Summary

Clause 20 deals with claims, disputes and arbitration.

Sub-Clause 20.1 deals with the Contractor’s claims. The Contractor must give notice wherever it considers itself entitled to additional time and money within 28 days. The 28 day notice is a condition precedent to the Contractor’s entitlement to time and money. Thereafter the Contractor must submit a fully detailed claim. The Engineer is then required to approve or disapprove the claim and thereafter make a Sub-Clause 3.5 determination. Each Payment Certificate must include such amounts for any claim as have been reasonably substantiated.

Sub-Clause 20.2 deals with the Appointment of the Dispute Adjudication Board. The Parties are required to jointly appoint a DAB by the date stated in the Appendix to Tender. The DAB can be one or three people. The DAB is required to incorporate the General Conditions of the Dispute Adjudication Agreement contained within the Appendix to the Conditions. The terms of payment need to be agreed and each Party is responsible for paying one-half of the remuneration.

Sub-Clause 20.3 deals with a failure to agree the DAB. In the event of a failure to appoint a DAB the decision is made by the appointing entity or official named in the Appendix to Tender.

A dispute of any kind arising out of the contract may be referred to the DAB. The reference must however refer to Sub-Clause 20.4. The decision of the DAB should be made within 84 days or within such period as approved by both Parties. The decision is stated to be binding on both Parties who shall promptly give effect to it unless and until it is revised in amicable settlement or an arbitral award. Sub-Clause 20.4 also requires that a person dissatisfied with the decision may give a notice of dissatisfaction and if that notice is not given the decision becomes final and binding upon both Parties.

Sub-Clause 20.5 imposes a requirement for amicable settlement following the DAB decision.

Sub-Clause 20.6 requires that disputes be settled by arbitration under the ICC Rules of Arbitration.

Sub-Clause 20.7 deals with the failure to comply with a DAB decision. The sub-clause provides that in the event that the DAB decision has become final and binding and a party fails to comply within it then that failure can be referred straight to arbitration.

Sub-Clause 20.8 deals with the situation where a dispute arises but there is no DAB in place.

Origin of clause

Clause 20 of FIDIC 1999 had its origins in the World Bank’s Standard Bidding Documents of 1995. FIDIC’s 1995 edition of the “Orange Book” included a clause that was similar to Clause 20 of the 1999 Red Book. A Supplement issued in 1996 for the 4th edn. Red and Yellow books then included a DAB provision.

Please click the button below to read the full article.