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FIDIC 1999 Books – Commentary on Clause 2
Corbett & Co. has devised a helpful commentary on FIDIC 1999 books Clause 2.
Clause 2 sets out certain obligations which are imposed on the Employer; however, this is by no means all the Employer’s obligations. The obligation to pay the Contractor, for example, is found in Sub-Clause 14.7 and the obligation to Take-Over the Works is found at Sub-Clause 10.1. The first obligation imposed on the Employer under this Clause is to give to the Contractor a right of access. Sub-Clause 2.1 needs to be read alongside Sub-Clauses 2.3 and 4.6, which make it clear that possession of the Site need not be exclusive.
Sub-Clause 2.2 imposes on the Employer an obligation to assist the Contractor when requested to obtain permits, licences or approvals required by the laws of the Country. The obligation to reasonably assist is not an absolute obligation and generally will not mean the Employer will have to expend money on fulfilling the obligation. Sub-Clause 2.3 imposes on the Employer an obligation similar to that imposed on the Contractor under Sub-Clause 4.6. The Employer is responsible for any failure by its personnel to co-operate with the Contractor or to comply with safety regulations, take care of persons on Site, make sure the Site is reasonably free from unnecessary obstructions, and protect the environment.
Sub-Clause 2.4 imposes on the Employer an obligation to show that financial arrangements have been made and are in place to enable it to pay the Contract Price. Sub-Clause 2.5 deals with the Employer’s Claims and requires that the Employer give notice and particulars of its claim before the Engineer makes a Determination under Sub-Clause 3.5. The Employer cannot set-off any claims it may have against the Contractor unless it complies with this Sub-Clause.
Author: Andrew Tweeddale
Tags: clause 42.1, clause 42.2, clause 54.3, clause 54.4, Employers' obligations, sub-clause 10.1, sub-clause 11.3, sub-clause 14.7, sub-clause 15.4, sub-clause 16.1, sub-clause 16.2, sub-clause 18.1, sub-clause 18.2, sub-clause 2.1, sub-clause 2.2, sub-clause 2.3, sub-clause 4.19, sub-clause 4.2, sub-clause 4.20, sub-clause 4.21, sub-clause 4.6, sub-clause 7.5, sub-clause 7.6, sub-clause 8.6, sub-clause 8.7, sub-clause 9.4
July 27, 2016
FIDIC 1999 Books – Commentary on Clause 5
Clause 5 defines a ‘nominated Subcontractor’ as either a Subcontractor who is stated in the Contract as being ‘nominated’; or who the Engineer instructs the Contractor to employ as a Subcontractor under clause 13. The Contractor may object to employing a nominated Subcontractor. A number of grounds are deemed to be reasonable for objecting and these include: where there are reasons to believe that the Subcontractor does not have sufficient resources, competence or financial strength to complete the subcontracted works; where the Subcontractor refuses to agree to indemnify the Contractor for any negligence; or where the Subcontractor does not agree to carry out the works so as not to put the Contractor in breach of its own obligations. If the Employer requires that the Contractor employ a nominated Subcontractor where a reasonable objection has been made then it must agree to indemnify the Contractor.
The Contractor is required to pay to the nominated Subcontractor the amounts which the Engineer certifies to be due in accordance with the Subcontract. This sum is then added to the Contract Price as well as any amount for overheads and profit as stated in the appropriate schedule or Appendix to Tender. However, before issuing a Payment Certificate to the Contractor the Engineer may ask for evidence that previous payments have been made to the nominated Subcontractor. If evidence is not provided by the Contractor or the Contractor does not satisfy the Engineer that there are grounds for withholding payment then the Employer may at his discretion pay the nominated Subcontractor directly.
Author: Andrew Tweeddale
Tags: clause 1.1.27, clause 1.1.28, Clause 13, clause 13.5 clause 59, clause 15.2, clause 17.3, clause 18.4, clause 19.1, clause 19.5, clause 25, Clause 4.2, clause 4.4, clause 4.5, clause 8.5, Re-nomination, Red Book 4th Edition, sub-clause 4.2, sub-clause 4.4, sub-clause 5.1, Subcontractor
August 1, 2016
FIDIC 1999 Books – Commentary on Clause 9
Clause 9 deals with the Tests on Completion. Sub-Clause 9.1 requires the Contractor to give notice when it is ready to carry out the Tests on Completion. Tests on Completion are a defined term at Sub-Clause 1.1.3.4. Sub-Clause 9.2 deals with delayed testing caused by either the Employer or the Contractor. Sub-Clause 9.3 deals with retesting after a failure to pass the Tests on Completion. Sub-Clause 9.4 deals with a failure to meet the requirements of the contract after retesting.
