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.

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.

What causes the Covid-19 measures?

It used to be that a Country would make a new law (for whatever reason) and a Contractor would claim that the new law was made after the Base Date and increased Cost and/or somehow caused delay to the Works. For example, a new tax would be applied to the purchase of materials[3] or new restrictions would be placed on their transportation. The Contractor would have priced the works based, amongst other things, on the laws as they were before the Base Date and the FIDIC forms assign the risk of increases in that price caused by changes in legislation to the Employer. Accordingly, the Contractor would notify a Sub-Clause 13.7[4] claim and the story would then carry on as prescribed in that Sub-Clause and in Clause 20.[5]

Insofar as the mechanics are concerned, the application of the provision has not changed much with the pandemic. However, the complexity of the event or circumstance has amplified: in countries around the world, measures at various levels of government are being implemented in response to the pandemic. The impact of such measures can be quite dramatic and at least some of the measures are of the type that Contractors have, would have or should have applied anyway. With this, a question that arises when examining the validity of a Sub-Clause 13.7[6] claim is: what about causation?

Those who understand that if Covid-19 is left unchecked, it can wreak havoc, also understand that wearing a face mask, socially distancing, getting tested and quarantining are necessary measures that prevent infection. Companies will (or at least should) in many cases apply such measures in their organisations regardless of whether the law compels it. At the same time that governments were getting to grips with lockdowns, companies around the world dusted off their contingency plans and put to the test the very same measures with which we are all now very familiar. In fact, contracts, such as the FIDIC forms, already impose obligations on the Contractor regarding the protection of its workforce that may apply to the pandemic.[7] At times, measures were implemented even before governments made them wide-ranging. In this scenario, would Sub-Clause 13.7[8] apply to a new law that requires certain measures against Covid-19? The answer to this question depends on the interpretation given to the Sub-Clause.

If a Contractor understands that a Covid-19 outbreak on Site will cause personnel to fall ill or to be fearful of coming to work, then that Contractor should implement the measures needed to protect its workforce if it wants to avoid any delay and disruption caused by lack of personnel. For example, it should purchase masks for its employees, install sanitising stations or checkpoints, implement social distancing, etc. In such a scenario, the cause of the increased Cost and/or delay and disruption that results from the implementation of such measures is Covid-19, it would appear. That Contractor may potentially be able to claim an extension of time (though not additional payment) under Sub-Clause 19.4 (a) [Consequences of Force Majeure].[9]

What came first, the virus or the law?

Would a law compelling the Contractor to purchase those masks, install those sanitising stations or checkpoints, implement social distancing, etc. change that causal link? From one point of view, arguably not.

Sub-Clause 13.7[10] applies to increases and decreases in Cost resulting from a change in legislation which affects the Contractor in its performance of its obligations under the Contract. A Sub-Clause 13.7[11] claim is only available where the Contractor suffers (or will suffer) delay and/or loss as a result of changes in legislation. In the scenario above, the Contractor would implement the necessary measures regardless of whether a new law requiring them comes into force. Also, had the coronavirus not emerged, the new law would have never existed. That is, the two events are not independent from each other because the pandemic caused the relevant new law to come into force. Therefore, insofar as a new law compels the Contractor to do something that the Contractor would have done regardless (of the coming into force of such new law and of the legal implications of non-compliance), then such new law, it may be argued, does not cause the increases in Cost and/or delay that result from the implemented measures.

In other words, the new law fails the “but for” test. This test is used to determine the cause of a loss as a matter of fact. In the context of this article, the test is: would the loss or delay have happened but for the occurrence of an act or event? Put another way: if the act or event had not occurred, would the loss or delay have been suffered? As such, if the loss or delay hinge on the act or event (e.g., the new law), it passes the test in that the act or event is a proven cause in fact of the loss or delay. However, if the loss or delay would have been suffered even without the act or event (such as in the scenario above), it fails the test. Therefore, under the interpretation above, Sub-Clause 13.7[12] would not apply.

As a result, the Contractor would not be able to claim time and money via Sub-Clause 13.7[13] but may perhaps still be entitled to time, for example, under Sub-Clause 19.4 (a)[14]. In the scenario above, Covid-19 would pass the “but for” test. Therefore, subject to meeting all other requirements for a Sub-Clause 19.4 (a)[15] claim,[16] if the Contractor can prove that it has suffered delay by reason of a Covid-19 event or circumstance, it should be entitled to an extension of time.

Perhaps a different scenario would put this into more perspective. If a Contractor were building a pier in the Caribbean and a hurricane was imminent, would it wait for the government to tell everyone to seek shelter before closing operations and sending everyone home? Of course not. That would be irresponsible. Some may argue that this situation is different because most Caribbean countries have had laws for decades that allow them to order businesses to close down if a hurricane is imminent and therefore Sub-Clause 13.7[17] would never apply. However, the relevant question for the purposes of this analogy is not whether a law is new. As mentioned before, the issue is causation and, in that sense, the hurricane scenario is no different from the pandemic scenario.

Also consider the scenario where a Contractor purchases surgical masks to protect its personnel on Site from Covid-19 and they are used before the legislature of the Country makes a new law that requires the use of masks. In this situation, the masks are purchased and used before the law comes into force. Therefore, the Cost incurred in the purchase of such masks could not be said to have resulted from the change in legislation.

However, once the law comes into force, questions arise:

1. Would the Cost of the masks purchased before the law coming into force but used thereafter be covered by Sub-Clause 13.7[18]?
2. Would the Cost of more masks purchased after the law coming into force be covered by Sub-Clause 13.7[19]?

According to the interpretation presented above, it may be arguable that, in either case, the cause of the purchase and use of the masks does not change insofar as Covid-19 continues to be a threat in the eyes of the Contractor. In fact, the Contractor’s purchase of the masks prior to the enactment of the new law may indicate that the Contractor would continue purchasing the masks regardless of the existence of a new law requiring them.

To make matters more complex, the legislature of a Country may have different views on what constitutes appropriate measures. It may pass new laws that go beyond what a Contractor considers necessary. For example, the new law may require the masks to be type KN95 but the Contractor intended to purchase the less expensive surgical masks. According to the interpretation presented above, in such a scenario, the Contractor may have an arguable case under Sub-Clause 13.7[20] but, it is suggested, only to the extent of the difference in Cost between the KN95 masks and the cheaper masks, not for the entire Cost of the KN95 masks. That is, the increase in Cost that results from purchasing the KN95 masks would arguably be caused by the new law and the Contractor may be able to claim the difference in Cost between the two types of masks.

