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.

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 due1.

But, what does “fair” and “fairly” mean and does it compromise the Engineer’s role as Employer’s agent?

The key things to note about the Engineer

• The Engineer is appointed by the Employer.

• The Engineer is paid for by the Employer.

• The Engineer is deemed to act for the Employer.

• The Engineer may be one of the Employer’s salaried employees.

• The Employer may replace the Engineer (without giving reasons)².

• The Engineer must carry out the duties assigned to him in the Contract.

• If the Engineer fails to perform his duties, this may be a breach of the Employer’s obligation under the Contract to have appointed an appropriate person.

• The Employer may impose a requirement that the Engineer obtains specific approval before exercising a particular power.

• Whenever the Engineer exercises a particular power for which the Employer’s approval is required, then the Employer shall be deemed to have given approval.

The Engineer is the Employer’s Agent

Agency occurs where a party is authorised to act as the representative of another. An agent may be appointed either expressly or impliedly by consent. Under Sub-Clause 3.1 of the 1999 FIDIC forms of contract, the Engineer is deemed to act for the Employer and thus authorised to act as the Employer’s representative, i.e. he is the Employer’s agent.

Therefore, (unless there is a Particular Condition to the contrary), when an Engineer makes a “fair determination” under Sub-Clause 3.5 or “fairly determines” the amount due in an Interim Payment Certificate under Sub-Clause 14.6, or Final Payment Certificate under Sub-Clause 14.13, he remains the Employer’s agent.

This is supported in the FIDIC’s Contract Guide (1st edition, 2000) which states (with emphasis added): “Under [the FIDIC Red Book 1999] or [the FIDIC Yellow Book 1999], the Employer is required to appoint the “Engineer”, who is to be named in the Appendix to Tender. The Engineer does not represent the Employer for all purposes. The Engineer is not authorised to amend the Contract, but he is deemed to act for the Employer as stated in subparagraph (a). The role of the Engineer is thus not stated to be that of a wholly impartial intermediary, unless such a role is specified in the Particular Conditions. If [the FIDIC Red/Yellow Book 1999’s] Engineer is an independent consulting engineer who is to act impartially, the following may be included in the Particular Conditions: At the end of the first paragraph of Sub-Clause 3.5, insert: “The Engineer shall act impartially when making these determinations.””

In the FIDIC Red Book 1999, FIDIC removed the express requirement for the Engineer to act impartially found in the previous form, and made a conscious and deliberate attempt to distance itself from the Anglo-Saxon concept that the Engineer’s duty to be impartial should be implied to reflect the fair and unbiased role of the Engineer as explained in the English House of Lords decision of Sutcliffe v Thackrath³ (considering the R.I.B.A. standard form of contract). This concept has been followed in subsequent English decisions such as those of Mr Justice Jackson in Costain v Bechtel⁴ (considering the N.E.C.2 form of contract) and Scheldebouw v St. James Homes (Grosvenor Dock) Ltd⁵. However, it is a concept that is not thought to be well understood or accepted internationally. In civil jurisdictions it is often asked how someone paid by one party (and therefore not independent) can act impartially as between Employer and Contractor.

Determinations

So, under the FIDIC Red Book 1999, must the Engineer maintain his role as the Employer’s agent when making a “fair determination” under Sub-Clause 3.5 or when he “fairly determines” the amount due in an Interim Payment Certificate under Sub-Clause 14.6 or Final Payment Certificate under Sub-Clause 14.13 and, if so, how? What do the words “fair” and “fairly” mean and do they compromise the Engineer’s role as Employer’s agent?

“Fair” is defined widely in the Oxford English Dictionary and includes (with emphasis added) at number 14(a): “Of conduct, actions, methods, arguments, etc.: free from bias, fraud, or injustice; equitable; legitimate, valid, sound.”

“Fairly” is also widely defined and includes (with emphasis added):“1. In a fair manner, so as to be fair….4. (a) By proper or legal means; legitimately; in accordance with rules or laws… (b) In accordance with what is right or just; equitably; without bias, impartially. Also: with good reason, rightfully….5. In a proper or suitable manner; appropriately, fittingly; (also) proportionately…6. Clearly, distinctly, plainly; frankly, openly….”