Author: Andrew Tweeddale
Tags: clause 37, Delayed Tests, sub-clause 1.34, sub-clause 9.1, sub-clause 9.3, sub-clause 9.4, Tests on Completion
FIDIC 1999 Books – Commentary on Clause 10
Clause 10 deals with the Taking-Over of the Works, Sections, or parts of the Works. Sub-Clause 10.1 deals with the Taking-Over of the Works and Sections. Taking-Over by the Employer happens when the Works (a) pass the Tests on Completion; (b) are substantially complete; (c) any contractual requirements relating to Taking-Over have been met; and (d) the Taking-Over Certificate has been issued or is deemed to have been issued.
Sub-Clauses 10.2 and 10.3 deal with deemed Taking-Over where the Employer uses part of the Works or interferes with the Tests on Completion for more than 14 days. The failure to issue a Taking-Over Certificate by the Engineer, where the Employer has taken into commercial use the Works, will amount to a breach of contract.
Author: Andrew Tweeddale
Tags: clause 48, sub-clause 10.2, sub-clause 10.3, Taking-Over Certificate by the Engineer, Taking-Over of the Works and Sections
The Courtesy Trap – FIDIC’s Sub-Clause 20.5 – Amicable Settlement and Emirates Trading
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.
Author: Andrew Tweeddale
Tags: clause 67.2, FIDIC 4th edition, FIDIC Red Book, FIDIC Silver Book, FIDIC Yellow Book, sub-clause 2.5, sub-clause 20.1, sub-clause 20.4, sub-Clause 20.5, sub-clause 3.5
August 11, 2016
FIDIC 1999 Books – Commentary of Clause 11
Clause 11 requires that the Works shall be in the condition required by the Contract at the end of the Defects Notification Period. Where the Contractor carries out work in the Defects Notification Period, it is not entitled to receive payment if the work was a result of a defect in the design for which the Contractor was responsible. Similarly, if the Plant, Materials or workmanship are not in accordance with the Contract or there is a failure by the Contractor to comply with any other obligation then it is required to remedy the problem without payment.
The Employer may obtain an extension of the Defects Notification Period if the Works, a Section or a major piece of Plant cannot be used during the Defects Notification Period. The Contractor is required to remedy any defect during the Defect Notification Period and, if it does not, the Employer may claim against the Contractor. Rights are given to the Contractor to undertake this work subject to the Employer’s reasonable security restrictions. Once the Defects Notification Period has expired the Engineer is required within 28 days, subject to receipt of the Contractor’s Documents and the completion of any tests, to issue a Performance Certificate. It is the Performance Certificate that is deemed to constitute acceptance of the Works. Sub-Clause 11.10 provides that after the Performance Certificate has been issued, each Party will remain liable for the fulfilment of any obligation which remains unperformed at the time. The extent and meaning of this clause is open to debate.
Author: Andrew Tweeddale
Tags: clause 11, FIDIC, FIDIC Red Book
FIDIC 1999 Books – Commentary on Clause 12
FIDIC 1999 is a re-measurement contract so that the Employer takes the risk of variations to the quantities and, in certain cases, to the rates and prices which may be applied for the work executed. If the Employer wishes to employ a Contractor on a lump-sum or cost plus basis then this clause needs to be deleted.
Sub-Clause 12.1 deals with the measurement of the works. Sub-Clause 12.2 does not include a reference to any standard method of measurement but states that the works are to be measured in accordance with the Bill of Quantities or other applicable Schedules. The lack of reference to a particular standard method of measurement has been criticised. Sub-Clause 12.3 deals with evaluating the appropriate rate or price for the works. There are three methods of evaluating the works:-
a) The rate or price specified for such item in the Contract; but if there is no such item
b) The rate or price specified for similar work.
c) However, in certain specified circumstances, a new rate or price shall be appropriate.
Sub-Clause 12.4 deals with the valuation of omissions from the Work.
As this is a re-measurement contract there is no warranty that the quantities measured in the Bill of Quantities are accurate. Nael Bunni suggests that when quantities within the Bill of Quantities are exceeded then payment should be at the rates set out in the Bill. There have been some cases where the courts have adopted differing approaches; however, in those cases the wording of the remeasurement clause differed to that within FIDIC. These decisions have been described by Dr. Bunni as being controversial.