Is causation really the issue?

In contrast, there is a more liberal interpretation of Sub-Clause 13.7[21] that may allow a claim in the scenarios explored above. A DAB/DAAB or arbitral tribunal may be sympathetic to a Contractor who argues that the effect of the words “resulting from”, “which affect” and “as a result of” in Sub-Clause 13.7[22] is that they simply give the claiming Party a contractual peg on which to hang its claim regardless of the existence of an alternative causal link.

According to this argument, the implementation of Covid-19 measures by the Contractor results from the pandemic itself, but also from the new law. That is, Covid-19 and any new laws that result from it would each be considered effective causes. As such, it would be argued, Sub-Clause 13.7[23] would apply to all of the Cost increases and/or delay caused by the implementation of the measures required in the new law.

Pre-existing obligations trump the claim

Many countries already had laws that required Parties to address the pandemic in one way or another. According to the World Health Organization (“WHO”), the last influenza pandemic happened in 2009-2010[24] and epidemics that affect entire regions are ever more frequent, faster and wider-reaching.[25] Countries that have had to deal with such issues may have already had laws to address an event such as the coronavirus.[26] Parties, Engineers, DABs/DAABs and arbitral tribunals must take such laws into consideration when assessing whether a change in legislation under Sub-Clause 13.7[27] has actually occurred.

As mentioned above, the FIDIC 1999 and 2017 forms also contain provisions that may arguably be applicable to the question of whether a Contractor had a pre-existing obligation with respect to the pandemic, for example, Sub-Clause 4.1 [Contractor’s General Obligations], Sub-Clause 4.8 [Safety Procedures] in 1999 or [Health and Safety Obligations] in 2017, Sub-Clause 6.4 [Labour Laws] and Sub-Clause 6.7 [Health and Safety] in 1999 or [Health and Safety of Personnel] in 2017. Applicable provisions may also be found in other documents of the Contract.

Where a law or a Contract obligation already exists that requires the Contractor to implement the types of measures that a new Covid-19 law provides, there may be an argument that the new law did not in fact change the law and/or that it does not actually affect the performance of obligations under the Contract. In such cases, Sub-Clause 13.7[28] may be inapplicable.

In conclusion, who bears the risk?

Whether a Contractor is entitled to Cost under Sub-Clause 13.7[29] in Covid-19 scenarios will depend on many issues, including the presence of pre-existing obligations and the interpretation given to whether the complexities in the causal link are relevant to its application.

However, at the end of the day, what really matters is not why a Contractor or an Employer take care of the health and safety of the personnel on Site during the pandemic, but that they do so quickly and effectively insofar as they possibly can to avoid the worst of the effects of the virus on the people who come to work. Questions of who is at risk for any Cost and delay suffered are to be dealt with when time allows (though within the timeframes in Clause 20 and other relevant Clauses).

When that time arrives, Parties, Engineers, DABs/DAABs and arbitral tribunals should give serious thought to the particular facts of each claim and how they relate to questions of causation, risk and pre-existing obligations in light of the relevant Contract provisions and the law, old and new.

[1] Partially reworded in FIDIC 2017 to [Adjustments for Changes in Laws] and renumbered to Sub-Clause 13.6.

[2] In the context of FIDIC 1999/2017, this may potentially be Sub-Clause 8.4/8.5 [Extension of Time for Completion], Sub-Clause 8.5/8.6 [Delays Caused by Authorities], and Sub-Clause 19.4 (a)/18.4(a) [Consequences of Force Majeure/an Exceptional Event].

[3] See National Highways Authority of India v Som Datt Builders-NCC-NEC (JV), Delhi High Court, Case No. OMP No. 40/2011 (25 April 2014), see https://indiankanoon.org/doc/92242211/ (accessed 24 August 2021) and National Highways Authority of India v M/S JSC Centrodorstroy, Supreme Court of India, Civil Appeal No. 2530 of 2016 (18 April 2016), see https://indiankanoon.org/doc/121392918/ (accessed 24 August 2021).

[4] Or Sub-Clause 13.6 under FIDIC 2017.

[5] Court cases and arbitral awards about Sub-Clause 13.7 are scarce and there are very few commentators that delve into the Sub-Clause to any depth, such as: Ellis Baker et al, FIDIC Contracts: Law and Practice, ¶ 2.160-2.163 at pp 74-75 and ¶ 4.95-4.103 at pp 169-70; George Rosenberg and Andrew Tweeddale, ‘Clause 13’, FIDIC 1999 Books Clause Commentaries (2016), pp 24-26, see https://internationalconstructionknowledgehub.com/knowledge-hub-fidic-1999-book-clause-commentaries/ (accessed 24 August 2021); and George Rosenberg, ‘Clause 13 Variations and Adjustments’, FIDIC 2017 A Practical Legal Guide (2020), pp 340–42.

[6] Or Sub-Clause 13.6 under FIDIC 2017.

[7] For example, FIDIC 1999 and 2017 include: Sub-Clause 4.1 [Contractor’s General Obligations], Sub-Clause 4.8 [Safety Procedures] in 1999 or [Health and Safety Obligations] in 2017, Sub-Clause 6.4 [Labour Laws] and Sub-Clause 6.7 [Health and Safety] in 1999 or [Health and Safety of Personnel] in 2017. Also, applicable provisions may also be found in other documents of the Contract.

[8] Or Sub-Clause 13.6 under FIDIC 2017.

[9] Or Sub-Clause 18.4 (a) [Consequences of an Exceptional Event] under FIDIC 2017.

[10] Or Sub-Clause 13.6 (a) & (b) under FIDIC 2017.

[11] Or Sub-Clause 13.6 (a) & (b) under FIDIC 2017.

[12] Or Sub-Clause 13.6 (a) & (b) under FIDIC 2017.

[13] Or Sub-Clause 13.6 (a) & (b) under FIDIC 2017.

[14] Or Sub-Clause 18.4 (a) under FIDIC 2017.

[15] Or Sub-Clause 18.4 (a) under FIDIC 2017.

[16] Such as, for example, (1) proving that the Covid-19 event or circumstance is a Force Majeure event or circumstance under FIDIC 1999 or an Exceptional Event under FIDIC 2017, (2) proving that the Covid-19 event or circumstance prevented the Contractor from performing its obligations under the Contract, and (3) submitting the required notices.

