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396
International Construction Contract Law
National Insurance Property Development Co Ltd v. NH International (Caribbean)
Ltd. Particular claims usually correspond to damages caused by the employer, the
contractor, or external grounds. When proving damages, one has to deal with difficulties based mainly on the three following problems: causation, concurrency, and
calculation. The subject of causation will be dealt with in connection with global
claims (discussed below in Section 10.6), the subject of concurrency will be touched
on in connection with concurrent delay (Chapter 7) and the difficulties with calculation will be dealt with in headquarters overhead claims (also discussed below in
Section 10.4.1). Causation, concurrency, and calculation issues lead to uncertainty
in the way the tribunals decide about claims for damages.
While there is no easy solution that can overcome these difficulties, if the parties
are aware of the uncertainty, they can take steps at an early stage to assess the best way
to establish the claim before a particular tribunal. This means that the party can carry
out the necessary analysis to formulate a robust position and assess the risks that
will increase the likelihood of successfully establishing the claim (Ramsey, 2013).
The best place to prepare a strong claim is at the construction site itself provided
that contemporary records of delay, disruption and their respective effect on costs is
updated in the time program and progress reports.
An application for damages (whether in a court or via a claim submission), can
be both confusing and tedious. Since the purpose of a claim is the recovery of damages, making the application clear, simple, and easily understandable is extremely
important. The damages claimed should, whenever possible, reference and tie to
the contractor’s accounting documents and records. This provides evidence that
can be verified and accessed. Damages that cannot be traced to accounting records
are immediately suspect, no matter how reasonable the amount claimed may seem.
There is a tendency for damages to be overstated in a claim submission, with the idea
that it can later be negotiated down to a more realistic but still acceptable amount.
However, this approach is not advisable, as the claimant will lose credibility and
will eventually have to explain the discrepancy between the claim amount and the
amount sought at trial (Schwartzkopf and McNamara, 2001).
There are three types of contractor claims in general, i.e. claims for:
•
•
•
10.2
extension of time (EOT);
additional payment;
extension of time and additional payment.
Claims for extension of time (EOT)
In some situations, the contractor can claim extensions of time for completion. It
is in fact a defense against contractual penalty/delay damages filed by the employer
and a form of risk sharing in some of situations such as extremely adverse weather.
The position of the SCL Protocol on the purpose of extension of time is that the
benefit to the contractor is only to relieve them of liability for damages for delay
for any period prior to the extended contract completion date. The benefit of an
EOT for the employer is that it establishes a new contract completion date and
prevents time for completion of the works becoming “at large.” Entitlement to an
Klee, Lukas. International Construction Contract Law, John Wiley & Sons, Incorporated, 2018. ProQuest Ebook Central,
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10. Claim Management
397
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EOT does not automatically lead to an entitlement to compensation. The parties
should attempt—as far as possible—to deal with the impact of employer risk events
as the work proceeds in terms of EOT and compensation. Where the full effect of
an employer risk event cannot be predicted with certainty at the time of the initial
assessment by the contract administrator, the contract administrator should grant
an EOT for the then predictable effect.
The employer usually claims an extension of the defects notification period in
terms of time (under Sub-Clause 2.5 in the FIDIC forms). Under the FIDIC forms
(CONS/1999 Red Book), the contractor may claim an extension of time for completion under Sub-Clause 8.4. The contractor is entitled (subject to Sub-Clause 20.1)
to an extension of the time for completion if and to the extent that completion is or
will be delayed by any of the following causes:
1. Variation (unless an adjustment to the time for completion has been agreed in
the variation procedure) or other substantial change in the quantity of an item
of work.
2. Cause of delay giving an entitlement to an extension of time under another
Sub-Clause (mainly Sub-Clauses 1.9 (late information, instruction, delayed
drawings), 2.1 (denied or late access or possession to site ), 4.7 (errors in setting
out information), 4.12 (unforeseeable physical conditions), 4.24 (fossils), 7.4
(testing), 8.5 (delays caused by authorities), 8.9 (engineer’s instructions to
suspend work), 10.3 (interference with tests on completion),16.4 (termination
by contractor), 17.4 (employer’s risks), 19.4 (force majeure), or 19.6 (optional
termination)).
3. Exceptionally adverse climatic conditions.
4. Unforeseeable shortages in the availability of personnel or goods caused by an
epidemic or governmental actions.
5. Any delay, impediment, or prevention caused by or attributable to the employer,
the employer’s personnel (including the engineer who is listed as employer’s personnel under Sub-Clause 1.1.2.6.), or the employer’s other contractors on site.
If the contractor considers themselves to be entitled to an extension of time for
completion, the contractor shall give notice to the engineer in accordance with
Sub-Clause 20.1. When determining each extension of time under Sub-Clause 20.1,
the engineer shall review previous determinations and may increase, but shall not
decrease, the total extension of time.
If the contractor obtains an extension of time, they may be in a position to
recover costs associated with the delay. However, there is no link (obligation)
between Sub-Clause 8.4 and additional payment.
The contractor must keep proper records of the consequences of the event causing
the claim in order to prove it. Documentation and reporting must follow the particular contractual provisions. For example, the contractor must keep records of labor,
materials, equipment, progress reports, photographic, and video documentation.
The importance of a maintained, detailed, and up-to-date time schedule should
be noted here. A claim for extension of time for completion is often submitted along
with the updated time schedule detailing how and to what extent the claim events
have influenced the individual construction works and relationship between activities. Critical paths in the time schedule are then explored together with floats, if any.
Klee, Lukas. International Construction Contract Law, John Wiley & Sons, Incorporated, 2018. ProQuest Ebook Central,
http://ebookcentral.proquest.com/lib/lau-ebooks/detail.action?docID=5448169.
Created from lau-ebooks on 2023-04-09 20:03:05.