Content of the pre-2017 FIDIC forms

Clauses 15-20

Clauses 15, 16 and 17

Clauses 15 and 16 deal with termination by the employer and suspension and termination by the contractor along with payment on termination, while clause 17 deals with risk and responsibility. This includes at subclause 17.6 the exclusion of the liability of both contractor and employer:

'... 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 International Federation of Consulting Engineers – FIDIC

Clause 17.6 also includes a cap on the liability of the contractor to the employer. If the level of the cap is not set out in the particular conditions, it shall be set at the level of the accepted contract amount (the price accepted in the contractor’s tender).

Clause 18

Clause 18 deals with insurance, setting out the conditions relating to insurance.

Clause 19

Clause 19 deals with force majeure. While most civil codes make provision for force majeure, at common law, force majeure is not a term of art and no provision will be implied in the absence of specific contractual provisions.

Under Clause 19, the contractor is entitled to an extension of time if completion is or will be delayed by force majeure, and in the situations described in subclause 19.4 (b) is also entitled to claim the additional cost it incurs.

Clause 20

Finally, clause 20 deals with claims, disputes and arbitration, and sets out a multi-tiered dispute resolution procedure.

Clause 20 provides as follows:

  • The contractor must notify the engineer of any circumstances giving rise to an entitlement to an extension of time or additional payment as soon as practicable and, in any event, not later than 28 days after the contractor became aware, or should have become aware of the circumstance;
  • The contractor must submit its claim for an extension of time or additional payment to the engineer within 42 days of the date on which the contractor became aware or should have become aware of the event giving rise to the claim. The engineer is to then make his or her determination (in the Silver Book, where there is no engineer, the contractor notifies the employer and the employer makes the determination);
  • If a dispute arises this is referred to the Dispute Adjudication Board (the DAB);
  • If either party is dissatisfied with the decision of the DAB, then it can give notice within 28 days failing which the decision becomes final and binding;
  • Following service of the notice of dissatisfaction, the parties are to try and settle the dispute via amicable settlement; and
  • Finally, if the dispute cannot be amicably settled then it shall be settled by international arbitration.

There have been a number of cases over the last 4 years about DABs under the FIDIC forms including:

  • The series of Singaporean cases (between 2011 and 2015) involving the enforcement of a non-final DAB decision in a dispute between CRW Joint Operation and PT Perusahaan Gas Negra (Persero) TBK. The 4 decisions have complicated rather than clarified of issue of enforcing a non-final DAB decision and provide 4 possible options to do so. A simple solution is for parties to incorporate FIDIC’s suggested amendments for clause 20 (for contracts other than the Gold Book, which already deals with the issue). (see Standard amendments for more information);
  • Decision 4A_124/2014 of the Swiss Supreme Court (July 2014) where it was found that the DAB procedure was a condition precedent to arbitration but that the parties did not have to go through it if it would amount to an abuse of process because it appeared futile to the efficient resolution of the dispute and there had been delay in appointing the DAB;
  • The English decision in Peterborough City Council v Enterprise Managed Services Ltd [2014] EWHC 3193 (TCC) which involved the Silver book where it was held that using an ad hoc DAB was a precondition to being able to bring a claim in court; and
  • The UK decision of Al Waddan Hotel Ltd v Man Enterprise Sal (Offshore) [2014] EWHC 4796 (TCC), which confirmed that the employer could not take advantage of its failure to appoint a replacement engineer by enforcing the condition precedent that the engineer’s decision is required before a dispute can be referred to arbitration. The case was based on the dispute resolution procedure under the old Red Book (4th edition, 1987), but is relevant for those using the old Red Book (which is still the case in some jurisdictions).