[17] Or Sub-Clause 13.6 (a) & (b) under FIDIC 2017.

[18] Or Sub-Clause 13.6 (a) & (b) under FIDIC 2017.

[19] Or Sub-Clause 13.6 (a) & (b) under FIDIC 2017.

[20] Or Sub-Clause 13.6 (a) & (b) under FIDIC 2017.

[21] Or Sub-Clause 13.6 (a) & (b) under FIDIC 2017.

[22] Or Sub-Clause 13.6 (a) & (b) under FIDIC 2017.

[23] Or Sub-Clause 13.6 (a) & (b) under FIDIC 2017.

[24] WHO, ‘Pandemic influenza’, see https://www.euro.who.int/en/health-topics/communicable-diseases/influenza/pandemic-influenza (accessed 24 August 2021) (“The most recent pandemic occurred in 2009 and was caused by an influenza A (H1N1) virus.”); WHO, ‘Past pandemics’, see https://www.euro.who.int/en/health-topics/communicable-diseases/influenza/pandemic-influenza/past-pandemics (accessed 24 August 2021) (“The first influenza pandemic of the 21st century occurred in 2009–2010 and was caused by an influenza A(H1N1) virus.”).

[25] WHO, ‘Managing epidemics: Key facts about major deadly diseases’, Geneva (2018), p 9, download from https://www.who.int/publications/i/item/managing-epidemics-key-facts-about-major-deadly-diseases (accessed 24 August 2021) (“Epidemics of infectious diseases are occurring more often, and spreading faster and further than ever, in many different regions of the world.”).

[26] WHO, ‘Pandemic influenza’, see https://www.euro.who.int/en/health-topics/communicable-diseases/influenza/pandemic-influenza (accessed 24 August 2021) (“For this reason, countries develop multi-sectoral preparedness plans describing their strategies and operational plans for responding to a pandemic.”); WHO, ‘Past pandemics’, see https://www.euro.who.int/en/health-topics/communicable-diseases/influenza/pandemic-influenza/past-pandemics (accessed 24 August 2021) (“It was the first pandemic for which many Member States had developed comprehensive pandemic plans describing the public health measures to be taken, aimed at reducing illness and fatalities.”).

[27] Or Sub-Clause 13.6 (a) & (b) under FIDIC 2017.

[28] Or Sub-Clause 13.6 (a) & (b) under FIDIC 2017.

[29] Or Sub-Clause 13.6 (a) & (b) under FIDIC 2017.

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

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 agreement, reflects the fact that this would be a breach of sub-clauses 1.7 [Assignment] or 4.4 [Subcontractors].
391 However, it is an important provision in light of the Court of Appeal decision in the Court of Appeal in Triple Point Technology v PTT.
398 Clause 15 of the FIDIC Emerald Book 2019 does not differ from clause 15 of the FIDIC Yellow Book 2017.
418 Clause 16 of the FIDIC Emerald Book 2019 does not differ from clause 16 of the FIDIC Yellow Book 2017.
525 Delete footnote 1.
544 It reasserts the non-mandatory nature of the dispute avoidance provisions in sub-clause 21.3.
577 Clause 21 of the FIDIC Emerald Book 2019 does not differ from clause 21 of the FIDIC Yellow Book 2017.
614 Notice 7. Notice should be given by Engineer (not Employer) – per commentary on pages 124-125. Copied to Employer (not Engineer).
615 Notice 8. Notice should be given by Engineer (not Employer)- per commentary on pages 124-125. Copied to Employer (not Engineer).
616 Notice 9. The origin of this notice should read 3.3 (not 3.4). The title of the sub-clause should read The Engineer’s Representative (not Delegation by the Engineer). The first line of the Notice should read ‘This Notice is made pursuant to Sub-Clause 3.3 [The Engineer’s Representative] of the General Conditions’.
624 Notice 21. Title should read Engineer (not Party) – per commentary on page 144.
624 Notice 22. Title should read Engineer (not Party).
625 Notice 23. Title should read Engineer (not Party) – per commentary on page 145.
628 Notice 27. Title should read Contractor (not Engineer).
Index FIDIC Emerald Book 2019

A PDF document can be found here: FIDIC 2017 – Errata – 2022

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?

BACKGROUND

The Maeda case related to the construction of tunnels for the Hong Kong to Guangzhou Express Rail Link. The Main Contractor was Maeda and China State in joint venture (the “JV”). The Sub Contractor was Bauer Hong Kong Limited (“Bauer”).

The Sub-Contract was not a standard FIDIC form of contract. It contained a condition precedent clause that required Bauer to state the contractual basis, together with full and detailed particulars and evaluation, of its claim within 28 days after giving its initial notice (Clauses 21.2 and 21.1 respectively of the Sub-Contract).

Sub-Clause 21 is set out in full below (with emphasis added):

“21.1      If the Sub-Contractor intends to claim any additional payment or loss and expense pursuant due to:

21.1.1    any circumstances or occurrence as a consequence of which the Contractor is entitled to additional payment or loss and expense under the Main Contract;

21.1.2    any alleged breach of the Sub-Contract, delay or prevention by the Contractor or by his representatives, employees or other sub-contractors;

21.1.3    any claim for discrepancy between Sub-Contract Drawings and documents pursuant to Clause 8.4;

21.1.4    any claim under Common Law, statute laws or by-law;

21.1.5    any extension of time granted to the Sub-Contractor with exception to those cases which the delay are caused by typhoon signal no. 8 and/or force majeure etc.

21.1.6    any Variation or Sub-Contract Variation, as a condition precedent to the Sub-Contractor’s entitlement to any such claim, the Sub-Contractor shall give notice of its intention to the Contractor within fourteen (14) days after the event, occurrence or matter giving rise to the claim became apparent or ought reasonably to have become apparent to the Sub-Contractor.  For the avoidance of doubt, the Sub-Contractor shall have no entitlement to any additional payment or any additional loss and expense and no right to make any claim whatsoever for any amount in excess of the Sub-Contract Sum in respect of any event, occurrence or matter whatsoever unless this Sub-Contract sets out an express right to that additional payment, additional loss and expense or claim.

