UNDERSTANDING THE FIDIC RED AND
YELLOW BOOKS
UNDERSTANDING THE FIDIC RED AND
YELLOW BOOKS
THIRD EDITION
JEREMY GLOVER
PARTNER, FENWICK ELLIOTT LLP
SIMON HUGHES QC
KEATING CHAMBERS
First edition published in 2006
Second edition published in 2011
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Foreword
This book on the FIDIC forms, now in its 3rd edn, comes at an opportune time.
The publication of the new FIDIC forms in late 2017 created much debate and
an expert commentary on the new provisions is to be welcomed both by those
who are considering including those provisions into contracts and those who are
now dealing with disputes involving the new forms. The new forms continue to
diverge from the tried and tested provisions of the Conditions of Contract
formerly published by the Institution of Civil Engineers and now known as the
ICC Conditions.
The world of international contracting is changing. The management of contracts has become increasingly important in order to effectively avoid and deal
with disputes before they escalate. The new FIDIC forms have reflected this
change and include more detailed provisions dealing with such things as programmes and the way in which claims and disputes are dealt with. There are now
new time limits and also deeming provisions if the Engineer does not take certain
actions within stated times. Increased competition in international contracting,
notably from Chinese contractors, emphasises the need for better management of
cost and time in construction contracts. Equally, as the authors observe, when
provisions become more detailed and prescriptive, the possibility of a party not
complying increases. In addition, there are increased costs of compliance, as
more management tasks have to be carried out both by the Contractor and the
Engineer.
The change in FIDIC forms from DABs to DAABs, by adding a dispute
avoidance role to the dispute board reflects a major shift in the way in which
disputes are handled. Experience, including that of the Independent Dispute
Avoidance Panel for the London 2012 Olympics, has shown that disputes can be
avoided if the issues are properly dealt with at an early stage. The role of dispute
avoidance against the background of adjudication should, if properly applied,
smooth the management process so that time is not spent building up claims to
be dealt with in long arbitration or court battles at the end of the project. Whilst
the Guidance to the Special Provisions includes reference to UNCITRAL or
other forms of arbitration, the standard form continues to align itself with
arbitration under the ICC Rules. Interestingly, the role of the increasing number
of modern International Commercial Courts, particularly in the vexed question of
the effective enforcement of DAAB decisions, is not mentioned in the new
forms.
The continued authorship of the book by specialist English construction
lawyers reflects the importance of English common law in the field of international construction. Jeremy Glover, a partner at Fenwick Elliott, has a wealth
of practical knowledge in international work and this is combined with the
international advocacy and advisory experience of Simon Hughes QC of Keating
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FOREWORD
Chambers. With the international use of the FIDIC form, the choice of law is a
matter of importance. In practice it has been found that the FIDIC form, despite
being grounded in expressions derived from English common law, provides a
comprehensive code which is easily applied in legal systems based on a civil
code or, for instance, obligations under Islamic law. However, the authors have
added a passage dealing with the principle of good faith, which forms an
important consideration when applying the FIDIC conditions in the Middle East
and other civil law jurisdictions.
This book provides the much needed authoritative and practical guidance on
the new FIDIC Red and Yellow books, contrasting the provisions of the two
forms. Through the use of an overview of key features, it gives a helpful
summary of the main points of each clause before embarking on a detailed
commentary on a clause-by-clause basis. By citation of court decisions in many
different jurisdictions, as well as articles by distinguished legal commentators, it
provides an authoritative commentary. It also provides guidance on legal arguments for those who are seeking to give advice when, as is inevitable, the
complex requirements of construction projects give rise to questions on the scope
and extent of obligations.
The previous editions of this book have now found a well-established place on
the bookshelves of construction lawyers, arbitrators and judges around the world.
There is no doubt that, with the recent changes to the FIDIC standard forms,
anyone considering the use of those forms or advising on issues which arise, will
need to add this 3rd edn to their collection. It will then, I am sure, continue to be
cited in arbitrations and courts around the world.
Vivian Ramsey
Singapore and London
November 2018
vi
Acknowledgements
The 2017 editions of the Conditions of Contract for Construction for Building
and Engineering Works Designed by the Employer (the Red Book) and Plant and
Design-Build Contract (the Yellow Book) are the copyright of FIDIC and are
reproduced with their kind permission. For more information and content please
visit http://www.fidic.org/bookshop.
vii
Introduction
The FIDIC suite is a truly international set of engineering standard forms, used
across a wide range of sectors and preferred by an impressive range of contractors and stakeholders often in the largest and most challenging projects.
Whilst it has always been understood that FIDIC and the FIDIC forms of contract
have a wide global reach, statistics are not that easy to come by as to usage, type
of usage and regional preferences. FIDIC itself has 102 national association
members. At the FIDIC International Users’ Conference, London, 6 December
2016, Simon Worley, a member of the FIDIC Red Book Update Task Group,
commented that:
‘‘The Red Book has been and is used in more countries around the World than
any other form of contract—160+.
More contracts are let under the FIDIC Red Book, annually by number, than
any other single international form of contract.
We don’t know the exact figures, but FIDIC Contracts (led by the Red
Book) account for many billions of USD/EUR, etc. worth of construction
works executed annually, probably more than any other single contract. And
how can we say this? Some figures estimate the Global Construction Market
in 2015 to be worth USD 8.5 trillion with emerging markets, where FIDIC is
traditionally most widely used, accounting for more than 50% of the World’s
construction output.”
Given the global economic role played by the FIDIC forms, it was inevitable that
the release of the 2nd edn of the FIDIC Red, Yellow and Silver Books was keenly
awaited within the construction industry. After a substantial period of consultation and a fair degree of speculation within the industry, FIDIC finally unveiled
its proposed revisions to the 1999 Rainbow Suite, at the December 2016 London
conference referred to above. FIDIC also issued a pre-release version of the
Yellow Book, the Contract for Plant & Design Build, described as being ‘‘for
viewing only’’.
Given that the FIDIC forms of contract are a set of contracting forms which are
prepared predominantly by engineers, the construction industry and the arbitration community were keen to see how far the amendments reflected the experience and challenges within major projects. After a further period of review,1 the
* We would like to acknowledge the great help and contribution to the finalisation of the text made
by Kort Egan, Barrister (Keating Chambers).
1
Described as being both “friendly” and “unfriendly”.
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INTRODUCTION
new editions of the FIDIC Red, Yellow and Silver Books were formally issued
on 5 December 2017.
A brief history of the FIDIC Form of Contract
The Fédération Internationale des Ingénieurs-Conseils (or FIDIC) organisation
was founded in 1913 by France, Belgium and Switzerland. The newest member,
Georgia, was admitted in October 2017.
The 1st edn of the Conditions of Contract (International) for Works of Civil
Engineering Construction was published in August 1957 having been prepared
on behalf of FIDIC and the Fédération Internationale des Bâtiment et des
Travaux Publics (FIBTP).2 FIDIC often describes its Contracts as having been
prepared ‘‘by engineers for engineers’’.
A subsequent edition was published in July 1969 recording a slight change of
name of the FIBTP, together with a supplementary section referable to clauses for
dredging and reclamation work. This edition was reprinted in 1973. The form of
these editions of the FIDIC Conditions followed that of the English ICE Conditions of Contract and the 1973 version followed closely the 4th edn of the ICE
Conditions, thus closing the provisions of the International Contract with specific
terminologies and concepts referable to English Standard Form provisions and
derivations. It is remarkable how little modification of an English domestic civil
engineering contract was introduced into the FIDIC Form which was promulgated for international use. One very distinguished author has this to say about
the FIDIC 2nd edn:
‘‘as a general comment, it is difficult to escape the conclusion that at least one
primary object in preparing the present international contract was to depart as
little as humanly possible from the English conditions’’.3
The FIDIC Form, as reflected in its 3rd edition, consisted of 71 General Conditions including a heading for the fluctuations clause and uncompleted heads for
separate agreement by the parties in latter parts. These were referred to as
“Conditions of Particular Application” but were suggestions for subjects upon
which the parties were required to reach their own agreement—clearly the
origins of the Particular or Special Conditions.
The role of the Engineer was identified, with functions including certification
and other determinations, and inherently supposed impartiality of the Engineer as
2
Gradually, further sponsors were added including the International Federation of Asian and West
Pacific Contractors Associations, the Associated General Contractors of America, and the InterAmerican Federation of the construction industry.
3
I.N. Duncan Wallace QC, The International Civil Engineering Contract, 1974.
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INTRODUCTION
between Contractor and Employer in relation to decision making. The form also
followed the English basis of re-measurement with quantities treated as approximate together with the system of nomination of sub-contractors. As Christopher
Thomas QC commented,4 this influence of English construction practices and
legal concepts was ‘‘extraordinary’’ in respect of an organisation founded in 1913
by France, Belgium and Switzerland and remaining essentially based in Continental Europe.
From the origins of the first three editions of the FIDIC “Red Book”, which
provided a standard form for use in many projects undertaken in the Commonwealth countries, the premise was that of a reasonably detailed design being
provided to the contractor by the employer or his engineer. The civil engineering
basis for the FIDIC Conditions was itself based on anticipated use in infrastructure projects such as roads, bridges, dams, tunnels and water and sewage
facilities. For this reason, the standard terms in the Red Book were less well
suited for use as contracts where major items of plant and process equipment
were manufactured remotely from site. Focus on this aspect led to the 1st edn of
the “Yellow Book” produced by FIDIC for mechanical and electrical works in
1963, with its emphasis on testing and commissioning and more suitable for the
manufacture and installation of plant. The 2nd edn was published in 1980.
Both the Red and Yellow Books were revised by FIDIC and new editions
published in 1987. A key feature of the 4th edn of the Red Book was the
introduction of an express term which required the Engineer to act impartially
when giving a decision or taking any action which might affect the rights and
obligations of the parties, whereas the previous editions had assumed this
implicitly. The 4th edn changed the title by the deletion of “International”,
reflecting a desire on the part of FIDIC that its form should be utilised domestically, albeit in domestic contracting where the effect of the law of the jurisdiction could give rise to different results from that which might otherwise have
been intended by the continued English terminology and concepts.5
It is to be observed that this 4th edn remains today the contract of choice
throughout much of the Middle East, particularly in the UAE albeit with often
detailed and complex bespoke amendments.
In 1995 a further contract was published (known as the Orange Book6). This
was for use on projects procured on a design and build or turnkey basis,
dispensing with the Engineer entirely, and provided for an “Employer’s Representative”, who, when determining value, costs or extensions of time, had to:
4
Readers who are familiar with the 1st and 2nd edns of this work, will be aware that much of the
information in this section on the history of the FIDIC Form, is taken from the original Introduction prepared by Christopher Thomas QC.
5
A. El Shalakany, ‘‘The Application of the FIDIC Civil Engineering Conditions in a Civil Code
System’’ (1989) 6 I.C.L.R. 226; M. Frilet, ‘‘How Certain Provisions of the FIDIC Contract Operate
under French Laws’’ (1992) I.C.L.R. 121.
6
G.L. Jaynes, ‘‘The New Colour in FIDIC’s Rainbow: The Trial Edition of the ‘Orange Book’’’
(1995) 12 I.C.L.R. 367.
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INTRODUCTION
‘‘determine the matter fairly, reasonably and in accordance with the Contract’’.
A supplement was published in November 1996 which provided the user with the
ability to incorporate alternative arrangements comprising an option for a Dispute Adjudication Board to go with modelled terms of appointment and procedural rules, and an option for payment on a lump sum basis rather than by
reference to bills of quantities.
Thus, the need to submit matters to the Engineer for his “Decision” prior to an
ability to pursue a dispute was eliminated. In its place, an Independent Dispute
Adjudication Board was introduced consisting of either one or three members
appointed jointly by the Employer and the Contractor at the commencement of
the contract, with the cost being shared by the parties.7 This provision mirrored
a World Bank amendment to the FIDIC Red Book.
In 1994 FIDIC established a task force to update both the Red and the Yellow
Books in the light of recent developments in the international construction
industry, including the development of the Orange Book. The key considerations
included:
(1) The role of the Engineer and in particular the requirement to act
impartially in the circumstances of being employed and paid by the
Employer.
(2) The desirability for the standardisation of the FIDIC forms.
(3) The simplification of the FIDIC forms in light of the fact that the FIDIC
conditions were promulgated in English but in very many instances were
being used by people whose first language was not English.
(4) The new books would be suitable for use in both common law and civil
law jurisdictions.
The 1994 task force led to the publication of four new contracts in 1999, which
become known as the Rainbow Suite:
(1) Conditions of Contract for Construction for Building and Engineering
Works Designed by the Employer: The Construction Contract (the “Red
Book”).
The Red Book is intended for projects where the main responsibility
for design rests with the Employer (or its Engineer), although the works
may also include elements of civil, mechanical, electrical and/or construction works designed by the Contractor. The work done is quantified,
with payment made on the basis of a bill of quantities (although it is also
possible for payment to be made on a lump sum basis).
7
C.B. Molineaux, ‘‘Real Time Dispute Resolution: Updating FIDIC’’ (1995) I.C.L.R. 12(2)
258–266, C. Seppälä, ‘‘The New FIDIC Provisions for a Dispute Adjudication Board’’ (1997)
I.C.L.R. 444.
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INTRODUCTION
(2) Conditions of Contract for Plant and Design-Build for Electrical and
Mechanical Plant, and for Building and Engineering Works, Designed
by the Contractor (the ‘‘Yellow Book’’).
The Yellow Book is intended for projects where responsibility for
design rests with the Contractor. The Contractor will design the project
in accordance with requirements specified by the Employer. The testing
procedures prescribed by the Yellow Book are usually more complicated
than those in the Red Book. Payment is made on a lump sum basis,
usually against a schedule of payments.
(3) Conditions of Contract for Engineering Procurement and Construction/
Turnkey Projects (the ‘‘Silver Book’’).
The Silver Book is intended for Engineering Procurement and Construction (“EPC”) arrangements. Under an EPC contract, the Contractor
is responsible for the entirety of the works and design required to
provide the Employer with a facility that is ready for operation at the
‘‘turn of a key’’. Accordingly, the Contractor’s risk for time and cost is
considerably greater than the risk it would assume under the Yellow
Book.
(4) Short Form of Contract (the ‘‘Green Book’’).
The Green Book is intended for engineering and building work of
relatively small capital value. Accordingly, the Green Book is suitable
for relatively simple or repetitive work, or work that will not require
input from specialist sub-contractors.
FIDIC is also keenly aware of the need to develop new contract forms in order
to adapt to changing conditions. Since the original publication of the 1999 suite
of contracts, FIDIC has introduced the following:
(1) Conditions of Contract for Construction for Building and Engineering
Works Designed by the Employer, for bank-financed projects only (the
‘‘Pink Book’’ or “MDB” Form):
The Pink Book is intended for projects funded by Multilateral Development Banks, such as the World Bank or the European Bank for
Reconstruction and Development.
(2) Conditions of Contract for Design, Build and Operate Projects 2008 (the
‘‘Gold Book’’8):
The Gold Book combines design, construction, operation and maintenance of a facility into a single contract, and is intended for “Design,
Build and Operate” projects. The project’s commissioning testing is
followed by a 20-year operation and maintenance period, during which
the Contractor must achieve various operational targets and then hand
8
The Gold Book can also be seen as a bridge between the 1999 and 2017 edns of the Rainbow Site,
as the origin of some of the changes made in 2017 is clearly signposted in the 2008 Form.
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INTRODUCTION
(3)
(4)
(5)
(6)
over the project to the Employer in an agreed condition. The DBO Form
was a response to the call for a standard concession contract for the
transport and water/waste sectors. FIDIC understood that the market had
been using the existing FIDIC Yellow Book with operations and maintenance obligations tacked on.
Dredgers Contract (the ‘‘Blue Book’’) 2nd edn 2016:
The Blue Book is intended for dredging and reclamation work and
ancillary construction. The Employer undertakes the design of the
project.
Consultant Model Agreements, including the Model Representative
Agreement (the ‘‘White Book’’) 5th edn 2017:
The White Book is an agreement to be used by the Employer and its
consultant.
Conditions of Subcontract for Construction for Building and Engineering Works Designed by the Employer (the ‘‘2011 Subcontract’’)9:
This is for the Red Book only.
Work is also in progress on a new Tunnelling/Underground contract
(apparently the ‘‘Emerald Contract’’), as well as one for Wind Farm
projects.
The 2nd edn of the FIDIC Rainbow Suite
It is likely that the new Contracts will follow the form of the 2017 2nd edn.
FIDIC’s reasons for updating the Contracts included the following:
(1) To ‘‘reinforce the role of the Engineer’’.
(2) To achieve ‘‘clarity, transparency and certainty’’.
(3) To address ‘‘issues raised by users over the past 17 years arising out of
the use of the 1999 Suite.’’
The question (one that we consider to be legitimate), ‘‘Will people use the 2017
amended forms?’’ is one we have heard on numerous occasions in the past few
months.10 There is always a tension, within standard form contracts, between the
attraction of contracts whose use has become familiar and whose provisions are
well-trodden and the desirability of changes which reflect, or seek to reflect,
emerging consensus within user groups, and also seek to reflect the realities of
modern international contracting.
9
This was the first update since 1994. As at the date of publication, there is no sub-contract to go
with the 2017 edns.
10
The initial view of the European International Contractors Federation (or EIC) was to call upon the
European Bank for Reconstruction & Development (‘‘ERBD”) for the time being to continue to
rely upon the 1999 FIDIC Form: see letter EIC to EBRD dated 24 October 2018.
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INTRODUCTION
The most striking feature of the new forms (especially for anyone familiar with
the 1999 forms), is their size. The contracts have doubled in size. The 1999
Yellow Book totalled 63 pages and is now 119 pages (or 126 pages, if you
include the appendices with the DB rules). As well as being more voluminous,
the FIDIC 2017 Suite is, on certain subjects, far more detailed and prescriptive.
This appears to be part of a trend, perhaps driven by other contracting forms,11
towards greater detail with express terms regarding the manner in which essential
obligations are to be formed. The apparent justification for such a relatively
prescriptive approach is to introduce more clarity and transparency, possibly
coupled with the notion that detailed terms leave less margin for error when
applied in the field. It is true, and important, that participants within international
projects typically come from a variety of backgrounds with different skills,
expectations and legal experience. Equally, an express term or a procedure,
which might seem insignificant in the scheme of things to the project site team,
may later, under the scrutiny of a commercial disputes team or lawyers, take on
a wholly different significance. FIDIC’s intention is to set out detailed rules for
the effective management of construction operations with minimal reliance on, or
need for recourse to, the substantive law governing the contract in question. If a
contract sets out step by step what each party must do, as well as the consequences of failing to take that step, then compliance is expected and any
consequences of non-compliance are left as the risk and responsibility of the
relevant party. That is the theory. In practice, construction operations and the
commercial considerations which follow, will rarely prove fully consistent with
exact contractual compliance. The more exact description as to the manner in
which contractual obligations are to be performed—and the use of default
provisions and deeming clauses—inevitably implies very substantial resourcing
of projects by contractor, engineer and employer alike. The financial and resource
burdens of contract administration—engineers, quantity surveyors, planners
—will have to be tackled at the earliest stages in a potential project. Equally, the
realisation of the cost and resource associated with far more prescriptive contract
provisions may in time lead to significant bespoke amendments, aimed at reducing the burden of compliance.
The theme of increased workload certainly applies to the Engineer. This is an
interesting development, given as we have said, the FIDIC suite has always been
drafted by engineers for engineers. The enhanced role for the Engineer is
interesting, in the UK context, given the extent to which the traditional view of
the certifier as holding the balance between the contracting parties,12 has been
subject to a degree of judicial scepticism.13 In the context of the 2017 edns,
Engineers must be particularly careful to act within the time limits set out in the
11
NEC springs to mind in this context.
Sutcliffe v Thackrah [1974] A.C. 727 at 737 per Lord Reid.
13
See the remarks of Lord Hoffmann in Beaufort Developments Ltd v Gilbert-Ash NI Ltd [1999]
A.C. 266 at 276 speaking of the architect acting qua certifier (‘‘ . . . He is a professional man but
can hardly be called independent . . . .”)
12
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INTRODUCTION
Contract. If they do not, the numerous deeming provisions to be found within the
Contract will come into play and the Employer may well find that it has
inadvertently approved something it might have preferred not to have. There are
of course advantages, in terms of commercial certainty and closure of issues,
with deeming or default provisions. Where projects are poorly resourced, however, participants in a contract, including the Engineer, may be tempted to supply
nominal or ‘‘stock’’ responses to notifications by the Contractor so as to avoid the
consequences of not responding at all. Clearly, that would be a regrettable
situation, and hardly consistent with the spirit and intent of the 2017 edns.
Again, the great focus on dispute avoidance and adjudication boards (now,
‘‘DAABs’’) is laudable, and the careful drafting is impressive. However, the
extent to which these detailed provisions—emphasising the valuable role to be
played by dispute boards—will be widely embraced on the international scene,
is open to doubt. Dispute Boards are frequently deleted from FIDIC contracts
used in the Middle East and elsewhere. Questions of recognition and enforcement of the decisions of dispute boards remain a major challenge to the use of
this sort of machinery in many of the jurisdictions where major projects occur,
and where the contracting environment is most vibrant. Where concerns exist as
to the justiciability of decisions of DAABs—either before an arbitral tribunal or
before a competent course which has, for example, issued an interim award
enforcing a decision of a DAAB pending its final determination of the merits—
then parties become significantly restricted in the tools available to resolve
disputes.
Given the dominance of the 1999 FIDIC Forms, it may be that initially, what
happens, is that Parties take what they like from the new 2017 edns and
incorporate14 these elements as bespoke amendments to the 1999 Form.15
Whether they do this or gradually move over to the 2017 edns, the new FIDIC
Forms are bound to be used more and more over time. With that in mind, in what
follows, we consider some of the changes to the Red and Yellow Books which
strike us as being of potentially greatest significance to users of these internationally recognised standard forms.
The FIDIC Golden Principles
One of FIDIC’s main current concerns is that whilst the 1999 Rainbow Suite is
the most widely used set of construction contracts globally, the FIDIC contract is
14
This would appear to be the approach of the EIC, who also recommended that the ERBD and
FIDIC review the ‘‘improvements” in the 2017 edn and see how they could be incorporated into
the 1999 edn.
15
Parties who do this should perhaps take heed of Coulson J’s comments in Fenice Investments Inc
v Jerram Falkus Construction Ltd [2009] EWHC 3272 (TCC) that: ‘‘Donald Keating always
advised parties who intended to sign up to construction contracts that they should either use an
unamended standard form of contract, or their own homemade contract conditions, and that to
attempt a mixture of both was usually a recipe for disaster.”
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INTRODUCTION
frequently amended to such an extent that the fundamental characteristics of the
FIDIC contracts can seem to be lost. One of FIDIC’s priorities in preparing the
new edition was to define and protect what FIDIC views as the fundamental, and
necessary, features of a FIDIC contract. In particular, FIDIC wanted to prevent
Parties from using the Particular Conditions of Contract to fundamentally change
the risk allocation and therefore the very nature of a FIDIC contract.
FIDIC has sought to address this important issue through the adoption of the
following Five Golden Principles:
GP1:
GP2:
GP3:
GP4:
GP5:
The duties, rights, obligations, roles and responsibilities of all the
Contract Participants must be generally as implied in the General
Conditions, and appropriate to the requirements of the project.
The Particular Conditions must be drafted clearly and unambiguously.
The Particular Conditions must not change the balance of risk/reward
allocation provided for in the General Conditions.
All time periods specified in the Contract for Contract Participants to
perform their obligations must be of reasonable duration.
All formal disputes must be referred to a Dispute Avoidance/Adjudication Board (or a Dispute Adjudication Board, if applicable) for a
provisionally binding decision as a condition precedent to arbitration.
These Golden Principles are not incorporated as a formal part of the General
Conditions. They are in the Guidance Section where FIDIC ‘‘strongly recommends” that drafters of the PCC abide by the ‘‘Five Golden Principles’’.
Currently, therefore they are no more than an expression of FIDIC’s intent: albeit
an important statement of intent that can be seen in many of the changes made
to the 2nd edn. We see this question of the growing status of the Golden
Principles as something which specific contracting parties—of funders, and in
particular the development banks—might address as bespoke amendments within
contracting terms. Equally, this may be an area which is developed when FIDIC
comes to consider a 3rd edn of the Rainbow Suite.
Good faith
For practitioners and construction professionals concerned with the use and
application of FIDIC contract terms, the interest of the topic of good faith is
likely to come from one of at least three sources. First, in the English law context,
interest in the question of whether the common law implies a duty of good faith
and fair dealing into commercial contexts, as a matter of law, has increased since
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INTRODUCTION
the decision of Leggatt J (as he then was) in Yam Seng Pte Ltd v International
Trade Corporation Ltd.16 Secondly, practitioners and construction professionals
familiar with disputes where the governing law is that of a civilian jurisdiction,
or where for example the UAE Civil Code applies,17 will be familiar with the idea
that an obligation of good faith in the performance18 of a contract is regarded as
a substantive governing principle which is generally accorded great importance.
Thirdly, returning to the UK, contract drafting bodies have rightly shown interest
in the use of express terms to reflect industry-wide expectations in relation to
trust and collaboration.19
Perhaps surprisingly, the FIDIC Forms—neither in the Golden Principles nor
the main body of the 21 clauses themselves—make express provision for good
faith, as obligation or expectation. One of the difficulties with the inclusion of
express terms relating to ‘‘good faith’’ within an international standard form
contract is that views as to the substantive content of any duty of ‘‘good faith’’
—and the point at which any such duty ought to be engaged—vary dramatically.
In any event, the absence of any attempt at an express term will mean, in some
but not at all, common law jurisdictions,20 that the express terms of the FIDIC
contract will not be subject to an added requirement that obligations be performed in accordance with broad principles of ‘‘good faith’’.21
Experience suggests that the position may be different within many civil law
16
[2013] EWHC 111 (Comm). See also the decision of the English Court of Appeal in Mid Essex
Hospital Services NHS Trust v Compass Group UK and Ireland Ltd [2013] EWCA Civ 200.
