Claims Under FIDIC Contract
CLAIMS UNDER THE NEW FIDIC CONDITIONS OF CONTRACT
Conditions of Contract for Construction, FIDIC Forms. It is known as ‘the Red Book’.
The FIDIC Conditions are used extensively on international construction projects, notably for major infrastructure work. The FIDIC Forms are used on projects funded by the World Bank, and the drafts of them were reviewed by it, and by the Asian Development Bank. Claims often arise, and this paper refers to the Clauses under which claims may arise, the responsibilities of each party, and the procedures for dispute adjudication and arbitration.
RULES GOVERNING ALL CLAIMS
Notices of Claims
Under Clause 20.1, the Contractor must give notice of any claim, whether for time or money, not later than 28 days after the Contractor became aware, or should have become aware, of the circumstances giving rise to the claim. If he does not comply with this rule, he will not receive an extension of time, and he will not be entitled to additional payment, and the Employer s discharged from all liability in connection with the claim.
Note that this applies to a claim made ‘otherwise’, as well as claims made under the Conditions. This can include a claim made under the general law, such as for breach of contract, or for negligence.
Clause 20.1 requires the Contractor to follow up his notice within 42 days of the occurrence of the circumstances giving rise to the claim (not within 42 days of giving the notice) with ‘a fully detailed claim which includes full supporting particulars’ of the claim.
The nature of these particulars will be discussed later. For the moment, it is vital to keep in mind these rules.
CLAIMS FOR EXTENSIONS OF TIME
Contractor’s Basic Entitlement
The basic Clause for the Contractor to claim an extension of time is Clause 8.4. It is there to allow the Contractor to point out where he has been delayed by reasons beyond his control. If he could not do this, and the Engineer did not have the power to give him an extension of time, he would be liable for liquidated damages for delay.
Further, if the Contractor obtains an extension of time, he may be in a position to recover his time-related costs of remaining on site longer. However, there is no natural link between Clause 8.4 and money. It is a time Clause.
Assessment of Delay
The Clause can be activated when the Contractor suffers delay, or will be delayed. The only realistic way of assessing delay is by comparison with the Clause 8.3 programme. If the programme is of sufficient quality, it should form a good basis for assessing delays.
Grounds for Extensions of Time
The possible grounds for an extension of time are:
- A cause of delay referred to in the Conditions (see below)
- Exceptionally adverse climatic conditions
- Unforeseeable shortages of personnel or Goods, caused by epidemics or governments
- A delay caused by the Employer or a party under his control
A cause of delay referred to in the Conditions
These are found throughout the Conditions. Try to find them! The following is a list:
- Clause 1.9 – late information
- Clause 2.1 – denied or late access or possession
- Clause 4.7 – errors in setting out information
- Clause 4.12 – adverse physical conditions
- Clause 4.24 – fossils
- Clause 7.4 – testing
- Clause 8.5 – delays caused by authorities
- Clause 8.9 – Engineer’s instructions to suspend work
- Clause 10.3 – Employer’s interference with Tests on Completion
- Clause 16.4 – termination by Contractor
- Clause 17.4 – Employer’s Risks
- Clause 19.4 – force majeure
- Clause 19.6 – optional termination
Contractor’s Basic Entitlement
The Contractor’s basic entitlement is summarised in Clause 12.1, which says that the
Works shall be measured and valued. The onus is on the Engineer to do this.
Clause 13.3 sets out the procedure for variations. It is easy enough to follow. The valuation rules are contained in Clause 12.3. The onus is on the Engineer to measure and value variations, but, in reality, the Contractor may well wish to claim more than.
the Engineer’s valuation.
Full Supporting Particulars: Basic Requirements
The Contractor is to provide full supporting details of his application within 42 days of the occurrence of the delaying event. In practice, it will be difficult for the Contractor to produce full supporting particulars within 42 days, especially if the project has been underway for some time, and is complex. This makes continuous
keeping of good records, and the rapid compilation of the claim, imperative. In reality, the quality of details varies considerably. Some claims are simply not detailed, and some are not even particularised. That type of claim does not deserve success. The basic requirement is for the claim to be particularised. If there are several different causes of delay, a period of delay should be attributed to each cause. That is the basic requirement of linking cause and effect. If there is concurrent delay, then the Contractor needs to say so. He then needs to decide which delay, if any, caused more overall delay.
The Engineer’s Obligations
By Clause 20.1, the Engineer is directed to respond with approval, or with disapproval and detailed comments, and in any event, respond on the principles of the claim. In making a determination of an extension, he must proceed in accordance with Clause 3.5. That requires him to consult with the Contractor, to try to reach agreement. If it is not possible to reach agreement, he must make a fair determination of the extension of time.
The Engineer is the first-step adjudicator or arbitrator. However, he is an informed adjudicator or arbitrator, unlike the tribunals who come on to the scene later on. The Engineer is not there to reject claims, but to deal with them fairly. That does not mean he has to allow unmeritorious claims. What it means is that, if the Contractor makes valid points, the Engineer should look into them, and arrive at a reasoned conclusion.
Given that he is an informed adjudicator or arbitrator, the Engineer will have knowledge of the facts. This means he should not put the Contractor to proof of absolutely everything, in the way that a tribunal might expect.
Note also that, under Clause 8.4, the Engineer may make a number of determinations.
When doing so, he must review, and may revise, previous determinations. However, he may not decrease them.