21.2        If the Sub-Contractor wishes to maintain its right to pursue a claim for additional payment or loss and expense under Clause 21.1, the Sub-Contractor shall as a condition precedent to any entitlement, within twenty eight (28) Days after giving of notice under Clause 21.1, submit in writing to the Contractor:

21.2.1    the contractual basis together with full and detailed particulars and the evaluation of the claim;

21.2.2    where an event, occurrence or matter has a continuing effect or where the Sub-Contractor is unable to determine whether the effect of an event, occurrence or matter will be continuing, such that it is not practicable for the Sub-Contractor to submit full and detailed particulars and the evaluation in accordance with Clause 21.2.1, a statement to that effect with reasons together with interim written particulars.  The Sub-Contractor shall thereafter, as a condition precedent to any entitlement submit to the Contractor at intervals of not more than twenty eight (28) Days (or at intervals necessary for the Contractor to comply with his obligations under the Main Contract, whichever is shorter) further interim written particulars until the full and detailed particulars are ascertainable, whereupon the Sub-Contractor shall as soon as practicable but in any event within twenty eight (28) Days (or as necessary for the Contractor to comply with his obligations under the Main Contract, whichever is shorter) submit to the Contractor full and detailed particulars and the evaluation of the claim;

21.2.3    details of the documents and any contemporary records that will be maintained to support such claim; and

21.2.4    details of the measures which the Sub-Contractor has adopted and proposes to adopt to avoid or reduce the effects of such event, occurrence or matter which gives rise to the claim.”

21.3        The Sub-Contractor shall have no right to any additional or extra payment, loss and expense, any claim for an extension of time or any claim for damages under any Clause of the Sub-Contract or at common law unless Clauses 21.1 and 21.2 have been strictly complied with.”

Bauer gave notice of its claim on time and provided full and detailed particulars within 28 days, submitting the contractual basis of its claim to be a Variation and/or Sub-Contract Variation for unanticipated ground conditions and naming specific clauses in the Sub-Contract.

The dispute between the JV and Bauer escalated to arbitration.

In the arbitration, Bauer also pursued an alternative contractual basis for its claim. This was a “like rights” claim, based on the main contractor’s entitlement under the provisions of the main contract, under different clauses of the Sub-Contract. This had not been included within the information provided within the 28 days (despite the wording of Sub-Clause 21.1).

The arbitrator (Sir Vivian Ramsey Q.C.) rejected Bauer’s variation claim on the basis that “the changed ground conditions do not, in themselves, give rise to payment as a Variation or Sub-Contract Variation, in the absence of an instruction”. This left the “like rights” claim. The arbitrator had to consider “whether the contractual basis of the claim made under Clause 21.2 had to be the same as the contractual basis of the claim made in the arbitration”. He decided that it did not, placing significance on the commercial purpose of the condition precedent clause.

The Court at First Instance disagreed with the arbitrator, finding that “there can be no dispute, and no ambiguity, from the plain and clear language used in Clause 21, that the service of notices of claim in writing referred to … are conditions precedent, must be “strictly” complied with, and failure to comply with these conditions will have the effect that [Bauer] will have “no entitlement” and “no right” to any additional or extra payment, loss and expense”. The judge, M Chan J, placed reliance on the English court cases of Rainy Sky SA v Kookmin Bank [2011] [1] and Arnold v Britton [2015] [2].

THE COURT OF APPEAL

Bauer appealed and (unsuccessfully) made a number of arguments including the following:

• Bauer had submitted notice. The issue was not whether such notice had been given but whether such notice complied with Sub-Clause 21.2.1.
• Sub-Clause 21.2.1 does not require Bauer to identify the contractual basis upon which its claim for additional payment or loss and expense ultimately succeeded in the arbitration. Had this been the intention of the parties, this would have had to have been expressed clearly.
• Sub-Clause 21.2.1 does not expressly state, nor can it be inferred, that Bauer was precluded from amending or substituting a contractual basis or that the effect of such an amendment or substitution would nullify the entitlement of Bauer to additional payment.
• Sub-Clause 21.2.1 was at the least ambiguous as to whether the notice needed to state the contractual basis upon which the claim ultimately succeeded or whether a party is precluded from pursuing a claim on a different contractual basis from that stated in the notice.  As such, it should have been construed narrowly.
• Sub-Clause 21.2.1 referred to “contractual basis” in the singular, rather than the plural. It could not be “strictly complied with” as stipulated in Sub-Clause 21.3, because the factual basis for Bauer’s claim provided not one but two contractual bases – as Variations or Sub-Contract Variations, and as a “like rights” 
• A party should not be prevented from advancing a claim after the expiry of a time bar merely because it placed a different legal label in the notice submitted when the substance of which was presented in time.
• The arbitrator said that, “to expect a party to finalise its legal case within the relatively short period and be tied to that case through to the end of an arbitration is unrealistic”. This was a finding of fact and as such is unimpeachable as a matter of law. The Court of First Instance was wrong to ignore this finding of fact.
• Clause 21, when read as a whole, contemplates and provides for a developing understanding of the factual causes or events for which notification is required, and this in turn informs the contractual basis or bases of the claim.  Where there is a developing state of affairs and there is provision for interim written particulars under Sub-Clause 21.2, it is manifest that the stated contractual basis under Sub-Clause 21.2 may be amended or substituted to reflect the understanding at that time.
• The arbitrator said that, “what is important from the point of view of the Contractor is to know the factual basis for the claim so that it can assess it and decide what to do”. This was a correct statement of the law, having regard to the commercial purpose of the notification clause.   The important commercial purpose of Sub-Clause 21.2 is whether the receiving party is able to make a proper evaluation of the claim as presented, not whether all the relevant boxes have been ticked.
• The finding in the Court of First Instance that “there is commercial sense in allocating risks and attaining finality by designating strict time limits for claims to be made and for the contractual basis of claims to be specified” just restated the purported effect of the clause.  The judge erroneously relied on case law and applied the concept of finality dogmatically and with no regard to the commercial purpose of the clause.