Author: Andrew Tweeddale
FIDIC 1999 Books – Commentary on Clause 13
Sub-Clause 13.1 deals with the right of the Engineer to vary the Contract. This right can be exercised at any time up to the issue of the Taking-Over Certificate. Sub-Clause 13.2 deals with value engineering and permits the Contractor to propose a change which will benefit the Employer. The proposal is prepared at the cost of the Contractor, who designs the change. Sub-Clause 13.3 deals with the procedure prior to the Engineer instructing a variation. The Engineer may request a proposal from the Contractor. However, while the Contractor is preparing the proposal it must proceed with the works.
Sub-Clause 13.4 deals with payment in applicable currencies. Sub-Clause 13.5 deals with Provisional Sums and ought to be read with Sub-Clause 1.1.4.10 which defines Provisional Sum as follows:- “a sum (if any) which is specified in the Contract as a provisional sum, for the execution of any part of the Works or for the supply of Plant, Materials or services under Sub-Clause 13.5 [Provisional Sums].” The Provisional Sum can only be used where there is an Engineer’s instruction and the Contractor receives payment for only the work done to which the Provisional Sum relates. Sub-Clause 13.6 deals with daywork. This is where work of a minor or incidental nature is to be carried out. The work is then valued in accordance with the Daywork Schedule in the Contract or if there is no Daywork Schedule then the alternative method of payment as prescribed in the Contract.
Sub-Clause 13.7 deals with the Cost arising from changes in the Laws of the Country which affect the Contractor in performance of his obligations under the Contract. Where the Contractor suffers delay or additional Cost then it must give notice under Sub-Clause 20.1 of the Contract. Sub-Clause 13.8 deals with adjustments for changes in cost. This Sub-Clause only applies where the “table of adjustment data” included in the Appendix to Tender has been completed. If the Sub-Clause does apply then the amounts payable to the Contractor for rises and fall in the cost of the Works are adjusted by a formula.
Author: Andrew Tweeddale
The SCL’s New Take on the Delay and Disruption Protocol
In June of this year, the Society of Construction Law (“SCL”) sent its members a draft of the second edition of its widely recognised Delay and Disruption Protocol. It follows the publication of a Rider published late last year about which this author wrote a previous article. Although the “2016 Draft” is meant to be consultatory, there are a number of improvements from the “2002 Edition” worth exploring before the final and definitive version is published sometime in the future. There have been many changes not all of which will be covered in this article and, in any case, I will only focus on changes other than those already included in the Rider.
Author: Gabriel Mulero Clas
Tags: delay and disruption protocol, SCL
October 3, 2016
Murphy’s Law
Earlier this year, the English High Court considered a heavily amended FIDIC Yellow Book 1999. Whilst the case is specific to the particular contractual amendments it is worth review. The case is J Murphy & Sons Ltd v Beckton Energy Ltd. It proceeded in court and on an expedited basis as a matter of some urgency because a bond was about to be called for non-payment of delay damages. The Contractor claimed the call would affect his commercial reputation, standing and creditworthiness, and may well need to be disclosed in future tenders. He had not paid the delay damages because there had been no agreement or determination of the entitlement to such by the Engineer under Sub-Clauses 2.5 and 3.5.
Author: Victoria Tyson
Tags: Beckton Energy, FIDIC, sub-clause 2.5, sub-Clause 20.5, sub-clause 3.5, sub-clause 4.2, sub-clause 8.2, sub-clause 8.7, Yellow Book
Unjust Enrichment and Construction Contracts – A Cinderella Story?
Two decades ago, unjust enrichment was described as “the Cinderella of law, barely 10 years old but growing up rapidly. Until recently unrecognised and overshadowed by the ugly sisters, Contract and Tort, Cinderella’s day has arrived.” In England a claim for unjust enrichment was initially referred to as a claim in ‘quasi contract’. This language has now been abandoned and unjust enrichment has a strong foothold in the landscape of commercial law and its role and limits are becoming more clearly defined. Despite this, it is only infrequently pleaded in construction cases and when argued it is often set out in broad terms where the facts do not support such a claim. However, this is cause of action that should not be overlooked by a contractor or employer – especially if they have claims that fall outside the four corners of their construction contract.
