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Sub-Clause 1.15: Limitation of Liability


The substance of this provision was already in Sub-Clause 17.6 in the 1999 edition and has now been separated from other provisions dealing with Risk and Responsibility.

As before it generally exempts parties from liability to the other for “loss of use of any Works, loss of profit, loss of any contract or any indirect or consequential loss” except in respect of a list of identified Sub-Clauses. The list has been extended and several of the changes are very significant. It also limits liability to certain levels in some circumstances. Finally, it excludes parties from cover by the exemption and limits in certain circumstances. All three elements have changed.

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January 27, 2018

Clause 2 – The Employer


Clause 2 now has 6 sub-clauses:

Employer’s claims has been removed to clause 20; and new provisions 2.5 [Site Data and Items of Reference] and 2.6 [Employer-Supplied Materials and Employer’s Equipment] have been added.

The obligations to provide possession, access and assistance with permits etc. are essentially the same, as are the consequences of failure to do so.

The main change to clause 2.4 [Employer’s Financial Arrangements] is that the Employer now sets out his arrangements in the Contract Data; and the Contractor can only request evidence of ability to pay if those arrangements change, there is non-payment or there are variations in excess of 30% or a single variation over 10%.

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FIDIC 2017 Books – Clause 3 – The Engineer


The main changes: Employer’s consent and neutrality

The main changes in Clause 3 are the express provisions in Sub-Clause 3.2 [Engineer’s Duties and Authority] that the Engineer is not required to obtain the Employer’s consent before the Engineer exercises its authority under Sub-Clause 3.7 [Agreement or Determination], and that the Engineer must act “neutrally” when exercising its duties under Sub-Clause 3.7 [Agreement or Determination].  Dictionary definitions suggest that “neutrally” is similar in meaning to the words “independently” or “impartially” found in the FIDIC Red Book 4th edition and the FIDIC Yellow Book 3rd edition. However, the drafting committee believe that by using a different word it will avoid the difficulties raised in the interpretation of independently or impartially in the earlier editions.  This remains to be seen.  The intention is that “the Engineer treats both Parties even-handedly, in a fair minded and unbiased manner”.

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Clause 4 – The Contractor


Clause 4 – The Contractor by Taner Dedezade.

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Clause 5 – Design


Clause 5 – Design by Taner Dedezade.

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Clause 6 – Staff and Labour


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.

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Clause 7 – Plant Materials and Workmanship


Clause 7 deals with a variety of issues relating to Plant Materials and Workmanship. All sub clauses have been subject to some change – in several cases of significance.

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Clause 8 – Commencement Delays and Suspension


Clause 8 – Commencement Delays and Suspension by Taner Dedezade.

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Clause 9 – Tests on Completion


The Contractor must now prepare a detailed test programme with timing and resources.

The Engineer reviews it and the result is a NONO, deemed or actual, which permits the tests to begin. This should help to remove some of the uncertainties that often can surround tests on completion.

Clause 9.2 deals with delayed tests, whether the delays are caused by the Employer or Contractor. If the tests are “unduly delayed” by the Employer or Engineer or by a cause for which the Employer is responsible, it says clause 10.3 “shall apply”.

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Clause 10 – Employers Taking Over


The main changes in Clause 10 are the express reference in Sub-Clause 10.1 [Taking Over the Works and Sections] to the supply of As-Built Records, Operation and Maintenance Manuals and Training as a requirement of Taking Over.

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Clause 13 – Variations and Adjustments


Clause 13 – Variations and Adjustments by George Rosenberg.

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Clause 14 – Contract Price and Payment


Clause 14 – Contract Price and Payment by George Rosenberg.

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FIDIC 2017 Books – Clause 15 – Termination by Employer


The main changes in Clause 15 are the new grounds for termination:

Non-compliance with a final and binding Engineer’s Determination (Sub-Clause 15.2.1(a)(ii)) and a binding or final and binding DAAB decision (Sub-Clause 15.2.1(a)(iii)) to the extent that such failure constitutes a “material breach” of the Employer’s obligations under the Contract.