17
See, for example, art.246(1) of the UAE Civil Code which provides that ‘‘ . . . the contract must
be performed in accordance with its contents, and in a manner consistent with the requirements of
good faith . . . ”.
18
The ambit of the obligation will depend upon the precise terms of the normative provisions which
will need to be carefully considered. Thus, art.246(1) of the UAE Civil Code would appear to be
concerned with the manner in which a contract, once concluded, is performed. Contrast this with
art.1112 introduced into the French Civil Code by Contract Ordinance No.2016 131 (12 February
2016, effective in contract entered into after 1 October 2016) which provides that: ‘‘ . . . L'initiative, le déroulement et la rupture des négociations précontractuelles sont libres. Ils doivent
impérativement satisfaire aux exigences de la bonne foi . . . ’’
19
The NEC4 Form of Contract states right at the beginning of the contract form that:
‘‘10.1 The Parties, the Project Manager and the Supervisor shall act as stated in this contract;
10.2 The Parties, the Project Manager and the Supervisor act in a spirit of mutual trust and
co-operation’’.
20
Although well beyond the scope of this ‘‘Introduction’’, the jurisprudence in the relevant ‘‘common
law’’ jurisdiction will need to be considered with great care to identify the nature, scope and effect
of any ‘‘Good Faith’’ requirements. Thus, and by way of example, the Full Federal Court in
Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 F.C.R. 199 (Allsop CJ,
Besanko and Middleton JJ agreeing) identified at [288] what is regarded as the ‘‘usual content’’ of
an obligation of good faith under Australian law.
21
Contrast Australia with England and Wales. The English Court of Appeal has made it clear that
there is no general doctrine of ‘‘good faith’’ in English contract law. Compass Group UK and
Ireland Ltd (trading as Medirest) v Mid Essex Hospital Services NHS Trust [2013] EWCA Civ
200. In MSC Mediterranean Shipping Company S.A. v Cottonex Anstalt [2016] EWCA Civ 789.
Lord Justice Moore-Bick went as far to say that there was ‘‘a real danger that if a general principle
of good faith were established it would be invoked as often to undermine as to support the terms
in which the parties have reached agreement”.
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INTRODUCTION
jurisdictions, where the requirements of good faith play a fundamental role in
regulating lawful behaviour under contracts.22
Notices
One of the more obvious features of the new contract is that the notice provisions
have been substantially re-worked and the number of notice requirements have
increased considerably. For example, notice requirements now appear in approximately 80 places in the 2017 Red Book. The frequent references to notices is a
test for Golden Principle 2 and the need to draft clearly and unambiguously. More
importantly, the purpose of these additions appears to be to reduce disputes as to
what constitutes a notice and to facilitate a better claims procedure.
Specifically, ‘‘Notice’’ is now a defined term at Sub-Cl.1.1.56:
‘‘A written communication identified as a Notice and issued in accordance
with Sub-Clause 1.3.’’
Sub-Clause 1.3(a) requires a notice to be a paper-original, signed by the Contractor’s Representative, the Engineer or the authorised representative of the
Employer, or an electronic original generated from any of the systems of
electronic transmission stated in the Contract Data.
Sub-Clause 1.3(b) draws a distinction between a Notice and other forms of
communication. Generally, a Notice need not refer to the clause under which it
is issued whereas another form of communication must do so.
However, it is important to bear in mind that a Notice given under certain
clauses must state that it is given under the relevant clause, e.g. Sub-Cll.15.2.1
(Termination for Contractor’s Default: Notice), 15.5 (Termination for Employer’s convenience), 16.1 (Suspension by Contractor), and 16.2.1 (Termination by
Contractor Notice).
Sub-Clause 1.3 also introduces the requirement that all Notices and other types
of communication shall ‘‘not be unreasonably withheld or delayed.’’
22
As an example, art.14 of the 2011 Romanian Civil Code says this:
(1) ‘‘Any natural or legal person must exercise its civil rights and must perform its civil
obligations with good faith in accordance with public policy and good morals.
(2) Good-faith is presumed unless proved otherwise”.
Whilst the meaning of these provisions seems clear, the concept of good faith under Romanian law
was analysed by Professor Liviu Pop who said that:
‘‘Good faith provided under art. 970 paragraph 1 Civil Code is actually a moral concept that became
a legal concept which regulates the behaviour of parties in the performance of the contract; it gives
the judge a legal instrument to sanction the behaviour of the parties under the contract in case this
behaviour violates the components of this rule: fidelity, sincerity, honesty or, generally speaking,
loyalty.”
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INTRODUCTION
The notice provisions within the FIDIC suite, as with notice provisions in
other standard form contracts, are often approached with a degree of circumspection by international tribunals. The proposition that certain formal steps constitute a necessary pre-condition (or ‘‘condition precedent’’ as expressed in
common law jurisdictions), which may lead to the refusal of any relief or remedy
regardless of the merits or substance of the claims, has little intuitive appeal to
many tribunals. It will also always be very important to carefully examine
relevant notice provisions in light of any bespoke amendments made by the
parties, and in light of the provisions relating to the law governing the contract.
In common law jurisdictions, there is greater explicit emphasis upon the
tribunal giving effect to the bargain reached between commercial parties, as
expressed in the natural and ordinary meaning to be given to the words used in
the contract.23Additionally, common law tribunals have been explicit in recognising that notice provisions have a legitimate role to play in the management of
complex supply chains and adopting a robust approach towards their use.24 In
light of this approach, a party concerned about absence of notices may seek to
deploy a range of arguments. It is sometimes asserted, by way of example, that
certain contractual claims (such as claims for Variations) are outside the scope of
the FIDIC notice provisions. This argument faces the difficulty of the broad terms
in which Sub-Cl.20.1(a) is drafted taken with the references to Sub-Cl.20.2
within Sub-Cl.13.3.2; and there is also the broader point that it would be
surprising if there were a category of contractual claims which was outside the
detailed procedures set out in Cl.20. Somewhat more difficult is the question
whether claims for damages for breach of contract are caught by the requirements
of Cl.20. Whilst the reference to ‘‘payment’’ within Sub-Cl.20.1(a) might suggest
only a claim to monetary entitlement arising under the terms of the FIDIC
contract, the distinction between ‘‘under’’ and ‘‘for breach of’’ contract—in this
particular context—can be overstated. It would be surprising if claims for
monetary compensation, arising out of an allegation that a party has breached the
FIDIC contract, were outside the scope of Cl.20. Common law concepts of
23
Common law tribunals are increasingly less concerned with identifying ‘‘clear words’’ which
underpin contractual terms whose effect may, in certain circumstances, lead to a loss of contractual
or common law rights (in the sense of Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol)
Ltd [1974] A.C. 689 at 717) as an almost separate part of the exercise of interpreting the relevant
contractual language. Decisions such as NH International (Caribbean) Ltd v National Insurance
Property Development Co Ltd [2015] UKPC 37, where Lord Neuberger PSC commented at [38]
that ‘‘…it is hard to see how the words of clause 2.5 [FIDIC 1999] could be clearer…”, indicate
that words which may be regarded as ‘‘clear’’ to one tribunal may not be regarded as ‘‘clear’’ to
another. The tendency of common law tribunals, in the case of the meaning and effect of notice
provisions, is to engage in a unitary exercise of arriving at the meaning of the language used by
the parties without introducing any additional obstacles for the party seeking to rely on the
exclusionary effect of the provisions.
24
Multiplex Constructions (UK) Ltd v Honeywell Control Systems Ltd [2007] EWHC 447; Steria Ltd
v Sigma Wireless Communications Ltd [2008] B.L.R. 79; WW Gear v McGee [2010] EWHC 1460;
and then the first instance decision in Obrascon Huarte Lain SA v A-G for Gilbraltar [2014]
EWHC 1028 (TCC) especially at [311] and [312].
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INTRODUCTION
waiver and estoppel are often deployed by a party seeking to surmount difficulties arising due to the absence of requisite notices. On complex projects, it will
often occur that payments are made, or other contractual entitlements are
acknowledged by the Engineer or the Employer, which may appear somewhat at
odds with a later denial of entitlement of grounds of lack of notice. The issues
which arise will inevitably be highly dependent upon particular facts; however,
it may often be challenging—save in the most obvious cases where notice
provisions have clearly been disapplied—to come within the particular legal
requirements associated with recognised forms of waiver and estoppel.
In a number of civil law jurisdictions, attitudes towards the debarring effect of
clearly drafted notice provisions, as within Cl.20, may be influenced by an
assessment of the degree of difficulty associated with full compliance, weighed
alongside the potentially significant loss of rights if the notice requirements are
not met.
The FIDIC notice provisions are a frequent battleground in contracts where the
governing law is that of the UAE or other GCC countries. The tensions between
the importance accorded to the natural meaning of the words in the FIDIC-based
contract; the drastic impact of a debarring provision; and substantive legal
provisions which seek to give expression to the conduct of the contracting
parties, provide a rich seam of disputes. The popularity of FIDIC standard forms
in the MENA region, coupled with the clarity with which Cl.20 is drafted, has
typically been a significant challenge for contractors. The starting-point will
almost invariably be that the tribunal will focus on the meaning to be given to the
language used by the parties in their contract,25 albeit that regard should be had
to the object of the contract and the parties’ mutual intention and not merely the
literal words used.26 Even so, there may be at least some reluctance in some
jurisdictions to regard the relevant FIDIC provisions as anything more than
administrative in nature.27 However, the conduct of the parties will be relevant;
and in this context, the first point to be noted is that, generally within jurisdictions
falling within the GCC, the engineer to the contract, even whether exercising
functions qua certifier, will be regarded as acting on behalf of the employer.28
This quickly becomes an area which is very sensitive to the specific facts before
the particular tribunal; however, where the Engineer determines entitlement to
25
See, for example, art.265(1) of the UAE Civil Code.
See, for example, art.265(2) of the UAE Civil Code.
As an illustration of this point of view, see for example, H. Sarie-Eldin, ‘‘Operation of FIDIC Civil
Engineering Conditions in Egypt and other Arab Middle Eastern Countries” (1994) 28 The
International Lawyer 951, 971, where the author argues (examining Cll.51 and 52 of the FIDIC
4th edn) that ‘‘ . . . it is difficult under Egyptian law to characterize such notice as a condition
precedent. The failure of the contractor to comply with the notice requirement will not bar him
from claims under the terms of the contract . . . ”.
28
Several decisions of the senior Dubai Courts have concluded that the engineer is to be regarded
as the employer’s agent, in all of his roles. See Dubai Court of Cassation, Petition No.44 of 2004
(Commercial) 3 October 2004; Dubai Court of Cassation , Petition 793 of 2009 (Commercial) 15
October 2009; and Dubai Court of Cassation, Petition No.68 of 2010 (Commercial) 13 April
2010.
26
27
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INTRODUCTION
extensions of time and/or additional payment, or where indeed certified sums are
paid, ‘‘on account’’ or otherwise, there the ability of the party defending claims
to rely upon the absence of notices, and the debarring effect of Sub-Cl.20.1 may
be significantly undermined. Where a party who may, based on an interpretation
of the clear language in a contract, be entitled to argue that the absence of
adequate notice amounts to a complete defence to a claim, has (by himself or by
the Engineer as his agent, if the Employer) acted in a manner substantially
inconsistent with reliance on notice provisions, then this will be fertile ground for
arguments that a party may not, or may no longer, rely on the notice provisions
as a defence. In some civil law jurisdictions, the concept may be express in the
maxim venire contra factum proprium. In the context of the UAE Civil Code, and
similar legislative provisions, good faith obligations will be relevant (art.246(1)
of the UAE Civil Code). However, other provisions may also become engaged,
depending on the precise facts.29 There may, of course, depending upon applicable governing law, be more fundamental objections to ‘‘notice provisions’’, based
on the proposition that they are precluded by some aspect of a civil code or other
normative rule. Whilst each case will need to be considered on its merits, the
experience of the authors is that international tribunals will approach with a
degree of skepticism any submissions that substantial parts of FIDIC Cl.20 are of
no effect. Arguments more usually revolve around fact-based scenarios where
there might be said to have been waiver or loss of rights; where there was de
facto notification to the Engineer so that there is no ‘‘prejudice’’; or where the
provision, perhaps as amended by the parties, makes compliance unreasonably
difficult. At all events, careful examination of the facts, in light of the applicable
governing law, will always be vital in these controversies.
The enhanced role of the Engineer
As we have noted above, the Engineer will find itself or themselves30 with a
significantly increased work-load as a result of the changes within the FIDIC
suite. Under Sub-Cl.3.1, the Engineer:
(1) may now be a legal entity rather than an individual;
(2) must be a professional engineer with suitable qualifications, experience
and competence; and
(3) must be fluent in the language of the Contract.
29
See for example, in the UAE context, art.70 of the UAE Civil Code (‘‘No person may resile from
what he has [conclusively] performed.’’), art.63 (‘‘A person shall be bound by his admissions.’’)
and art.55 (‘‘That which has lapsed (been waived) or ceased to exist shall not arise again’’).
30
And not, we note, ‘‘himself”, as FIDIC have adopted gender neutral drafting.
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INTRODUCTION
Under Sub-Cl.3.2, if an Engineer exercises a specified authority for which the
Employer’s consent is required, then (for the purposes of the Contract), such
consent is deemed to have been given.
Sub-Clause 3.3 provides an Engineer with the ability to appoint an ‘‘Engineer’s Representative’’ and to delegate to them the authority necessary to act on
the Engineer’s behalf at the Site. The Engineer’s Representative is to be based at
the Site for the whole time that the Works are being executed.
Sub-Clause 3.7, formerly Sub-Cl.3.5, has been substantially extended and is
now headed ‘‘Agreement or Determination’’ reflecting the fact that the Engineer
is under a positive obligation to encourage agreement of the claims.
Sub-Clause 3.7 begins by stating that when making a determination, the
Engineer shall act ‘‘neutrally’’ and ‘‘shall not be deemed to act for the
Employer.’’ This is in contrast to words such as ‘‘independently’’ and ‘‘impartially’’ that feature in previous FIDIC forms. The new wording should be read
with the new statement under Sub-Cl.3.2 that by Sub-Cl.3.2, there shall be no
requirement for the Engineer to obtain the Employer’s consent before the Engineer exercises their authority to make a determination under this sub-clause.31
‘‘Neutrally’’ is not defined but the Guidance to the General Provisions states
that the intention behind the statements was to ensure that ‘‘although the Engineer is appointed by the Employer and acts for the Employer in most other
respects under the Contract, when acting under this Sub-Clause the Engineer
treats both Parties even-handedly, in a fair-minded and unbiased manner.’’
Whilst the intention of the draftsmen was to make the mind-set of the Engineer
clear, the word ‘‘neutral’’ does not appear to have improved the previous wording
and further debate on this point seems likely.
Sub-Clause 3.7.1 reinforces the concept of consultation. Under the 1999 edns,
the Engineer was required to consult with the Parties before making a determination. However, this was a requirement honoured more in the breach than anything
else. Now, the Engineer is required to consult with both Parties jointly and/or
separately and encourage discussion in an endeavour to reach agreement. To help
ensure compliance, the Engineer is to provide both Parties with a record of the
consultation. This is of course a good example of FIDIC’s attempts to promote
dispute avoidance. If an agreement is reached, within the limit for agreement
prescribed by Sub-Cl.3.7.3, the Engineer is required to give a Notice stating that
is it a ‘‘Notice of the Parties’’ Agreement and include a copy of the agreement to
be signed by both Parties. Pursuant to Sub-Cl.3.7.3, the Notice of Agreement
must be given within 42 days or such other time limit as may be proposed by the
Engineer and agreed by both Parties.
If no agreement is achieved within the time limit or both Parties advise the
Engineer that no agreement can be achieved within the time limit, the Engineer
will proceed to make a determination.
31
This statement has no doubt been introduced in response to one of the more unusual Employer
amendments, namely to require the Employer’s consent before making a determination which
leads an extension of time or to an increased contract sum.
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INTRODUCTION
Sub-Clause 3.8 further demonstrates the shift towards collaboration, this time
through the promotion of communication, as the Engineer or the Contractor’s
Representative may require the other to attend a management meeting to discuss
arrangements for future work and/or other matters in connection with the execution of the Works. The Engineer is to keep a record of each such management
meeting and to supply copies of the record to those attending and to the
Employer. This is another example of the Engineer’s increased workload. The
Engineer must also take heed of the numerous deeming provisions, to be found
throughout the Contract. If the relevant time period is not met, then a corresponding deeming provision has to be added. These deeming provisions apply to all
Parties to differing degrees.
Fitness for purpose in the Yellow Book
The fitness for purpose provision in Sub-Cl.4.1 has been reworked.
The 1999 edn of the Yellow Book states:
‘‘When completed, the Works shall be fit for the purposes for which the Works
are intended as defined in the Contract.’’
The 2017 edn states:
‘‘When completed, the Works (or Section or Part or major item of Plant, if any)
shall be fit for the purpose(s) for which they are intended, as defined and
described in the Employer’s Requirements (or, where no purpose(s) are so
defined and described, fit for their ordinary purpose.’’
Limiting the fitness for purpose to the Employer’s Requirements narrows its
scope and should provide greater certainty as to the obligations imposed on the
Contractor. However, there remains the distinct possibility that the purpose will
be insufficiently defined in the Employer’s Requirements.
Whilst a default position is welcomed in the event that a purpose is not
specified, ‘‘fit for their ordinary purpose’’ appears to add very little clarity to the
obligations imposed on the Contractor. It also seems that the amendments have
opened up a potential avenue for future disputes by stating that the fitness for
purpose obligation does not just apply to “the Works’’ but also potentially to a
‘‘Section or Part or major item of Plant.’’
A related point is that the 2017 Yellow Book contains a newly framed
indemnity at Sub-Cl.17.4 that provides:
‘‘The Contractor shall also indemnify and hold harmless the Employer against
all acts, errors or omissions by the Contractor in carrying out the Contractor’s
design obligations that result in the Works (or Section or Part or major item
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of Plant, if any), when completed, not being fit for the purpose(s) for which
they are intended under Sub-Clause 4.1 [Contractor’s General Obligations].’’
This indemnity is more limited in scope than the fitness for purpose obligation in
Sub-Cl.4.1 since the indemnity is limited to design obligations that result in the
Works not being fit for purpose. The indemnity is further limited by the fact that
the failure must be a result of the acts, errors or omissions on the part of the
Contractor. The fitness for purpose obligation does not impose such requirements. The burden of proof is therefore on the Employer to identify a relevant
act, error or omission as opposed to simply demonstrating that the Works are not
fit for purpose.
This indemnity was one of the major causes of what we have termed the
“unfriendly” reviews of the 2016 pre-release version of the Yellow Book. So
concerned were international contractor groups, that a number of them (including, amongst others, the Confederation of International Contractors’ Association,
the European International Contractors, and the International Contractors Association of Korea) sent a joint letter to FIDIC highlighting their particular worries.32 Contractors were therefore, quite rightly, anxious about having to sign up
to what would effectively be an unlimited liability for certain design breaches
and fitness for purpose, not only unrestricted as to the type of losses that may be
recoverable but also unlimited as to the overall liability for any such claims.
However, FIDIC listened to the Contractors and revisited the indemnity wording,
making changes before the 2017 edn was released. As a result, the fitness-forpurpose obligation now relates to the Employer’s Requirements or ‘‘ordinary
purpose” and there is no uncapped indemnity for fitness-for-purpose.
Building Information Modelling or BIM
One striking feature of the pre-release version of the Yellow Book was the
absence of any mention of BIM or any form of digital design.33This was
addressed—to a limited degree at least—in the 2017 edns. Whilst there is still no
specific mention of BIM in the General Conditions, there is now a special
Advisory Note within the Special Provisions which deals with the use of
BIM.
Given that the FIDIC form of contract has been used in over 160 countries, this
means, as the Advisory Note acknowledges, that there is a wide range of
32
https://www.eic-federation.eu/sites/default/files/paragraph-files/letter_cica-eic-icak-ocaji_fidic_
yb_final.pdf [Accessed October 2018].
33
Those interested in understanding some of the legal issues surrounding the use of BIM should
consult The Winfield Rock Report: http://www.ukbimalliance.org/resources/request-a-copy-of-thewinfield-rock-report/ [Accessed October 2018].
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INTRODUCTION
understanding and usage of what FIDIC terms the ‘‘varying degrees of complexity’’ associated with BIM. This is something FIDIC still needs to address and
probably explains, in large part, the time FIDIC is taking to finalise its position.
The Advisory Note indicates that FIDIC are going to prepare two documents—a
‘‘Technology Guideline’’ and a ‘‘Definition of Scope Guideline Specific to BIM’’,
which are intended to provide further detailed support for the use of BIM on
projects that employ the FIDIC form.
A key feature of drafting contracts on BIM-enabled projects is clear and
unambiguous drafting, in line with Golden Principle 2. Everyone must understand exactly what they are being asked to do.
In the Advisory Note, FIDIC recognise that BIM is ‘‘founded on a team
approach and successful projects utilising BIM encourage collaboration.” This is
a further indication of the importance given to dispute avoidance in the 2017
Form.
Advance warning
One of the features brought across from the Gold Book, Sub-Cl.8.4 introduces
advance warning provisions into the Books requiring:
‘‘each Party to advise the other and the Engineer, and the Engineer to advise
the Parties, in advance of any known or probable future events or circumstances which may:
(1)
(2)
(3)
(4)
adversely affect the work of the Contractor’s Personnel;
adversely affect the performance of the Works when completed;
increase the Contract Price; and/or
delay the execution of the Works or a Section (if any).’’
The provisions offer no time limit or explicit sanction for a failure to issue an
advance warning.
This provides room for the parties to specify a time by which an advance
warning should be given and the consequences for the Contractor if they fail to
issue an advance warning within such time or at all.
Sub-Clause 8.4 also provides the Engineer with an entitlement to require the
Contractor to submit a proposal under Sub-Cl.13.3.2 [Variation by Request for
Proposal] to avoid or minimise the effects of such event(s) or circumstance(s).
Whilst this imposes further obligations on both the Engineer and the Contractor, the idea behind Advance Warning is again the promotion of dispute
avoidance, dealing with problems early on, before they become serious disputes.
In simple terms, encouraging the Parties to talk to one another. This recognition
of the importance of communication can also be seen in the adoption at SubCl.3.8 of management meetings.
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INTRODUCTION
Termination by Employer
The 2017 edns contain new grounds for termination by the Employer:
(1) non-compliance with a determination by the Engineer under Sub-Cl.3.7
or with a decision of a DAAB (Cl.21.4) and such failure constitutes a
material breach of the Contractor’s obligations under the Contract;
(2) where the Employer is entitled to Delay Damages that exceed the
maximum amount of Delay Damages stated in the Contract Data (SubCl.15.2.1(c)); and
(3) for the Employer’s convenience (Sub-Cl.15.5).
Non-compliance
With regards to (a), ‘‘material breach’’ is not defined and the Guidance on the
General Conditions does not provide any further explanation.
The reference to material breach may be intended to more clearly reflect the
common law position.
Akenhead J in Obrascon Huarte Lain SA v Her Majesty’s Attorney General for
Gibraltar34 considered a contract that contained the General Conditions of
Contract of the 1999 Yellow Book, subject to some relatively minor changes. The
case revolved around termination and Akenhead J stated at [321]:
‘‘It follows that, in construing both Clauses 15.1 and 15.2 of the Contract, a
commercially sensible construction is required. The parties cannot sensibly
have thought (objectively) that a trivial contractual failure in itself could lead
to contractual termination. Thus, there being one day's culpable delay on a
730-day contract or 1m2 of defective paintwork out of 10,000m2 good paintwork would not, if reasonable and sensible commercial persons had anything
to do with it, justify termination even if the Contractor does not comply with
a Clause 15.1 notice. What is trivial and what is significant or serious will
depend on the facts.’’
Jackson LJ, Gloster LJ and Floyd LJ made no comment on this reasoning in the
Court of Appeal35 and agreed with Akenhead J that the Government of Gibraltar
was entitled to, and did, terminate the Contract.
The question of material breach will therefore inevitably depend on the
facts.
It seems likely that the content of the determination or the DAAB’s decision
will determine whether non-compliance with it constitutes a material breach.
34
35
[2014] EWHC 1028 (TCC).
[2015] EWCA Civ 712.
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Exceeding the maximum amount of Delay Damages
‘‘Delay Damages’’ is a new defined term in the 2017 edns. Sub-Clause 1.1.28
defines the term as, “The damages for which the Contractor shall be liable under
Sub-Clause 8.8 [Delay Damages] for failure to comply with Sub-Clause 8.2
[Time for Completion].’’
Sub-Clause 8.8 provides that Delay Damages are the amount stated in the
Contract Data that shall be paid for every day which elapses between the relevant
time for completion, as defined in Sub-Cl.8.2, and the relevant Date of Completion of the Works or Section.
The Parties can specify, in the Contract Data relating to Sub-Cl.8.8, the
maximum amount of Delay Damages, beyond which the Employer is entitled to
terminate the Contract.
The intention again is to introduce certainty and remove any debate as to the
amount of liquidated damages that have to have accrued before the Employer can
terminate.
As we have already stated, FIDIC is a truly global contract and this can be
illustrated by the treatment of delay damages in different jurisdictions. For
example, in South Africa under the Conventional Penalties Act 15 of 1962, the
court can reduce the amount of Delay Damages that might be applicable if the
Contractor can prove that the Employer will be unjustly enriched if he receives
the Delay Damages as specified in the Contract.
A similar approach is adopted by many Arab civil codes. The Arabic term
used, mostly by state courts, for liquidated or delay damages can be translated as
‘‘delay fines’’ or ‘‘penalty clause’’ or even ‘‘consensual compensation.’’ In Qatar,
art.265 of the Civil Code allows the parties to a contract to calculate the amount
of damages payable in the event of delay. However, by art.266 the court can
reduce the delay damages if the Contractor can show that the Employer has not
suffered any loss or the amount claimed is exaggerated. By art.267, the amount
of delay damages agreed in the Contract Data will be a cap on the damages
payable, except in circumstances of fraud or gross mistake.
