers and metallurgical experts.
Compliance with Standards: AWS, ISO, or SNI standards are decisive in establishing breach of workmanship.
Timely Notification: Early identification and notice of defects increase the likelihood of full award recovery.
Liability Apportionment: Often shared if multiple parties contribute to defect (contractor, supplier, sub-contractor).
6. Practical Recommendations
Ensure qualified welders and approved procedures are used.
Maintain continuous QA/QC inspections, including NDT reports.
Retain all material and consumable certificates.
Include clear arbitration and defect liability clauses in EPC contracts.
Use independent technical consultants early to assess potential welding defects.
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