Maxing out the Delay Damages (Sub-Clause 15.2.1(c)). There is no requirement for the Delay Damages to have been actually deducted.  It is not clear what the position would be if the Contractor claims an EOT and it is granted by the DAAB or arbitrator after termination so that the Delay Damages are reduced below the cap.  Would the termination then be unlawful? 

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FIDIC 2017 Books – Clause 16 – Termination by Contractor


The main changes in Clause 16 are the new grounds for suspension and termination:

Non-compliance with a final and binding Engineer’s Determination and binding or final and binding DAAB decision, to the extent that such failure constitutes a “material breach” of the Employer’s obligations under the Contract. (Sub-Clauses 16.1(d) and 16.2.1(d)). What constitutes a “material breach” is likely to be the subject of many disputes (see the commentary on Clause 15).

Non-receipt of a Notice of the Commencement Date under Sub-Clause 8.1 [Commencement of Works] within 84 days after receiving the Letter of Acceptance. (Sub-Clauses 16.2.1(f)). This is development to ground (h) in the FIDIC Pink (MDB) Book which states: “the Contractor does not receive the Engineer’s instructions recording the agreement of both Parties on the fulfilment of the conditions for the Commencement of the Works under Sub-Clause 8.1 [Commencement of Works]”.  It protects the Contractor from the financial consequences of fluctuations in the rates and prices during an extended delay to the start of the Works, although the Contractor ould be entitled to damages for breach of contract in any event.  More importantly, it gives the Contractor loss of profit on the entire project.

Engagement in corrupt, fraudulent, collusive or coercive practice at any time in relation to the Works or to the Contract. (Sub-Clauses 16.2.1(j).) This introduces parity between the Employer and Contractor.  The wording is identical to that under Sub-Clause 15.2.1(h). In the FIDIC 1999 editions, the Employer was entitled to terminate if the Contractor gave or offered an inducement or reward etc. but there was no recipricol arrangement.

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Clause 17 – Care of the Works and Indemnities


Clause 17 – Care of the Works and Indemnities by […]

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Clause 18 – Exceptional Events


“Exceptional Events” has replaced “Force Majeure” and the provision is now clause 18 rather than clause 19 but otherwise little has changed. FIDIC appear to have decided that the term “force majeure” brought with it too much baggage for those using it in civil law jurisdictions. Many users have pre-conceptions about what force majeure is and is not and perhaps did not consider what FIDIC meant by the term. With the new term, users should approach the provision with a more open mind.

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Clause 20 – Employer’s and Contractor’s Claims


The 1999 Clause 20 has now been divided into Clauses 20 and 21 whereby Clause 20 refers to Claims and Clause 21 refers to Disputes and Arbitration. Another main upgrade is that Employer’s Claims now need to follow the same procedure. The main list of Employer’s and Contractor’s Claims is as follows:
a. Additional payment;
b. Reduction in the Contract Price;
c. Extension of the DNP; and
d. Extension of time.

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FIDIC 1999 Upgrade Launched


Corbett & Co. has published its selection of the best bits of the FIDIC 2017 2nd Editions adapted for use with the 1999 forms. With many people put off by the 50,000+ words of the new editions, the FIDIC 1999 Upgrade will permit users to benefit from FIDIC’s new ideas and improvements.

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July 17, 2018

FIDIC 1999 Books – Commentary on Clause 3


Clause 3 deals with the duties and obligations of the Engineer and his assistants. 

Sub-Clause 3.1 deals with the role and duties of the Engineer.  The Engineer is deemed to act for the Employer.  The Engineer has no authority to relieve the Contractor of his duties, obligations or responsibilities under the Contract; nor can the Engineer amend the Contract.

Under Sub-Clause 3.2 the Engineer can delegate authority to any assistants; however, the Engineer cannot delegate the responsibility to make Determinations.  Under Sub-Clause 3.3 the Engineer may issue instructions or modified Drawings at any time, which are necessary for the execution of the Works.  If the instruction constitutes a Variation, then it is dealt with under Clause 13 [Variations and Adjustments].  The Contractor is required to comply with any instruction given by the Engineer or delegated assistant. 