In contrast, in the UAE, art.390 of the Civil Transactions law (Civil Code) 70
states:
‘‘1- The contracting parties may fix the amount of compensation in advance by
making a provision therefor in the contract or in a subsequent agreement,
subject to the provisions of the law. The court may, on the application of either
party, vary such agreement so as to make the compensation equal to the loss
and any agreement to the contrary shall be void.’’
Therefore, in the UAE, both the Contractor and the Employer may challenge the
element of ‘‘loss’’. Article 390(2) entitles the judge to vary the parties’ agreement
to reflect the actual loss. Parties should be aware that as a starting point, the court
will attempt to respect the parties’ agreement. In other words, the burden of proof
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INTRODUCTION
is placed squarely on the party trying to challenge the figure agreed in the
contract.
In England and Wales, the long-standing rule was that the delay damages must
represent a ‘‘genuine covenanted pre-estimate of damage’’.36 That was refined in
2015 by the Supreme Court37 who said that the key question was whether the
delay damages clause is a secondary obligation which imposes a detriment which
is out of all proportion to the legitimate interest of the innocent party. If so, it will
be penal and therefore unenforceable.
Whatever the jurisdiction, parties should be aware that it is quite rare that a
court or Tribunal can be persuaded that the agreed rate of delay damages is an
exaggerated one. The English courts in 2005 noted that there had only been four
earlier cases where the argument had previously been successfully run.38
Termination for convenience
The 2017 edns contain a new Sub-Cl.15.5 that entitles the Employer to terminate
the Contract at any time for the Employer’s convenience, by giving a Notice of
such termination to the Contractor.
The phrase ‘‘for the Employer’s convenience’’ is not developed or defined by
drafting.
The Guidance on the General Conditions only reminds parties intent on using
the Contract that it may not be permissible for the Employer to terminate the
Contract for convenience under the applicable law of many jurisdictions.
As a result, the Guidance states that before inviting tenders the Employer
should verify that the wording of the sub-clause is consistent with the law
governing the Contract.
It is particularly surprising that there is little explanation of the constraints on
the entitlement to terminate ‘‘for the Employer’s convenience’’, considering that
the general trend of the 2017 edns is to produce more detailed and prescriptive
provisions: an example of FIDIC not following its own Golden Principles.
The Contract does provide some security to the Contractor in the event of such
a termination:
(1) After giving Notice to terminate, the Employer immediately:
(a) has no right to further use any of the Contractor’s Documents,
which are to be returned to the Contractor, except those for which
the Contractor has received payment or for which payment is due
under a Payment Certificate (Sub-Cl.15.5(a)); and
36
Dunlop Ltd v New Garage Co Ltd (1915) A.C. 79.
Cavendish Square Holdings BV v Talal El Makdessi [2015] UKSC 67.
38
Alfred McAlpine Capital Projects Ltd v Tilebox [2005] EWHC 281 (TCC).
37
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INTRODUCTION
(b) has no right, provided that Sub-Cl.4.6 that deals with co-operation
applies, to allow the continued use (if any) of the Contractor’s
Equipment, Temporary Works, access arrangements and/or other of
the Contractor’s facilities or services (Sub-Cl.15.5(b)); and
(c) has to make arrangements to return the Performance Security to the
Contractor;
(2) The Contractor is entitled to payment under Sub-Cl.15.6:
(a) in the event of a termination, the Contractor is to submit detailed
supporting particulars setting out the value of work done and the
“amount of any loss of profit or other losses and damages suffered
by the Contractor as a result of the termination’’;
(b) the reference to ‘‘other losses and damages’’ is a catch-all phrase
that ensures that the Contractor is not limited to claiming the loss of
profit;
(c) the Engineer will agree or determine the amount due and issue a
Payment Certificate for the amount so due without the need for the
Contractor to submit a Statement; and
(d) the Employer is to pay the amount certified in the Payment Certificate within 112 days of the receipt by the Engineer of the Contractor’s submission (Sub-Cl.15.7).
Suspension and termination by the Contractor
The 2017 edns have also introduced several new grounds that entitle the Contractor to terminate:
(1) Non-compliance with a determination by the Engineer under Sub-Cl.3.7
or with a decision of a DAAB (Cl.21.4) and such failure constitutes a
material breach of the Employer’s obligations under the Contract (SubCl.16.2.1(d)).
(2) Non-receipt by the Contractor of a Notice of the Commencement Date
under Sub-Cl.8.1 [Commencement of Works] within 84 days after
receiving the Letter of Acceptance (Sub-Cl.16.2.1(f)).
(3) The Employer is found, based on reasonable evidence, to have engaged
in corrupt, fraudulent, collusive or coercive practice at any time in
relation to the Works or to the Contract (Sub-Cl.16.2.1(j)).
The above comments on non-compliance with a determination by the Engineer
or with a decision of the DAAB are equally applicable to Sub-Cl.16.2.1(d).
It is also worth noting the attempt made in Sub-Cl.16.2.1(e) to raise the
threshold for termination where the Employer has failed to perform his obligations under the Contract.
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INTRODUCTION
In the 1999 edns, Sub-Cl.16.2(d) stated that the Contractor was entitled to
terminate the Contract if “the Employer substantially fails to perform his obligations under the Contract.’’ In the 2017 edns, Sub-Cl.16.2.1(e) states that the
Contractor is entitled to give a Notice of its intention to terminate if “the
Employer substantially fails to perform, and such failure constitutes a material
breach of, the Employer’s obligations under the Contract.’’
The requirement that the failure must constitute a ‘‘material breach’’ seems to
be aimed at preventing termination following a substantial failure in performing
a trivial part of the Contract.
Sub-Clause 16.2.1(j) represents a change from the 1999 edns where termination for corrupt payments, etc. was a right only possessed by the Employer.
Under the 2017 edns both Parties possess this right.
Exceptional events
Clause 19 of the 1999 edns referred to “Force Majeure.’’ Part of the definition of
“Force Majeure’’ was “an exceptional event or circumstance.’’ Clause 18 of the
2017 edns refers to an “Exceptional Event’’ and so the relevant part of the
definition is replaced by “an event or circumstance.’’
It appears that the change was an attempt to assuage the concerns of civil
lawyers for whom the phrase “Force Majeure’’ may bear different connotations.
The phrase “exceptional event’’ does not seem to have brought any additional
clarity to the clause.
One change to the non-exhaustive list of ‘‘Exceptional Events’’ in Sub-Cl.18.1
is that “strikes and lockouts,’’ that were grouped with riots, commotion and
disorder under the 1999 edns, have now been separated out into their own
standalone example at Sub-Cl.18.1(d). This reflects that strikes and lockouts are
likely to be the most common form of ‘‘Exceptional Event’’ and do not sit easily
with the more extreme connotations evoked by the word ‘‘riot’’.
Claims
The provisions related to Claims and Disputes have been separated and redrafted
substantially.
Sub-Clause 20.1 of the 2017 edns sets out a procedure for:
(1) Employer claims for ‘‘any additional payment from the Contractor (or
reduction in the Contract Price and/or to an extension of the DNP”);
(2) Contractor claims for any “additional payment from the Employer and/
or to EOT’’; and
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INTRODUCTION
(3) Either Party for “another entitlement or relief against the other . . . of
any kind whatsoever . . . except (a) and (b).’’
The 2017 edns contain notable changes to the relevant timings:
(1) the FIDIC 1999 28-day time-bar on notification of Claims now also
applies to the Employer (Sub-Cl.20.2.1);
(2) if the Engineer considers that the claiming Party has failed to give the
Notice of the Claim within the 28-day period, the Engineer shall, within
14 days of receiving the Notice of Claim, give a Notice to the claiming
Party with reasons (Sub-Cl.20.2.2);
(3) if no such Notice is given within the 14 days, the Notice of Claim is
deemed to be valid. The other party can give a Notice to the Engineer
if they disagree with the deemed valid notice and require the Engineer
to make a determination (Sub-Cl.20.2.2);
(4) the 1999 42-day timeframe for the “fully detailed claim’’ has been
increased to 84 days (Sub-Cl.20.2.4);
(5) if the claiming Party fails to submit a statement of the contractual/legal
basis of the claim within the 84 days, the Notice of Claim is deemed to
have lapsed and the Engineer, within 14 days after the time limit has
expired, is to give a Notice to that effect to the claiming Party (SubCl.20.2.4); and
(6) if the Engineer does not give such a Notice within the 14-day period,
then the Notice of Claim is deemed to be a valid Notice. As above, the
other Party can disagree with the deemed valid Notice and require the
Engineer to make a determination (Sub-Cl.20.2.4).
It is also worth noting that, in response to an Engineer’s Notice, provided as a
result of a Party’s failure to comply with a time-limit, a Party that disagrees with
the Engineer or believes that there are circumstances which justify late submission should include details of the disagreement or the justification for the late
submission in the fully detailed claim (Sub-Cll.20.2.2 and 20.2.4).
The timeline of the Claims process is therefore more clearly defined and it has
become particularly important for the Engineer to monitor the dates on which
Notices are given.
One result of the new FIDIC approach may be an increased number of claims,
as both Parties will need to try and ensure that they do not lose the right to make
a claim. That said, this was not the view of the FIDIC User’s Conference in
London in December 2017, where one of the authors co-led a session looking at
these enhanced claims provisions. As part of that session the audience were
asked for their views on the likely impact of the changes made to the Rainbow
Suite in terms of the number of claims. Their reply was revealing:
u Less claims? 46%
u No change? 29%
u More claims? 25%
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INTRODUCTION
Time will tell. Of course, more claims do not necessarily mean more disputes.
This is one reason, no doubt, for the increased emphasis on dispute avoidance to
be found throughout the new contract.
Disputes and Arbitration
Dispute
‘‘Dispute’’ is a defined term at Sub-Cl.1.1.29 in the 2017 edns and denotes:
‘‘any situation where:
‘‘(a) one Party makes a claim against the other Party (which may be
a Claim, as defined in these Conditions, or a matter to be determined by the Engineer under these Conditions, or otherwise);
(b) the other Party (or the Engineer under Sub-Clause 3.7.2 [Engineer’s Determination] rejects the claim in whole or in part;
and
(c) the first Party does not acquiesce (by giving a NOD under SubClause 3.7.5 [Dissatisfaction with Engineer’s determination] or
otherwise, provided however that a failure by the other Party (or
the Engineer) to oppose or respond to the claim, in whole or in
part, may constitute a rejection if, in the circumstances, the DAAB
or the arbitrator(s) as the case may be, deem it reasonable for it
to do so.’’
Whilst an attempt has clearly been made to narrow the scope of the term
‘‘dispute’’, this definition does not seem to be straightforward to apply and
therefore may be a source of disputes in the future.
The DAAB
The term “Dispute Review Board’’ or “DRB” from the 1999 edns has been
replaced by the term “Dispute Avoidance/Adjudication Board.’’ This again
reflects the emphasis in the 2017 edns on dispute avoidance. The DAAB is a
standing DAAB rather than an ad hoc DAB. This is clearly intended to help the
DAAB to become an effective dispute resolution mechanism which can add
“real-time” project value. In the English case of Mi-Space (UK) Ltd v Lend Lease
Construction (EMEA) Ltd,39 Akenhead J, albeit in relation to a Dispute Review
Board, explained that:
39
[2013] EWHC 2001 (TCC).
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INTRODUCTION
‘‘DRBs have become quite common on very substantial infrastructure type
projects around the world, many of them involving hundreds of millions of
dollars or more. They often comprise three members, one being chairman, who
will keep a weather eye on the project as it goes along, with more or less
regular meetings at the site. One of the main ideas of having DRBs is that they
can look at disputes as they emerge and make recommendations to the parties
with a view to ‘nipping in the bud’ such incipient disputes.’’
One method of promoting the use of the DAAB may be for further thought to be
given regarding project funders specifying that part of any loan advance is to be
ring-fenced in order to ensure prompt payment of DAAB fees. This would reflect
the position already adopted by the Japanese International Cooperation Agency
(‘‘JICA’’) which provides that the Employer’s share for any Dispute Board cost
is eligible for JICA’s financing under its Official Development Assistance (or
‘‘ODA’’) Loans.
FIDIC has introduced a number of provisions to aid the setting up of the
DAAB. The 1999 Red Book states in Sub-Cl.20.2 that the Parties were to
‘‘jointly appoint a DAB by the date stated in the Appendix to Tender.’’
The 1999 Yellow Book states in Sub-Cl.20.2 that the Parties were to ‘‘jointly
appoint a DAB by the date 28 days after a Party gives notice to the other Party
of its intention to refer a dispute to a DAB in accordance with Sub-Clause
20.4.’’
The 2017 edns share a single provision at Sub-Cl.21.1 that provides that,
unless the Parties agree otherwise, the DAAB members are to be appointed
within 28 days after the Contractor receives the Letter of Acceptance.
If one Party refuses or fails to sign a DAAB agreement40 within 14 days of the
other Party’s request to do so, the appointing entity or official named in the
Contract Data will, at the request of either or both Parties and after due consultation with both Parties, appoint the member of the DAAB.
After the appointment the Parties and the member(s) so appointed will be
deemed to have signed and be bound by a DAAB agreement (Sub-Cl.21.2).
Avoidance of disputes
Similar to the 2008 Gold Book, the 2017 Yellow and Red Books contain a new
sub-clause that deals with the avoidance of disputes.
40
A tactic often employed by those seeking to avoid the Dispute Board process and especially having
to honour Dispute Board decisions. See ICC Case 18505, where it was said that: ‘‘it is most
striking—that Respondent, on the one hand, refused to sign the DAB Agreement, having the
consequence that there could be no DAB, and, on the other hand, uses the fact that there is no DAB
as a basis to argue that the Claimant’s claims are not admissible.”
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INTRODUCTION
Sub-Clause 21.3 permits the Parties to make a joint request at any time to the
DAAB, except during the period when the Engineer is carrying out a determination, to ‘‘provide assistance and/or informally discuss and attempt to resolve any
issue or disagreement.’’
Interruption of the limitation period
A new paragraph has also been added in relation to the effect of a reference on
the limitation period.
Sub-Clause 21.4.1 expressly provides that the reference of a dispute to the
DAAB, unless prohibited by law, is deemed to interrupt the running of any
applicable statute of limitation or prescription period.
DAAB’s decisions
In line with the 1999 edns, the DAAB must give its decision within 84 days after
receiving the reference.
Sub-Clause 21.4.3 of the 2017 edns makes clear that the DAAB decisions are
expressly binding on the Engineer.
The Employer is responsible for ensuring the Engineer’s compliance with the
DAAB decision.
Sub-Clause 21.4.3 also adds that, where the DAAB requires a payment of an
amount by one Party to another, subject to the DAAB’s discretion to require the
payee to provide an appropriate security, the amount shall be ‘‘immediately due
and payable without any certification or Notice.’’ This is in line with Golden
Principle 5, albeit drafted more clearly, that DAAB Decisions must be provisionally binding.
This is an important part of the DAAB process. If the decisions of the DAAB
are ignored and the ‘‘successful” party has to go to arbitration or the courts to
seek the same redress, it is easy to see why some might consider that the DAAB
is an unnecessary expense. However, FIDIC has repeatedly affirmed that its
intention is that any DAB decision, whether subject to a Notice of Dissatisfaction
or not, be able to be enforced summarily in arbitration in the first instance—the
‘‘pay now, argue later” doctrine adopted in many common law countries through
adjudication or security of payment regimes. This was explained by the Singapore courts in the Persero II proceedings41 as creating:
41
PT Perusahaan Gas Negara (Persero) TBK (‘‘PGN”) v CRW Joint Operation (Indonesia)
(‘‘CRW”) [2014] SGHC 146 and Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation
[2015] SGCA 30.
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INTRODUCTION
‘‘a contractual security of payment regime, intended to be available to the
parties even if no statutory regime exists under the applicable law . . . [and
under which] When a dispute over a payment obligation arises, the regime
facilitates the contractor’s cash flow by requiring the employer to pay now, but
without disturbing the employer’s entitlement (and indeed also the contractor’s
entitlement) to argue later about the underlying merits of that payment obligation.”
The intent behind the amended provisions is to give the Parties to the Contract
confidence that DAAB decisions will be enforceable, which will give added
strength to the DAAB, which should in turn enhance its dispute avoidance
standing.
Notice of Dissatisfaction
‘‘Notice of Dissatisfaction” or ‘‘NOD” is a defined term at Sub-Cl.1.1.57 in the
2017 edns.
The term refers to the Notice that one Party may give to the other Party if it
is dissatisfied, either with an Engineer’s determination under Sub-Cl.3.7 or a
DAAB’s decision under Sub-Cl.21.4.
Sub-Clause 21.4.4 now permits a party to draft a NOD in respect of parts of
the DAB’s decision. The part(s) that the Party is dissatisfied with should be
clearly identified in the NOD.
The parts specified in the NOD and any other parts affected by such parts are
deemed to be severable from the rest of the decision, and the remainder of the
decision becomes final and binding on both Parties as if the NOD had not been
given.
Amicable settlement
As was found in Sub-Cl.20.5 of the 1999 edns, provision is made in Sub-Cl.21.5
of the 2017 edns for amicable settlement without recourse to arbitration.
The time period for amicable settlement has however been reduced from 56
days to 28 days.
Arbitration
The 2017 edns have retained ICC arbitration and there are now four routes to
arbitration:
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INTRODUCTION
(1) the issuance of a NOD followed by an attempt at amicable settlement
(Sub-Cl.21.5);
(2) any failure to comply with a DAAB decision (Sub-Cl.21.7);
(3) any failure to comply with an agreement or a final and binding determination of the Engineer (Sub-Cl.3.7.5); or
(4) no DAAB has been put in place (Sub-Cl.21.8).
A particularly notable change is that, in an attempt to incentivise parties to utilise
DAABs, the arbitrator may take into account the extent to which a Party has
failed to co-operate in constituting and appointing a DAAB, in any award dealing
with costs of the arbitration (Sub-Cl.21.6).
The support for DAABs is also demonstrated by the fact that where a Party has
failed to comply with a DAAB’s decision, whether binding or final and binding,
the arbitral tribunal will have the power by way of summary or other expedited
procedure, to order, whether by an interim or provisional measure or an award,
the enforcement of that decision (Sub-Cl.21.7).
The provisional measure or an award is subject to the express reservation that
the rights of the Parties are reserved until the merits of the dispute are resolved
by an award.
Conclusion
Some of the headline changes are as follows:
(1) The 2017 edns contain a significant increase in the number of notice
requirements and newly prescribed formalities in relation to them.
(2) The role of the Engineer has been significantly enhanced.
(3) Fitness for purpose—there has been an attempt in the Yellow Book to
ensure that the purpose is defined with a greater degree of precision.
(4) Advance warning provisions are present for the first time.
(5) New grounds for termination by both the Employer and Contractor.
(6) ‘‘Force Majeure’’ has been replaced by ‘‘Exceptional Event’’.
(7) There have been significant changes to the timetable for Claims and
additional burdens have been imposed on the Engineer.
(8) Greater emphasis has been placed on DAABs and dispute avoidance.
The 2017 edns are certainly more detailed and prescriptive than their predecessors and are therefore likely to exert additional pressure on contracting parties
attempting to comply with the provisions. Whether this more prescriptive
approach ultimately detracts from the adaptability of the FIDIC Suite in different
jurisdictions, contracting environments and project challenges—which is one of
the great strengths of FIDIC in our view—remains to be seen.
Simon Hughes QC
Jeremy Glover
October 2018
xxxvii
TABLE OF CONTENTS
Foreword
Acknowledgements
Introduction
Table of Cases
Table of International Cases
Table of Statutes
Table of International Statutory Material
v
vii
ix
xlvii
lv
lvii
lix
CLAUSE 1—GENERAL PROVISIONS
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
1.9
1.10
1.11
1.12
1.13
1.14
1.15
1.15
1.16
Definitions
Interpretation
Notices and Other Communications
Law and Language
Priority of Documents
Contract Agreement
Assignment
Care and Supply of Documents
Delayed Drawings or Instructions (Red Book)
Errors in the Employer's Requirements (Yellow Book)
Employer’s Use of Contractor’s Documents
Contractor’s Use of Employer’s Documents
Confidentiality
Compliance with Laws
Joint and Several Liability
Limitation of Liability
Inspections and Audit by the Bank (Pink Book)
Contract Termination
1–002
1–027
1–030
1–033
1–036
1–039
1–042
1–045
1–048
1–051
1–054
1–057
1–060
1–063
1–066
1–069
1–074
1–076
CLAUSE 2—THE EMPLOYER
2.1
2.2
2.3
2.4
2.5
2.6
Right of Access to the Site
Assistance
Employer’s Personnel and Other Contractors
Employer’s Financial Arrangements
Site Data and Items of Reference
Employer-Supplied Materials and Employer’s Equipment
2–002
2–007
2–010
2–014
2–021
2–024
CLAUSE 3—THE ENGINEER
3.1
The Engineer
3–002
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TABLE OF CONTENTS
3.2
3.3
3.4
3.5
3.6
3.7
3.8
Engineer's Duties and Authority
The Engineer's Representative
Delegation by the Engineer
Engineer's Instructions
Replacement of the Engineer
Agreement or Determination
Meetings
3–005
3–008
3–011
3–014
3–017
3–020
3–033
CLAUSE 4—THE CONTRACTOR
4.1
4.1
4.2
4.3
4.4
4.4
4.5
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
4.17
4.18
4.19
4.20
4.21
4.22
4.23
Contractor’s General Obligations (Red Book)
Contractor’s General Obligations (Yellow Book)
Performance Security
Contractor’s Representative
Contractor's Documents (Red Book)
Subcontractors (Yellow Book)
Training (Red Book)
Nominated Subcontractors (Yellow Book)
Co-operation
Setting Out
Health and Safety Obligations
Quality Management and Compliance Verification Systems
Use of Site Data
Sufficiency of the Accepted Contract Amount
Unforeseeable Physical Conditions
Rights of Way and Facilities
Avoidance of Interference
Access Route
Transport of Goods
Contractor’s Equipment
Protection of the Environment
Temporary Utilities
Progress Reports
Security of the Site
Contractor's Operations on Site
Archaeological and Geological Findings
4–002
4–010
4–018
4–023
4–026
4–030
4–033
4–036
4–041
4–044
4–047
4–050
4–056
4–059
4–062
4–071
4–074
4–077
4–080
4–083
4–086
4–089
4–092
4–095
4–098
4–101
CLAUSE 5—SUBCONTRACTING (Red Book)
5.1
5.2
Subcontractors
Nominated Subcontractors
5–002R
5–005R
CLAUSE 5—DESIGN (Yellow Book)
5.1
5.2
5.3
xl
General Design Obligations
Contractor's Documents
Contractor’s Undertaking
5–002Y
5–005Y
5–008Y
TABLE OF CONTENTS
5.4
5.5
5.6
5.7
5.8
Technical Standards and Regulations
Training
As-Built Records
Operation and Maintenance Manuals
Design Error
5–011Y
5–014Y
5–017Y
5–020Y
5–023Y
CLAUSE 6—STAFF AND LABOUR
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
6.9
6.10
6.11
6.12
6.12
6.13
6.14
6.15
6.16
6.17
6.18
6.19
6.20
6.21
6.22
6.23
6.24
Engagement of Staff and Labour
Rates of Wages and Conditions of Labour
Recruitment of Persons
Labour Laws
Working Hours
Facilities for Staff and Labour
Health and Safety of Personnel
Contractor’s Superintendence
Contractor’s Personnel and Key Personnel
Contractor’s Records
Disorderly Conduct
Key Personnel
Foreign Personnel (Pink Book)
Supply of Foodstuffs
Supply of Water
Measures Against Insect and Pest Nuisance
Alcoholic Liquor or Drugs
Arms and Ammunition
Festivals and Religious Customs
Funeral Arrangements
Forced Labour
Child Labour
Employment Records of Workers
Workers’ Organisations
Non-discrimination and Equal Opportunity
6–002
6–005
6–008
6–011
6–014
6–017
6–020
6–023
6–026
6–029
6–032
6–035
6–039
6–040
6–041
6–042
6–043
6–044
6–045
6–046
6–047
6–048
6–049
6–050
6–051
CLAUSE 7—PLANT, MATERIALS AND WORKMANSHIP
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9
Manner of Execution
Samples
Inspection
Testing by the Contractor
Defects and Rejection
Remedial Work
Ownership of Plant and Materials
Royalties
Origins of Goods
7–002
7–005
7–008
7–011
7–014
7–017
7–020
7–025
7–028
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TABLE OF CONTENTS
CLAUSE 8—COMMENCEMENT, DELAYS AND SUSPENSION
8.1
8.2
8.3
8.4
8.5
8.6
8.7
8.8
8.9
8.10
8.11
8.12
8.13
Commencement of Works
Time for Completion
Programme
Advance Warning
Extension of Time for Completion
Delays Caused by Authorities
Rate of Progress
Delay Damages
Employer’s Suspension
Consequences of Employer's Suspension
Payment for Plant and Materials After Employer's Suspension
Prolonged Suspension
Resumption of Work
8–002
8–006
8–009
8–012
8–015
8–032
8–035
8–038
8–042
8–045
8–048
8–051
8–054
CLAUSE 9—TESTS ON COMPLETION
9.1
9.2
9.3
9.4
Contractor’s Obligations
Delayed Tests
Retesting
Failure to Pass Tests on Completion
9–002
9–006
9–009
9–012
CLAUSE 10—EMPLOYER’S TAKING OVER
10.1
10.2
10.3
10.4
Taking Over of the Works and Sections
Taking Over Parts
Interference with Tests on Completion
Surfaces Requiring Reinstatement
10–002
10–006
10–009
10–012
CLAUSE 11—DEFECTS AFTER TAKING OVER
11.1 Completion of Outstanding Work and Remedying Defects
11.2 Cost of Remedying Defects
11.3 Extension of Defects Notification Period
11.4 Failure to Remedy Defects
11.5 Remedying of Defective Work Off Site
11.6 Further Tests After Remedying Defects
11.7 Right of Access After Taking Over
11.8 Contractor to Search
11.9 Performance Certificate
11.10 Unfulfilled Obligations
11.11 Clearance of Site
11–002
11–007
11–010
11–013
11–016
11–019
11–022
11–025
11–028
11–031
11–034
CLAUSE 12—MEASUREMENT AND EVALUATION (Red Book)
12.1
12.2
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Works to be Measured
Method of Measurement
12–002R
12–005R
TABLE OF CONTENTS
12.3
12.4
Valuation of the Works
Omissions
12–008R
12–011R
CLAUSE 12—TESTS AFTER COMPLETION (Yellow Book)
12.1
12.2
12.3
12.4
Procedure for Tests After Completion
Delayed Tests
Retesting
Failure to Pass Tests After Completion
12–002Y
12–005Y
12–008Y
12–011Y
CLAUSE 13—VARIATIONS AND ADJUSTMENTS
13.1
13.2
13.3
13.4
13.5
13.6
13.7
Right to Vary
Value Engineering
Variation Procedure
Provisional Sums
Daywork
Adjustments for Changes in Laws
Adjustments for Changes in Cost
13–002
13–006
13–009
13–012
13–015
13–018
13–021
CLAUSE 14—CONTRACT PRICE AND PAYMENT
14.1 The Contract Price (Red Book)
14.1 The Contract Price (Yellow Book)
14.2 Advance Payment
14.3 Application for Interim Payment
14.4 Schedule of Payments
14.5 Plant and Materials Intended for the Works
14.6 Issue of IPC
14.7 Payment
14.8 Delayed Payment
14.9 Release of Retention Money
14.10 Statement at Completion
14.11 Final Statement
14.12 Discharge
14.13 Issue of FPC
14.14 Cessation of Employer’s Liability
14.15 Currencies of Payment
14–002
14–005
14–008
14–011
14–014
14–017
14–020
14–023
14–024
14–029
14–032
14–035
14–038
14–041
14–044
14–047
CLAUSE 15—TERMINATION BY EMPLOYER
15.1
15.2
15.3
15.4
15.5
15.6
15.7
Notice to Correct
Termination for Contractor's Default
Valuation After Termination for Contractor’s Default
Payment After Termination for Contractor’s Default
Termination for Employer’s Convenience
Valuation After Termination for Employer’s Convenience
Payment After Termination for Employer’s Convenience
15–002
15–005
15–019
15–022
15–025
15–031
15–034
xliii
TABLE OF CONTENTS
CLAUSE 16—SUSPENSION AND TERMINATION BY
CONTRACTOR
16.1
16.2
16.3
16.4
Suspension by Contractor
Termination by Contractor
Contractor’s Obligations After Termination
Payment After Termination by Contractor
16–002
16–005
16–008
16–011
CLAUSE 17—CARE OF THE WORKS AND INDEMNITIES
17.1
17.2
17.3
17.4
17.5
17.6
Responsibility for Care of the Works
Liability for Care of the Works
Intellectual and Industrial Property Rights
Indemnities by Contractor
Indemnities by Employer
Shared Indemnities
17–002
17–005
17–008
17–011
17–015
17–018
CLAUSE 18—EXCEPTIONAL EVENTS
18.1
18.2
18.3
18.4
18.5
18.6
Exceptional Events
Notice of an Exceptional Event
Duty to Minimise Delay
Consequences of an Exceptional Event
Optional Termination
Release from Performance Under the Law
18–002
18–005
18–008
18–011
18–014
18–017
CLAUSE 19—INSURANCE
19.1
19.2
General Requirements
Insurance to be Provided by the Contractor
19–002
19–005
CLAUSE 20—EMPLOYER’S AND CONTRACTOR’S CLAIMS
20.1
20.2
Claims
Claims for Payment and/or EOT
20–002
20–005
CLAUSE 21—DISPUTES AND ARBITRATION
21.1
21.2
21.3
21.4
21.5
21.6
21.7
21.8
Constitution of the DAAB
Failure to Appoint DAAB Member(s)
Avoidance of Disputes
Obtaining DAAB’s Decision
Amicable Settlement
Arbitration
Failure to Comply with DAAB’s Decision
NO DAAB in Place
21–002
21–005
21–008
21–011
21–018
21–021
21–024
21–027
CHAPTER 22—DAAB
General Conditions of Dispute Avoidance/Adjudication Agreement
xliv
22–001
TABLE OF CONTENTS
Annex DAAB Procedural Rules
22–025
CHAPTER 23—BUILDING INFORMATION MODELLING (“BIM”)
What is BIM?