Reference is made to the Oxford English Dictionary as it is a well-regarded and accepted authority on the English language, which is the official language of the FIDIC forms of contract. Obviously, not everyone will accept this source. However, from these definitions, it is logical to conclude that the Engineer is obliged to act without bias and impartially when making determinations under Sub-Clauses 3.5, 14.6 and 14.13, notwithstanding his role as Employer’s agent.

This conclusion is supported in other parts of the FIDIC Red Book 1999 General Conditions of Contract. If it were not the case:

• Why would the Engineer (as Employer’s agent) need to consult with both parties before reaching a determination?

• Why would the Employer be entitled to dispute the Engineer’s determination and refer it to the Dispute Board under Sub-Clause 20.4 (particularly if the Employer’s specific approval has been sought prior to issuing the determination)?

• How could the determination be disputed under the FIDIC form if the Contractor and the Engineer (as Employer’s agent) agreed? Ordinarily, if a principal does not like something his agent has done which was properly within the agent’s authority, the principal would take it up with the agent under the agency agreement.

The conclusion is also supported in the FIDIC Code of Ethics which states: “The consulting engineer shall: – Be impartial in the provision of professional advice, judgement or decision…”

The wording of the FIDIC Contracts Guide might be interpreted to compliment such a view. On one reading, the phrase “The role of the Engineer is thus not stated to be that of a wholly impartial intermediary…” could allow room for the Engineer to act as an impartial intermediary in limited situations, such as when making fair determinations under Sub-Clauses 3.5, 14.6 and 14.13.

An Engineer’s professional codes of conduct could also be relevant in establishing the way in which he is expected to behave. For example, the Guidance Notes on the Interpretation and Application of the Rules of Professional Conduct of the Institution of Civil Engineers state (with emphasis added): “Rule 1: All members shall discharge their professional duties with integrity and shall behave with integrity in relation to all conduct bearing upon the standing, reputation and dignity of the Institution and of the profession of civil engineering. The manner in which members can fulfil this Rule includes, but is not limited to, the following: -Carry out their professional duties with complete objectivity and impartiality.”

The FIDIC White Book 2006 goes further and refers to independence, although the obligation is not mandatory. Sub-Clause 3.3.2 states: “Where the Services include the exercise of powers or performance of duties authorised or required by the terms of a contract between the Client and any third party, the Consultant may: … (b) if authorised to certify, determine or exercise discretion to do so fairly between the Client and third party not as an arbitrator but as an independent professional exercising his judgement with reasonable skill, care and diligence;…”

The problem has been recognised in the pre-release version of the FIDIC Yellow Book 2017. In Sub-Clause 3.2 of the FIDIC Yellow Book 2017 (as in Sub-Clause 3.1 of the FIDIC Yellow Book 1999), the Engineer is still deemed to act for the Employer, i.e. he remains the Employer’s agent, except as otherwise stated in the Conditions. However, to remove any ambiguity as to how the Engineer should act when brokering agreements or making determinations, Sub-Clause 3.7 states, “The Engineer shall act neutrally between the Parties when carrying out duties under this Sub-Clause”. Siobhan Fahey of the FIDIC Contract Committee acknowledges that the words “fair” and “fairly” are causing problems around the world and she hopes that the new obligation on the Engineer to act “neutrally”, when making a fair determination under Sub-Clause 3.7, will resolve this issue. However, there is a risk that neutrally may be seen as a synonym for impartially used in previous editions which could see the opening up of old arguments⁶.

Note also that in the pre-release version of the FIDIC Yellow Book 2017, Sub-Clause 14.6.1 obliges the Engineer to issue an Interim Payment Certificate (“IPC”) stating the amount which he “fairly considers to be due” to the Contractor (and not the amount which he “fairly determines to be due” as in the FIDIC Red Book 1999). A similar change has been made in Sub-Clause 14.13 in respect of the Final Payment Certificate (“FPC”). This takes the issue of IPCs and FPCs outside the scope of Sub-Clause 3.7 and the Engineer’s obligation to act neutrally in the first instance. However, if the Contractor is not satisfied with an IPC, he may refer it to the Engineer for a determination. There seems to be no corresponding provision in respect of FPCs.