The Court of Appeal held that Bauer had failed to give proper notice under Sub-Clause 21.2 and that the arbitrator’s decision was wrong in law. Bauer was not entitled to bring a claim in the arbitration on a different contractual basis than the one notified. This was for a number of reasons, including the following:

• There was no dispute that for a “like rights” claim, the notice provisions in Sub-Clause 21.2 must be strictly complied with as conditions precedent to any entitlement to a claim for additional payment under Clause 21.
• Under Sub-Clause 21.2, the notice would need to be given within 28 days after the giving of the original notice.  In the notification served by Bauer within that period, Bauer made its claim on the contractual basis of a Variation or Sub-Contract Variation and there was no mention of a “like rights” claim, which is a different contractual basis.
• According to the plain wording of Sub-Clause 21.2, the notice or submission that is required to be given within 28 days of the notice of intention to claim must cover three things: (i) the contractual basis; (ii) full and detailed particulars; and (iii) the evaluation of the claim. 
• The full and detailed particulars and the evaluation of the claim: Sub-Clause 21.2 allows for submissions to be made at subsequent periods, where an event, occurrence or matter has a continuing effect or where the Sub-Contractor is unable to determine if an event, occurrence or matter will be continuing, such that it is not practicable to comply with Sub-Clause 21.2.1. Under Sub-Clause 21.2.2, the developing understanding of the factual causes or events is permitted to have an impact only on the provision of full and detailed particulars and the evaluation of the claim.  The allowance to make subsequent submissions does not extend to the obligation to state the contractual basis.
• The “contractual basis”: The wording of Sub-Clause 21.2 is clear and unambiguous. Within the stipulated time, the Sub-Contractor is required to give notice of the contractual basis, not any possible contractual basis which may turn out not to be the correct basis.  The reference to the contractual basis would not preclude identifying more than one basis in the alternative or stating more than one basis in the notice or serving more than one notice each stating a contractual basis.  
• Interpretation: There is no justification in giving Sub-Clause 21.2.1 a narrow construction or strained interpretation.
• Contra proferentem: There was no ambiguity in Sub-Clause 21.2.1 that needed to be resolved by invoking the contra proferentem
• Finding of fact: The arbitrator did not make a finding of fact that the time stipulated is unrealistically short. What he said about this was a statement of opinion, rather than a finding of fact.
• Developing facts: Reliance on a developing understanding of the factual events was not considered to be a valid argument. Bauer gave notice in August 2011 stating the contractual basis as Variation or Sub-Contract Variation under Sub-Clause 21.1.6.  It could have given notice of a “like rights” claim under Sub-Clause 21.1.1, whether alternatively or cumulatively, within the stipulated time.  Under Sub-Clause 21.1, the period of 42 days only commences “after the event, occurrence or matter giving rise to the claim became apparent or ought reasonably to have become apparent to the Sub-Contractor”.
• Commercial purpose: Apart from providing the factual basis for the claim so that the receiving party is able to access the claims validity at a time when the facts giving rise to the claim are still fresh, there are two further commercial purposes for identifying the contractual basis within the stipulated period: first, finality and second, in a chain contract situation, the Contractor may need to know whether the Sub-Contractor’s claim would have to be passed up the line. The arbitrator’s interpretation may prejudicially affect this commercial purpose.
• If the only purpose of Clause 21 was to inform the JV of the factual basis for the claim so it could investigate the claim in time, it would have been worded in a similar way to certain clauses in the Main Contract.  But that is not how Clause 21 was worded and it is not permissible to interpret Sub-Clause 21.2.1 in such a manner as to re-write the plain language of the provision.

FIDIC

Some clauses in the FIDIC forms of contract also require a party giving notice of a claim to specify the contractual or legal basis of the claim in the notice or the supporting particulars as a condition precedent of that claim. What impact, if any, will this decision have on the FIDIC forms of contract?

The FIDIC Yellow Book 1999

The FIDIC Yellow Book 1999 separates Employer and Contractor claims.

Employer’s Claims

Sub-Clause 2.5 requires “notice” (to be given as soon as reasonably practicable after the Employer became aware of the event or circumstance giving rise to the claim), and “particulars”.  In the case of NH International (Caribbean) Limited v National Insurance Property Development Company Limited [2015][3] the Privy Council said that the wording of Sub-Clause 2.5 “makes it clear that, if the Employer wishes to raise such a claim, it must do so promptly and in a particularised form”.

The particulars must “specify the Clause or other basis of the claim” as soon as practicable after the Employer became aware of the event or circumstances giving rise to the claim. Sub-Clause 2.5 does not specify what will happen if the Employer subsequently changes the Clause or other basis of the claim. Compliance with Sub-Clause 2.5 is a condition precedent. The Employer “shall only be entitled to set off against or make any deduction from an amount certified in a Payment Certificate, or to otherwise claim against the Contractor, in accordance with [Sub-Clause 2.5]”. The Guidance states (with emphasis added), “In order to be effective, the particulars should include the basis of the claim, with relevant Clause number(s), and detailed substantiation of the extension and/or payment being claimed”. Therefore, it would appear that a failure to give the correct particulars is not intended to render the notice invalid.  Further, as the obligation is to give particulars specifying the Clause or other basis of the claim “as soon as reasonably practicable”, arguably, there is more flexibility in changing the Clause or other legal basis of the claim than in the Maeda case which had a strict 28-day deadline.

Note too that Sub-Clause 2.5 distinguishes the “Clause” from the “basis of claim”. Therefore, the basis of claim may be much wider that a mere clause of the contract. Perhaps, it could be expressed as: (i) a claim under the contract; (ii) a claim for breach of contract; (iii) a claim in tort; (iv) a claim under the governing or other applicable law etc.  However, there is no reliable authority on this, and it would be dangerous to place so much reliance on the word “or”. Consequently, it would be wise for an Employer to note each and every clause that could possibly be implicated as well as any basis of claim for breach of contract, in tort, and under the governing or other applicable law etc.

Contractor’s Claims

Firstly: Sub-Clause 20.1 requires “notice” to be given no later than 28 days after the Contractor became aware, or should have become aware, of the event or circumstance. The Guidance states (with emphasis added), “Generally, there is no need for this notice to indicate how much extension of time and/or payment may be claimed, or to state the Clause or other contractual basis of the claim”. Therefore, it need only be a bare notice. The notice is a condition precedent. If the Contractor fails to give such notice within 28 days “the Time for Completion shall not be extended, the Contractor shall not be entitled to additional payment, and the Employer shall be discharged from all liability in connection with the claim”.