What is the FIDIC approach?
Contract risk management
What might FIDIC be thinking about?
The BIM Protocol
BIM Execution Plan
BIM Information Manager
Conclusion
PS. The first reported UK BIM case: Trant v Mott MacDonald
Common Data Environment (“CDE”)
23–002
23–003
23–004
23–005
23–006
23–007
23–008
23–009
23–010
23–011
APPENDICES
Appendix 1—Particular Conditions Part A: Contract Data
Appendix 2—Particular Conditions Part B: Special Provisions
Appendix 3—Forms of Letter of Tender, Letter of Acceptance, Contract
Agreement and Dispute Adjudication/Avoidance Agreement
Appendix 4—Notes on the Preparation of Tender Documents and Special
Provisions
Appendix 5—Forms of Securities
Index
page 641
xlv
General Conditions, UKBC-UFIDIC 500922875 (2021)
General Conditions
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Differences between the Red and Yellow Books
1-001
There are a number of small differences in the definitions between the Red and Yellow Books which reflect the nature of the
contracts. The Yellow Book definitions include Performance Damages, 1 Employer’s Requirements, Contractor’s Proposals
and Schedules (including payment and/or rates and prices, as well as guarantees), whilst the Red Book includes definitions of
Drawings and Specification. Where mention is made to Specification subsequently in the Red Book, where the paragraph is
replicated in the Yellow Book, reference will usually be made to the Employer’s Requirements.
This difference results in two different Sub-Cll.1.9, headed “Delayed Drawings” or “Instructions” in the Red Book and “Errors
in the Employer’s Requirements” in the Yellow Book.
Footnotes
1
See Sub-Cll.11.4 and 12.4 below.
End of Document
© 2025 Thomson Reuters.
© 2025 SWEET & MAXWELL
1
Section 1.1 - Definitions, UKBC-UFIDIC 500922901 (2021)
Section 1.1 - Definitions
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
1-002
In the Contract the following words and expressions shall have the meanings stated, except where the context requires
otherwise
1.1.1Accepted Contract Amount means the amount accepted in the Letter of Acceptance for the execution of the Works
in accordance with the Contract.
1.1.2Advance Payment Certificate means a Payment Certificate issued by the Engineer for advance payment under
Sub-Clause 14.2.2 [Advance Payment Certificate].
1.1.3Advance Payment Guarantee means the guarantee under Sub-Clause [Advance Payment Guarantee].
1.1.4Base Date means the date 28 days before the latest date for submission of the Tender.
In the Red Book, sub.cl.1.1.5 refers to Bill of Quantities which means the document entitled bill of quantities (if any)
included in the Schedules.
1.1.5Claim means a request or assertion by one Party to the other Party for an entitlement or relief under any Clause
of these Conditions or otherwise in connection with, or arising out of, the Contract or the execution of the Works.
1.1.6Commencement Date means the date as stated in the Engineer’s Notice issued under Sub-Clause 8.1
[Commencement of Works].
1.1.7Compliance Verification System means the compliance verification system to be prepared and implemented by
the Contractor for the Works in accordance with Sub-Clause 4.9.2 [Compliance Verification System].
1.1.8Conditions of Contract or these Conditions means these General Conditions as amended by the Particular
Conditions.
1.1.9Contract means the Contract Agreement, the Letter of Acceptance, the Letter of Tender, any addenda referred to
in the Contract Agreement, these Conditions, the Employer’s Requirements, the Schedules, the Contractor’s Proposal,
the JV Undertaking (if applicable) and the further documents (if any) which are listed in the Contract Agreement or
in the Letter of Acceptance.
1.1.10Contract Agreement means the agreement entered into by both Parties in accordance with Sub-Clause 1.6
[Contract Agreement].
1.1.11Contract Data means the pages, entitled contract data which constitute Part A of the Particular Conditions.
1.1.12Contract Price means the price defined in Sub-Clause 14.1 [The Contract Price].
1.1.13Contractor means the person(s) named as contractor in the Letter of Tender accepted by the Employer and the
legal successors in title of such person(s).
© 2025 Thomson Reuters.
1
Section 1.1 - Definitions, UKBC-UFIDIC 500922901 (2021)
1.1.14Contractor’s Documents means the documents prepared by the Contractor as described in Sub-Clause 5.2
[Contractor’s Documents], including calculations, digital files, computer programs and other software, drawings,
manuals, models, specifications and other documents of a technical nature.
1.1.15Contractor’s Equipment means all apparatus, equipment, machinery, construction plant, vehicles and other
items required by the Contractor for the execution of the Works. Contractor’s Equipment excludes Temporary Works,
Plant, Materials and any other things intended to form or forming part of the Permanent Works.
1.1.16Contractor’s Personnel means the Contractor’s Representative and all personnel whom the Contractor utilises
on Site or other places where the Works are being carried out, including the staff, labour and other employees of the
Contractor and of each Subcontractor; and any other personnel assisting the Contractor in the execution of the Works.
1.1.17Contractor’s Proposal 2 means the part of the Tender stated or implied as being the Contractor’s proposal for
execution of the Works, as included in the Contract. Such documents may include the Contractor’s preliminary design.
1.1.18Contractor’s Representative means the natural person named by the Contractor in the Contract or appointed by
the Contractor under Sub-Clause 4.3 [Contractor’s Representative], who acts on behalf of the Contractor.
1.1.19Cost means all expenditure reasonably incurred (or to be incurred) by the Contractor in performing the Contract,
whether on or off the Site, including taxes, overheads and similar charges, but does not include profit. Where the
Contractor is entitled under a Sub-Clause of these Conditions to payment of Cost, it shall be added to the Contract
Price.
1.1.20Cost Plus Profit means Cost plus the applicable percentage for profit stated in the Contract Data (if not stated,
five percent (5%)). Such percentage shall only be added to Cost, and Cost Plus Profit shall only be added to the
Contract Price, where the Contractor is entitled under a Sub-Clause of these Conditions to payment of Cost Plus Profit.
1.1.21Country means the country in which the Site (or most of it) is located, where the Permanent Works are to be
executed.
1.1.22DAAB or Dispute Avoidance/Adjudication Board means the sole member or three members (as the case may
be) so named in the Contract, or appointed under Sub-Clause 21.1 [Constitution of the DAAB] or Sub-Clause 21.2
[Failure to Appoint DAAB Member(s)].
1.1.23DAAB Agreement means the agreement signed or deemed to have been signed by both Parties and the sole
member or each of the three members (as the case may be) of the DAAB in accordance with Sub-Clause 21.1
[Constitution of the DAAB] or Sub-Clause 21.2 [Failure to Appoint DAAB Member(s)], incorporating by reference
the General Conditions of Dispute Avoidance/Adjudication Agreement contained in the Appendix to these General
Conditions with such amendments as are agreed.
1.1.24Date of Completion means the date stated in the Taking-Over Certificate issued by the Engineer; or, if the last
paragraph of Sub-Clause 10.1 [Taking Over the Works and Sections] applies, the date on which the Works or Section
are deemed to have been completed in accordance with the Contract; or, if Sub-Clause 10.2 [Taking Over Parts] or
Sub-Clause 10.3. [Interference with Tests on Completion] applies, the date on which the Works or Section or Part are
deemed to have been taken over by the Employer.
1.1.25day means a calendar day.
1.1.26Daywork Schedule means the document entitled daywork schedule (if any) included in the Contract, showing
the amounts and manner of payments to be made to the Contractor for labour, materials and equipment used for
daywork under Sub-Clause 13.5 [Daywork].
1.1.27Defects Notification Period or DNP means the period for notifying defects and/or damage in the Works or a
Section or a Part (as the case may be) under Sub-Clause 11.1 [Completion of Outstanding Work and Remedying
Defects], as stated in the Contract Data (if not stated, one year), and as may be extended under Sub-Clause 11.3
© 2025 Thomson Reuters.
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Section 1.1 - Definitions, UKBC-UFIDIC 500922901 (2021)
[Extension of Defects Notification Period]. This period is calculated from the Date of Completion of the Works or
Section or Part.
1.1.28Delay Damages means the damages for which the Contractor shall be liable under Sub-Clause 8.8 [Delay
Damages] for failure to comply with Sub-Clause 8.2 [Time for Completion].
1.1.29Dispute means any situation where:
(a)one Party makes a claim against the other Party (which may be a Claim, as defined in these
Conditions, or a matter to be determined by the Engineer under these Conditions, or otherwise);
(b)the other Party (or the Engineer under Sub-Clause 3.7.2 [Engineer’s Determination]) rejects the
claim in whole or in part; and
(c)the first Party does not acquiesce (by giving a NOD under Sub-Clause 3.7.5 [Dissatisfaction with
Engineer’s determination] or otherwise),
provided however that a failure by the other Party (or the Engineer) to oppose or respond to the claim, in whole or
in part, may constitute a rejection if, in the circumstances, the DAAB or the arbitrator(s), as the case may be, deem
it reasonable for it to do so.
1.1.30Employer means the person named as the employer in the Contract Data and the legal successors in title to
this person.
In the Red Book, sub.cl.1.1.30 refers to: Drawings means the drawings of the Works included in the Contract, and
any additional and modified drawings issued by (or on behalf of) the Employer in accordance with the Contract.
1.1.31Employer’s Equipment means the apparatus, equipment, machinery, construction plant and/or vehicles (if any)
to be made available by the Employer for the use of the Contractor under Sub-Clause 2.6 [Employer-Supplied
Materials and Employer’s Equipment]; but does not include Plant which has not been taken over under Clause 10
[Employer’s Taking Over].
1.1.32Employer’s Personnel means the Engineer, the Engineer’s Representative (if appointed), the assistants described
in Sub-Clause 3.4 [Delegation by the Engineer] and all other staff, labour and other employees of the Engineer and of
the Employer engaged in fulfilling the Employer’s obligations under the Contract; and any other personnel identified
as Employer’s Personnel, by a Notice from the Employer or the Engineer to the Contractor.
1.1.33Employer’s Requirements 3 means the document entitled employer’s requirements, as included in the Contract,
and any additions and modifications to such document in accordance with the Contract. Such document describes the
purpose(s) for which the Works are intended, and specifies Key Personnel (if any), the scope, and/or design and/or
other performance, technical and evaluation criteria, for the Works.
1.1.34Employer-Supplied Materials means the materials (if any) to be supplied by the Employer to the Contractor
under Sub-Clause 2.6 [Employer-Supplied Materials and Employer’s Equipment].
1.1.35Engineer means the person named in the Contract Data appointed by the Employer to act as the Engineer for
the purposes of the Contract, or any replacement appointed under Sub-Clause 3.6 [Replacement of the Engineer].
1.1.36Engineer’s Representative means the natural person who may be appointed by the Engineer under Sub-Clause
3.3 [Engineer’s Representative].
1.1.37Exceptional Event means an event or circumstance as defined in Sub-Clause 18.1 [Exceptional Events].
1.1.38Extension of Time or EOT means an extension of the Time for Completion under Sub-Clause 8.5 [Extension
of Time for Completion].
1.1.39FIDIC means the Fédération Internationale des Ingénieurs-Conseils, the International Federation of Consulting
Engineers.
© 2025 Thomson Reuters.
3
Section 1.1 - Definitions, UKBC-UFIDIC 500922901 (2021)
1.1.40Final Payment Certificate or FPC means the payment certificate issued by the Engineer under Sub-Clause
14.13 [Issue of FPC].
1.1.41Final Statement means the Statement defined in Sub-Clause 14.11.2 [Agreed Final Statement].
1.1.42Foreign Currency means a currency in which part (or all) of the Contract Price is payable, but not the Local
Currency.
1.1.43General Conditions means this document entitled ‘Conditions of Contract for Plant and Design-Build for
Electrical & Mechanical Plant, and for Building and Engineering Works, designed by the Contractor’, as published
by FIDIC.
1.1.44Goods means Contractor’s Equipment, Materials, Plant and Temporary Works, or any of them as appropriate.
1.1.45Interim Payment Certificate or IPC means a Payment Certificate issued by the Engineer for an interim payment
under Sub-Clause 14.6 [Issue of IPC].
1.1.46Joint Venture or JV means a joint venture, association, consortium or other unincorporated grouping of two or
more persons, whether in the form of a partnership or otherwise.
1.1.47JV Undertaking means the letter provided to the Employer as part of the Tender setting out the legal undertaking
between the two or more persons constituting the Contractor as a JV. This letter shall be signed by all the persons who
are members of the JV, shall be addressed to the Employer and shall include:
(a)each such member’s undertaking to be jointly and severally liable to the Employer for the
performance of the Contractor’s obligations under the Contract;
(b)identification and authorisation of the leader of the JV; and
(c)identification of the separate scope or part of the Works (if any) to be carried out by each member
of the JV.
1.1.48Key Personnel means the positions (if any) of the Contractor’s Personnel, other than the Contractor’s
Representative, that are stated in the Specification.
1.1.49Laws means all national (or state or provincial) legislation, statutes, acts, decrees, rules, ordinances, orders,
treaties, international law and other laws, and regulations and by-laws of any legally constituted public authority.
1.1.50Letter of Acceptance means the letter of formal acceptance, signed by the Employer, of the Letter of Tender,
including any annexed memoranda comprising agreements between and signed by both Parties. If there is no such
letter of acceptance, the expression Letter of Acceptance means the Contract Agreement and the date of issuing or
receiving the Letter of Acceptance means the date of signing the Contract Agreement.
1.1.51Letter of Tender means the letter of tender, signed by the Contractor, stating the Contractor’s offer to the
Employer for the execution of the Works.
1.1.52Local Currency means the currency of the Country.
1.1.53Materials means things of all kinds (other than Plant), whether on the Site or otherwise allocated to the Contract
and intended to form or forming part of the Permanent Works, including the supply-only materials (if any) to be
supplied by the Contractor under the Contract.
1.1.54month is a calendar month (according to the Gregorian calendar).
1.1.55No-objection means that the Engineer has no objection to the Contractor’s Documents, or other documents
submitted by the Contractor under these Conditions, and such Contractor’s Documents or other documents may be
used for the Works.
© 2025 Thomson Reuters.
4
Section 1.1 - Definitions, UKBC-UFIDIC 500922901 (2021)
1.1.56Notice means a written communication identified as a Notice and issued in accordance with Sub-Clause 1.3
[Notices and Other Communications].
1.1.57Notice of Dissatisfaction or NOD means the Notice one Party may give to the other Party if it is dissatisfied,
either with an Engineer’s determination under Sub-Clause 3.7 [Agreement or Determination] or with a DAAB’s
decision under Sub-Clause 21.4 [Obtaining DAAB’s Decision].
1.1.58Part means a part of the Works or part of a Section (as the case may be) which is used by the Employer and
deemed to have been taken over under Sub-Clause 10.2 [Taking Over Parts].
1.1.59Particular Conditions means the document entitled particular conditions of contract included in the Contract,
which consists of Part A – Contract Data and Part B – Special Provisions.
1.1.60Party means the Employer or the Contractor, as the context requires. Parties means both the Employer and
the Contractor.
1.1.61Payment Certificate means a payment certificate issued by the Engineer under Clause 14 [Contract Price and
Payment].
1.1.62Performance Certificate means the certificate issued by the Engineer (or deemed to be issued) under Sub-Clause
11.9 [Performance Certificate].
1.1.63Performance Damages 4 means the damages to be paid by the Contractor to the Employer, for the failure to
achieve the guaranteed performance of the Plant and/or the Works or any part of the Works (as the case may be), as
set out in the Schedule of Performance Guarantees.
1.1.64Performance Security means the security under Sub-Clause 4.2 [Performance Security].
1.1.65Permanent Works means the works of a permanent nature which are to be executed by the Contractor under
the Contract.
1.1.66Plant means the apparatus, equipment, machinery and vehicles (including any components) whether on the Site
or otherwise allocated to the Contract and intended to form or forming part of the Permanent Works.
1.1.67Programme means a detailed time programme prepared and submitted by the Contractor to which the Engineer
has given (or is deemed to have given) a Notice of No-objection under Sub-Clause 8.3 [Programme].
1.1.68Provisional Sum means a sum (if any) which is specified in the Contract by the Employer 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 13.4
[Provisional Sums].
1.1.69QM System means the Contractor’s quality management system (as may be updated and/or revised from time
to time) in accordance with Sub-Clause 4.9.1 [Quality Management System].
1.1.70Retention Money means the accumulated retention moneys which the Employer retains under Sub-Clause 14.3
[Application for Interim Payment] and pays under Sub-Clause 14.9 [Release of Retention Money].
1.1.71Review means examination and consideration by the Engineer of a Contractor’s submission in order to assess
whether (and to what extent) it complies with the Contract and/or with the Contractor’s obligations under or in
connection with the Contract.
1.1.72Schedules means the document(s) entitled schedules prepared by the Employer and completed by the Contractor,
as attached to the Letter of Tender and included in the Contract. Such document(s) may include data, lists and schedules
of payments and/or rates and prices, and guarantees.
1.1.73Schedule of Payments means the document(s) entitled schedule of payments (if any) in the Schedules showing
the amounts and manner of payments to be made to the Contractor.
© 2025 Thomson Reuters.
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Section 1.1 - Definitions, UKBC-UFIDIC 500922901 (2021)
1.1.74Schedule of Performance Guarantees 5 means the document(s) entitled schedule of performance guarantees
(if any) in the Schedules showing the guarantees required by the Employer for performance of the Works and/ or the
Plant or any part of the Works (as the case may be), and stating the applicable Performance Damages payable in the
event of failure to attain any of the guaranteed performance(s).
1.1.75Schedule of Rates and Prices means the document(s) entitled schedule of rates and prices (if any) in the
Schedules.
1.1.76Section means a part of the Works specified in the Contract Data as a Section (if any).
1.1.77Site means the places where the Permanent Works are to be executed and to which Plant and Materials are to
be delivered, and any other places specified in the Contract as forming part of the Site.
1.1.78Special Provisions means the document (if any), entitled special provisions which constitutes Part B of the
Particular Conditions.
In the Red Book, sub-cl.1.1.76 refers to Specification 6 means the document entitled specification included in the
Contract, and any additions and modifications to the specification in accordance with the Contract. Such document
specifies the Works.
1.1.79Statement means a statement submitted by the Contractor as part of an application for a Payment Certificate
under Sub-Clause 14.3 [Application for Interim Payment], Sub-Clause 14.10 [Statement at Completion] or Sub-Clause
14.11 [Final Statement].
1.1.80Subcontractor means any person named in the Contract as a subcontractor, or any person appointed by the
Contractor as a subcontractor or designer, for a part of the Works; and the legal successors in title to each of these
persons.
1.1.81Taking-Over Certificate means a certificate issued (or deemed to be issued) by the Engineer in accordance with
Clause 10 [Employer’s Taking Over].
1.1.82Temporary Works means all temporary works of every kind (other than Contractor’s Equipment) required on
Site for the execution of the Works.
1.1.83Tender means the Letter of Tender, the Contractor’s Proposal, the JV Undertaking (if applicable), and all other
documents which the Contractor submitted with the Letter of Tender, as included in the Contract.
1.1.84Tests after Completion means the tests (if any) which are stated in the Specification and which are carried out
in accordance with the Special Provisions after the Works or a Section (as the case may be) are taken over under
Clause 10 [Employer’s Taking Over].
1.1.85Tests on Completion means the tests which are specified in the Contract or agreed by both Parties or instructed
as a Variation, and which are carried out under Clause 9 [Tests on Completion] before the Works or a Section (as the
case may be) are taken over under Clause 10 [Employer’s Taking Over].
1.1.86Time for Completion means the time for completing the Works or a Section (as the case may be) under SubClause 8.2 [Time for Completion], as stated in the Contract Data as may be extended under Sub-Clause 8.5 [Extension
of Time for Completion], calculated from the Commencement Date.
1.1.87Unforeseeable means not reasonably foreseeable by an experienced contractor by the Base Date.
1.1.88Variation means any change to the Works, which is instructed as a variation under Clause 13 [Variations and
Adjustments].
1.1.89Works mean the Permanent Works and the Temporary Works, or either of them as appropriate.
1.1.90Year means 365 days.’
© 2025 Thomson Reuters.
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Section 1.1 - Definitions, UKBC-UFIDIC 500922901 (2021)
Footnotes
2
3
4
5
6
This sub-clause does not appear in the Red Book.
This sub-clause does not appear in the Red Book.
This sub-clause does not appear in the Red Book.
This sub-clause and Sub-Cl.1.1.74 do not appear in the Red Book.
Although referred to in the Yellow Book, see for example the reference to Tests being defined in the Specification in
Sub-Cl.1.1.84, the word Specification is not defined.
End of Document
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© 2025 SWEET & MAXWELL
7
Overview of Key Features, UKBC-UFIDIC 500922843 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Overview of Key Features
1-003
The definitions in Cl.1.1 have increased in number and been subject to significant amendments. The definitions are also now
grouped alphabetically as opposed to by category, as was the case in the 1999 edns.
The opening words of Sub-Cl.1.1 mean that the definitions apply to all the documents of the Contract and not only to the
Conditions of Contract. Both Parties should therefore be aware of them when drafting documents.
End of Document
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© 2025 SWEET & MAXWELL
1
Commentary, UKBC-UFIDIC 500922881 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
1-004
A number of the defined terms warrant further consideration.
The references to sub-clauses below are to the 2017 Red Book unless otherwise stated.
End of Document
© 2025 Thomson Reuters.
© 2025 SWEET & MAXWELL
1
Sub-Clauses 1.1.2—1.1.3: Advance Payment Certificate and..., UKBC-UFIDIC...
Sub-Clauses 1.1.2—1.1.3: Advance Payment Certificate and
Advance Payment Guarantee
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
Sub-Clauses 1.1.2—1.1.3: Advance Payment Certificate and Advance Payment Guarantee
1-005
These are new defined terms in relation to advance payments.
The 1999 edns provided that the Engineer would issue an Interim Payment Certificate for the first instalment after receiving
an application for an interim payment certificate, the Performance Security and a guarantee in amounts and currencies equal
to the advance payment.
