1999 Suite: Commentary on Clause 13.8 – Variations: Adjustments for Changes in Cost
Employers avoid paying more under existing contracts, but forcing unprofitable work risks contractor insolvency. Contractors now seek protection from price fluctuations, preferring short projects or cost-plus letters of intent. Cost adjustment mechanisms, like FIDIC 1999 Sub-Clause 13.8, may help.
Price escalation and FIDIC: is Force Majeure an answer?
Could provisions in FIDIC contracts giving relief for ‘Force Majeure’ or ‘Exceptional Events’ provide relief to contractors suffering as a result of price escalation? It is well documented that construction and engineering projects around the globe are being affected by extreme and sometimes unprecedented price escalation. This is for many reasons including the Covid-19 pandemic and the Russo-Ukrainian conflict.
International Arbitration and Third Party Funding: Time to Rethink Reward and Risk?
The English Commercial Court has now confirmed in two separate decisions that an arbitral tribunal may award a winning claimant its third party funding costs. How significant are these decisions and it is time to rethink the potential reward and risk of international arbitration?
FIDIC’s New Green Form: The Missing Link
In December 2021 FIDIC issued its 2nd edition of the Green Book. It is not so much an update to the 1st edition as a new and improved, intermediate form of contract. FIDIC is promoting it as a simpler, user-friendly alternative to the FIDIC 2017 Red and Yellow Books, where significant contract administration and management resources are not needed. The Green Book 2nd edition is recommended to be used by the World Bank for projects up to US$ 10 million. The Green Book 1st edition was originally intended for projects of US $500,000 with no more than a 6-month duration. However, the Green Book 1st was sometimes used for larger projects with a duration of up to two years. The Green Book 2nd therefore takes over from where the Green Book 1st left off. This is to be welcomed. The FIDIC 2017 suite of contracts (Red/Yellow/Silver) is unsuitable for smaller projects where less administration is required. The Green Book 2nd will therefore fill a much-needed gap in the FIDIC rainbow and is likely to be attractive to both Contractors and Employers. This article looks at some of the key features of the Green Book 2nd.
On-Demand Bonds, Injunctions and FIDIC Contracts
Bonds and guarantees will usually be required in any major construction project and they are a requirement within FIDIC standard forms. An on-demand bond is a security that unconditionally requires a Bank or other surety to pay to the beneficiary a sum of money once a demand has been made and, on occasion, on the presentation of certain documents. This can be contrasted with a normal guarantee which will usually require the beneficiary to prove a liability against the obligor/debtor who has the benefit of the guarantee. These normal types of guarantees are commonly referred to as “see to it” guarantees.[1]
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.
The Baby is Back in the Bath: Liquidated Damages in the UK Supreme Court
In March 2019, in the English Court of Appeal, Sir Rupert Jackson upended the orthodox approach to the operation of liquidated damages clauses in commercial contracts. Sir Rupert had suggested that where the contractor fails to complete the project, general damages at common law may be a more logical remedy than liquidated damages up to the date of termination, with general damages thereafter. Order has been restored in the UK Supreme Court, which recently held in Triple Point Technology, Inc v PTT Public Company Ltd[1] that liquidated damages for delay were payable in respect of work which had not been
Arbitration Update – The new FIDIC certifications: will they pass the test?
In March 2020, FIDIC launched FIDIC Credentialing Ltd (FCL) to certify industry professionals. Though seen by some as overambitious, it aims to address real issues with FIDIC forms. This article examines one programme's potential to solve these problems.
FIDIC 2017: A Practical Legal Guide – Errata
Page Corrigenda 146 For provisions referring to sub-clause 3.7, see sub clauses 1.1.29, 1.1.57, 148 Clause 3 of the FIDIC Emerald Book 2019 … 348 Footnote 1: FIDIC’s Emerald Book 2019 … 353 Delete sentence " There is a discussion under Sub-Clause 17.6 of its implications." 364 It should be noted that sub-clause 1.15 of the Contract limits liability.... 374 In the FIDIC 2017 suite, the Engineer must state only what is wrong, the relevant contractual clause, and by when it must be fixed; … 381 The right to terminate if the Contractor assigns or subcontracts the Contract without the Employer’s
Arbitration Update 2021
This article looks at recent changes in arbitration rules, including new LCIA, DIFC-LCIA, and ICC rules, the Seoul Protocol on Video Conferencing, the Africa Arbitration Academy Protocol on Virtual Hearings, and revisions to the IBA Rules on Taking Evidence.
‘Subject to Contract’ in English Law
This article examines the 'subject to contract' label in English law, its use to avoid premature binding agreements, and its interpretation in two recent court cases, highlighting that its effect depends on the specific circumstances.
Changing Tack
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 [2020] 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?
Obstacles to the Appointment of an Arbitrator
Airports Authority of Trinidad and Tobago v Jusamco Pavers Ltd[1] is an under reported FIDIC Yellow Book 1999 case. It considers: (1) delay in commencing arbitration, (2) replacement of the Engineer, and (3) whether an Engineer’s determination is a pre-requisite to commencing arbitration. Background The parties entered into a FIDIC 1999 Yellow Book contract for the £165 million rehabilitation of the airport in Trinidad and Tobago and an upgrade of the Perimeter Road and Fence. The Employer was the Airports Authority of Trinidad and Tobago (AATT) and Jusamco Pavers Limited (JPL), the Contractor. Unusually, the Engineer named in this contract,
Tribunal Secretaries: Tasks, Transparency and Regulation
The debate surrounding the use of tribunal secretaries in international arbitration is not new. In 2002, Partasides christened the issue "the Fourth Arbitrator"[1]. Noting concern within the arbitration community at a perceived excessive role of tribunal assistants, Partasides argued that this concern could damage the legitimacy of the arbitral process. Hindsight shows that it is, at least, a fertile ground for arbitral challenges. The concern centres on the concept of the arbitrator's mandate as personal ('intuitu personae'). It therefore should not be delegated to a tribunal secretary, who is most often a junior lawyer. The use of tribunal secretaries is
Can an Employer Instruct an Airport Instead of a Road?
What is the point of a variations clause? It is almost inevitable that, however well thought through a construction project is at design stage, when it comes to be built, there will be a need for some variations. The FIDIC 1999 Red, Yellow and Silver Books, for example, devote an entire chapter to the subject (Clause 13 [Variations and Adjustments]). At least under English law an employer is not entitled unilaterally to vary the original works unless the new work is of a kind contemplated by the clauses of the contract which provide for the ordering of extras. The purpose