Unfortunately, the pre-release version of the FIDIC White Book 2017 is difficult to reconcile with the pre-release version of the FIDIC Yellow Book 2017 as it obliges the Engineer to act independently. Mandatory language is now used. Sub-Clause 3.9.3 states, “…If the Consultant is authorised under the Works Contract to certify, determine or exercise discretion in the discharge of its duties then the Consultant shall act fairly as go between [sic] the Client and the [C]ontractor, exercising independent professional judgement and using reasonable skill, care and diligence”.

Employer’s approval

The position is further complicated where the Engineer is obliged to obtain the Employer’s approval before, for example, agreeing or determining an extension of time and/or additional costs, or issuing Variations (under the FIDIC Red Book 1999 Particular Conditions or as set out in Sub-Clause 3.1 of the FIDIC Pink Book 2010). Under Sub-Clause 3.5 the Engineer is obliged to make a fair determination, but if the Employer does not approve that fair determination, the Engineer cannot make it. This leaves the Engineer in a very difficult position. He should not make a determination he thinks unfair but as the Employer’s agent he ought to do as he is told by his principal.

In practice, what appears to happen is that the Engineer does nothing and the matter is referred to the Dispute Board to resolve where a Dispute Board is provided for. Sub-Clause 20.1 of the FIDIC Pink Book 2010 states that “If the Engineer does not respond within the timeframe defined in this Clause⁷, either Party may consider that the claim is rejected by the Engineer and any of the Parties may refer to the Dispute Board in accordance with Sub-Clause 20.4”.

However, it is arguable that, by failing to approve the fair determination, the Employer has interfered with, or prevented, the Engineer from carrying out the duties assigned to him in the Contract .  If done unreasonably, this may be considered a breach of contract by the Employer.  Further, if the contract machinery for extending time for Employer risk and shared risk events is rendered inoperable by such an act of prevention, time may be set at large, entitling the Contractor to a reasonable time within which to complete the Works and defeat any claim for liquidated damages.  This may happen if, for example, there is no recourse to a Dispute Board because one has not been appointed by the date stated in the Appendix to Tender (under the FIDIC Red Book 1999) or Contract Data (under the FIDIC Pink Book 2010).

Conclusion

The lack of clarity concerning the Engineer’s role in the FIDIC form has been criticised since 1999, and it is obvious to see why. Employers generally wish to have full control over their agents, whilst Contractors are concerned that the Engineer’s determinations will naturally favour the Employer. As currently drafted, this can cause problems for all concerned. Whilst the problems have been recognised in the pre-release version of the FIDIC Yellow Book 2017, the requirement upon the Engineer to act “neutrally” when making a determination is likely to raise many more questions. Further, an increase in payment disputes is to be predicted where the Engineer is obliged to issue Interim Payment Certificates and Final Payment Certificate fairly but not neutrally.

¹There is no express obligation of fairness in any other contractual provision including, for example, Taking-Over under Sub-Clause 10.1.
²Although the Employer may not replace the Engineer with a person against whom the Contractor raises reasonable objection.
³[1974], AC 727. Lord Reid at page 737: “The building owner and the contractor make their contract on the understanding that in all such matters the [Engineer] will act in a fair and unbiased manner and it must therefore be implicit in the owner’s contract with the [Engineer] that he shall not only exercise due care and skill but also reach such decisions fairly, holding balance between his client and the contractor”. Lord Morris at pages 740-741: “Being employed and paid by the owner [the Engineer] unquestionably has in diverse ways to look after the interests of the owner. In doing so he must be fair and he must be honest. He is not employed by the owner to be unfair to the contractor”.
⁴[2005] EWHC 1018 (TCC).
⁵[2006] EWHC 89 (TCC).
⁶“Neutral” is defined in the Oxford English Dictionary as “Not belonging to, associated with, or favouring any party or side”.  “Impartial” is defined similarly in the Oxford English Dictionary as “Not partial; not favouring one party or side more than another; unprejudiced, unbiased, fair, just, equitable. (Of persons, their conduct, etc.)”.
⁷42 days.
⁸Roberts v Bury Improvement Commissioners [1870] L.R. 5 C.P. 310 – Blackburn J. “…it is a principle very well established at common law, that no person can take advantage of non-fulfilment of a condition the performance of which has been hindered by himself …; and also that he cannot sue for a breach of contract occasioned by his own breach of contract…”.