In the 2017 edns an “Advance Payment Certificate” is to be issued by the Engineer within 14 days after the Employer has
received the Performance Security, Advance Payment Guarantee and a copy of the Contractor’s application for the advance
payment.
The 1999 edns required that a guarantee be issued, in amounts and currencies equal to the advance payment, by an entity and
from within a country or jurisdiction approved by the Employer.
The term “Advance Payment Guarantee” has been introduced to denote a guarantee that satisfies these requirements.
End of Document
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1
Sub-Clause 1.1.6: Claim, UKBC-UFIDIC 500922834 (2021)
Sub-Clause 1.1.6: Claim
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
Sub-Clause 1.1.6: Claim
1-006
The provisions relating to Claims and Disputes have been separated and redrafted substantially.
“Claim” has become a defined term and has been drafted broadly.
The 1999 edns referred to the Contractor giving notice to the Engineer if he considered himself entitled to an extension of Time
for Completion and/or any additional payment, under any Clause of the Conditions or otherwise in connection with the Contract.
Under the 2017 edns, a “Claim” is a request or assertion for an “entitlement or relief” under any Clause of the Conditions or
otherwise “in connection with, or arising out of, the Contract or the Execution of the Works.” Parties should be aware of this
wider definition when it comes to giving notice of a potential claim under Sub-Cl.20.2.
End of Document
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Sub-Clause 1.1.8, 1.1.68: Compliance Verification System..., UKBC-UFIDIC...
Sub-Clause 1.1.8, 1.1.68: Compliance Verification System and
QM System
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
Sub-Clause 1.1.8, 1.1.68: Compliance Verification System and QM System
1-007
The 1999 edns required the Contractor to institute a quality assurance system to demonstrate compliance with the requirements
of the Contract.
The phrase “Quality Assurance” has been replaced by “Quality Management” and the 2017 edns impose a further requirement
on the Contractor to prepare and implement a “Compliance Verification System.”
The Compliance Verification System is to demonstrate that the design (if any), Materials, Employer-Supplied Materials (if any),
Plant, work and workmanship comply in all respects with the Contract.
The Compliance Verification System has to be in accordance with the details stated in the Specification (if any) and has to
include a method for reporting the results of all inspections and tests carried out by the Contractor.
End of Document
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Sub-Clause 1.1.17: Contractor’s Personnel, UKBC-UFIDIC 500922842 (2021)
Sub-Clause 1.1.17: Contractor’s Personnel
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
Sub-Clause 1.1.17: Contractor’s Personnel
1-008
The term “Contractor’s Personnel” to be found in the Yellow Book only, was drafted broadly in the 1999 edns and has been
extended even further.
The term now captures not just all personnel that the Contractor utilises on site but also personnel whom the Contractor utilises
on “other places where the Works are being carried out.”
End of Document
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Sub-Clause 1.1.17 (Yellow Book): Contractor’s Proposal, UKBC-UFIDIC 500922898...
Sub-Clause 1.1.17 (Yellow Book): Contractor’s Proposal
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
Sub-Clause 1.1.17 (Yellow Book): Contractor’s Proposal
1-009
The “Contractor’s Proposal”, to be found in the Yellow Book only, is a new defined term that refers to the part of the Tender
“stated or implied” as being the Contractor’s Proposal for execution of the Works.
Whilst appreciating that the inclusion of the word “implied” can reflect the practical reality found in projects, greater certainty
would have been achieved if the Contractor had been required to state the part of the Tender that constitutes the Contractor’s
Proposal.
End of Document
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Sub-Clause 1.1.18: Contractor’s Representative, UKBC-UFIDIC 500922847 (2021)
Sub-Clause 1.1.18: Contractor’s Representative
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
Sub-Clause 1.1.18: Contractor’s Representative
1-010
The 2017 edns are explicit that the Contractor’s Representative must be a “natural” person.
End of Document
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1
Sub-Clause 1.1.19: Cost, UKBC-UFIDIC 500922856 (2021)
Sub-Clause 1.1.19: Cost
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
Sub-Clause 1.1.19: Cost
1-011
“Cost” has been clarified further with “taxes” added to the definition and it being made clear that, where the Contractor is
entitled under a Sub-Clause of the Conditions to the payment of Cost, Cost is to be added to the Contract Price. Cost will need
to be shown to have been incurred, and reasonably incurred, by the Contractor. However, it is important to remember that the
entitlement to recover “Cost” does not automatically give rise to a right to an additional entitlement to an element of profit.
That entitlement will depend on the actual wording of the individual sub-clause. To determine whether an element of profit is
recoverable, you need to look at the actual wording of the individual sub-clauses. In general terms, and as noted by the 1999
FIDIC Guide, an element of profit will be recoverable in addition to Cost where the Employer is blameworthy. Where neither
party is at fault then it is usually only Cost that is recoverable.
The 1999 FIDIC Guide further notes that overhead charges may include reasonable financing costs incurred because of payment
being received after expenditure.
End of Document
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Sub-Clause 1.1.20: Cost-Plus-Profit, UKBC-UFIDIC 500922860 (2021)
Sub-Clause 1.1.20: Cost-Plus-Profit
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
Sub-Clause 1.1.20: Cost-Plus-Profit
1-012
“Cost-Plus-Profit” is a new defined term with the applicable percentage for profit set at 5 per cent unless it is stated in the
Contract Data.
End of Document
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1
Sub-Clause 1.1.22: DAAB, UKBC-UFIDIC 500922889 (2021)
Sub-Clause 1.1.22: DAAB
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
Sub-Clause 1.1.22: DAAB
1-013
The term “Dispute Adjudication Board” or “DAB” has been replaced by the term “Dispute Avoidance/Adjudication Board”
reflecting the increased emphasis placed on dispute avoidance in the 2017 edns.
End of Document
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Sub-Clause 1.1.23: DAAB Agreement, UKBC-UFIDIC 500922832 (2021)
Sub-Clause 1.1.23: DAAB Agreement
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
Sub-Clause 1.1.23: DAAB Agreement
1-014
This is a new defined term and it is notable that the agreement can be “deemed to have been” signed by both Parties.
This reflects that if one Party refuses or fails to sign a DAAB agreement within 14 days of the other Party’s request to do so, the
appointing entity or official named in the Contract Data will, at the request of either or both Parties and after due consultation
with both Parties, appoint the member of the DAAB.
After the appointment the Parties and the member(s) so appointed will be deemed to have signed and be bound by a DAAB
agreement (Sub-Cl.21.2).
End of Document
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Sub-Clause 1.1.24: Date of Completion, UKBC-UFIDIC 500922882 (2021)
Sub-Clause 1.1.24: Date of Completion
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
Sub-Clause 1.1.24: Date of Completion
1-015
This new definition makes explicit that the Date for Completion is either:
(a)the date stated in the Taking-Over Certificate issued by the Engineer;
(b)the date on which the Works or Section are deemed to have been completed; or
(c)the date on which the Works or Section or Part have been deemed to have been taken over by the Employer.
End of Document
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Sub-Clause 1.1.27: Defects Notification Period, UKBC-UFIDIC 500922866 (2021)
Sub-Clause 1.1.27: Defects Notification Period
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
Sub-Clause 1.1.27: Defects Notification Period
1-016
In Sub-Cl.11.1 of the 1999 edns, the Contractor was to be notified if any defect appeared or damage occurred. Despite this, the
“Defects Notification Period” was only defined as the period for notifying defects.
The 2017 edns expressly state that this is the period for notifying defects “and/or damage”.
End of Document
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Sub-Clause 1.1.29: Dispute, UKBC-UFIDIC 500922829 (2021)
Sub-Clause 1.1.29: Dispute
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
Sub-Clause 1.1.29: Dispute
1-017
This definition adapted from Sub-Cl.1.1.31 of the 2008 Good Book effectively consists of three parts and a clarification.
A dispute is a situation where:
(a)one Party makes a claim against the other party. This could be a “Claim” or a matter to be determined by the Engineer;
(b)the other Party rejects the claim in whole or in part; and
(c)the first party does not acquiesce. 7
The reference to issuing a Notice of Dissatisfaction with the Engineer’s Determination should be viewed as an example because
the phrase “or otherwise” demonstrates that a Party can fail to acquiesce by other means.
The clarification is that a failure by a Party (or the Engineer) to oppose or respond to a claim, in whole or in part, may constitute
a rejection provided that the DAAB or arbitrator deem it reasonable for it to have done so.
Footnotes
7
The definition is thus more abbreviated than the list of seven propositions of what constitutes a dispute set out by Jackson
J as he then was in the case of Amec v Secretary of State for Transport [2005] EWCA Civ 291. A list which remains
useful whether the contract is entered into under English law or not. See also Collins (Contractors) Ltd v Baltic Quay
Management (1994) Ltd [2005] C.I.L.L. 2213.
End of Document
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Sub-Clause 1.1.32: Employer’s Personnel, UKBC-UFIDIC 500922894 (2021)
Sub-Clause 1.1.32: Employer’s Personnel
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
Sub-Clause 1.1.32: Employer’s Personnel
1-018
The new definition attempts to clarify further who is captured by the term “Employer’s Personnel”.
It refers to all other staff, labour, and other employees of the Engineer and of the Employer but in order to be Employer’s
Personnel, such individuals must be “engaged in fulfilling the Employer’s obligations under the Contract”.
The Employer and Engineer are also able to notify the Contractor that any person forms part of the Employer’s Personnel.
End of Document
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Sub-Clause 1.1.36: Engineer’s Representative, UKBC-UFIDIC 500922858 (2021)
Sub-Clause 1.1.36: Engineer’s Representative
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
Sub-Clause 1.1.36: Engineer’s Representative
1-019
This is a new role created in the 2017 edns.
The Engineer may appoint and delegate to an Engineer’s Representative who must be:
(a)a natural person:
(b)a professional engineer with suitable qualifications, experience and competence;
(c)fluent in the ruling language; and
(d)based at the Site for the whole time that the Works are being executed at the Site.
End of Document
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1
Sub-Clause 1.1.37: Exceptional Event, UKBC-UFIDIC 500922873 (2021)
Sub-Clause 1.1.37: Exceptional Event
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
Sub-Clause 1.1.37: Exceptional Event
1-020
This term replaces “Force Majeure” that appeared in previous editions but it appears to add very little.
Part of the definition of “Force Majeure” was “an exceptional event or circumstance”.
Now that the term itself is titled “Exceptional Event”, that part of the definition has been replaced by “an event or circumstance”.
End of Document
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1
Sub-Clauses 1.1.53, 1.1.66: Materials and Plant, UKBC-UFIDIC 500922879 (2021)
Sub-Clauses 1.1.53, 1.1.66: Materials and Plant
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
Sub-Clauses 1.1.53, 1.1.66: Materials and Plant
1-021
The phrase “whether on the Site or otherwise allocated to the Contract’’ has been added, presumably to prevent disputes as to
whether items not on the Site could be classified as materials or Plant.
End of Document
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1
Sub-Clause 1.1.56: Notice, UKBC-UFIDIC 500922833 (2021)
Sub-Clause 1.1.56: Notice
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
Sub-Clause 1.1.56: Notice
1-022
The significant increase in the number of notice requirements contained in the 2017 edns makes it particularly important to
be aware of this definition.
A Notice must:
(a)be identified as a Notice;
(b)be a paper-original, signed by the Contractor’s Representative, the Engineer or the authorised representative of the
Employer, or an electronic original generated from any of the systems of electronic transmission stated in the Contract Data;
(c)under certain clauses state that it is given under the relevant clause, e.g. Sub-Cll.15.2.1 (Termination for Contractor’s
Default: Notice), 15.5 (Termination for Employer’s convenience), 16.1 (Suspension by Contractor), and 16.2.1
(Termination by Contractor Notice); and
(d)not be unreasonably withheld or delayed.
End of Document
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1
Sub-Clause 1.1.80: Subcontractor, UKBC-UFIDIC 500922904 (2021)
Sub-Clause 1.1.80: Subcontractor
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
Sub-Clause 1.1.80: Subcontractor
1-023
The definition has been extended slightly to capture anyone appointed by the Contractor as a “designer”.
End of Document
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1
Sub-Clause 1.1.81: Taking-Over Certificate, UKBC-UFIDIC 500922831 (2021)
Sub-Clause 1.1.81: Taking-Over Certificate
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
Sub-Clause 1.1.81: Taking-Over Certificate
1-024
In the 2017 edns the certificate can be “deemed to be issued” in accordance with Cl.10 and the definition makes it explicit that
it is the Engineer that issues or is deemed to issue the certificate.
End of Document
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1
Sub-Clause 1.1.82: Temporary Works, UKBC-UFIDIC 500922849 (2021)
Sub-Clause 1.1.82: Temporary Works
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
Sub-Clause 1.1.82: Temporary Works
1-025
In the 2017 edns Sub-Clause 1.2(j) states that the execution of the Works means the construction and completion of the Works
and the remedying of any defects.
The definition of “Temporary Works” has been shortened to reflect this with references to “completion of” the Permanent Works
and “the remedying of any defects” removed.
End of Document
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Sub-Clause 1.1.88: Variation, UKBC-UFIDIC 500922883 (2021)
Sub-Clause 1.1.88: Variation
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.1 - Definitions
Commentary
Sub-Clause 1.1.88: Variation
1-026
Any change to the works can now only be “instructed” as a variation under Cl.13 and the reference to any change of works
being “approved” has been removed.
End of Document
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1
Section 1.2 - Interpretation, UKBC-UFIDIC 500922838 (2021)
Section 1.2 - Interpretation
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.2 - Interpretation
1-027
In the Contract, except where the context requires otherwise:
(a)words indicating one gender include all genders; and ‘he’, ‘his’ and ‘himself’ shall be read as ‘he/she’, ‘his/her’
and ‘himself/herself’ respectively;
(b)words indicating the singular also include the plural and words indicating the plural also include the singular;
(c)provisions including the word ‘agree’, ‘agreed’ or ‘agreement’ require the agreement to be recorded in writing;
(d)written or in writing means hand-written, type-written, printed or electronically made, and resulting in a permanent
record;
(e)may means that the Party or person referred to has the choice of whether to act or not in the matter referred to;
(f)shall means that the Party or person referred to has an obligation under the Contract to perform the duty referred to;
(g)‘consent’ means that the Employer, the Contractor or the Engineer (as the case may be) agrees to, or gives
permission for, the requested matter;
(h)‘including’, ‘include’ and ‘includes’ shall be interpreted as not being limited to, or qualified by, the stated items
that follow;
(i)words indicating persons or parties shall be interpreted as referring to natural and legal persons (including
corporations and other legal entities); and
(j)execute the Works or execution of the Works means the design, construction and completion of the Works and the
remedying of any defects.
In any list in these Conditions, where the second-last item of the list is followed by ‘and’ or ‘or’ or ‘and/or’ then all of the
list items going before this item shall also be read as if they are followed by ‘and’ or ‘or’ or ‘and/or’ (as the case may be).
The marginal words and other headings shall not be taken into consideration in the interpretation of these Conditions.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922872 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.2 - Interpretation
Overview of Key Features
1-028
•Any agreement must be recorded in writing.
•Any agreement can be in writing if it is handwritten, typewritten, printed or an electronic version is provided so that a
permanent record is made.
End of Document
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Commentary, UKBC-UFIDIC 500922830 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.2 - Interpretation
Commentary
1-029
The interpretation section contains a number of new clarifications:
•“May” indicates that the Party or person has a discretion.
•Shall means that the Party or person is under an obligation.
•Consent means that the Employer, Contractor or the Engineer agrees to or gives permission for, the requested matter.
•“Including,” “include” and “includes” denotes that the stated items that follow do not constitute an exhaustive list.
•Words indicating persons and parties are to be interpreted as referring to natural and legal persons (including corporations
and other legal entities). It is important to be clear on whether a role can only be performed by a natural person, as the 2017
edns impose some new requirements in relation to this, i.e. a Contractor’s Representative must be a natural person.
•Execute the Works or execution of the Works refers to the construction and completion of the Works, the remedying of
any defects and any design specified in the Contract.
End of Document
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Section 1.3 - Notices and Other Communications, UKBC-UFIDIC 500922878 (2021)
Section 1.3 - Notices and Other Communications
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.3 - Notices and Other Communications
1-030
Wherever these Conditions provide for the giving of a Notice (including a Notice of Dissatisfaction) or the issuing,
providing, sending, submitting or transmitting of another type of communication (including acceptance, acknowledgement,
advising, agreement, approval, certificate, Claim, consent, decision, determination, discharge, instruction, No-objection,
record(s) of meeting, permission, proposal, record, reply, report, request, Review, Statement, statement, submission or any
other similar type of communication), the Notice or other communication shall be in writing and
(a)shall be:
(i)a paper-original signed by the Contractor’s Representative, the Engineer, or the authorised representative of
the Employer (as the case may be); or
(ii)an electronic original generated from any of the systems of electronic transmission stated in the Contract Data
(if not stated, system(s) acceptable to the Engineer), where the electronic original is transmitted by the electronic
address uniquely assigned to each of such authorised representatives, or both, as stated in these Conditions; and
(b)if it is a Notice, it shall be identified as a Notice. If it is another form of communication, it shall be identified as
such and include reference to the provision(s) of the Contract under which it is issued where appropriate;
(c)delivered by hand (against receipt), or sent by mail or courier (against receipt), or transmitted using any of the
systems of electronic transmission under sub-paragraph (a)(ii) above; and
(d)delivered, sent or transmitted to the address for the recipient’s communications as stated in the Contract Data.
However, if the recipient gives a Notice of another address, all Notices and other communications shall be delivered
accordingly after the sender receives such Notice.
Where these Conditions state that a Notice or NOD or other communication is to be delivered, given, issued, provided,
sent, submitted or transmitted, it shall have effect when it is received (or deemed to have been received) at the recipient’s
current address under sub-paragraph (d) above. An electronically transmitted Notice or other communication is deemed
to have been received on the day after transmission, provided no non-delivery notification was received by the sender.
All Notices, and all other types of communication as referred to above, shall not be unreasonably withheld or delayed.
When a Notice or NOD or certificate is issued by a Party or the Engineer, the paper and/or electronic original shall be
sent to the intended recipient and a copy shall be sent to the Engineer or the other Party, as the case may be. All other
communications shall be copied to the Parties and/or the Engineer as stated under these Conditions or elsewhere in the
Contract.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922840 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.3 - Notices and Other Communications
Overview of Key Features
1-031
•Where the provisions provide for the giving of a Notice or another type of communication, the Notice or communication
should be in writing.
•The Notice or communication is to be a paper-original, signed by the Contractor’s Representative, the Engineer or the
authorised representative of the Employer, or an electronic original generated from any of the systems of electronic
transmission stated in the Contract Data.
•Notices and other types of communications should not be unreasonably withheld or delayed. 8
Footnotes
8
Unless the Contract provides for a set time period, this will be a question of fact and degree depending on the
circumstances. See Neodox Ltd v Swinton and Pendlebury BC 5 B.L.R. 38. Diplock J’s approach was expressly approved
by Lord Drummond Young in City Inn Construction Ltd v Shepherd Construction Ltd [2007] CSOH 190.
End of Document
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1
Commentary, UKBC-UFIDIC 500922836 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.3 - Notices and Other Communications
Commentary
1-032
Sub-Clause 1.3 makes a distinction between Notices and other forms of communication in relation to how they should be
identified.
Notices should be identified as a Notice whereas an alternative form of communication has to be identified as such and must
include reference to the provision of the Contract under which it is issued where appropriate.
It is explicitly stated in the Contract where Notices must set out the provision of the Contract under which it is issued, i.e. SubCll.15.2.1 (Termination for Contractor’s Default: Notice) and 15.5 (Termination for Employer’s Convenience).
The 2017 edns also make clear that a Notice or other communication will have effect when it is received (or deemed to have
been received) at the recipient’s current address.
If the Notice or communication only takes effect on receipt, it is unclear under what circumstances and when the recipient will
be deemed to have received the Notice or Communication. 9
An electronically transmitted Notice or other communication is deemed to have been received on the day after transmission,
provided no non-delivery notification was received by the sender.
Footnotes
9
It is important that all parties are aware of the correct address to which communications should be sent. For example,
email was found to be an effective means of service in Bernuth Lines v High Seas Shipping [2005] EWHC 3020 (Comm).
However, it does depend on who the email is addressed to. In Bernuth a generic email address was used, which was in
effect being held out as the only email address of the company. In Sino Channel Asia Ltd v Dana Shipping and Trading
Pte [2017] EWCA Civ 1703 and Glencore Agriculture BV v Conqueror Holdings Ltd [2017] EWHC 2893 (Comm), the
arbitration notice was emailed to an employee of the other party with whom the claiming party had a previous course
of dealings. In the Sino case, service was valid because the employee had implied and ostensible authority to accept
service. That was not the case in the Glencore case, where the service was held to be invalid.
End of Document
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Section 1.4 - Law and Language, UKBC-UFIDIC 500922853 (2021)
Section 1.4 - Law and Language
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.4 - Law and Language
1-033
The Contract shall be governed by the law of the country (or other jurisdiction) stated in the Contract Data (if not stated,
the law of the Country), excluding any conflict of law rules.
The ruling language of the Contract shall be that stated in the Contract Data (if not stated, the language of these Conditions).
If there are versions of any part of the Contract which are written in more than one language, the version which is in the
ruling language shall prevail.
The language for communications shall be that stated in the Contract Data. If no language is stated there, the language for
communications shall be the ruling language of the Contract.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922862 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.4 - Law and Language
Overview of Key Features
1-034
•The Contract Data should set out the law of the Contract.
•If not stated, the Contract shall be governed by the law of the Country, excluding any conflict of law rules.
•The Contract Data should set out the ruling language of the Contract and the language for communications.
•If not stated, the ruling language shall be the language of the Conditions and the language for communications shall be
the ruling language of the Contract.
End of Document
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1
Commentary, UKBC-UFIDIC 500922839 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.4 - Law and Language
Commentary
1-035
The 1999 edns received some criticism for providing no fall-back provisions if the parties failed to choose a governing law.
The 2017 edns have been amended in response to such criticism.
In the event that the governing law is not stated in the Contract, the governing law will be the law of the country in which the
Site (or most of it) is located, where the Permanent Works are to be executed.
If the ruling language is not stated then it shall be the language of the Conditions of the Contract.
End of Document
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1
Section 1.5 - Priority of Documents, UKBC-UFIDIC 500922835 (2021)
Section 1.5 - Priority of Documents
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.5 - Priority of Documents
1-036
The documents forming the Contract are to be taken as mutually explanatory of one another. If there is any conflict,
ambiguity or discrepancy, the priority of the documents shall be in accordance with the following sequence:
(a)the Contract Agreement;
(b)the Letter of Acceptance;
(c)the Letter of Tender;
(d)the Particular Conditions Part A – Contract Data;
(e)the Particular Conditions Part B – Special Provisions;
(f)these General Conditions;
(g)the Employer’s Requirements (This reads “Specification” in the Red Book);
(h)the Schedules;
(i)the Contractor’s Proposal;
(j)the JV Undertaking (if the Contractor is a JV); and
(k)any other documents forming part of the Contract.
If a Party finds an ambiguity or discrepancy in the documents, that Party shall promptly give a Notice to the Engineer,
describing the ambiguity or discrepancy. After receiving such Notice, or if the Engineer finds an ambiguity or discrepancy
in the documents, the Engineer shall issue the necessary clarification or instruction.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500922857 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.5 - Priority of Documents
Overview of Key Features
1-037
•The priority of documents is, unless stated otherwise, as listed at items (a)–(k).
•The Engineer will resolve any ambiguity or discrepancy either after receiving a Notice from a party or upon finding such
an ambiguity or discrepancy.
End of Document
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1
Commentary, UKBC-UFIDIC 500922865 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.5 - Priority of Documents
Commentary
1-038
By retaining the same hierarchy of documents, barring the addition of a JV undertaking at (j), the 2017 edns continue to reflect
the traditional English common law position that the written words chosen by the parties ought to have priority, on questions
of interpretation, over the printed words (or standard wording) used by the parties. 10
The 2017 edns introduce a notice requirement whereby a party that finds an ambiguity or discrepancy should promptly give
Notice to the Engineer, describing the ambiguity or discrepancy.
In response to such a Notice, or upon the Engineer discovering an ambiguity or discrepancy, the Engineer will issue the necessary
clarification or instruction.
Footnotes
10
Robertson v French [1803] 4 East 130 and Glynn v Margetson [1893] A.C. 351 HL.
End of Document
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1
Section 1.6 - Contract Agreement, UKBC-UFIDIC 500922844 (2021)
Section 1.6 - Contract Agreement
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.6 - Contract Agreement
1-039
The Parties shall sign a Contract Agreement within 35 days after the Contractor receives the Letter of Acceptance, unless
they agree otherwise. The Contract Agreement shall be based on the form annexed to the Particular Conditions. The costs
of stamp duties and similar charges (if any) imposed by law in connection with entry into the Contract Agreement shall
be borne by the Employer.
If the Contractor comprises a JV, the authorised representative of each member of the JV shall sign the Contract Agreement.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922880 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.6 - Contract Agreement
Overview of Key Features
1-040
•The Parties are to sign a Contract Agreement within 35 days of the receipt of the Contractor’s Letter of Acceptance.
•The form of contract shall be that annexed to the Particular Conditions.
•The Employer will be responsible for any stamp duties and similar charges.
End of Document
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1
Commentary, UKBC-UFIDIC 500922846 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.6 - Contract Agreement
Commentary
1-041
The 2017 edns require the parties to sign, as opposed to “enter into” as was required by the 1999 edns, a Contract Agreement.
The period for doing so has been extended to 35 days from 28 days.
By requiring a signed written agreement to be entered into within 35 days of receipt of the Letter of Acceptance, the sub-clause
aims to achieve certainty and avoid disputes as to what constituted offer and acceptance.
