FIDIC / Legal Reference: FIDIC Red Book Clause 14.8
Interest charges payable by the employer to the contractor where the employer fails to pay the contractor any amount certified in an Interim or Final Payment Certificate by the due date. Financing charges accrue automatically — the contractor does not need to prove actual financial loss.
What it means in practice
Under Clause 14.8, if the employer fails to pay by the due date, the contractor is entitled to receive financing charges on the overdue amount. The rate is typically specified in the Appendix to Tender and is commonly set at a rate above the local central bank lending rate.
Financing charges are often overlooked in final account settlements — partly because they are viewed as minor compared to the main claim. In practice, on large projects with long payment delays, financing charges can accumulate to a significant sum.
Where disputes arise
Disputes over financing charges arise where the employer contests the date from which charges begin to run, the applicable rate is disputed, or the employer argues that the delay in payment was caused by the contractor’s own failure to submit a compliant Statement.
UAE Context
Late payment is a systemic issue in UAE construction — particularly on public sector projects where government approval processes create delays between the Engineer’s certification and actual payment.
Related terms
Financing charges and late payment claims are part of e-Basel’s construction payment advisory services. We help contractors quantify and pursue outstanding amounts.
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