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.

This article 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.

Click here to read the full article originally published in The International Construction Law Review in 2016.

Rumour reaches us that the Multilateral Development Banks (MDBs) behind the Pink Book, FIDIC’s harmonised version of the 1999 Red Book, will discontinue the experiment. Should we be sorry to see the back of the Pink Book? We think not.

Rumour reaches us that the Multilateral Development Banks (MDBs) behind the Pink Book, FIDIC’s harmonised version of the 1999 Red Book, will discontinue the experiment. Should we be sorry to see the back of the Pink Book? We think not.

The idea would be to return to the Red Book with each MDB developing its own particular conditions.

The fragile consensus between the banks was already unravelling: the 2010 edition already had six bank-specific versions of clauses 15.6 to 16.2 on the subject of bribery and corruption.

The creations of committees are notoriously odd. The more independent and strong-willed the representatives of the committees, the odder will be the result. MDBs – and there were nine of them involved in the first version in 2005 – can be notoriously stubborn. So it would be no surprise to learn that their amendments to the Red Book produced some oddities.

However, to be fair, the Pink Book also gave birth to some interesting ideas which FIDIC would do well to consider when drafting the 2^nd editions of the Red, Yellow and Silver Books, a process now under way.

Below we consider a sample of both MDB oddities and also some it its good ideas.

Oddity #1: Contractor Control of the Commencement Date

The “stand-out” oddity relates to the Commencement Date. The amendments to clause 8.1 effectively put the Contractor in charge of when both work and the Time for Completion start. The Commencement Date can only be given when both parties have agreed that four precedent conditions have been fulfilled. Two of these are under the control of the Contractor, namely the signature of the Contract Agreement by the Contractor and the payment of the advance payment which depends on the provision by the Contractor of the advance payment guarantee.

The result is that if it benefits a Contractor to delay the start date – for example to give himself additional mobilisation time or in order to avoid a winter period – he can do so simply by delaying provision of the guarantee.

Better still for the unscrupulous, if the notice and instruction to commence are not provided within 180 days, the Contractor can terminate for Employer default and claim his lost profit on the job! This is apparently so even if the delay was due to the Contractor withholding his guarantee.

Of course, legal systems would resist this extraordinary result. Good faith doctrines would no doubt be mobilised in the civil law world to try to prevent a windfall result. Prevention principles might help out the Employer.

The question is: what were the draftsmen thinking when they added this to the MDB form? It was not in the original 2005 edition. And: who was lobbying the MDBs on behalf of contractors? They plainly did a very good job.

Good Idea #1: Define the Term “Profit”

The Pink Book defines as 5% the profit to which the Contractor is entitled as part of “Cost plus profit”. This avoids the 10 instances of “reasonable profit” that appear in the Red Book with all the accompanying room for uncertainty and argument. (Should “reasonable profit” be based on any profit figures in the contract, or the Contractor’s tender calculations, or current market profit levels or the Contractor’s own average historical profitability or indeed the profitability of the particular project?)

There are 71 “reasonables” and “reasonablys” plus two “unreasonablys” still left to argue about but the MDBs have taken a step in the right direction.

Oddity #2: The Contractor Chooses his Bonding Bank

The contractors’ lobby appears to have succeeded regarding bonds and guarantees. Clauses 4.2 and 14.2 have been amended so that contractors can provide performance and advance payment guarantees from any “reputable bank or financial institution selected by the Contractor”. The same applies to retention bonds which, by clause 14.9, the Contractor is entitled to substitute for a cash retention on taking-over.