End of Document
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1
Section 1.7 - Assignment, UKBC-UFIDIC 500922899 (2021)
Section 1.7 - Assignment
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.7 - Assignment
1-042
Neither Party shall assign the whole or any part of the Contract or any benefit or interest in or under the Contract. However,
either Party:
(a)may assign the whole or any part of the Contract with the prior agreement of the other Party, at the sole discretion
of such other Party; and
(b)may, as security in favour of a bank or financial institution, assign the Party’s right to any moneys due, or to become
due, under the Contract without the prior agreement of the other Party.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500922888 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.7 - Assignment
Overview of Key Features
1-043
•Neither party can assign its interest in the Contract without the prior agreement of the other, unless it is an assignment of
the Party’s right to any monies due, or to become due, as security in favour of a bank or financial institution.
End of Document
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1
Commentary, UKBC-UFIDIC 500922887 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.7 - Assignment
Commentary
1-044
In the 1999 edns, Sub-Cl.1.7(a) explicitly referred to the other Party’s consent being required whereas Sub-Cl.1.7(b) was silent
on consent. From that it was inferred that no consent was required under Sub-Cl.1.7(b).
The 2017 edns have confirmed this inference. Sub-Clause 1.7(b) explicitly states that a Party can assign, without the prior
agreement of the other Party, its right to any monies due, or to become due, as security in favour of a bank or financial institution.
End of Document
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1
Section 1.8 - Care and Supply of Documents, UKBC-UFIDIC 500922867 (2021)
Section 1.8 - Care and Supply of Documents
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.8 - Care and Supply of Documents
Each of the Contractor’s Documents shall be in the custody and care of the Contractor, unless and until submitted to the
Engineer. The Contractor shall supply to the Engineer one paper-original, one electronic copy (in the form as specified in
the Employer’s Requirements or, if not stated, a form acceptable to the Engineer) and additional paper copies (if any) as
stated in the Contract Data of each of the Contractor’s Documents. 11
1-045
The Contractor shall keep at all times, on the Site, a copy of:
(a)the Contract,
(b)the records under Sub-Clause 6.10 [Contractor’s Records] and Sub-Clause 20.2.3 [Contemporary records];
(c)the publications (if any) named in the Employer’s Requirements;
(d)the Contractor’s Documents; and
(e)Variations, Notices and other communications given under the Contract.
The Employer’s Personnel shall have right of access to all these documents during all normal working hours, or as otherwise
agreed with the Contractor.
If a Party (or the Engineer) becomes aware of an error or defect (whether of a technical nature or otherwise) in a document
which was prepared by (or on behalf of) the Contractor for use in the execution of the Works, the Party (or the Engineer)
shall promptly give a Notice of such error or defect to the other Party (or to the Parties). The Contractor shall then promptly
rectify the error or defect at the Contractor’s risk and cost.
Footnotes
11
The following paragraph can be found at the beginning of the Red Book: “The Specification and Drawings shall be
in the custody and care of the Employer. Unless otherwise stated in the Contract, two copies of the Contract and of
each subsequent Drawing shall be supplied to the Contractor, who may make or request further copies at the cost of
the Contractor.”
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500922897 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.8 - Care and Supply of Documents
Overview of Key Features
1-046
•The Employer shall keep the Specification and Drawings. 12
•The Employer shall provide the Contractor with two copies of the Contract and every drawing, unless otherwise stated
in the Contract.
•If the Contractor requires more than two copies, he shall have to pay for them.
•The Contractor shall look after the Contractor’s Documents.
•The Contractor must supply the Engineer with one paper-original, one electronic copy and additional paper copies (if any)
stated in the Contract Data of the Contractor’s Documents.
•At least one copy of: the Contract, the Contractor’s Records under Sub-Cl. 6.10, the Contemporary Records under SubCl.20.2.3, the publications (if any) named in the Specification, the Contractor’s Documents, the Drawings, the Variations,
the Notices, and other communications given under the Contract, must be kept by the Contractor on site.
•The Employer’s Personnel shall have a right of access to the documents during all normal working hours or as otherwise
agreed.
•If a party (or the Engineer) becomes aware of an error or defect (whether of a technical nature or otherwise) in any of the
documents prepared for use in executing the works, they must promptly give a Notice to the other Party or Parties.
Footnotes
12
Red Book only.
End of Document
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1
Commentary, UKBC-UFIDIC 500922852 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.8 - Care and Supply of Documents
Commentary
1-047
The opening paragraph beginning “The Specification” does not appear in the Yellow Book. However, both the 2017 edns
streamline the number of copies the Contractor must supply to the Engineer.
The Contractor previously had to supply six copies of each of the Contractor’s Documents but now only has to supply one
paper-original, one electronic copy and any additional paper copies stated in the Contract Data.
The documents required to be kept on site by the Contractor have also been extended to include:
(a)The Contractor’s Records under Sub-Cl.6.10. These include records of information such as the occupation and actual
working hours of each class of Contractor’s Personnel, the types of Temporary Works and the types of Plant installed in
the Permanent Works.
(b)The contemporary records as described under Sub-Cl.20.2.3.
(c)Any publications named in the Specification.
(d)Any Notices or other communications given under the Contract.
The Employer’s Personnel were previously entitled to access these documents “at all reasonable times.” The 2017 edns attempt
to avoid disputes as to what constitutes a reasonable time by providing that the right of access is “during all normal working
hours” or as otherwise agreed.
End of Document
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Section 1.9 - Delayed Drawings or Instructions (Red Book), UKBC-UFIDIC 500922859...
Section 1.9 - Delayed Drawings or Instructions (Red Book)
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.9 - Delayed Drawings or Instructions (Red Book)
1-048
The Contractor shall give a Notice to the Engineer whenever the Works are likely to be delayed or disrupted if any necessary
drawing or instruction is not issued to the Contractor within a particular time, which shall be reasonable. The Notice shall
include details of the necessary drawing or instruction, details of why and by when it should be issued, and details of the
nature and amount of the delay or disruption likely to be suffered if it is late.
If the Contractor suffers delay and/or incurs Cost as a result of a failure of the Engineer to issue the notified drawing or
instruction within a time which is reasonable and is specified in the Notice with supporting details, the Contractor shall be
entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to EOT and/or payment of such Cost Plus Profit.
However, if and to the extent that the Engineer’s failure was caused by any error or delay by the Contractor, including
an error in, or delay in the submission of, any of the Contractor’s Documents, the Contractor shall not be entitled to such
EOT and/or Cost Plus Profit.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500922885 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.9 - Delayed Drawings or Instructions (Red Book)
Overview of Key Features
1-049
Sub-Clause 1.9 provides for the giving of a Notice by the Contractor, to the Engineer, upon the occurrence of delay due to any
necessary drawing or instruction not being issued within a particular time.
Subject to Sub-Cl.20.2, the Contractor will be entitled to an Extension of Time and/or Cost Plus Profit if the drawing or
instruction is specified in the Notice with supporting details and the Engineer does not issue the notified drawing or instruction
within a reasonable time.
The Contractor is not entitled to an EOT and/or Cost Plus Profit if the Engineer’s failure was caused by any error or delay
by the Contractor.
End of Document
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1
Commentary, UKBC-UFIDIC 500922903 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.9 - Delayed Drawings or Instructions (Red Book)
Commentary
1-050
The process in Sub-Cl.1.9 is largely the same as in the 1999 edns.
At all events, the provision in its terms places a significant practical burden upon the Contractor since, in a complex project, it
will not always be clear that the lack of provision or the late provision, of, say, steel erection drawings, is likely of itself to cause
delay and/or disruption to the Works. However, the Contractor ought to have sufficient site resource and site experience to take
a pragmatic yet cautious, approach to written notices, and provide the requisite notice where there is any realistic possibility of
delay or disruption resulting from the late release of information.
An important aspect of the notice requirements in Sub-Cl.1.9 is the requirement for the Contractor to specify a reasonable period
by which the information is required (presumably the date being selected as one which will avoid any, or any further, delay
or disruption to the Works).
The 1999 edns required the Contractor to give a further notice, subsequent to the Engineer’s failure to issue the drawing or
instruction, in order to be entitled to an Extension of Time or Cost Plus Profit.
The 2017 edns provide that if the Engineer fails to provide the notified drawing or instruction within a reasonable time then,
subject to Sub-Cl.20.2, the Contractor will be entitled to an EOT and/or Cost Plus Profit. Sub-Clause 20.2.1 requires the
Contractor to give a Notice to the Engineer describing the event giving rise to the cost or delay as soon as practicable and in
any event no later than 28 days after the claiming Party became aware or should have become aware of the event. Sub-Clause
20.2.3 also requires the Contractor to keep such contemporary records as may be necessary to substantiate the Claim.
End of Document
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1
Section 1.9 - Errors in the Employer’s Requirements..., UKBC-UFIDIC...
Section 1.9 - Errors in the Employer’s Requirements (Yellow
Book)
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.9 - Errors in the Employer’s Requirements (Yellow Book)
1-051
If the Contractor finds an error, fault or defect in the Employer’s Requirements as a result of scrutinising them under SubClause 5.1 [General Design Obligations], the Contractor shall give a Notice to the Engineer within the period stated in the
Contract Data (if not stated, 42 days) calculated from the Commencement Date.
If, after expiry of this period, the Contractor finds an error, fault or defect in the Employer’s Requirements, the Contractor
shall also give a Notice to the Engineer describing the error, fault or defect.
The Engineer shall then proceed as specified under Sub-Clause 3.7 [Agreement or Determination] to agree or determine:
(a)whether or not there is an error, fault or defect in the Employer’s Requirements;
(b)whether or not (taking account of cost and time) an experienced contractor exercising due care would have
discovered the error, fault or other defect:
owhen examining the Site and the Employer’s Requirements before submitting the Tender; or
oif the Contractor’s Notice is given after the expiry of the period stated in the first paragraph of this Sub-Clause,
when scrutinising the Employer’s Requirements under Sub-Clause 5.1 [General Design Obligations]; and
(c)what measures (if any) the Contractor is required to take to rectify the error, fault or defect
(and, for the purpose of Sub-Clause 3.7.3 [Time limits], the date the Engineer receives the Contractor’s Notice under this
Sub-Clause shall be the date of commencement of the time limit for agreement under Sub-Clause 3.7.3).
If, under sub-paragraph (b) above, an experienced contractor would not have discovered the error, fault or other defect:
(i)Sub-Clause 13.3.1 [Variation by Instruction] shall apply to the measures that the Contractor is required to take (if
any); and
(ii)if the Contractor suffers delay and/or incurs Cost as a result of the error, fault or defect, the Contractor shall be
entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to EOT and/or payment of such Cost Plus Profit.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922869 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.9 - Errors in the Employer’s Requirements (Yellow Book)
Overview of Key Features
1-052
•The Contractor is to give a Notice to the Engineer, within the period stated in the Contract Data or within 42 days of the
Commencement Date if no period is stated, if he discovers an error, fault or defect in the Employer’s Requirements.
•If the Contractor finds an error, fault or defect after the expiry of the period, the Contractor is to give a Notice to the
Engineer describing the error, fault or defect.
•The Engineer will then agree or determine:
(i)whether or not there is an error;
(ii)whether or not (taking account of cost and time) an experienced contractor exercising due care would have
discovered the error when examining the Site and the Employer’s Requirements before submitting the Tender or when
scrutinising the Employer’s Requirements under Sub-Cl.5.1; and
(iii)what measures (if any) the Contractor is required to take to rectify the error.
•The date the Engineer receives the Contractor’s Notice is the date of commencement of the time limit for agreement under
Sub-Cl.3.7.3.
•If an experienced contractor would not have discovered the error:
(i)Sub-Cl.13.3.1 (Variation by Instruction) applies to the measures required to be taken by the Contractor (if any); and
(ii)the Contractor is entitled to EOT and/or payment of Cost Plus Profit, subject to Sub-Cl.20.2 (Claims for Payment
and/or EOT), if the Contractor suffers delay and/or incurs Cost as a result of the error.
End of Document
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1
Commentary, UKBC-UFIDIC 500922850 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.9 - Errors in the Employer’s Requirements (Yellow Book)
Commentary
1-053
This sub-clause has been substantially extended in the 2017 Yellow Book.
The Contractor now has two periods in which to give a Notice:
(a)within the period stated in the Contract Data or if not stated, within 42 days, calculated from the Commencement Data; or
(b)after expiry of such a period.
Previously the Engineer only had to agree or determine whether and (if so) to what extent the error could not reasonably have
been so discovered and whether any extensions of time or Costs plus reasonably profit were due as a result.
The new sub-clause effectively imposes a four-stage process for the Engineer to consider:
(1)Is there an error in the Employer’s Requirements?
(2)Would an experienced contractor exercising due care, taking account of cost and time, have discovered the error
when examining the Site and the Employer’s Requirements before submitting the Tender or if the Contractor’s Notice is
given after the expiry of the period, when scrutinising the Employer’s Requirements under Sub-Cl.5.1 (General Design
Obligations)?
(3)What measures (if any) is the Contractor required to take to rectify the defect?
(4)If an experienced Contractor would not have discovered the error, what extensions of time and Costs Plus Profit are due?
Sub-Clause 13.3.1 (Variation by Instruction) applies to any measures that the Contractor is required to take.
End of Document
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1
Section 1.10 - Employer’s Use of Contractor’s Documents, UKBC-UFIDIC 500922877...
Section 1.10 - Employer’s Use of Contractor’s Documents
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.10 - Employer’s Use of Contractor’s Documents
1-054
As between the Parties, the Contractor shall retain the copyright and other intellectual property rights in the Contractor’s
Documents and other design documents made by (or on behalf of) the Contractor.
The Contractor shall be deemed (by signing the Contract Agreement) to give to the Employer a non-terminable transferable
non-exclusive royalty-free licence to copy, use and communicate the Contractor’s Documents and such other design
documents, including making and using modifications of them. This licence shall:
(a)apply throughout the actual or intended operational life (whichever is longer) of the relevant parts of the Works;
(b)entitle any person in proper possession of the relevant part of the Works to copy, use and communicate the
Contractor’s Documents and such other design documents for the purposes of completing, operating, maintaining,
altering, adjusting, repairing and demolishing the Works;
(c)in the case of Contractor’s Documents and such other design documents which are in the form of electronic or
digital files, computer programs and other software, permit their use on any computer on the Site and/or at the locations
of the Employer and the Engineer and/ or at other places as envisaged by the Contract; and
(d)in the event of termination of the Contract:
(i)under Sub-Clause 15.2 [Termination for Contractor’s Default], entitle the Employer to copy, use and
communicate the Contractor’s Documents and the other design documents made by or for the Contractor; or
(ii)under Sub-Clause 15.5 [Termination for Employer’s Convenience], Sub-Clause 16.2 [Termination by
Contractor] or Sub-Clause 18.5 [Optional Termination], entitle the Employer to copy, use and communicate the
Contractor’s Documents for which the Contractor has received payment
for the purpose of completing the Works and/or arranging for any other entities to do so.The Contractor’s Documents and
other design documents made by (or on behalf of) the Contractor shall not, without the Contractor’s prior consent, be
used, copied or communicated to a third party by (or on behalf of) the Employer for purposes other than those permitted
under this Sub-Clause.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500922854 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.10 - Employer’s Use of Contractor’s Documents
Overview of Key Features
1-055
•The Contractor retains copyright in its own documents.
•The Employer has a right to use and copy the Contractor’s documents during the life of the project provided that use
relates to the project in question.
•In the event of a termination due to the default of the Contractor, pursuant to Sub-Cl.15.2, the Employer is entitled to
copy, use and communicate the Contractor’s documents for the purpose of completing the Works and/or arranging for any
other entities to do so.
•In the event of a termination of the Contract:
(a)for Employer’s Convenience (under Sub-Cl.15.5);
(b)by the Contractor under Sub-Cl.16.2; or
(c)under Sub-Cl.18.5 (Optional Termination)
the Employer is entitled to copy, use and communicate the Contractor’s Documents for which the Contractor has received
payment providing that it is for the purpose of completing the Works and/or arranging for any other entities to do so.
End of Document
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1
Commentary, UKBC-UFIDIC 500922861 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.10 - Employer’s Use of Contractor’s Documents
Commentary
1-056
The sub-clause is almost entirely unchanged except for the addition of the provisions in relation to termination in Sub-Cl.1.10(d).
In the event of a termination for Contractor’s Default, the Employer is not required to pay to copy, use and communicate
the documents but is required to pay if the Termination is for the Employer’s Convenience, by the Contractor or Optional
Termination.
Regardless of the basis for termination, the documents can only be used and copied for the purpose of completing the Works
and/or arranging for any other entities to do so.
End of Document
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Section 1.11 - Contractor’s Use of Employer’s Documents, UKBC-UFIDIC 500922895...
Section 1.11 - Contractor’s Use of Employer’s Documents
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.11 - Contractor’s Use of Employer’s Documents
1-057
As between the Parties, the Employer shall retain the copyright and other intellectual property rights in the Employer’s
Requirements and other documents made by (or on behalf of) the Employer. The Contractor may, at the Contractor’s cost,
copy, use and communicate these documents for the purposes of the Contract.
These documents (in whole or in part) shall not, without the Employer’s prior consent, be copied, used or communicated
to a third party by the Contractor, except as necessary for the purposes of the Contract.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500922893 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.11 - Contractor’s Use of Employer’s Documents
Overview of Key Features
1-058
•The Employer retains copyright in its own documents.
•The Contractor may, for the purpose of the project, copy and use the Employer’s documents.
End of Document
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1
Commentary, UKBC-UFIDIC 500922874 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.11 - Contractor’s Use of Employer’s Documents
Commentary
1-059
The only change to this sub-clause is that the new version specifies that the documents “in whole or in part” are not to be
copied, used or communicated to a third party by the Contractor, without the Employer’s prior consent, except as necessary
for the purposes of the Contract.
End of Document
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1
Section 1.12 - Confidentiality, UKBC-UFIDIC 500922870 (2021)
Section 1.12 - Confidentiality
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.12 - Confidentiality
1-060
The Contractor shall disclose all such confidential and other information as the Engineer may reasonably require in order
to verify the Contractor’s compliance with the Contract.
The Contractor shall treat all documents forming the Contract as confidential, except to the extent necessary to carry out
the Contractor’s obligations under the Contract. The Contractor shall not publish, permit to be published, or disclose any
particulars of the Contract in any trade or technical paper or elsewhere without the Employer’s prior consent.
The Employer and the Engineer shall treat all information provided by the Contractor and marked ‘confidential’, as
confidential. The Employer shall not disclose or permit to be disclosed any such information to third parties, except as
may be necessary when exercising the Employer’s rights under Sub-Clause 15.2 [Termination for Contractor’s Default].
A Party’s obligation of confidentiality under this Sub-Clause shall not apply where the information:
(a)was already in that Party’s possession without an obligation of confidentiality before receipt from the other Party;
(bbecomes generally available to the public through no breach of these Conditions; or
(c)is lawfully obtained by the Party from a third party which is not bound by an obligation of confidentiality.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922886 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.12 - Confidentiality
Overview of Key Features
1-061
•If the Engineer requires information, which is confidential, to check up on the Contractor’s performance of the Contract,
that information must be disclosed by the Contractor.
•The Contractor is to treat all documents forming the Contract as confidential except to the extent necessary to perform its
obligations under the Contract. Such documents cannot be published or disclosed without the Employer’s prior consent.
•The Employer and Engineer are to treat all information provided by the Contractor and marked “confidential”, as
confidential. Such information is not be disclosed to third parties except if necessary in the event of a termination due to
the Contractor’s default.
•The obligations of confidentiality do not apply to information:
(i)already in the party’s possession that was not required to be kept confidential prior to receipt;
(ii)generally available to the public through no breach of the Conditions; or
(iii)lawfully obtained from a third party which is not bound by an obligation of confidentiality.
End of Document
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1
Commentary, UKBC-UFIDIC 500922871 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.12 - Confidentiality
Commentary
1-062
It was notable that the previous edns did not impose any specific obligation on the Engineer to keep any such information
disclosed confidential and equally there was no requirement on either party to keep details of the contract private and
confidential.
The new second paragraph is identical to the addition suggested in the Particular Conditions of the previous edns.
The 2017 edns however go one step further as the Particular Conditions of the 1999 edns were silent on any obligations of
confidentiality imposed on the Employer.
The new provisions ensure that the obligations of confidentiality are not one sided. The Engineer and Employer are required to
treat as confidential all information provided by the Contractor and marked “confidential”.
Contractors should bear in mind that the obligation is only triggered if the information is marked confidential.
The Employer or Engineer cannot disclose, or permit to be disclosed, the information to third parties, unless the Employer has
terminated the Contract due to the Contractor’s default and is exercising its rights under Sub-Cl.15.2.
A Party’s obligation of confidentiality is not triggered in certain circumstances, i.e. if the Party already possessed the information
without an obligation of confidentiality, if it is generally available to the public, or if it lawfully obtained from a third party
not bound by any obligation of confidentiality.
End of Document
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1
Section 1.13 - Compliance with Laws, UKBC-UFIDIC 500922890 (2021)
Section 1.13 - Compliance with Laws
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.13 - Compliance with Laws
1-063
The Contractor and the Employer shall, in performing the Contract, comply with all applicable Laws. Unless otherwise
stated in the Employer’s Requirements:
(a)the Employer shall have obtained (or shall obtain) the planning, zoning or building permit or similar permits,
permissions, licences and/or approvals for the Permanent Works, and any other permits, permissions, licenses and/
or approvals described in the Employer’s Requirements as having been (or being) obtained by the Employer. The
Employer shall indemnify and hold the Contractor harmless against and from the consequences of any delay or failure
to do so, unless the failure is caused by the Contractor’s failure to comply with sub-paragraph (c) below;
(b)the Contractor shall give all notices, pay all taxes, duties and fees, and obtain all other permits, permissions, licences
and/or approvals, as required by the Laws in relation to the execution of the Works. The Contractor shall indemnify
and hold the Employer harmless against and from the consequences of any failure to do so unless the failure is caused
by the Employer’s failure to comply with Sub-Clause 2.2 [Assistance];
(c)within the time(s) stated in the Employer’s Requirement’s the Contractor shall provide such assistance and all
documentation, as described in the Employer’s Requirements or otherwise reasonably required by the Employer, so
as to allow the Employer to obtain any permit, permission, licence or approval under sub-paragraph (a) above; and
(d)the Contractor shall comply with all permits, permissions, licences and/or approvals obtained by the Employer
under sub-paragraph (a) above.
If, having complied with sub-paragraph (c) above, the Contractor suffers delay and/or incurs Cost as a result of the
Employer’s delay or failure to obtain any permit, permission, licence or approval under sub-paragraph (a) above, the
Contractor shall be entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to EOT and/or payment of such
Cost Plus Profit.
If the Employer incurs additional costs as a result of the Contractor’s failure to comply with:
(i)sub-paragraph (c) above; or
(ii)sub-paragraph (b) or (d) above, provided that the Employer shall have complied with Sub-Clause 2.2 [Assistance],
the Employer shall be entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to payment of these costs
by the Contractor.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922884 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.13 - Compliance with Laws
Overview of Key Features
1-064
•The Contractor and the Employer must comply with the applicable laws.
•The Employer is responsible for obtaining planning and other permissions for the permanent works.
•If the Employer fails to obtain the correct or proper planning permission, it must indemnify the Contractor for any
consequence of this failure.
•It is the responsibility of the Contractor to give all notices and pay all taxes and other duties in relation to the completion
of the Works.
•If the Contractor fails to do this, it is responsible for indemnifying the Employer for the consequences of this failure.
•The Contractor is obliged to assist and provide documentation to the Employer to allow the Employer to obtain any permit
or permission, etc.
•The Contractor is to comply with all permits and permissions obtained by the Employer.
•The Contractor is entitled to an extension of time and/or payment of Cost Plus Profit if, having provided any assistance
required by the Employer, the Contractor suffers delay and/or incurs Cost as a result of the Employer’s failure to obtain
any permit or permission, etc.
•The Employer is entitled to the additional costs incurred as a result of:
(i)the Contractor’s failure to provide assistance to the Employer in obtaining any permit or permission, etc.; and
(ii)the Contractor’s failure to pay any notices or taxes, etc. or to comply with any permits or permissions obtained
by the Employer, provided that the Employer has provided reasonable assistance if requested by the Contractor to
do so under Sub-Cl.2.2.
End of Document
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1
Commentary, UKBC-UFIDIC 500922841 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.13 - Compliance with Laws
Commentary
1-065
Sub-Clause 1.13(a) has attempted to respond to the suggestion that the division of responsibility between the Employer and
Contractor should be made clearer.
The previous version of the sub-clause only required the Contractor to obtain the “planning, zoning or similar permission for
the Permanent Works” as well as any other permissions described in the Specification.
In contrast, in the 2017 edns the responsibilities of the respective parties are set out in greater detail in order to enable either
Party to claim a remedy should the other fail to comply with its obligations.
The Employer is required to obtain “the planning, zoning or building permit or similar permits, permissions licenses and/or
approvals for the Permanent Works” as well as any other permissions described in the Specification.
Sub-Clauses 1.13(c) and (d) impose further requirements on the Contractor to provide assistance and documentation to the
Contractor and to comply with all permits, etc. obtained by the Employer.
The Contractor is entitled to extensions of time and Cost Plus Profit if the Contractor suffers delay and/or Cost as a result of
a failure by the Employer to obtain any permit, etc.
The Employer is entitled to additional costs incurred as a result of the Contractor’s failure:
(a)to provide assistance and documentation, as described in the Specification or otherwise reasonably required by the
Employer; and
(b)to give all notices and pay taxes, etc. and to comply with all permits, etc. obtained by the Employer, provided that the
Employer has, in accordance with Sub-Cl.2.2, provided reasonable assistance to the Contractor on request.
End of Document
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Section 1.14 - Joint and Several Liability, UKBC-UFIDIC 500922876 (2021)
Section 1.14 - Joint and Several Liability
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.14 - Joint and Several Liability
1-066
If the Contractor is a Joint Venture:
(a)the members of the JV shall be jointly and severally liable to the Employer for the performance of the Contractor’s
obligations under the Contract;
(b)the JV leader shall have authority to bind the Contractor and each member of the JV; and
(c)neither the members nor (if known) the scope and parts of the Works to be carried out by each member nor the
legal status of the JV shall be altered without the prior consent of the Employer (but such consent shall not relieve
the altered JV from any liability under sub-paragraph (a) above).
