FIDIC has launched the Second Editions of the Red, Yellow, and Silver Books, now over 50% longer than the 1999 forms. Key updates include more prescriptive processes, new time-bars, enhanced Dispute Boards, and a separate chapter on Disputes and Arbitration.
Clause 19 covers Force Majeure and release from performance, with broader definitions than typical laws. It prescribes detailed insurance requirements, reducing flexibility. The Contractor bears most obligations, necessitating careful amendments and professional advice to avoid misunderstandings and ensure proper incorporation into contracts.
English courts have historically held 'consequential loss' to be synonymous with 'indirect loss'. However, a recent case questions this position. It is also worth nothing that courts in different countries interpret 'consequential loss' differently from English courts.
English law recognises different types of mistake and permits various equitable remedies in case of mistake, as illustrated by the two English court decisions examined in this article.
Whilst it is widely understood that the law on liquidated damages differs considerably between common law and civil law jurisdictions, there are also differences within common law jurisdictions which are sometimes overlooked. This article summarises the recent developments to the law on penalties in England and Wales, as reported by Steve Mangan in May 2016[1], and compares them with the developments to the law on penalties in Australia.
Clause 15 covers Termination by the Employer, including notices to correct, grounds for termination, valuation at termination, payment after termination, and the Employer's entitlement to terminate at will with 28 days' notice.
Third party funding is increasingly used in international arbitration even though the cost can be significant. A new case has established that a winning claimant could recover the cost of obtaining third party funding as a cost in the arbitration.
The Engineer is deemed to act for the Employer and is essentially the Employer’s agent under the FIDIC Red Book 1999. He is not a wholly impartial intermediary, unless such a role is specified in the Particular Conditions, and there is no general obligation under the FIDIC Red Book 1999 for the Engineer to act independently or impartially. However, when he is required to make a determination under Sub-Clause 3.5, he is obliged to make it a fair determination and when he is obliged to issue an Interim Payment Certificate under Sub-Clause 14.6, or a Final Payment Certificate under Sub-Clause 14.13, he must fairly determine the amount due.
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.
Two decades ago, unjust enrichment was described as “the Cinderella of law, barely 10 years old but growing up rapidly. Until recently unrecognised and overshadowed by the ugly sisters, Contract and Tort, Cinderella’s day has arrived.” In England a claim for unjust enrichment was initially referred to as a claim in ‘quasi contract’. This language has now been abandoned and unjust enrichment has a strong foothold in the landscape of commercial law and its role and limits are becoming more clearly defined. Despite this, it is only infrequently pleaded in construction cases and when argued it is often set out in broad terms where the facts do not support such a claim. However, this is cause of action that should not be overlooked by a contractor or employer – especially if they have claims that fall outside the four corners of their construction contract.
Earlier this year, the English High Court considered a heavily amended FIDIC Yellow Book 1999. Whilst the case is specific to the particular contractual amendments it is worth review. The case is J Murphy & Sons Ltd v Beckton Energy Ltd. It proceeded in court and on an expedited basis as a matter of some urgency because a bond was about to be called for non-payment of delay damages. The Contractor claimed the call would affect his commercial reputation, standing and creditworthiness, and may well need to be disclosed in future tenders. He had not paid the delay damages because there had been no agreement or determination of the entitlement to such by the Engineer under Sub-Clauses 2.5 and 3.5.
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.
In this article Corbett & Co. Director Andrew Tweeddale addresses whether sub-clause 20.5 is a condition precedent to the commencement of an arbitration or whether it is an obligation, the breach of which will not affect the jurisdiction of the arbitral tribunal to resolve the dispute.
Clause 5 defines a "nominated Sub-Contractor" and allows the Contractor to object on reasonable grounds. If the Employer insists on employing the Sub-Contractor, it must indemnify the Contractor. Payments to the Sub-Contractor are certified by the Engineer.
In its bulletin of 5 January 2016, the ICC announced penalties to encourage arbitrators to deliver up their awards more quickly than at present. The tardiness of some arbitrators has long been cause for major discontent amongst both lawyers and clients. Corbett & Co.’s worst experience was a sole arbitrator who took more than 18 months to issue an award on a preliminary issue!
What relief does FIDIC provide when bank accounts are frozen as a result of war, hostilities, rebellion, terrorism etc.? Maybe not as much as you think. Tensions in Africa and the Middle East have seen the implementation of numerous international financial sanctions. While these sanction regimes vary in execution and enforcement they often freeze assets and prevent financial transactions. These restrictions may impact on the Employer’s performance of its payment obligations under the Contract. This can have serious consequences where the Contractor is entitled to suspend or terminate on notice for non-payment. Many parties automatically assume that financial sanctions will be recognised as force majeure. However, this may not be the case.
FIDIC is arguably the most widely used standard form of international construction contract but reported FIDIC cases are rare. Is it time for an increased publication of FIDIC cases? There are three categories of decisions arising out of FIDIC dispute resolution provisions: 1. Decisions of the Engineer or the Dispute Adjudication Board (DAB), which will generally not be published or reported to anyone other than the parties involved in the dispute. 2. Decisions of arbitral tribunals, which are not usually made public although this is subject to certain exceptions. 3. Decisions of national courts, which are a relatively rare occurrence for the reasons discussed below.
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]
How important is it for an Employer to give a Sub-Clause 2.5 notice of a set-off or cross-claim under the FIDIC Red Book form of contract? Very, according to the Privy Council in NH International (Caribbean) Limited v National Insurance Property Development Company Limited . It found that: o Sub-Clause 2.5 applies to any claims the Employer wishes to make. o The Employer must make such claims promptly and in a particularised form. o Where the Employer fails to raise a claim as required, the back door of set-off or cross-claims is firmly shut. The case also serves as a warning to Employers who take a relaxed view towards their obligation under Sub-Clause 2.4 to provide reasonable evidence of the financial arrangements they have made and are maintaining to pay the Contract Price. It doesn’t matter how wealthy or important the Employer is (it may be a Government, company or individual with very substantial funds) detailed financial information must still be provided.
The English Supreme Court has ruled that losers in adjudications have six years to challenge an adjudicator’s decision from the payment date, while winners' rights to seek improvement end with the original claim's limitation period. This article considers the implications.