As the MDBs know better than most, the value of bonds does not depend only on the repute of the bank but also on the attitude of the courts. The courts appear to be very willing to intervene on behalf of a contractor to block payment. Other countries have the same problem – or safeguards – depending on your point of view.

The fact is that if the point of the bond is to provide security nearly equivalent to cash in hand, or at least security obtainable “on demand”, then it matters where it comes from. Employers should be careful to ensure that the bond will be readily cashable. These amendments effectively prevent that. It is particularly odd that amendments made by funders for their client Employers should insist on bonds in lieu of cash retention; and then undermine the value of those bonds.

Good Idea #2: A Timescale for the Engineer’s Determination

The obligation on the Engineer to make determinations promptly is specified in clause 3.5. He has 28 days. The consequence of not making a determination in relation to a claim within 42 days is spelt out in clause 20.1: the claim may be treated as rejected and the matter may be referred to the dispute board. This is a welcome clarification: it was generally understood that silence could be treated as a rejection; but there was much room for argument as to the required length of the silence and the effect of a late determination.

Oddity #3: Contractor Receives Profit if Project Cancelled

It is odd that the MDBs should volunteer that Employers who cancel the project and terminate for convenience under clause 15.5 should have to compensate contractors for their lost profit as if the termination were a default.

The 1999 editions – and, I would imagine, the 2^nd editions will do the same – require Employers to refund to Contractors their costs and pay for their demobilisation but they do not award profit. It was accepted that Contractors signing FIDIC contracts took the risk that their clients might cancel the project for one reason or another. An omission is a cancellation of part only of the project: however, here the Pink Book does not award lost profit on the omitted work.

Clause 16.4 no longer refers expressly to loss of profit but there can be little doubt that a right to be paid “the amount of any loss or damage suffered by the Contractor as a result of this termination” would include profit.

Good Idea #3: Time Limit for Employer’s Claims

The Red Book imposes tough time-limits and draconian sanctions on Contractor claims; but imposes neither on the claims of Employers. It seems right and a little more balanced to impose a time-limit on the Employer’s notices of claim. Even though there is no express sanction attached to a failure to notify, the 28-day obligation reduces the contrast between the regimes applying to Contractors and Employers.

Conclusion

Whether the Pink Book continues to a new edition or not, it has certainly produced some good ideas as well as some curiosities. Harmony may be desirable in general but perhaps not when it comes to standard forms.

For a full list of the differences between the Red Book 1999 and the Pink Book 2010,click here

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

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 of a ‘variation clause’ is to enable an employer to avoid having to enter into a new contract with the same contractor, or perhaps another contractor, to have him perform the variation. If the employer were to approach a new contractor, he would face re-tendering costs, possible increases in prices, delay, and clashes between the original and new contractors on site. If on the other hand the employer is able to vary the original contract, costs and inconvenience may be kept to a minimum.

The contractor may argue however that the nature of the proposed varied works falls outside the scope of his original pricing mechanism, and he should be properly compensated for that. Therefore, arguably, a well-drafted variations clause will address the type of changes that that the employer may instruct and provide a clear mechanism for valuing them.

What does the FIDIC Variation Clause say?

A variation is defined in the FIDIC Red Book as meaning

“any change to the Works, which is instructed or approved as a Variation under Clause 13 [Variation and Adjustments].”

Sub-Clause 13.1 of the FIDIC Red Book provides that:

“Variations may be initiated by the Engineer at any time prior to issuing the Taking-Over Certificate for the Works, either by an instruction or by a request to the Contractor to submit a proposal.”

