FIDIC ‘launched’ the FIDIC 2022 reprints at the FIDIC International Construction Users’ Conference 2022, in London. The reception to the changes was mixed – some embraced the clarity; others questioned the significance and cost. This article draws your attention to 10 of the key areas of change in respect of the FIDIC Red Book 2017 including the definition of Claim, matters to be agreed or determined, the definition of Dispute and Exceptional Events.
The FIDIC 2017 forms first appeared at the December FIDIC Users’ Conference four years ago. No one has suggested that the FIDIC 2017 forms of contract did not rectify some of the problems in the FIDIC 1999 forms, and in Edward Corbett’s articles, ‘Cherry Picking FIDIC 2017,’ and ‘FIDIC 2017 – First Impressions of the 3-Kilo Suite’, he considered some of these changes. This new suite of contracts had, at best, a lukewarm reception when they were first reviewed, with some commentators complaining about the length of these new contracts and that the contracts had not taken account of criticisms that had been made by reviewers. This article looks at the twelve worst ‘gifts’ that FIDIC gave to us for Christmas 2017.
Unfortunately, under the FIDIC Red and Yellow Books 1999, the right of an Employer to set off from an amount already certified in a Payment Certificate but unpaid is inexplicit. Once the Employer has a Sub-Clause 3.5 determination, it may ask the Engineer to deduct the amount determined from the next Payment Certificate. This is clear. But rather than rely on the Engineer, can the Employer instead, itself, deduct by way of set off from an amount already certified in a Payment Certificate but unpaid? This is not clear.
In March 2019, in the English Court of Appeal, Sir
A contract may require a party giving notice of a claim to specify the contractual or legal basis of that claim in the notice (or the supporting particulars). What if that party states a contractual or legal basis for the claim but later (perhaps with the benefit of additional information or because of advice from its lawyers) changes its mind or wants to include further contractual or legal bases? This was considered by the Hong Kong Court of Appeal in Maeda Corporation and China State Construction Engineering (Hong Kong) Limited v Bauer Hong Kong Limited  HKCA 830. It found that a subcontractor could not change the contractual basis for its claim once the time period for providing such notice had expired. What, if any, impact will this decision have on the FIDIC forms of contract?
It has been suggested that FIDIC’s new Emerald Book may be “a contractors’ charter for riches”. 1 This article examines whether this new form of contract for underground works by FIDIC and the International Tunnelling and Underground Space Association is too contractor-biased or whether it provides a sensible and pragmatic risk allocation process, in an area of construction and engineering which is well known for claims. If more risks are placed on the Employer in this form of contract, what are the benefits of the contract compared to, for example, an unamended FIDIC Yellow Book?
Much has already been written concerning the new FIDIC forms of contract published in December 2017. They are approximately 50 % longer and sought to set out the various procedure in much greater detail with the object of both encouraging good practice and reducing the scope for disputes. Numerous minor amendments have also been made. The purpose of this article is to look in more detail at the provisions dealing with Variations, these being amongst the most frequently scrutinised in practice.
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 14 deals with all aspects of payment. It also deals with the Statement at Completion, the Final Payment Certificate, Discharge and Cessation of the Employer’s Liability. The Clause provides that this is a re-measurement contract and that the quantities stated in the Bill of Quantities are estimated. There is provision for an advance payment to be made to the Contract. Applications for Interim Payment Certificates are made monthly and these must be supported by documents and a report on progress. Unless the amount assessed is less than the minimum amount set out in the Appendix to Tender, the Engineer has 28 days to issue an Interim Payment Certificate, which states the amount the Engineer fairly determines to be due. The Employer thereafter has an obligation to pay the amount certified, in the currencies named in the Appendix to Tender. In the event that payment is not received the Contractor can claim financing charges compounded monthly. Fifty per cent of the retention monies are paid when the Taking-Over Certificate is issued. Where there are Sections then a proportion is paid. The balance of retention is paid on the expiry of the latest Defects Notification Period or, where there are Sections, a proportion at the expiry of the Defects Notification Period for that Section. Within 84 days of receiving the Taking-Over Certificate the Contractor submits a Statement at Completion. This must include an estimate of all sums which the Contractor considers due. Within 56 days of receiving a Performance Certificate, the Contractor submits a Final Statement. The Contractor must also submit with the Final Statement a written discharge which confirms that the total of the Final Statement represents full and final settlement of all moneys due. The Engineer then issues to the Employer a Final Payment Certificate. The Contract states that the Employer shall have no liability to the Contractor except to the extent that the Contractor has included an amount expressly for that matter in the Final Statement and also the Statement at Completion.
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 14 - Contract Price and Payment by George Rosenberg.
Clause 13 - Variations and Adjustments by George Rosenberg.
Clause 12 deals with Tests after Completion. It is more
Clause 8 - Commencement Delays and Suspension by Taner Dedezade.
If the parties to a FIDIC contract cannot agree on a suitable DAB member and they have selected FIDIC as their appointing entity, they may request FIDIC to appoint that DAB member. FIDIC’s present procedures however seem less than ideal. They increase the prospect of rejection of the candidate nominated by FIDIC in the first instance and so also the need to repeat the exercise. They could also result in an appointment unacceptable to one or both parties. In my view they need to be revised.
Read the full article here.
If there is no DAB appointed by the parties to a FIDIC 1999 contract, may disputes be referred directly to arbitration under clause 20.8? This issue has troubled many in the industry – and has now been considered in English and Swiss courts.
The English Court considers termination and notice provisions under the FIDIC Yellow Book 1999. How are clause 15.1 notices to correct limited? Do termination events have to be repudiations? Is it fatal to serve notice of termination on the ’wrong’ address? When does the 28-day period under clause 20.1 start to run? Mr Justice Akenhead offers guidance to the industry.