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.

Clause 3 deals with the duties and obligations of the Engineer and his assistants.  Sub-Clause 3.1 deals with the role and duties of the Engineer.  The Engineer is deemed to act for the Employer.  The Engineer has no authority to relieve the Contractor of his duties, obligations or responsibilities under the Contract; nor can the Engineer amend the Contract. Under Sub-Clause 3.2 the Engineer can delegate authority to any assistants; however, the Engineer cannot delegate the responsibility to make Determinations.  Under Sub-Clause 3.3 the Engineer may issue instructions or modified Drawings at any time, which are necessary for the execution of the Works.  If the instruction constitutes a Variation, then it is dealt with under Clause 13 [Variations and Adjustments].  The Contractor is required to comply with any instruction given by the Engineer or delegated assistant.  Sub-Clause 3.4 deals with the replacement of the Engineer.  The Employer must not replace the Engineer with someone against whom the Contractor raises reasonable objection. Sub-Clause 3.5 deals with Determinations.  When making a Determination the Engineer should consult with each of the Parties and, if agreement cannot be reached, make a fair determination in accordance with the Contract, taking due regard of all relevant circumstances.  Both Parties are required to give effect to any Determination unless, or until, it is revised under Sub-Clause 20.1 [Claims, Disputes and Arbitration].

Corbett & Co. has published its selection of the best bits of the FIDIC 2017 2nd Editions adapted for use with the 1999 forms. With many people put off by the 50,000+ words of the new editions, the FIDIC 1999 Upgrade will permit users to benefit from FIDIC’s new ideas and improvements.

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.

“Exceptional Events” has replaced “Force Majeure” and the provision is now clause 18 rather than clause 19 but otherwise little has changed. FIDIC appear to have decided that the term “force majeure” brought with it too much baggage for those using it in civil law jurisdictions. Many users have pre-conceptions about what force majeure is and is not and perhaps did not consider what FIDIC meant by the term. With the new term, users should approach the provision with a more open mind.

Clause 17 - Care of the Works and Indemnities by George Rosenberg.

The main changes in Clause 16 are the new grounds for suspension and termination: Non-compliance with a final and binding Engineer’s Determination and binding or final and binding DAAB decision, to the extent that such failure constitutes a “material breach” of the Employer’s obligations under the Contract. (Sub-Clauses 16.1(d) and 16.2.1(d)). What constitutes a “material breach” is likely to be the subject of many disputes (see the commentary on Clause 15). Non-receipt of a Notice of the Commencement Date under Sub-Clause 8.1 [Commencement of Works] within 84 days after receiving the Letter of Acceptance. (Sub-Clauses 16.2.1(f)). This is development to ground (h) in the FIDIC Pink (MDB) Book which states: “the Contractor does not receive the Engineer’s instructions recording the agreement of both Parties on the fulfilment of the conditions for the Commencement of the Works under Sub-Clause 8.1 [Commencement of Works]”.  It protects the Contractor from the financial consequences of fluctuations in the rates and prices during an extended delay to the start of the Works, although the Contractor ould be entitled to damages for breach of contract in any event.  More importantly, it gives the Contractor loss of profit on the entire project. Engagement in corrupt, fraudulent, collusive or coercive practice at any time in relation to the Works or to the Contract. (Sub-Clauses 16.2.1(j).) This introduces parity between the Employer and Contractor.  The wording is identical to that under Sub-Clause 15.2.1(h). In the FIDIC 1999 editions, the Employer was entitled to terminate if the Contractor gave or offered an inducement or reward etc. but there was no recipricol arrangement.

The main changes in Clause 15 are the new grounds for termination: Non-compliance with a final and binding Engineer’s Determination (Sub-Clause 15.2.1(a)(ii)) and a binding or final and binding DAAB decision (Sub-Clause 15.2.1(a)(iii)) to the extent that such failure constitutes a “material breach” of the Employer’s obligations under the Contract. Maxing out the Delay Damages (Sub-Clause 15.2.1(c)). There is no requirement for the Delay Damages to have been actually deducted.  It is not clear what the position would be if the Contractor claims an EOT and it is granted by the DAAB or arbitrator after termination so that the Delay Damages are reduced below the cap.  Would the termination then be unlawful?