Secondly: A fully detailed claim including “supporting particulars of the basis of the claim” is also required within 42 days after the Contractor became aware (or should have become aware) of the event or circumstance giving rise to the claim, or within such other period as may be proposed by the Contractor and approved by the Engineer. Sub-Clause 20.1 does not specify what will happen if the Contractor subsequently changes the basis of the claim and the Guidance does not assist. A failure to give the correct supporting particulars does not render the notice of claim lapsed or invalid but might affect the quantum of the claim: “Unless and until the particulars supplied are sufficient to substantiate the whole of the claim, the Contractor shall only be entitled to payment for such part of the claim as he has been able to substantiate”. This is a key difference from the Maeda case, which said that a failure to give a statement of the “contractual and/or other legal basis of the Claim” would render the notice of claim lapsed or invalid. On this basis, it is arguable that the decision in the Maeda case ought not apply to this clause.

The FIDIC Gold Book 2008 is different. In this form, Sub-Clause 1.3 provides that a Notice must include reference to the Clause under which it is issued, and Sub-Clause 20.1 (c) states that if the Contractor fails to provide the “contractual or other basis of the claim” within the required time, the Notice of claim is considered to be invalid. This has the same effect as if no Notice had been given in the first place so that the Employer has no liability in respect of the claim. Therefore, the decision in the Maeda case might be applied. If more time is required to establish the correct contractual or other basis of claim the Contractor might ask the Employer’s Representative for an extension of time or, failing that, there is specific wording in the FIDIC Gold Book for the DAB to be asked to overrule the given 42-day limit.

As stated above, the basis of claim may be much wider that a mere clause of the contract.

The FIDIC Yellow Book 2017

The FIDIC Yellow Book 2017 combines Employer and Contractor claims (Sub-Clause 20.2).

Firstly: Sub-Clause 20.2.1 requires “Notice” to be given no later than 28 days after the claiming Party became aware, or should have become aware, of the event or circumstance. This Notice is a condition precedent. If the claiming party “fails to give a Notice of claim within this period of 28 days, the claiming party shall not be entitled to any additional payment , the Contract Price shall not be reduced (in the case of the Employer as the claiming Party), the Time for Completion (in the case of the Contractor as the claiming Party) or the DNP (in the case of the Employer as the claiming Party) shall not be extended, and the other Party shall be discharged from any liability in connection with the event or circumstance giving rise to the Claim”. As above, this need only be a bare notice. Under Sub-Clause 1.3 (b) it must be identified as a Notice but does not need to include reference to the provision(s) of the Contract under which it is issued.

Secondly: Sub-Clause 20.2.4 requires a fully detailed claim including, among other things, “(b) a statement of the contractual and/or other legal basis of the Claim” (i) within 84 days after the claiming party became aware, or should have become aware, of the event or circumstance giving rise to the claim, or (ii) within such other period as may be proposed by the claiming party and approved by the Engineer. It is a condition precedent to state the contractual and/or other legal basis of the claim: “If within this time limit the claiming Party fails to submit the statement under sub-paragraph (b) above, the Notice of Claim shall be deemed to have lapsed, it shall no longer be considered as a valid Notice, and the Engineer shall, within 14 days after this time limit has expired, give a Notice to the claiming Party accordingly”. In other words, a failure to specify the contractual and/or other legal basis of the Claim will render the Notice of Claim lapsed (and the Claim potentially time-barred). As with the FIDIC Gold Book 2008, if further time is needed to establish the contractual or legal basis of the claim a party may seek an extension of time from the Engineer (or ask the DAB for the additional time, if time permits).

Sub-Clause 20.2.4 does not specify what will happen if the claiming party subsequently changes the contractual and/or legal basis of the claim, and the Guidance does not assist, but the risk of doing so appears greater in the FIDIC 2017 editions than the FIDIC 1999 editions. Having lawyers available (on Site) to analyse each and every claim and accurately establish the correct contractual and/or other legal basis within 12 weeks of a party becoming aware (or ought to have become aware) of the event or circumstances giving rise to the claim will be undesirably burdensome and costly.

Again, the contractual and/or other legal basis of claim may be much wider that a mere clause of the contract.

Arbitration

Sub-Clause 20.6 of the FIDIC Yellow Book 1999 and Sub-Clause 21.6 of the FIDIC Yellow Book 2017 states: “Neither Party shall be limited in the proceedings before the arbitrator(s) to the evidence or arguments previously put before the [DAB / DAAB] to obtain its decision…”.

This suggests that a party may change its legal arguments, at least, in arbitration proceedings. Does this include the contractual and/or other legal basis of claim in its notice, particulars, or fully detailed claim? Is the freedom to change arguments to be construed within the confines of the clauses notified? Such an argument appears not to have been considered in the Maeda case. 

1] UKSC 50.

[2] AC 1619.

[3] UKPC 37.

FIDIC’s 2017 editions introduced a new Claims management system in clause 20 that channels Claims through two very different procedures. One of them is very simple and involves almost no risk whereas the other will require investment of significant project resources, will take the parties a considerable amount of time to resolve and carries fatal consequences if not followed properly. It has therefore become a priority for anyone handling this Claims management system to understand how clause 20.1 sorts the different types of Claims and to recognise that the classification scheme is not as straightforward as the wording of the Contract suggests, as explored in this article.

FIDIC’s 2017 editions introduced a new Claims[1] management system in clause 20 that channels Claims through two very different procedures. One of them is very simple and involves almost no risk whereas the other will require investment of significant project resources, will take the parties a considerable amount of time to resolve and carries fatal consequences if not followed properly.

It has therefore become a priority for anyone handling this Claims management system to understand how clause 20.1 sorts the different types of Claims and to recognise that the classification scheme is not as straightforward as the wording of the Contract suggests.

FIDIC’s press release[2] explained that their intention was to differentiate time and money Claims, which would follow the more formal procedure in clause 20.2, from any other type of Claim, which would follow the simpler procedure. Unfortunately, despite their intentions, the language used in clause 20.1 suggests that not all money Claims may need to follow the more formal procedure.

The Three Types of Claim

Clause 20.1 governs the birth of certain Claims arising between the Parties and classifies them as set out below:

“A Claim may arise:

(a) if the Employer considers that the Employer is entitled to any additional payment from the Contractor (or reduction in the Contract Price) and/or to an extension of the DNP;

(b) if the Contractor considers that the Contractor is entitled to any additional payment from the Employer and/or to EOT; or

(c) if either Party considers that he/she is entitled to another entitlement or relief against the other Party. Such other entitlement or relief may be of any kind whatsoever (including in connection with any certificate, determination, instruction, Notice, opinion or valuation of the Engineer) except to the extent that it involves any entitlement referred to in sub-paragraphs (a) and/or (b) above.”