The Sub-Clause goes on to provide that the Contractor “shall execute and be bound by each Variation“. The only exception which enables the Engineer to cancel, confirm or vary the instruction is where the Contractor promptly gives notice and particulars to the Engineer stating that he “cannot readily obtain the Goods required for the Variation“. The Sub-Clause goes on to list what a Variation “may” include. From the wording it is not clear whether the word “may” is intended to mean that the list that follows is an exhaustive or non-exhaustive one although the latter is more likely. Sub-Clause 12.3 of the Red Book provides a mechanism to the Engineer to evaluate instructed Variations. The valuation clause is quite difficult to interpret but is not the subject of this short article.

Neither the FIDIC Yellow Book nor the Silver Book contains a list of possible Variations like the one provided in the Red Book. Nor do they make provision for the valuation of Variations in the same way that the Red Book does. However Sub-Clause 13.1 of both the Yellow and Silver Books picks up on one of the scenarios in the Red Book list referred to above, namely that a Variation shall not comprise the omission of any work which is to be carried out by others. Therefore, unless it is considered that Variations under the Red Book are restricted to the categories listed, all the FIDIC Red, Yellow and Silver Book contracts allow the Employer to instruct a variation which the Contractor is then bound to execute. On a strict construction of Clause 13, there is no restriction on the nature or scope of additional work that can be instructed as long as it is a “change to the Works“.

Is the FIDIC Variation Clause Sufficiently Comprehensive?

What, therefore, is a change to the works? The Concise Oxford Dictionary defines ‘change’ as: “Making or becoming different; substitution of one for another variety“. Does that definition help? How different can the change make the project? What if the change makes the project an entirely different proposition to that which was tendered for? So, to take the extreme example posed in the title, if the employer wished the contractor to build an airport as a variation to a road project, would that be permissible?

Back in 1876, Lord Cairns in the English case of Thorn v London Corporation distinguished between additional or varied work that was contemplated by the contract, and work that was not. He described work not contemplated by the contract as “additional or varied work, so peculiar, so unexpected, and so different from what any person reckoned or calculated upon, that it is not within the contract at all” and concluded that such work would not fall within the variation clause.[1] Other cases in England have followed this approach.

In the United states a ‘cardinal-change’ doctrine has developed. Initially it referred to the legal principle by which a contractor is released from the obligation to work under the terms of a government contract if the government has made a major or cardinal change to that contract by directing the contractor to perform work not within its general scope. In some states the doctrine is now also recognised in relation to private contracts. The law has developed to the point in the US where in some states the doctrine also covers circumstances where a large number of small changes are instructed which individually would fall within the ambit of the variations clause, but which collectively have the effect of completely changing the scope of works.

Under the doctrine, when a contractor claims that there has been a cardinal change, it is essentially an assertion that the employer has breached the contract. The purpose of the doctrine is to provide a remedy for the contractor who feels obliged to execute changed or additional work despite his protest that the change is cardinal. A court addressing the issue of ‘cardinal-change’ and the contractor’s claim for damages would be likely to consider:

• The individual and cumulative impact of changes;
• The degree of added complexity and difficulty of the work;
• Any disruption caused to the contractor’s performance;
• The overall impact upon contract cost and time of performance; and
• The effect of change on compensation or risk allocation.

The American courts (using a similar approach to the English courts) would in effect ask whether the employer has made changes to a project beyond what the parties reasonably could have anticipated at the time the contract was entered into.

Plainly it will be a question of fact whether a change falls within the Thorn test for a legitimate variation or whether it crosses the threshold of a cardinal change. It is suggested that it would be inappropriate to set out in the FIDIC General Conditions an exhaustive set of criteria to aid in that determination. The question however is whether the principles referred to in Thorn or that of a cardinal change should find expression in the FIDIC conditions at all.

Conclusion

Having witnessed the consequences of employers’ attempts to impose a ‘cardinal change’ on contractors, in the author’s view it would be sensible for the FIDIC standard forms of contract to include in their ‘variation clause’ greater clarity on what does constitute a change, perhaps adopting wording derived from the Thorn test, and for the concept of a cardinal change to be expressly recognised. Major disputes might thereby be avoided.

Please get in touch at joanne.clarke@howardkennedy.com or victoria.tyson@howardkennedy.com with your thoughts or to discuss any concerns.

[1] 1 App Cas 120.