FIDIC Changes in Legislation and Covid-19: Compelled by Law or Just Doing Your Job?
Up until the spring of 2020, a FIDIC 1999 Sub-Clause 13.7 [Adjustments for Changes in Legislation][1] claim was just one of many issues to be resolved, for example, in a delay and disruption claim or a Cost claim. However, the focus it receives in the context of Covid-19 is drastically different. Many in the industry are using the changes in legislation provision to seek financial compensation in a situation that would otherwise potentially only attract an extension of time.[2] Awarding Cost for Covid-19 events regardless of the circumstances may seem to some (Contractors mostly, though there are Employers and Engineers who agree) like the appropriate thing to do, but whether it is correct according to the Contract is a different question.
Del tiempo y dinero en contratos FIDIC durante Covid-19
El efecto del coronavirus en la construcción es amplio y desconocido, en particular, en cómo evaluar el tiempo y el dinero perdido. Por fortuna, los contratos FIDIC proveen varias opciones a las Partes para manejar riesgos y proteger derechos. Este artículo analiza cómo se trataría la pandemia del Covid-19 bajo el Contrato de Construcción de Obras FIDIC 2010 armonizado por el Banco Mundial en español.
Unintended Consequences of the FIDIC 2017 Clause 20.1 Claims Classification System
FIDIC’s 2017 editions introduced a new Claims management system in clause 20 that channels Claims through two very different procedures. One of them is very simple and involves almost no risk whereas the other will require investment of significant project resources, will take the parties a considerable amount of time to resolve and carries fatal consequences if not followed properly. It has therefore become a priority for anyone handling this Claims management system to understand how clause 20.1 sorts the different types of Claims and to recognise that the classification scheme is not as straightforward as the wording of the Contract suggests, as explored in this article.
Clause 20 – Employer’s and Contractor’s Claims
The 1999 Clause 20 has now been divided into Clauses 20 and 21 whereby Clause 20 refers to Claims and Clause 21 refers to Disputes and Arbitration. Another main upgrade is that Employer’s Claims now need to follow the same procedure. The main list of Employer’s and Contractor’s Claims is as follows: a. Additional payment; b. Reduction in the Contract Price; c. Extension of the DNP; and d. Extension of time.
Clause 6 – Staff and Labour
The 2017 Clause 6 is largely the same as its 1999 counterpart. However, it contains some notable additions and differences, the most glaring of which is the addition of a new type of staff/labourer to the Contractor’s Personnel called Key Personnel in Sub-Clause 6.12.
The Risk of Relying on the Obrascon case’s ruling on Sub-Clause 20.1 Claim Notices
Contractors are sometimes concerned about the politics of their FIDIC 1999 Sub-Clause 20.1 notices. Some Contractors may consider that serving Sub-Clause 20.1 notices may send the wrong message, particularly in the honeymoon period when the works have just begun. However, the consequences of failing to serve a timely claim notice are so dire that doubtless the issue is regularly on every Contractor’s mind. The case of Obrascon Huarte Lain SA v Her Majesty's Attorney General for Gibraltar1 in the Technology and Construction Court of England and Wales provided some welcomed relief to many Contractors worldwide who may now attempt to rely on its finding on the timing of claim notices when postponing service of these crucial notices.
The SCL’s New Take on the Delay and Disruption Protocol
In June of this year, the Society of Construction Law (“SCL”) sent its members a draft of the second edition of its widely recognised Delay and Disruption Protocol. It follows the publication of a Rider published late last year about which this author wrote a previous article. Although the “2016 Draft” is meant to be consultatory, there are a number of improvements from the “2002 Edition” worth exploring before the final and definitive version is published sometime in the future. There have been many changes not all of which will be covered in this article and, in any case, I will only focus on changes other than those already included in the Rider.
Society of Construction Law’s Rider 1 to its Delay and Disruption Protocol
In July of this year, the Society of Construction Law (SCL) published Rider 1 (“the Rider”) of its 2002 Delay and Disruption Protocol (“the Protocol”). The Rider’s Preamble lists a series of amendments to the Protocol intended to serve as an update reflecting (a) legal and industry practice developments, (b) feedback, (c) technological developments, (d) increase in scale of larger projects, and (e) international use of the Protocol. The Rider is intended to serve as the first part of the amendments to the Protocol, the totality of which should feature in a consolidated and updated version of the Protocol later this year.[1]