Sub-Clause 3.4 deals with the replacement of the Engineer.  The Employer must not replace the Engineer with someone against whom the Contractor raises reasonable objection.

Sub-Clause 3.5 deals with Determinations.  When making a Determination the Engineer should consult with each of the Parties and, if agreement cannot be reached, make a fair determination in accordance with the Contract, taking due regard of all relevant circumstances.  Both Parties are required to give effect to any Determination unless, or until, it is revised under Sub-Clause 20.1 [Claims, Disputes and Arbitration].

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September 26, 2018

FIDIC 1999 Books – Commentary on Clause 14


Clause 14 deals with all aspects of payment.  It also deals with the Statement at Completion, the Final Payment Certificate, Discharge and Cessation of the Employer’s Liability.

The Clause provides that this is a re-measurement contract and that the quantities stated in the Bill of Quantities are estimated.  There is provision for an advance payment to be made to the Contract.  Applications for Interim Payment Certificates are made monthly and these must be supported by documents and a report on progress.   Unless the amount assessed is less than the minimum amount set out in the Appendix to Tender, the Engineer has 28 days to issue an Interim Payment Certificate, which states the amount the Engineer fairly determines to be due.  The Employer thereafter has an obligation to pay the amount certified, in the currencies named in the Appendix to Tender.  In the event that payment is not received the Contractor can claim financing charges compounded monthly.

Fifty per cent of the retention monies are paid when the Taking-Over Certificate is issued.  Where there are Sections then a proportion is paid.  The balance of retention is paid on the expiry of the latest Defects Notification Period or, where there are Sections, a proportion at the expiry of the Defects Notification Period for that Section.    Within 84 days of receiving the Taking-Over Certificate the Contractor submits a Statement at Completion.  This must include an estimate of all sums which the Contractor considers due.

Within 56 days of receiving a Performance Certificate, the Contractor submits a Final Statement.  The Contractor must also submit with the Final Statement a written discharge which confirms that the total of the Final Statement represents full and final settlement of all moneys due.  The Engineer then issues to the Employer a Final Payment Certificate.  The Contract states that the Employer shall have no liability to the Contractor except to the extent that the Contractor has included an amount expressly for that matter in the Final Statement and also the Statement at Completion.

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Unintended Consequences of the FIDIC 2017 Clause 20.1 Claims Classification System


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.

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October 29, 2018

Variation Provisions in the FIDIC Yellow Book 2017


Much has already been written concerning the new FIDIC forms of contract published in December 2017. They are approximately 50 % longer and sought to set out the various procedure in much greater detail with the object of both encouraging good practice and reducing the scope for disputes. Numerous minor amendments have also been made.

The purpose of this article is to look in more detail at the provisions dealing with Variations, these being amongst the most frequently scrutinised in practice.

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Fitness for Purpose Højgaard and FIDIC’s Yellow Books


MT Højgaard AS v E.ON Climate and Renewables UK Robin Rigg East Ltd & Anor is an important English case because it considered a fitness for purpose obligation in a design and build contract. In FIDIC’s Yellow Book contracts (1999 and 2017) there are also fitness for purpose obligations. This article examines the Supreme Court’s analysis of a fitness for purpose obligation in the Højgaard case and whether it would be applied to FIDIC’s Yellow Book contracts.

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Cherry Picking FIDIC 2017


Much has been said about the new Red, Yellow and Silver Books 2nd Editions launched by FIDIC in December last year. The most obvious comment has been about their size, almost 50,000 words, which is some 60% longer than the 1999 forms.

Although the 1999 forms were not perfect, most regular users seem to be agreed that they did not need 20,000 words to fix the issues. This consensus led this author to attempt to cherry-pick the good bits from the 2017 forms and to propose amendments to add the good ideas to the 1999 forms. The amendments apply to all three forms unless it is indicated otherwise.

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