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922902 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.14 - Joint and Several Liability
Overview of Key Features
1-067
•If the Contractor is a joint venture, then all members of the joint venture must be jointly and severally liable to the
Employer.
•The JV leader will have authority to bind the Contractor and each member of the JV.
•The members of the joint venture, the scope and parts of the Works to be carried out by each member and the legal status
of the joint venture cannot be altered without the prior consent of the Employer.
•Any such consent does not relieve the altered JV from any liability.
End of Document
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1
Commentary, UKBC-UFIDIC 500922892 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.14 - Joint and Several Liability
Commentary
1-068
The new edns have removed the references to consortiums or other incorporated groupings and the reference to persons being
“deemed to be” jointly and severally liable.
The new Sub-Cl.1.14 refers only to joint ventures and imposes an explicit obligation on all members to be jointly and severally
liable.
The requirement to notify the Employer of the leader, as previously contained in Sub-Cl.1.14(b), has been removed and the
reference to the leader having the authority to bind the Contractor and each member is all that remains.
Sub-Clause 1.14(c) has attempted to achieve greater clarity.
It is difficult to see a significant change that comes from the replacement of the word “composition” with “members.”
The Sub-Clause does impose an additional requirement that the scope and parts of the Works to be carried out by each member
cannot be altered without prior consent of the Employer.
It is also made clear that any change as described in Sub-Cl.1.14(c) does not affect the position that all members of the JV are
jointly and severally liable.
End of Document
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1
Section 1.15 - Limitation of Liability, UKBC-UFIDIC 500922848 (2021)
Section 1.15 - Limitation of Liability
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.15 - Limitation of Liability
1-069
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, other
than under:
(a)Sub-Clause 8.8 [Delay Damages];
(b)sub-paragraph (c) of Sub-Clause 13.3.1 [Variation by Instruction];
(c)Sub-Clause 15.7 [Payment after Termination for Employer’s Convenience];
(d)Sub-Clause 16.4 [Payment after Termination by Contractor];
(e)Sub-Clause 17.3 [Intellectual and Industrial Property Rights];
(f)the first paragraph of Sub-Clause 17.4 [Indemnities by Contractor]; and
(g)Sub-Clause 17.5 [Indemnities by Employer].
The total liability of the Contractor to the Employer under or in connection with the Contract, other than:
(i)under Sub-Clause 2.6 [Employer-Supplied Materials and Employer’s Equipment];
(ii)under Sub-Clause 4.19 [Temporary Utilities];
(iii)under Sub-Clause 17.3 [Intellectual and Industrial Property Rights]; and
(iv)under the first paragraph of Sub-Clause 17.4 [Indemnities by Contractor],
shall not exceed the sum stated in the Contract Data or (if a sum is not so stated) the Accepted Contract Amount.
This Sub-Clause shall not limit liability in any case of fraud, gross negligence, deliberate default or reckless misconduct
by the defaulting Party.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500922845 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.15 - Limitation of Liability
Overview of Key Features
1-070
•Claims for indirect or consequential loss or damage, loss of use of the Works, loss of any contract, or loss of profit can
only be made in respect of Sub-Cll.8.8, 13.3.1(c), 15.7, 16.4, 17.3, 17.4 (first paragraph) and 17.5.
•The Contractor’s total liability is capped and shall not exceed either the sum stated in the Contract or the Accepted Contract
Amount.
•The total liability is not capped under Sub-Cll.2.6, 4.19, 17.3 and 17.4 (first paragraph).
•There are no limitations on liability in cases of fraud, gross negligence, deliberate default or reckless misconduct by the
defaulting party.
End of Document
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1
Commentary, UKBC-UFIDIC 500922855 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.15 - Limitation of Liability
Commentary
1-071
The substance of Sub-Cl.1.15 was previously contained in Sub-Cl.17.6 and the sub-clause remains in three parts:
(a)an exemption from liability for loss of use of any Works, loss of profit, loss of any contract or for any indirect or
consequential loss subject to the specified exceptions;
(b)a cap on total liability subject to the specified exceptions; and
(c)there is no limit on liability in cases of fraud, gross negligence, deliberate default or reckless misconduct.
The exceptions specified to the exemption from liability have been substantially extended.
The only exceptions to the exemption from liability in the 1999 edns were Sub-Cll.16.4 (which deal with termination by the
Contractor) and 17.1 (which deal with general indemnification obligations).
The following sub-clauses are additional exceptions in the 2017 edns:
(a)Sub-Cl.8.8 (Delay Damages);
(b)Sub-Cl.13.3.1(c) (Variation by Instruction);
(c)Sub-Cl.15.7 (Payment after Termination for Employer’s Convenience); and
(d)Sub-Cl.17.3 (Intellectual and Industrial Property Rights).
The relationship between Sub-Cll.1.15 and 8.8 may require further clarification.
Sub-Clause 8.8 provides that Delay Damages are the only damages due from the Contractor for the Contractor’s failure to
comply with Sub-Cl.8.2 (Time for Completion) other than in the event of termination under Sub-Cl.15.2 (Termination for
Contractor’s Default) before completion of the Works.
This appears to suggest that it would be possible to claim loss of profits in the event of a termination for Contractor’s default.
Despite this, termination for Contractor’s default is not listed in Sub-Cl.1.15 as an exception that permits the recovery of loss
of profits.
If the Parties intend for the Employer to be able to claim loss of profit following a termination for Contractor’s default,
certainty would be promoted by including Sub-Cl.15.4 (Payment after Termination for Contractor’s Default) in the list in the
first paragraph of Sub-Cl.1.15.
The inclusion of Sub-Cl.13.3.1(c) in the list means that, provided the Parties have agreed to the omission of any work which
is to be carried out by others, the Contractor is entitled to claim loss of profit and other losses and damages suffered (or to be
suffered) as a result of the omission.
The wording in Sub-Cll.1.15 and 13.3.1(c) is slightly different. Sub-Clause 1.15 entitles a Party to claim for loss of any contract
or consequential loss whereas Sub-Cl.13.3.1(c) entitles the Contractor to claim for “other losses and damages suffered as a
result of the omission”. This difference does not appear to affect the categories of losses that are recoverable.
© 2025 Thomson Reuters.
1
Commentary, UKBC-UFIDIC 500922855 (2021)
Similarly, Sub-Cl.15.6 entitles the Contractor to claim the “amount of any loss of profit or other losses and damages suffered.”
The difference in wording with Sub-Cl.1.15 does not appear to affect the categories of losses recoverable.
Under Sub-Cl.17.3 both Parties agree to indemnify each other against any claims arising from an infringement of intellectual
or industrial property rights by the other.
Sub-Clause 17.3 appears to have been included in the list to avoid any dispute that the sums incurred as a result of the indemnity
are excluded as indirect or consequential.
Cap on total liability
1-072
There remains no limit on the cap and the default in the event of no sum being stated as the cap is still the Accepted Contract
Amount.
The four exclusions to the cap are also maintained though some of the excluded sub-clauses have been renumbered and/or
amended.
For example, Sub-Cl.4.19 has been renamed “Temporary Utilities” and the Contractor is now expressly responsible for the
provision of all temporary utilities including telecommunications.
No limitation of liability in the event of fraud, etc.
1-073
The sub-clause ends by confirming that the cap and any limitation of liability will not apply in cases of fraud, deliberate default,
gross negligence or reckless misconduct.
The term “gross negligence” is a notable addition to the 1999 version.
The effect of the term will vary depending on the governing law of the Contract with English law traditionally sceptical about
the concept. 13
The courts do recognise an express contractual agreement that gross negligence, as opposed to mere negligence, will attract
liability and there is a line of cases that has considered how such a clause should be construed under English law. 14
Most recently, Field J noted in Marex Financial Ltd v Creative Finance Ltd that gross negligence “connotes in my opinion a
want of care that is more fundamental than a failure to exercise reasonable care. The difference between the two concepts is
one of degree.” 15
The guidance to the 2017 edns suggests the following definition:
“Gross negligence means any act or omission of a party which is contrary to the most elementary rules of diligence
which a conscientious employer or contractor would have observed in similar circumstances, and/or which show
serious reckless disregard for the consequences of such an act or omission. It involves materially more want of
care than mere inadvertence or simple negligence.”
Footnotes
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2
Commentary, UKBC-UFIDIC 500922855 (2021)
13
14
15
Armitage v Nurse [1997] 3 W.L.R.1046 per Millett LJ, later Lord Millett; Tradigrain SA v Intertek Testing Services (ITS)
Canada Ltd [2007] EWCA Civ 154, [2017] 1 C.L.C.188 per Moore-Bick LJ at [23]. Note in Tradigrain that German
law was the governing law of the insurance policy and so Moore-Bick LJ applied the concept of gross negligence in
German law.
Red Sea Tankers Ltd v Papachristidis (The Ardent) [1997] 2 Lloyd’s Rep. 547 (Comm); Great Scottish & Western
Railway Co Ltd v British Railways Board unreported, Court of Appeal, 10 February 2000; Camerata Property Inc
v Credit Suisse Securities (Europe) Ltd [2011] EWHC 479 (Comm); Winnetka Trading Corporation v Julius Baer
International Ltd [2011] EWHC 2030 (Ch); and Marex Financial Ltd v Creative Finance Ltd [2013] EWHC 2155
(Comm).
[2013] EWHC 2155 (Comm) at [67].
End of Document
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3
Section 1.15 - Inspections and Audit by the Bank (Pink Book), UKBC-UFIDIC 500922900...
Section 1.15 - Inspections and Audit by the Bank (Pink Book)
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.15 - Inspections and Audit by the Bank (Pink Book)
1-074
The Contractor shall permit the Bank and/or persons appointed by the Bank to inspect the Site and/or the Contractor’s
accounts and records relating to the performance of the Contract and to have such accounts and records audited by auditors
appointed by the Bank if required by the Bank.
End of Document
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1
Commentary, UKBC-UFIDIC 500922896 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.15 - Inspections and Audit by the Bank (Pink Book)
Commentary
1-075
This sub-clause only appears in the MBD version of the FIDIC Form. There is no specific requirement of confidentiality and
the Contractor might want to clarify this before granting the access required by this sub-clause. Further, it is not thought that
this clause and the right to inspect survives the termination of the Contract.
End of Document
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1
Section 1.16 - Contract Termination, UKBC-UFIDIC 500922868 (2021)
Section 1.16 - Contract Termination
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.16 - Contract Termination
1-076
Subject to any mandatory requirements under the governing law of the Contract, termination of the Contract under any SubClause of these Conditions shall require no action of whatsoever kind by either Party other than as stated in the Sub-Clause.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500922863 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.16 - Contract Termination
Overview of Key Features
1-077
•Subject to any mandatory requirements under the governing law of the Contract, termination of the Contract requires no
specific action unless stated in the relevant sub-clause of the Contract.
End of Document
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1
Commentary, UKBC-UFIDIC 500922864 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 1 - Clause 1—General Provisions
General Conditions
Section 1.16 - Contract Termination
Commentary
1-078
Sub-Clause 1.16 is a new addition to the 2017 edns that appears to have a two-fold purpose:
(a)To remind parties that the governing law may impose mandatory requirements for termination. 16
(b)To make clear that, unless a mandatory requirement applies, the relevant sub-clause specifies the only steps required
to terminate the Contract.
Footnotes
16
For example, art.892 of the UAE Civil Code. Article 892 states that a contract of Muqawala (i.e. a contract to make a
thing or to perform a task, thus encompassing construction contracts) shall terminate, on completion of all the agreed
works or services, by mutual consent; or by court order.
End of Document
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1
Chapter 2 - Clause 2—The Employer, UKBC-UFIDIC 500922914 (2021)
Chapter 2 - Clause 2—The Employer
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 2 - Clause 2—The Employer
Differences between the Red and Yellow Books
2-001
The one significant difference between the Contracts is to be found in Sub-Cl.2.1 of the Yellow Book, dealing with the situation
where the Contractors’ Documents require the Employer to give the Contractor possession of any foundations, structure, plant
or means of access.
End of Document
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1
Section 2.1 - Right of Access to the Site, UKBC-UFIDIC 500922916 (2021)
Section 2.1 - Right of Access to the Site
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 2 - Clause 2—The Employer
Section 2.1 - Right of Access to the Site
The Employer shall give the Contractor right of access to, and possession of, all parts of the Site within the time (or times)
stated in the Contract Data. The right and possession may not be exclusive to the Contractor. If, under the Contract, the
Employer is required to give (to the Contractor) possession of any foundation, structure, plant or means of access, the
Employer shall do so in the time and manner stated in the Employer’s Requirements. However, the Employer may withhold
any such right or possession until the Performance Security has been received.
2-002
If no such time is stated in the Contract Data, the Employer shall give the Contractor right of access to, and possession
of, those parts of the Site within such times as may be required to enable the Contractor to proceed in accordance with the
Programme or, if there is no Programme at that time, the initial programme submitted under Sub-Clause 8.3 [Programme].
If the Contractor suffers delay and/or incurs Cost as a result of a failure by the Employer to give any such right or possession
within such time, the Contractor shall be entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to EOT
and/or payment of such Cost Plus Profit.
However, if and to the extent that the Employer’s failure was caused by any error or delay by the Contractor, including an
error in, or delay in the submission of, any of the applicable Contractor’s Documents, the Contractor shall not be entitled
to such EOT and/or Cost Plus Profit.
If, under the Contract, the Employer is required to give to the Contractor possession of any foundation, structure, plant or
means of access in accordance with Contractor’s Documents, the Contractor shall submit such Contractor’s Documents to
the Engineer in the time and manner stated in the Employer’s Requirements. 1
Footnotes
1
This paragraph appears in the Yellow Book only.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922915 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 2 - Clause 2—The Employer
Section 2.1 - Right of Access to the Site
Overview of Key Features
2-003
•The Employer shall give the Contractor right of access to and possession of all parts of the site as stated in the Contract.
•Such right to access to and possession of the site may not be exclusive.
•Access to or possession of the site may be withheld until the Performance Security has been received.
•If the Contractor suffers delay or incurs cost due to: (a) the failure by the Employer to give access as set out in the Contract,
or (b) if no time is specified, within such time as may be required to enable the Contractor to proceed in accordance with
his programme, he is entitled, subject to Sub-Cl.20.2, to an extension of time and payment of Cost Plus Profit.
•No extension of time will be granted if the Employer’s failure to give possession or access was caused by an error or delay
by the Contractor, including delay in the submission of the Contractor’s Documents.
•The Yellow Book contains an additional obligation whereby if the Employer is required to give to the Contractor
possession of any foundation, structure, plant or means of access in accordance with Contractor’s Documents, the
Contractor has to submit such Contractor’s Documents to the Engineer in the time and manner stated in the Employer’s
Requirements.
End of Document
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Commentary, UKBC-UFIDIC 500922917 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 2 - Clause 2—The Employer
Section 2.1 - Right of Access to the Site
Commentary
Access
2-004
The 2017 edns have retained at Sub-Cll.1.1.74 (Red Book) and 1.1.77 (Yellow Book) the same wide definition of the “Site”.
This means that the Site is not only where the permanent works are to be executed, and to which plant and materials are to
be delivered, but also “any other places as may be specified in the Contract as forming part of the site”. 2 It therefore remains
important for all parties to understand what constitutes the Site in order that the required access can be given.
The time within which the Employer must provide access is to be set out in the Contract Data, where there is provision to fix
the number of days within which the Employer must give access to the site.
A notable change is that the Appendix to Tender of the 1999 edns used the Commencement Date as a base date. The parties
therefore agreed that the time for access to the Site was to be a specified number of days after the Commencement Date.
The 2017 edns use a different base date. The Contract Data refers to the Contractor being given right of access to “all or part
of the Site” within the specified number of days “after receiving the Letter of Acceptance”.
Sub-Clause 8.1 of the 1999 and 2017 edns provides that the Commencement Date will be no later than 42 days after the
Contractor receives the Letter of Acceptance and so the new base date is an earlier reference point.
The second paragraph of the updated sub-clause contains two notable additions.
First, the Employer only has to provide access to the “parts of” the Site required to enable the Contractor to proceed with the
programme. This addition reflects that the Employer does not necessarily have to provide access to the whole site to enable
the Contractor to proceed with the programme.
Secondly, if there is no programme at that time, the Employer has to provide access within such a time as may be required to
enable the Contractor to proceed with the “initial programme” submitted under Sub-Cl.8.2.
The concept of an “initial programme” is itself a new addition. The 1999 edns required the Contractor to submit a detailed time
programme to the Engineer within 28 days after receiving a Notice from the Engineer stating the Commencement Date.
The new Sub-Cl.8.2 describes a more exhaustive process. The Contractor is required to submit an initial programme within 28
days after receiving the Notice stating the Commencement Date and is to submit a revised programme whenever a programme
ceases to reflect actual progress or is inconsistent with the Contractor’s obligations. Any initial or required programme has
to comply with the extensive requirements set out in the second paragraph of Sub-Cl.8.2. If the Engineer fails to submit an
objection Notice within 21 days of receipt of an initial programme or 14 days of receipt of a revised programme, the initial or
revised programme becomes the Programme.
The initial programme will therefore be relevant for the purposes of Sub-Cl.2.1 if the period for the Engineer to give a Notice
of objection has not yet expired.
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Commentary, UKBC-UFIDIC 500922917 (2021)
Sub-Clause 2.1 has also retained the reference to the Contractor not necessarily having exclusive rights of access and possession
of the site.
The Contractor should establish which parts of the Site he has shared control over because this not only has an obvious impact
on the likely tender figure and the project programme but the Contract also imposes an express obligation on the Contractor
under Sub-Cl.4.6 to co-operate with all other contractors.
The sub-clause still makes no reference to the Employer’s right of access to the site. Whilst it may be said that Sub-Cl.7.3 covers
this, that sub-clause deals primarily with rights of inspection and so the Employer might want to consider, for the avoidance
of any doubt, inserting a clause confirming his rights of access:
“The Contractor will allow the Employer and/or the Employer’s Personnel access to the Site as and when required
by the Employer for any purpose whatsoever.”
Performance Security
2-005
Sub-Clause 4.2 deals with the bond or Performance Security which the Contractor may be required to provide under the Contract.
By Sub-Cl.4.2, the Contractor must provide the Performance Security within 28 days of receiving the Letter of Acceptance.
The parties to the contract must therefore check the appropriate timescales set out in the Contract for the provision of access to
the site to ensure that there is no conflict between these two requirements.
By Sub-Cl.14.6(a), an Employer may withhold payment if the Performance Security has not been provided within the contractual
timescale. Here Sub-Cl.2.1 provides an additional tool for the Employer to encourage the provision of the necessary Performance
Security. The Employer may withhold possession of the Site where no Performance Security has been provided. Therefore,
it is important that the parties keep each other informed of any delays in obtaining this security. An Employer will need to
balance the importance of obtaining the financial security provided by the Performance Security against the need to commence
work on site promptly.
Whilst that is not the situation here and the Employer has a choice about whether to withhold access or not, it is submitted that
a Contractor would not be able to make a successful claim for an extension of time in circumstances where the reason that site
access was withheld was a failure to provide a bond.
Claims
2-006
The failure by an Employer to provide timely access is one of the biggest causes of dispute. If a Contractor wants to claim an
extension of time, costs and profit as a consequence of any failure by the Employer to provide access to the site in due time,
the Contractor must comply with the notice requirements contained in Sub-Cl.20.2.
The final paragraph of the sub-clause retains the provision that the Contractor will not be entitled to an extension of time, profit
or cost if the Employer’s failure to give possession or access was caused by an error or delay by the Contractor. The example
given in the sub-clause is any delay in the submission of the Contractor’s Documents.
Footnotes
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Commentary, UKBC-UFIDIC 500922917 (2021)
2
In England and Wales, the courts have said that when defining the “site”, the matter has to be considered as “one of
overall impression rather than a detailed examination of particular documents or obligations”: see Ramsey J in Laker
Vent Engineering Ltd v Jacobs C&E Ltd [2014] EWHC 1058 (TCC) and HHJ Bowsher QC in ABB Zantingh Ltd v Zedal
Building Services Ltd [2000] EWHC 40 (TCC).
End of Document
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Section 2.2 - Assistance, UKBC-UFIDIC 500922923 (2021)
Section 2.2 - Assistance
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 2 - Clause 2—The Employer
Section 2.2 - Assistance
2-007
If requested by the Contractor, the Employer shall promptly provide reasonable assistance to the Contractor so as to allow
the Contractor to obtain:
(a)copies of the Laws of the Country which are relevant to the Contract but are not readily available; and
(b)any permits, permissions, licences or approvals required by the Laws of the Country (including information
required to be submitted by the Contractor in order to obtain such permits, permissions, licences or approvals):
(i)which the Contractor is required to obtain under Sub-Clause 1.13 [Compliance with Laws];
(ii)for the delivery of Goods, including clearance through customs; and
(iii)for the export of Contractor’s Equipment when it is removed from the Site.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922907 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 2 - Clause 2—The Employer
Section 2.2 - Assistance
Overview of Key Features
2-008
•If requested by the Contractor, the Employer must promptly provide reasonable assistance to the Contractor in obtaining:
(i)copies of the relevant laws which are not readily available; and
(ii)any permits, permissions, licenses or approvals required by the laws of the country.
End of Document
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Commentary, UKBC-UFIDIC 500922912 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 2 - Clause 2—The Employer
Section 2.2 - Assistance
Commentary
2-009
This sub-clause has remained largely the same.
The reference in the 1999 edns to the Employer providing reasonable assistance “where he is in a position to do so” has been
removed.
Under the 2017 edns, the only qualification on the Employer’s obligation to provide reasonable assistance is that it must be
provided “promptly”.
Sub-Clause 2.2(b) has been amended to make clear that the obligation includes a requirement for the Employer to provide
such information as may be required for the Contractor to obtain the permits, permissions, licenses or approvals required by
the law of country.
A Contractor can be liable for any costs incurred by the Employer as a result of the Contractor’s failure to obtain all permits,
permissions and licenses required by the law pursuant to Sub-Cl.1.13 and so a Contractor would be well advised to consider
taking advantage of the opportunity this clause provides.
Unlike other sub-clauses, no specific sanction is provided in respect of a failure by the Employer to provide reasonable
assistance. For example, Sub-Cl.1.13 specifically refers to the potential entitlement of the Contractor to an extension of time
and/or payment of any costs plus profit for the Employer’s delay or failure to obtain any permit, permission, licence or approval.
If the Contractor suffered delay as a result of the Employer’s failure to provide reasonable assistance, the easiest way for the
Contractor to obtain an extension of time would be under Sub-Cl.8.5(e). Under that sub-clause the Contractor has entitlement
to an EOT where completion has been delayed due to “any delay, impediment or prevention caused by or attributable to the
Employer.”
There remains no obvious mechanism by which the Contractor can recover any costs incurred as a result of the Employer’s
failure to provide reasonable assistance.
The sub-clause also remains silent on whether the Employer is entitled to payment for any assistance given. It is presumed that
a reasonable payment is required (as per the 1999 version).
End of Document
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Section 2.3 - Employer’s Personnel and Other Contractors, UKBC-UFIDIC 500922911...
Section 2.3 - Employer’s Personnel and Other Contractors
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 2 - Clause 2—The Employer
Section 2.3 - Employer’s Personnel and Other Contractors
2-010
The Employer shall be responsible for ensuring that the Employer’s Personnel and the Employer’s other contractors (if
any) on or near the Site:
(a)co-operate with the Contractor’s efforts under Sub-Clause 4.6 [Cooperation]; and
(b)comply with the same obligations which the Contractor is required to comply with under sub-paragraphs (a) to (e)
of Sub-Clause 4.8 [Health and Safety Obligations] and under Sub-Clause 4.18 [Protection of the Environment].
The Contractor may require the Employer to remove (or cause to be removed) any person of the Employer’s Personnel
or of the Employer’s other contractors (if any) who is found, based on reasonable evidence, to have engaged in corrupt,
fraudulent, collusive or coercive practice.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922909 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 2 - Clause 2—The Employer
Section 2.3 - Employer’s Personnel and Other Contractors
Overview of Key Features
2-011
•The Employer shall be responsible for ensuring that the Employer’s Personnel and his other contractors:
(i)co-operate with the Contractor to the limited extent provided for in Sub-Cl.4.6;
(ii)comply with the health and safety requirements set out in paras(a)–(e) of Sub-Cl.4.8; and
(iii)take all necessary measures to protect the environment both on and off the Site as required by Sub-Cl.4.18.
End of Document
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Commentary, UKBC-UFIDIC 500922905 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 2 - Clause 2—The Employer
Section 2.3 - Employer’s Personnel and Other Contractors
Commentary
Co-operation
2-012
In the 1999 edns, the definition of “Employer’s Personnel” was widely drafted in that it referred to the Engineer, the Engineer’s
assistants, all staff, labour and other employees of the Engineer and of the Employer together with any other personnel notified
to the Contractor by either the Engineer or the Employer as being members of the Employer’s Personnel.
Under the 2017 definition only other staff, labour and employees of the Engineer and of the Employer “engaged in fulfilling
the Employer’s obligations under the Contract” are captured by the term “Employer’s Personnel”.
Sub-Clause 2.3 imposes an obligation on the Employer that is intended to complement the Contractor’s obligation under SubCl.4.6 to co-operate with the Employer’s personnel, other contractors employed by the Employer and personnel of any legally
constituted public authority.
The 2017 version of Sub-Cl.4.6 appears to impose a wider obligation of co-operation on the Contractor. The Contractor is to
co-operate with “and” allow appropriate opportunities for carrying out work. The 1999 version only required the Contractor to
allow appropriate opportunities for carrying out work.
Sub-Clause 2.3 therefore imposes an obligation on the Employer to ensure that its personnel and contractors co-operate with
the Contractor and allow him appropriate opportunities for work. The Employer should take steps to ensure that any contractors
adhere to these provisions by reflecting the provisions in any contracts entered into with other contractors.
Health and safety and the environment
2-013
Under the 1999 version of Sub-Cl.2.3, the Employer had to ensure that its personnel and employers took actions similar to those
that the Contractor was required to take under sub-paras (a)–(c) of Sub-Cl.4.8 and Sub-Cl.4.18.
