Escalating construction costs under FIDIC: is Sub-Clause 13.8 an answer?

Construction costs are escalating. Under existing contracts, an employer will not want to pay more for the works. But forcing a contractor to perform works that are unprofitable or causing a massive loss is unlikely to be in the best interests of the project. It may result in the insolvency of the contractor forcing the employer to abandon the contract or re-let it, probably at a premium. Is a mechanism for cost adjustment, such as FIDIC 1999 Sub-Clause 13.8 [Adjustments for Changes in Costs], an answer?

By |30/08/2022|Cost, featured, Knowledge Hub|Comments Off on Escalating construction costs under FIDIC: is Sub-Clause 13.8 an answer?

FIDIC’S Golden Principles – holding back the tide?

FIDIC is concerned about its image. It says that heavily amending the FIDIC forms of contract impacts upon the FIDIC brand and that this is damaging FIDIC’s reputation. It seeks to address this with the introduction of five Golden Principles. But the Golden Principles are merely aspirational; they are not binding and have no contractual effect. Does this render them a pointless gesture ‘trying to hold back the tide’?

By |10/03/2020|Dispute Boards, featured, Knowledge Hub|Comments Off on FIDIC’S Golden Principles – holding back the tide?

FIDIC contracts – What protection do they give contractors for employer financial problems?

In all construction contracts, one of the central principles is the Employer’s obligation to pay the contract price. The Contractor will be wary about the Employer’s financial standing and ability to pay and concerned to ensure that payments are made on time and that effective remedies are available in case of late or non-payment. The FIDIC standard forms of contract contain provisions dealing with these aspects.

By |21/05/2019|Dispute Boards, featured, Knowledge Hub|Comments Off on FIDIC contracts – What protection do they give contractors for employer financial problems?

FIDIC 1999 Books – Commentary on Clause 8

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. 

By |14/11/2018|Delay, English Law, featured, Knowledge Hub|Comments Off on FIDIC 1999 Books – Commentary on Clause 8

Cherry Picking FIDIC 2017

Much has been said about the new Red, Yellow and Silver Books 2nd Editions launched by FIDIC in December last year. The most obvious comment has been about their size, almost 50,000 words, which is some 60% longer than the 1999 forms. Although the 1999 forms were not perfect, most regular users seem to be agreed that they did not need 20,000 words to fix the issues. This consensus led this author to attempt to cherry-pick the good bits from the 2017 forms and to propose amendments to add the good ideas to the 1999 forms. The amendments apply to all three forms unless it is indicated otherwise.

By |29/10/2018|Adjudication / Dispute Boards / ADR, Arbitration, Delay, Dispute Boards, Drafting, featured, Knowledge Hub|Comments Off on Cherry Picking FIDIC 2017

FIDIC 1999 Books – Commentary on Clause 14

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.

By |26/09/2018|featured, Knowledge Hub|Comments Off on FIDIC 1999 Books – Commentary on Clause 14

FIDIC 2017 – First Impressions of the 3-Kilo Suite

In London last week, FIDIC launched its Second Editions of the Red, Yellow and Silver Books. They are big, weighing in at almost a kilo each. The general conditions cover 106 pages with more than 50,000 words, over 50% longer than the 1999 forms. Many improvements have been made, addressing issues that have emerged since 1999. Fans of Dispute Boards will be pleased to see that all three books now have standing boards with more emphasis on dispute avoidance; and that appointment of DB members and enforcement of their decisions have been made easier. Disputes and Arbitration are now dealt with in a separate chapter 21. Here are the most interesting changes to the Yellow Book.

By |13/12/2017|Dispute Boards, featured, Knowledge Hub|Comments Off on FIDIC 2017 – First Impressions of the 3-Kilo Suite

All Damage Is In A Sense Consequential – So What In Law Are Consequential Losses?

Sub-Clause 17.6 of FIDIC’s Red, Yellow and Silver Book is an exemption clause and provides in the opening paragraph that: “Neither Party shall be liable to the other Party for loss of use of any Works, loss of profit, loss of any contract or for any indirect or consequential loss or damage which may be suffered by the other Party in connection with the Contract…” The phrase ‘indirect or consequential loss or damage’ has been examined by the English courts on numerous occasions. Historically the words ‘consequential loss’ were held to be synonymous with ‘indirect loss’. However, a recent case questions whether this will be correct in all cases.

By |03/08/2017|English Law, featured, Knowledge Hub|Comments Off on All Damage Is In A Sense Consequential – So What In Law Are Consequential Losses?

Can a party ignore FIDIC’s DAB process and refer its dispute directly to arbitration?

If there is no DAB appointed by the parties to a FIDIC 1999 contract, may disputes be referred directly to arbitration under clause 20.8? This issue has troubled many in the industry – and has now been considered in English and Swiss courts.

By |17/11/2014|Adjudication / Dispute Boards / ADR, Dispute Boards, Knowledge Hub|Comments Off on Can a party ignore FIDIC’s DAB process and refer its dispute directly to arbitration?

Mind The Gap: Analysis of Cases and Principles Concerning the Ability of ICC Arbitral Tribunals to Enforce Binding DAB Decisions Under the 1999 FIDIC Conditions of Contract

Read the full article here.

By |01/01/2014|Arbitration, Dispute Boards, Knowledge Hub|Comments Off on Mind The Gap: Analysis of Cases and Principles Concerning the Ability of ICC Arbitral Tribunals to Enforce Binding DAB Decisions Under the 1999 FIDIC Conditions of Contract

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