The first two types are defined by who makes the claim and what entitlement may be claimed whereas the third type is a catch-all category that covers any other entitlement.

The Two Procedures

Types (a) and (b) follow the procedure contained in clause 20.2 which includes, amongst other things, the submission of a written Notice of Claim, a subsequent fully detailed Claim document including evidence and updates to the Claim, formal content requirements for each document, obligations to maintain contemporary records, precise time bar provisions for each submission after which the claiming Party may lose their entitlement and follow up procedures in case of disagreements on the timeliness of the submissions.

Type (c) Claims follow the procedure at paragraph 20.1 (3). The claiming Party first requests the entitlement or relief against the other and the other Party or the Engineer must then disagree. There is no extraordinary formality on either of these other than following the basic requirements of communications under sub-clause 1.3 (e.g., being in writing, etc.) ^[3] and no specific time requirement. Once the disagreement is established, the claiming Party need only serve a simple Notice with details of the case and the disagreement to refer the matter to the Engineer. There is no specific time bar provision, update requirements, etc.

Therefore, the correct classification of a Claim is important because it may result in a more time-consuming procedure and the risk of loss of contractual rights.

Classification Scheme

Type (a) and (b) Claims relate exclusively to four entitlements only one of which is common to both:

Type (c) Claims are for any other entitlement or relief of any kind whatsoever except for the four entitlements in (a) and (b). The list of what these Claims may relate to (e.g., certificates, instructions, etc.) is not exhaustive and does not limit or qualify the types of entitlements or reliefs that fall within type (c).^[4] In other words, type (c) is for any Claim that is not for one of the four entitlements in types (a) and (b).

Clause 20.1 does not provide clear examples of a type (c) Claim. However, at the very least, any claim that does not relate to time or money would fall within the category. For example, a Contractor’s request for a declaration that the Engineer issue a Taking Over Certificate is not strictly about time and money. This event or circumstance may have time and money implications but the request for the declaration itself is not a claim for time and money. The Guidance of the 2017 editions confirms that declarations are type (c) and also mentions ambiguities or discrepancies in the Contract documents and access to Site issues as other examples.

On this basis, it may first appear that type (c) only includes Claims other than for time and money. However, the Guidance stops short of reaching this conclusion; it only provides a list of items that may fall within the category. ^[5] More importantly, there is nothing in the wording of clause 20.1 that makes it absolutely clear that no money claims may fall within type (c). As a result, the wording of type (c) has scope for money claims to fall within this category as long as they are not for additional payment from the other Party or reduction in the Contract Price.

Entitlements to Additional Payment

It should not escape anyone that the entitlement for additional payment is about money. However, the word additional limits the scope of the entitlement. As some commentators have already asked, what are these payments additional to? ^[6]

Bunni mentions that “a claim is generally taken in practice to be an assertion for additional monies due to a party” [emphasis of the author]. ^[7] Otherwise, claims would include Contractors’ payment applications for the original scope of works. ^[8]

Jaeger & Hoek have taken a more straightforward approach: additional payments comprise those that are “over and above [payments] which are already included in the accepted contract amount”.^[9] Accepted Contract Amount (ACA) is a defined term that effectively means the sum agreed by the Parties in the Letter of Acceptance. Anything other than that is additional. Therefore, payments made for works carried out under the Contract are not additional.

As Jaeger & Hoek put it “claims are nothing more than the crystallisation of an anticipated, not yet specified, part of the Contract Price”.^[10] This is consistent with the definition in clause 14.1 and the obligations in sub-clauses 3.7.4, 14.6.1 and 20.2.7 of the Yellow Book 2017. The Contract Price is the ACA subject to additions and/or reductions. These additions include entitlements to additional payment under clause 20 that may only become due pending or resulting from an Engineer’s determination. ^[11] In other words, additional payments are not part of the Contract Price from the moment the Contract is signed, only from the moment they become due which is sometime after the Notice of Claim is served.

Therefore, additional payment is any payment that is additional to the sum that the Parties originally agreed for the works when the Contract was signed and what has been added or reduced by the time the Claim arises. In other words, the payment is additional if it is not payable out of the Contract Price as adjusted by the time of the event or circumstance of the Claim.

Another point of view was that implied in the ICC Final Award 19581. ^[12] Whilst considering whether a claim for the return of a Retention Money Guarantee requires notice, the Arbitral Tribunal stated that the guarantee “does not constitute a consideration given in exchange of the works performed by Claimant or another form of “additional payment”.” [emphasis added] The use of the word another conflates payments given in exchange of the Works covered by the Contract Price and payments additional to that. It suggests that payments pursuant to the Contract Price and any other payment are one and the same so that the phrase additional payment is interchangeable with the phrase any payment. This view is incorrect. It leads to the misconception that additional means additional to zero or additional to what has been paid by the time the Claim is made whether or not the payment is anticipated as part of the Contract Price. One consequence would be that any request for money, including, as Bunni warns, ^[13] applications for payment of the works would effectively fall within the category. It would also render the word additional superfluous. The FIDIC forms are standardised contracts the result of decades of trial and error and painstaking drafting from a variety of professionals and the phrase has been included in previous versions of the FIDIC forms. Also, the commentators that have analysed the word additional in widely used books have been expressly acknowledged in the second edition as special advisers to the Contracts Committee or as having reviewed drafts. Therefore, the assumption should be that the use of the word additional has been carefully weighed and may not be ignored. This would be consistent with the principle of contract interpretation whereby each part of the contract should be given effect. ^[14]

The word should also be interpreted in the context of the entire clause. There should be no doubt that an EOT is an amount of time that is additional to the Time for Completion provided in the Contract Data. Also, clause 20.1 (a) entitles the Employer to either additional payment or a reduction in the Contract Price. Therefore, the baseline for any change to the sums that pass between the Parties is the Contract Price at the time the Claim arises.

Type (c) Claims for Payment of Unpaid yet Certified Work

An example of a type (c) money claim is a request for payment of a payment certificate for works carried out under the Contract that the Employer has failed to pay.