Author: Andrew Tweeddale, Corbett Lawyers
Tags: adjudication, bonds, construction contracts, DAB, Unjust enrichment
FIDIC 1999 Books – Commentary on Clause 4
Clause 4 sets out various obligations which fall on the Contractor under the Contract and which cannot easily be classified elsewhere. The obligations under Clause 4 are of a wide range covering 24 different topics. Sub-Clause 4.1 sets out the Contractor’s general obligation to carry out his duties in accordance with the contract.
Clause 4 of the FIDIC Red Book 1999 amalgamates various Contractor obligations under one provision. However this Clause 4 is not exclusive as there are also other Contractor obligations scattered throughout the Contract. Other significant general obligations which could equally have been included in Clause 4 (and which should be read in conjunction with this Clause 4) are as follows:
• Sub-Clause 1.3 [Communications]
• Sub-Clause 1.7 [Assignment]
• Sub-Clause 1.8 [Care and Supply of Documents]
• Sub-Clause 1.9 [Delayed Drawings or Instructions]
• Sub-Clause 1.10 [Employer’s Use of Contractor’s Documents]
• Sub-Clause 1.12 [Confidential Details]
• Sub-Clause 1.13 [Compliance with Laws]
• Clause 6 [Staff and Labour]
• Clause 7 [Plant, Materials and Workmanship]
• Sub-Clause 8.2 [Time for Completion]
• Sub-Clause 8.3 [Programme]
Author: Andrew Tweeddale
Tags: Contractor obligations, FIDIC, Red Book
November 23, 2016
Knowledge Hub – FIDIC 1999 Books Clause Commentaries
Click on any of the documents below to read Corbett […]
Author: Corbett Lawyers
December 21, 2016
The Risk of Relying on the Obrascon case’s ruling on Sub-Clause 20.1 Claim Notices
Contractors are sometimes concerned about the politics of their FIDIC 1999 Sub-Clause 20.1 notices. Some Contractors may consider that serving Sub-Clause 20.1 notices may send the wrong message, particularly in the honeymoon period when the works have just begun. However, the consequences of failing to serve a timely claim notice are so dire that doubtless the issue is regularly on every Contractor’s mind.
The case of Obrascon Huarte Lain SA v Her Majesty’s Attorney General for Gibraltar1 in the Technology and Construction Court of England and Wales provided some welcomed relief to many Contractors worldwide who may now attempt to rely on its finding on the timing of claim notices when postponing service of these crucial notices.
Author: Gabriel Mulero Clas
Tags: Featured, FIDIC, Gibraltar, Obrascon, sub-clause 20.1, sub-clause 8.4
February 8, 2017
The Employer’s Agent
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.
Author: Victoria Tyson
Tags: Featured, FIDIC, FIDIC Code of Ethics, FIDIC Red Book, FIDIC Yellow Book, FIDIC Yellow Book 2017, sub-clause 14.13, sub-clause 14.6, sub-clause 3.1, sub-clause 3.5, The Employer's Agent, The Engineer
A Surprise Award of Third Party Funding Costs
Third party funding is increasingly used by claimants in international arbitration even though the cost can be significant. To the surprise of many, the English Commercial Court recently held in Essar v. Norscot that a winning claimant could recover from the losing respondent the cost of obtaining third party funding as a cost in the arbitration. So, what exactly is third party funding and what are the implications of Essar v. Norscot for parties involved in international arbitration.
Author: Joanne Clarke
Tags: Essar v Norscot, ICC Report of Costs, Third Party Funding
FIDIC 1999 Books – Commentary on Clause 16
Clause 16 deals with suspension and termination by the Contractor.
Sub-Clause 16.1 deals with the Contractor’s right to suspend work in the event that the Engineer fails to certify in accordance with Sub-Clause 14.6 [Payment Certificates] or the Employer fails to comply with Sub-Clause 2.4 [Employer’s Financial Arrangements] or Sub-Clause 14.7 [Payment]. Prior to the Contractor suspending work it must give 21 days’ notice. The right to suspend does not affect the Contractor’s entitlement to terminate or claim financing charges. In the event that the Contractor suffers delay or cost as a result of suspension it must give notice under Sub-Clause 20.1 [Contractor’s Claims].
Sub-Clause 16.2 deals with the Termination by the Contractor. There are seven grounds specified. In most cases the Contractor may give 14 days’ notice if it intends to terminate the contract; however, where there has been a prolonged suspension under Sub-Clause 8.11 [Prolonged Suspension] or, inter alia, bankruptcy, liquidation, insolvency or receiving or administration orders have been made against the Employer then the Contractor may by notice terminate immediately.
