"[...] IHG® Rewards Club membership and InterContinental® Ambassador and Royal Ambassador benefits are provided where available, at the sole discretion of IHG [...]"
The T&Cs contradict themselves?

I have understanding in cases, where e.g. IC Berlin can not provide upgrade from 60 club rooms to one of the 7 suites, that are not excluded from upgrades.
Do you remember, if the upgrade you are claiming, was available in the app when booking you room?
In exact 2 stays of my ca. 80 nights in ICs in 2017 the guaranteed upgrade could not be provided when 1) guaranteed upgrade category was obviously sold out and 2) I booked spontanousley.
Then I was "offered", to change my reservation to a price category that can provide available upgrade.
Everything else would have been unpractically and unrealistic under that circumstances.
But at least a corresponding rate reduction should be self-evident.