Up until the spring of 2020, a FIDIC 1999 Sub-Clause 13.7 [Adjustments for Changes in Legislation] 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. 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.
Although Clause 17 is titled ‘Risk and Responsibility’ it also sets out other provisions relating to indemnities, limitation of liability and, unusually, the specific topic of intellectual and industrial property rights. The clause provides that the Contractor assumes responsibility and bears the risk for the care of the works during execution and for remedying any defects during the Defects Notification Period. Risk transfers to the Employer on issue of the Taking–Over Certificate to the extent of works defined as being completed. Generally, in construction contracts ‘risk’ is understood to mean an event or circumstance which causes delay, loss or damage to the Works. A risk can be said to be Employer caused, Contractor caused or neutral. The purpose of risk allocation is to determine which party bears the risk for such events. The Contractor may be required to remediate the damage at his own cost or the Employer may be required to pay for the damaged works. It has been stated that the “FIDIC standard forms are generally recognised as being well balanced because both parties bear parts of the risks arising from the project.”
Clause 8 contains all the fundamental provisions relating to the start of the Works, the Time for Completion, delays and the entitlement of the Contractor to an extension of time and of the Employer to delay damages, and finally the circumstances in which a suspension of the Works can occur and the implications for the Parties.
Clause 8 - Commencement Delays and Suspension by Taner Dedezade.
Click through to read Corbett & Co.'s helpful commentary on FIDIC 1999 book Clause 15
Corbett & Co. has devised a helpful commentary on FIDIC 1999 books Clause 2. Clause 2 sets out certain obligations which are imposed on the Employer; however, this is by no means all the Employer’s obligations. The obligation to pay the Contractor, for example, is found in Sub-Clause 14.7 and the obligation to Take-Over the Works is found at Sub-Clause 10.1. The first obligation imposed on the Employer under this Clause is to give to the Contractor a right of access. Sub-Clause 2.1 needs to be read alongside Sub-Clauses 2.3 and 4.6, which make it clear that possession of the Site need not be exclusive. Sub-Clause 2.2 imposes on the Employer an obligation to assist the Contractor when requested to obtain permits, licences or approvals required by the laws of the Country. The obligation to reasonably assist is not an absolute obligation and generally will not mean the Employer will have to expend money on fulfilling the obligation. Sub-Clause 2.3 imposes on the Employer an obligation similar to that imposed on the Contractor under Sub-Clause 4.6. The Employer is responsible for any failure by its personnel to co-operate with the Contractor or to comply with safety regulations, take care of persons on Site, make sure the Site is reasonably free from unnecessary obstructions, and protect the environment. Sub-Clause 2.4 imposes on the Employer an obligation to show that financial arrangements have been made and are in place to enable it to pay the Contract Price. Sub-Clause 2.5 deals with the Employer’s Claims and requires that the Employer give notice and particulars of its claim before the Engineer makes a Determination under Sub-Clause 3.5. The Employer cannot set-off any claims it may have against the Contractor unless it complies with this Sub-Clause.
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