Sub-Clause 16.3 deals with Cessation of Work by the Contractor and Removal of the Contractor’s Equipment. This Sub-Clause applies where the termination takes place under Sub-Clause 15.5 [Employer’s Entitlement to Termination]; Sub-Clause 16.2 [Termination by Contractor]; or Sub-Clause 19.6 [Optional Termination, Payment and Release].
Sub-Clause 16.4 deals with Payment on Termination. Once termination under Sub-Clause 16.2 [Termination by Contractor] has taken effect then the Contractor is entitled to the return of the Performance Security; payment in accordance with Sub-Clause 19.6 [Optional Termination, Payment and Release] and loss of profit or other loss and damage sustained by the contractor as a result of termination.
Author: Andrew Tweeddale
February 21, 2017
FIDIC 1999 Books – Commentary on Clause 15
Click through to read Corbett & Co.’s helpful commentary on FIDIC 1999 book Clause 15
Author: Corbett Lawyers
Tags: Featured
May 10, 2017
Penalty Clauses Down Under
Whilst it is widely understood that the law on liquidated damages differs considerably between common law and civil law jurisdictions, there are also differences within common law jurisdictions which are sometimes overlooked. This article summarises the recent developments to the law on penalties in England and Wales, as reported by Steve Mangan in May 2016[1], and compares them with the developments to the law on penalties in Australia.
Author: Victoria Tyson
August 3, 2017
Mistake In English Law: Two Recent Cases
English law recognises different types of mistake and permits various equitable remedies in case of mistake, as illustrated by the two English court decisions examined in this article.
Author: Andrew Tweeddale, Corbett Lawyers
Tags: Featured
All Damage Is In A Sense Consequential – So What In Law Are Consequential Losses?
Sub-Clause 17.6 of FIDIC’s Red, Yellow and Silver Book is an exemption clause and provides in the opening paragraph that: “Neither Party shall be liable to the other Party for loss of use of any Works, loss of profit, loss of any contract or for any indirect or consequential loss or damage which may be suffered by the other Party in connection with the Contract…” The phrase ‘indirect or consequential loss or damage’ has been examined by the English courts on numerous occasions. Historically the words ‘consequential loss’ were held to be synonymous with ‘indirect loss’. However, a recent case questions whether this will be correct in all cases.
Author: Andrew Tweeddale, Corbett Lawyers
Tags: Featured
FIDIC 1999 Books – Commentary on Clause 19
Clause 19 deals with two distinct events: (1) Force Majeure; and (2) release from performance under the law. Force Majeure is often narrowly defined under the laws of many countries; however, within the FIDIC 1999 forms of contract it has a much broader meaning. The terminology used by FIDIC has therefore sometimes been criticized as being misleading.
Author: Andrew Tweeddale, George Rosenberg
Tags: Clause 19, definitions, Featured, FIDIC, Force Majeure
September 28, 2017
FIDIC 2017 – First Impressions of the 3-Kilo Suite
In London last week, FIDIC launched its Second Editions of the Red, Yellow and Silver Books. They are big, weighing in at almost a kilo each. The general conditions cover 106 pages with more than 50,000 words, over 50% longer than the 1999 forms.
Many improvements have been made, addressing issues that have emerged since 1999. Fans of Dispute Boards will be pleased to see that all three books now have standing boards with more emphasis on dispute avoidance; and that appointment of DB members and enforcement of their decisions have been made easier. Disputes and Arbitration are now dealt with in a separate chapter 21.
Here are the most interesting changes to the Yellow Book.
Author: Corbett Lawyers
Tags: Featured
December 13, 2017
FIDIC 2017 – Corbett & Co.’s Guide to the Main Changes
In December 2017, FIDIC launched its long-awaited 2nd Editions of the Red, Yellow and Silver Books. In these articles, the FIDIC specialists at Corbett & Co. identify and comment on the main changes in the new Yellow Book…..New vocabulary that users will have to learn include definitions of Notice, Claim and Dispute as well as Notice of No-objection and Review….
Author: Corbett Lawyers
Tags: Featured
January 23, 2018
FIDIC 2017 – Clauses & Articles
FIDIC 2017 – A Practical Legal Guide – Errata. Click […]
Author: Corbett Lawyers
January 27, 2018
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