A Contractor’s claim for payment of an unpaid certificate is essentially a claim for a debt that results from the Employer’s non-payment in breach of clause 14.7 of the second edition. The Contract already provides the following remedies for this breach: financing charges (clause 14.8), suspension (clause 16.1) and termination (clause 16.2). However, there is no contract clause that specifically provides for the most obvious remedy: payment of the certified amount. Therefore, these claims rely on the law of the contract for payment of the unpaid sums. Consequently, this type of claim arises out of or is in connection with the Contract. According to sub-clause 1.1.5, a Claim is defined as under, in connection with and/or arising out of the Contract or its execution. Therefore, a claim for the sums of an unpaid certificate fits into the contractual definition of a Claim and may be subject to clause 20.1.

As explained above, the type (c) category is a catch-all provision that covers any entitlement other than the four entitlements of types (a) and (b), e.g., it covers entitlements for payments that are not additional. If the certificate covers work carried out under the Contract then such sums are payable out of the Contract Price. They are therefore Claims for another entitlement that is not additional payment and, as such, are not type (b). Also, type (c) expressly provides that the other entitlements may be in connection with any certificate or valuation of the Engineer, i.e., payment certificates are within its scope. As a result, these Claims should be classified as type (c).

The result of this classification is that a Contractor may be forced to refer to the short procedure in paragraph 20.1 (3) in order to obtain payment of certified work that has not been paid in the time allotted in the Contract.

short procedure. A mistake in categorising a Claim may result in, at worst, losing the right to a Claim and, at best, wasting valuable resources on a long and drawn out procedure.

Unintended Consequences

The second edition’s classification scheme is not as straightforward as it first seems. FIDIC’s press release about the 2017 edition makes it clear that the intention was for types (a) and (b) to cover all Claims for time and money and type (c) to cover Claims that are not.[15] However, this is not clear enough in the Contract itself. Most money Claims should be easily categorised under types (a) and (b). However, some may fall outside of these categories and must follow the type (c) procedure. The word additional results in some money Claims such as those for payment of an unpaid payment certificate for works carried out under the Contract to fall outside the remit of type (b). By phrasing type (c) so openly, it covers any entitlement whatsoever other than the four of types (a) and (b) including an entitlement for payment of unpaid certified works.[16]

Contractors, Employers and Engineers handling the new Claims management system should not immediately conclude that if the Claim is for time and money it goes through the long procedure and if it is non-monetary or non-temporal it follows the short procedure. A mistake in categorising a Claim may result in, at worst, losing the right to a Claim and, at best, wasting valuable resources on a long and drawn out procedure.

_____________________________________________________________________

[1] A defined term in the second edition.

[2] Published by FIDIC here, page 9.

[3] According to clause 1.3, requests and other communications similar to those listed in the clause shall be in writing.

[4] According to paragraph 1.2 (h), the list at paragraph 20.1 (c) that follows the word including is not exhaustive and does not limit or qualify the complete list of entitlements or reliefs.

[5] Even if the Guidance is not necessarily part of the contract, its language should be interpreted on the basis of paragraph 1.2 (h), i.e., this list is not exhaustive and should not be interpreted as limiting or qualifying the complete list of entitlements or reliefs.

[6] Ellis Baker, et al, FIDIC Contracts: Law and Practice, 2009, paragraph 6.189 at page 313.

[7] Nael Bunni, The FIDIC Forms of Contract Third Edition, 2005, pages 294-295.

[8] Bunni, page 294.

[9] Axel-Volkmar Jaeger and Goetz-Sebastian Hoek, FIDIC – A guide for Practitioners, 2010, page 365.

[10] Jaeger and Hoek, page 365.

[11] The discussion of when that occurs is beyond the scope of this article but, according to sub-clause 20.2.7, it may be before the clause 3.7 agreement or determination is issued.

[12] Award rendered in August 2014 and seat was an Eastern European jurisdiction.

[13] Bunni, pages 294 and 295.

[14] Richard Calnan, Principles of Contractual Interpretation, 2013, paragraphs 3.42 to 3.46 at pages 37-38.

[15] Published by FIDIC here, page 9.

[16] Some entitlements that may be interpreted as types (a) or (b) have special provisions setting out their own procedure and expressly precluding the application of clause 20.2. For example, the process for variations is set out in clause 13.3 which channels time and money issues directly to clause 3.7 and clause 14.8 entitlements to financing charges require only that they be requested. Similarly, there are other payment entitlements that may be interpreted as type (c) but that also have special provisions particularising their own procedures. For example, sub-clause 14.6.3 provides mechanisms to correct or modify an interim payment certificate. There is a question of whether, on the basis that a payment certificate correction or modification may be interpreted as type (c) but the sub-clause 14.6.3 procedures do not preclude paragraph 20.1 (3), the two provisions are complementary and, therefore, the formalities of paragraph 20.1 (3) should somehow apply to sub-clause 14.6.3. However, this is outside the scope of this article.

Clause 6 is similar to the 1999 version but adds Key Personnel, strictly regulated by the Engineer. Other changes include clearer employment laws, notice for work outside normal hours, enhanced health and safety roles, and improved record-keeping.

The 2017 Clause 6 is largely the same as its 1999 counterpart. However, it contains some notable additions and differences, the most glaring of which is the addition of a new type of staff/labourer to the Contractor’s Personnel called Key Personnel in Sub-Clause 6.12.

It only applies if such personnel are specified in the Employer’s Requirements and the important aspect of this provision is not what this type of personnel does but that their appointment and presence is strictly regulated.

They are named in the Tender and substitutions and dismissals need the Engineer’s consent. They also need to be based on Site for the whole period of the Works. This is perhaps to avoid too much change of important employees of the Contractor and to ensure that their focus is on the project at hand.

Other changes include:

• The 1999 edition prohibited the Contractor from hiring of the Employer’s Personnel in Sub[1]Clause 6.3 and the 2017 edition has imposed the same obligation on the Employer and the Engineer vis-à-vis the Contractor.
• The Contractor’s obligation to follow employment laws including wages and working hours has become clearer.
• If work needs to be carried out outside normal workdays and working hours, the Contractor now needs to give Notice to this effect.
• The role of the health and safety officer (accident prevention officer in FIDIC 1999) has been slightly emphasised.
• The importance of fluency in the language of communications has been reinforced.
• The Engineer now has the added right to request the removal of personnel who have engaged in corruption or fraud or who have been employed from the Employer.
• The Contractor’s obligations to maintain records have been enhanced and include Personnel, Equipment, Plant, Materials and Temporary Works and must specify work activity, location and day of work.

Article Author: Gabriel Mulero Clas

Clause 6 – Staff and Labour