Sub-Clause 4.8 has been extended in the 2017 edns. Therefore, the Employer has to ensure compliance with paras (a)–(e) of the
new sub-clause. This means that the Employer is under an obligation to ensure that his own personnel and any other contractors:
(a)comply with all applicable health and safety regulations and laws;
(b)comply with all applicable health and safety obligations specified in the Contract;
(c)comply with all directives issued by the Contractor’s health and safety officer;
(d)take care of the health and safety of all persons entitled to be on the Site and other places (if any) where the works
are being executed; and
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Commentary, UKBC-UFIDIC 500922905 (2021)
(e)keep the Site, Works and any other places where the works are being carried out clear of unnecessary obstruction so
as to avoid danger to them.
Similarly, Sub-Cl.4.18 has been amended. Under the 2017 edns the Contractor must take “all necessary measures” as opposed
to all reasonable steps and has to comply with the environmental impact statement for the Works, in addition to the previous
requirements to protect the environment and limit damage and nuisance. Sub-Clause 4.18 also makes clear that emissions and
other pollutants are not to exceed the values prescribed in the Specification or those prescribed by “applicable laws.”
The Employer is therefore under an obligation to ensure that his own personnel and contractors comply with these additional
requirements. Accordingly, it is important that the Employer undertakes suitable supervision of his own personnel to ensure
that this obligation is carried out and that any contract with any other contractors contains similar obligations to those imposed
by Sub-Cll.4.8 and 4.18.
End of Document
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2
Section 2.4 - Employer’s Financial Arrangements, UKBC-UFIDIC 500922918 (2021)
Section 2.4 - Employer’s Financial Arrangements
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 2 - Clause 2—The Employer
Section 2.4 - Employer’s Financial Arrangements
2-014
The Employer’s arrangements for financing the Employer’s obligations under the Contract shall be detailed in the Contract
Data.
If the Employer intends to make any material change (affecting the Employer’s ability to pay the part of the Contract Price
remaining to be paid at that time as estimated by the Engineer) to these financial arrangements, or has to do so because
of changes in the Employer’s financial situation, the Employer shall immediately give a Notice to the Contractor with
detailed supporting particulars.
If the Contractor:
(a)receives an instruction to execute a Variation with a price greater than ten percent (10%) of the Accepted Contract
Amount, or the accumulated total of Variations exceeds thirty percent (30%) of the Accepted Contract Amount;
(b)does not receive payment in accordance with Sub-Clause 14.7 [Payment]; or
(c)becomes aware of a material change in the Employer’s financial arrangements of which the Contractor has not
received a Notice under this Sub-Clause,
the Contractor may request and the Employer shall, within 28 days after receiving this request, provide reasonable evidence
that financial arrangements have been made and are being maintained which will enable the Employer to pay the part of
the Contract Price remaining to be paid at that time (as estimated by the Engineer).
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922913 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 2 - Clause 2—The Employer
Section 2.4 - Employer’s Financial Arrangements
Overview of Key Features
2-015
•The Employer is to detail in the Contract Data his arrangements for financing the Employer’s obligations under the
Contract. 3
•If the Employer intends to make any material change to the financial arrangements or has to do so because of changes in
the Employer’s financial position, the Employer must immediately give a Notice to the Contractor with detailed supporting
particulars.
•The Contractor can only request evidence that the Employer is able to pay the remaining sum due under the Contract if:
(a)the Contractor receives an instruction to execute a Variation with a price greater than 10 per cent of the Accepted
Contract Amount or the accumulated total of variations exceeds 30 per cent of the Accepted Contract Amount;
(b)there is a failure to pay in accordance with Sub-Cl.14.7; or
(c)the Contractor becomes aware of a material change in the Employer’s financial arrangements and the Employer
has failed to give a Notice under the sub-clause.
•The Employer has to provide reasonable evidence that financial arrangements have been made and are being maintained
within 28 days after receiving such a request.
Footnotes
3
Thus bringing the 2017 edns more in line with the MDB Version, albeit that Sub-Cl.8.1(b) of the MDB version makes
the delivery to the Contractor of reasonable evidence of the Employer’s Financial arrangements a condition precedent
to the commencement of the Works.
End of Document
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Commentary, UKBC-UFIDIC 500922908 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 2 - Clause 2—The Employer
Section 2.4 - Employer’s Financial Arrangements
Commentary
2-016
The arrangements contained in Sub-Cl.2.4 have been fundamentally changed.
Request
2-017
Previously the Contractor could request, seemingly at any time and under any circumstances, reasonable evidence that the
Employer had made and maintained financial arrangements to enable it to pay the Contract Price.
Under the 2017 edns the Employer sets out its arrangements in the Contract Data and the Contractor can only request evidence
of the Employer’s ability to pay if one of the three prescribed circumstances is present.
Notice
2-018
Under the previous books the Employer was required to give a notice if he intended to make any material change to his financial
arrangements. No definition was provided of material change.
The 2017 edns require the Employer to give a Notice if he intends to make a material change or if he “has to do so because of
changes in the Employer’s financial situation.” Importantly, the sub-clause provides some welcome clarity on what constitutes
a material change. A material change is a step that affects the Employer’s ability to pay the part of the Contract Price remaining
to be paid at that time as estimated by the Engineer.
Sanction
2-019
The clause does not contain a sanction if the Employer fails to provide reasonable evidence within 28 days of receiving the
request from the Contractor. Nevertheless, Sub-Cl.16.1(b) permits the Contractor, not less than 21 days after giving a Notice
to the Employer, to suspend work, provided that the failure to provide reasonable evidence constitutes a material breach of the
Employer’s obligations under the Contract. This potentially gives a period of 49 (i.e. 28 plus 21) days before a Contractor is
entitled to suspend.
If the Contractor does not receive reasonable evidence within 42 days of giving a Notice under Sub-Cl.16.1(b) then, pursuant
to Sub-Cl.16.2.1(a), the Contractor is entitled to give a Notice of an intention to terminate the Contract. Unless the Employer
provided the evidence within 14 days of receiving the Notice issued under Sub-Cl.16.2.1(a), the Contractor can terminate the
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Commentary, UKBC-UFIDIC 500922908 (2021)
Contract immediately by giving a second Notice. In total, there is a period of 105 days from the date of the initial request for
reasonable evidence to termination of the Contract.
Reasonable evidence
2-020
It remains the case that no definition of “reasonable evidence” has been provided. The evidence must merely show that the
Employer is able to pay the remaining part of the Contract Price. The reasonableness of the evidence will inevitably depend on
the circumstances of each request and therefore it is easy to see how disputes may arise as to the adequacy of evidence provided.
The Privy Council considered the 1999 version of Sub-Cl.2.4 and endorsed an arbitrator’s construction of what is meant by
the phrase “reasonable evidence that financial arrangements have been made and are being maintained”. The arbitrator held
that the wording required more than showing that the Employer is able to pay. Instead what is required is evidence of “positive
steps” on the part of the Employer that highlight that “financial arrangements” have been made to pay sums due under the
Agreement. 4 In that case the failure to provide reasonable evidence had led to valid termination by the Contractor. This same
phrase remains in the 2017 sub-clause and so the construction remains relevant to the new sub-clause. This is potentially an area
of vulnerability in the case of an employer who is, for example periodically placed in funds by lenders or by a state-owned entity.
It may not always be straightforward to produce evidence, although in the NH International case, the arbitrator had evidence
that the state-owned enterprise had an established practice of having funds secured by cabinet.
Footnotes
4
NH International v National Insurance Property Development Co [2015] UKPC 37.
End of Document
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2
Section 2.5 - Site Data and Items of Reference, UKBC-UFIDIC 500922906 (2021)
Section 2.5 - Site Data and Items of Reference
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 2 - Clause 2—The Employer
Section 2.5 - Site Data and Items of Reference
2-021
The Employer shall have made available to the Contractor for information, before the Base Date, all relevant data in
the Employer’s possession on the topography of the Site and on sub-surface, hydrological, climatic and environmental
conditions at the Site. The Employer shall promptly make available to the Contractor all such data which comes into the
Employer’s possession after the Base Date.
The original survey control points, lines and levels of reference (the “items of reference” in these Conditions) shall be
specified in the Employer’s Requirements or issued to the Contractor by a Notice from the Engineer.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922921 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 2 - Clause 2—The Employer
Section 2.5 - Site Data and Items of Reference
Overview of Key Features
2-022
•The Employer must make available to the Contractor before the Base Date, all relevant data in the Employer’s possession
of the topography of the site and on sub-surface, hydrological, climatic and environmental conditions at the Site.
•The Employer must promptly make available all such data that comes into its possession after the Base Date.
•The original items of references must be specified on the drawings and/or in the Specification or issued to the Contractor
by a Notice from the Engineer.
End of Document
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Commentary, UKBC-UFIDIC 500922922 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 2 - Clause 2—The Employer
Section 2.5 - Site Data and Items of Reference
Commentary
2-023
Sub-Clause 2.5 previously dealt with Employer’s Claims. Under the 2017 edns the Claims provisions have been redrafted
substantially and are now contained in Cl.20.
The new Sub-Cl.2.5 has drawn on Employer’s obligations that previously featured in Sub-Cll.4.7 (Setting out) and 4.10 (Site
Data).
The first paragraph is an enlarged version of the first paragraph of the 1999 version of Sub-Cl.4.10. This is welcomed considering
the potential for problems surrounding different or unforeseeable site conditions is one of the largest risk areas in the type of
civil engineering projects catered for under the Red Book.
The Employer warrants that it has made available all relevant data prior to the Base Date and that it will continue to make this
data available. It is likely that the Employer will have carried out certain investigations in establishing the viability of this project.
The obligation is not one to provide the data; it is to make the data available. The sub-clause does not say in what form the
data is to be made available. Therefore, an Employer might attempt to satisfy this obligation by providing the Contractor with
details of the information he has in his possession. If this is how the Employer chooses to comply with this clause, then the
Contractor must ask to see the information.
The Employer should bear in mind the extent of the definition of “Site” in Sub-Cll.1.1.74 (Red Book) and 1.1.77 (Yellow Book)
when providing the relevant data. The definition is a wide one, including not just where the Permanent Works are to be carried
out but also any other places specified in the Contract forming part of the site.
The question arises as to whether the Employer makes any warranty regarding the accuracy of the data provided. It is submitted
that the answer must be that he does. It may well be for this reason that Sub-Cl.4.10 so carefully limits what the Employer
has to provide. The data must be supplied prior to tenders being submitted. The Contractor will therefore rely on that data. For
example, by Sub-Cl.4.11, the Contractor is, in part at least, deemed to have based its tender sum on the data provided.
Unlike the 1999 edns, Sub-Cl.4.7 the 2017 Red and Yellow Books requires the Contractor to verify the accuracy of all the items
of reference before they are used for the Works and to promptly deliver the results of each verification to the Engineer.
It is considered that the Employer must act in good faith in complying with the requirements of this sub-clause. By good faith we
mean the exercise of fair and open dealing with no concealed pitfalls or traps. The exact meaning of good faith depends on the
jurisdiction that the contract operates under. English law has become significantly murkier on the question of a general obligation
of good faith. Whilst Leggatt J, as he then was, in particular has been in favour of the implication of such an obligation in the
context of relational contracts, 5 there is still a significant degree of judicial restraint around the implication of a term as to good
faith. 6 The concept is recognised in many civil codes, including those operated under Sharia principles. These typically impose
an overriding obligation that contracts are performed 7 both according to their terms and in a way compatible with good faith.
The Employer is required to make available “all relevant data” and so it is for the Employer to decide, at its own risk, what
is relevant.
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Commentary, UKBC-UFIDIC 500922922 (2021)
The new Sub-Cl.2.5 also now contains the Employer’s obligation previously set out at Sub-Cl.4.7 to set out the original points,
lines and levels of reference. New Sub-Cl.4.7 only focuses on the Contractor setting out the works in relation to the items of
reference.
Footnotes
5
6
7
Yam Seng Pte Ltd v International Trade Corp Ltd [2013] EWHC 111 (QB); [2013] 1 Lloyd’s Rep. 526; Al Nehayan v
Kent [2018] EWHC 333 (Comm).
MSC Mediterranean Shipping Co SA v Cottonex Anstalt [2016] EWCA Civ 789; [2016] 2 C.L.C. 272 per Moore-Bick
LJ at [45]; Sir R. Jackson, “Does Good Faith Have Any Role in Construction Contracts?” SCL Paper 207 (January
2018). See also, www.scl.org.uk [Accessed 10 September 2018]. Further discussion of the role of good faith can be
found in the Introduction of this book and paras 15-028 and 20-018.
Civil codes may differ as to whether the obligations of good faith are applicable in the performance of the contract only,
or whether they are also engaged during the parties’ negotiation of the contract.
End of Document
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2
Section 2.6 - Employer-Supplied Materials and Employer’s..., UKBC-UFIDIC...
Section 2.6 - Employer-Supplied Materials and Employer’s
Equipment
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 2 - Clause 2—The Employer
Section 2.6 - Employer-Supplied Materials and Employer’s Equipment
2-024
If Employer-Supplied Materials and/or Employer’s Equipment are listed in the Employer’s Requirements for the
Contractor’s use in the execution of the Works, the Employer shall make such materials and/or equipment available to the
Contractor in accordance with the details, times, arrangements, rates and prices stated in the Employer’s Requirements.
The Contractor shall be responsible for each item of Employer’s Equipment whilst any of the Contractor’s Personnel is
operating it, driving it, directing it, using it, or in control of it.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922919 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 2 - Clause 2—The Employer
Section 2.6 - Employer-Supplied Materials and Employer’s Equipment
Overview of Key Features
2-025
•If Employer-Supplied Materials and/or Employer’s Equipment are listed in the specification for the Contractor’s use, the
Employer must make any materials and/or equipment available in accordance with the details, times, arrangements, rates
and prices stated in the Specification.
•The Contractor is responsible for each item of Employer’s equipment whilst any of its personnel is operating, driving,
directing, using or in control of it.
End of Document
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Commentary, UKBC-UFIDIC 500922910 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 2 - Clause 2—The Employer
Section 2.6 - Employer-Supplied Materials and Employer’s Equipment
Commentary
2-026
This sub-clause requires little comment since it effectively states that if the Contract requires the Employer to provide materials
and equipment then the Employer should provide them.
The final paragraph of the sub-clause makes it explicit that the Contractor is responsible for any item whilst any of the
Contractor’s Personnel are using it. The Contractor must therefore be aware of the wide scope of the definition of Contractor’s
Personnel found at Sub-Cl.1.1.17 of the Red Book and Sub-Cl.1.1.16 of the Yellow Book. The definition captures the
Contractor’s Representative, all personnel whom the Contractor utilises on site or other places where the works are being carried
out, including the employees of each subcontractor, and any other personnel assisting the Contractor in the execution of the
works.
End of Document
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1
Chapter 3 - Clause 3—The Engineer, UKBC-UFIDIC 500922929 (2021)
Chapter 3 - Clause 3—The Engineer
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Differences between the Red and Yellow Books
3-001
There are no differences between the Red and Yellow Forms treatment of this clause.
End of Document
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1
Section 3.1 - The Engineer, UKBC-UFIDIC 500922930 (2021)
Section 3.1 - The Engineer
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.1 - The Engineer
3-002
The Employer shall appoint the Engineer, who shall carry out the duties assigned to the Engineer in the Contract.
The Engineer shall be vested with all the authority necessary to act as the Engineer under the Contract.
If the Engineer is a legal entity, a natural person employed by the Engineer shall be appointed and authorised to act on
behalf of the Engineer under the Contract.
The Engineer (or, if a legal entity, the natural person appointed to act on its behalf) shall be:
(a)a professional engineer having suitable qualifications, experience and competence to act as the Engineer under
the Contract; and
(b)shall be fluent in the ruling language defined in Sub-Clause 1.4 [Law and Language].
Where the Engineer is a legal entity, the Engineer shall give a Notice to the Parties of the natural person (or any replacement)
appointed and authorised to act on its behalf. The authority shall not take effect until this Notice has been received by both
Parties. The Engineer shall similarly give a Notice of any revocation of such authority.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922941 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.1 - The Engineer
Overview of Key Features
3-003
•The Engineer is appointed by the Employer.
•The Engineer is obliged to carry out the functions described in the Contract.
•The Engineer must be vested with the authority necessary to act as Engineer under the Contract.
•If the Engineer is a legal entity, the requirements in the sub-clause must be complied with.
•The Engineer or if a legal entity, the natural person appointed to act on its behalf, must meet the requirements set out
in the sub-clause.
End of Document
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1
Commentary, UKBC-UFIDIC 500922943 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.1 - The Engineer
Commentary
3-004
The first line of the 2017 sub-clause is identical to the 1999 version but the remainder of the sub-clause has been newly drafted
to clarify that an Engineer can be a legal entity under the 2017 edns.
The Engineer is not a party to the Contract. Indeed, the Engineer is not defined as a Party at Sub-Cl.1.1.60 of the Red and Yellow
Books. Nevertheless, he is appointed by the Employer and effectively acts as his agent.
The significant change in the 2017 edns is that it is made explicit that the Engineer can be a legal entity. If the Engineer is to
be a legal entity, further requirements are imposed:
(a)A natural person employed by the Engineer must be appointed and authorised to act on behalf of the Engineer under
the Contract.
(b)The Engineer must give a Notice to the Parties of the natural person appointed and the natural person’s authority will
not take effect until both Parties have received the Notice.
(c)A Notice must also be given for any replacement or for the revocation of the authority of the natural person.
The 1999 edns were silent as to the qualifications and experience that an Engineer must possess. The 2017 edns specify that
an Engineer must have the qualifications, experience and competence to perform the role of Engineer under the Contract and
must also be fluent in the ruling language of the Contract.
End of Document
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1
Section 3.2 - Engineer’s Duties and Authority, UKBC-UFIDIC 500922938 (2021)
Section 3.2 - Engineer’s Duties and Authority
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.2 - Engineer’s Duties and Authority
3-005
Except as otherwise stated in these Conditions, whenever carrying out duties or exercising authority, specified in or implied
by the Contract, the Engineer shall act as a skilled professional and shall be deemed to act for the Employer.
The Engineer shall have no authority to amend the Contract or, except as otherwise stated in these Conditions, to relieve
either Party of any duty, obligation or responsibility under or in connection with the Contract.
The Engineer may exercise the authority attributable to the Engineer as specified in or necessarily to be implied from the
Contract. If the Engineer is required to obtain the consent of the Employer before exercising a specified authority, the
requirements shall be as stated in the Particular Conditions. There shall be no requirement for the Engineer to obtain the
Employer’s consent before the Engineer exercises his/her authority under Sub-Clause 3.7 [Agreement or Determination].
The Employer shall not impose further constraints on the Engineer’s authority.
However, whenever the Engineer exercises a specified authority for which the Employer’s consent is required, then (for
the purposes of the Contract) such consent shall be deemed to have been given.
Any acceptance, agreement, approval, check, certificate, comment, consent, disapproval, examination, inspection,
instruction, Notice, No-objection, record(s) of meeting, permission, proposal, record, reply, report, request, Review, test,
valuation, or similar act (including the absence of any such act) by the Engineer, the Engineer’s Representative or
any assistant shall not relieve the Contractor from any duty, obligation or responsibility the Contractor has under or in
connection with the Contract.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922944 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.2 - Engineer’s Duties and Authority
Overview of Key Features
3-006
Except as otherwise stated, the Engineer must act as a skilled professional when carrying out duties or exercising authority
specified in or implied by the Contract. The Engineer will be deemed to act for the Employer when doing so.
The Engineer has no authority to amend the Contract or, unless stated in the Conditions, to relieve either Party of any duty or
obligation owed under the Contract.
For certain further acts, specified authority is required and the requirements for obtaining the consent of the Employer will be
stated in the Particular Conditions.
Whenever the Engineer exercises a specified authority for which the Employer’s consent is required, such consent is deemed
to have been given for the purposes of the Contract.
Neither any act nor omission by the Engineer, Engineer’s representative or any assistant shall relieve the Contractor of any
obligation or responsibility under the Contract.
End of Document
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1
Commentary, UKBC-UFIDIC 500922924 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.2 - Engineer’s Duties and Authority
Commentary
3-007
The first paragraph of the sub-clause is new and imposes a standard that the Engineer must adhere to when carrying out duties or
exercising authority under the Contract. Under English law, the requirement to act as a “skilled professional” would represent a
requirement that the Engineer exercised reasonable skill and care. As McNair J stated, “The test is the standard of the ordinary
skilled man exercising and professing to have that special skill.” 1
The 2017 edns retain the provision that the Engineer has no authority to amend the Contract. However, a further prohibition has
been added. The second paragraph ends by stating that, unless otherwise stated in the Conditions, the Engineer has no authority
to relieve either Party of any duty, obligation or responsibility arising under the Contract.
The Engineer is free to exercise the authority specified or to be necessarily implied from the Contract. For certain acts, specified
authority is required and the requirements to obtain this are to be included in the Particular Conditions. The sub-clause explicitly
states that the Engineer is not required to obtain the Employer’s consent before exercising his authority under Sub-Cl.3.7. 2
The 1999 edns required the Employer to undertake not to impose further constraints on the Engineer’s authority, “except as
agreed with the Contractor.” The 2017 edns contain a redrafted sentence that requires the Employer not to impose further
constraints on the Engineer’s authority. There is no provision to agree with the Contractor to impose any such constraints.
The fourth paragraph of the sub-clause is identical to the previous edns and provides that consent will be deemed to have been
given when the Engineer exercises a specified authority for which the Employer’s consent is required.
The final paragraph represents an extended version of Sub-Cl.3.1(c) of the 1999 edns. The 2017 edns provide a more exhaustive
list of acts that do not relieve the Contractor of any obligation under the Contract, i.e. “acceptance,” “agreement,” “comment,”
“disapproval, “record(s) of meeting”, and “permission.” The new sub-clause also makes clear that it is not simply acts or
omissions of the Engineer that do not relieve the Contractor of responsibility but also acts or omissions by the Engineer’s
Representative or any assistant.
The final line of the sub-clause has also been amended. The previous version ended by stating that the Contractor was not relieved
of any responsibility, including errors, omissions, discrepancies and non-compliances. These examples have been removed from
the 2017 edns that instead specify that the Contractor will not be relieved from any duty, obligation or responsibility. This is
sufficiently broad to capture the examples contained in the 1999 edns and makes clear that any act or omission by the Engineer
(or the Engineer’s Representative or assistant) will not affect the contractual obligations imposed on the Contractor.
Footnotes
1
2
Bolam v Friern Hospital Management Committee [1957] 1 W.L.R. 582. This also mirrors the obligation in the 2017
White Book that the Consultant exercises the reasonable, skill, care and diligence to be expected from a Consultant
experienced in the provision of such services for projects of similar size, nature and complexity.
This wording has been introduced to try and deal with a typical amendment made to the 1999 edns that an Engineer had
to obtain the specific approval of the Employer before making a determination under Sub-Cl.3.5, giving sub-contractor
© 2025 Thomson Reuters.
1
Commentary, UKBC-UFIDIC 500922924 (2021)
consent under Sub-Cl.4.2, giving approval to the Contractor’s documents under Sub.Cl.5.2, agreeing anextension of
time under Sub-Cl.8.4, or instructing Cl.13 variations.
End of Document
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2
Section 3.3 - The Engineer’s Representative, UKBC-UFIDIC 500922932 (2021)
Section 3.3 - The Engineer’s Representative
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.3 - The Engineer’s Representative
3-008
The Engineer may appoint an Engineer’s Representative and delegate to him/ her in accordance with Sub-Clause 3.4
[Delegation by the Engineer] the authority necessary to act on the Engineer’s behalf at the Site, except to replace the
Engineer’s Representative.
The Engineer’s Representative (if appointed) shall comply with sub-paragraphs (a) and (b) of Sub-Clause 3.1 [The
Engineer] and shall be based at the Site for the whole time that the Works are being executed at the Site. If the Engineer’s
Representative is to be temporarily absent from the Site during the execution of the Works, an equivalently qualified,
experienced and competent replacement shall be appointed by the Engineer, and the Contractor shall be given a Notice
of such replacement.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922934 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.3 - The Engineer’s Representative
Overview of Key Features
3-009
The Engineer may appoint an Engineer’s Representative and delegate to them the authority necessary to act on the Engineer’s
behalf at the site, except the authority to replace the Engineer’s Representative.
The Engineer’s Representative must be:
(a)a natural person:
(b)a professional engineer with suitable qualifications, experience and competence;
(c)fluent in the ruling language; and
(d)based at the Site for the whole time that the Works are being executed at the Site.
End of Document
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1
Commentary, UKBC-UFIDIC 500922947 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.3 - The Engineer’s Representative
Commentary
3-010
The Engineer’s Representative was removed from the 1999 edns but has been reintroduced into the 2017 edns. The Engineer’s
Representative must be based at the Site for the whole time the Works are being executed and must comply with the same
requirements as an Engineer under sub-paras (a) and (b) of Sub-Cl.3.1. This new sub-clause reflects the reality that on many
projects, the actual Engineer, is represented on Site by colleagues. 3
If the Engineer’s Representative is to be temporarily absent from the Site during the execution of the Works, the Engineer must
appoint an equivalent replacement and a Notice of such replacement must be given to the Contractor
Footnotes
3
There are instances of the Engineer not visiting Site at all, which are hopefully isolated or merely anecdotal tales.
End of Document
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Section 3.4 - Delegation by the Engineer, UKBC-UFIDIC 500922946 (2021)
Section 3.4 - Delegation by the Engineer
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.4 - Delegation by the Engineer
3-011
The Engineer may from time to time assign duties and delegate authority to assistants, and may also revoke such assignment
or delegation, by giving a Notice to the Parties, describing the assigned duties and the delegated authority of each assistant.
The assignment, delegation or revocation shall not take effect until this Notice has been received by both Parties. However,
the Engineer shall not delegate the authority to:
(a)act under Sub-Clause 3.7 [Agreement or Determination]; and/or
(b)issue a Notice to Correct under Sub-Clause 15.1 [Notice to Correct].
Assistants shall be suitably qualified natural persons, who are experienced and competent to carry out these duties and
exercise this authority, and who are fluent in the language for communications defined in Sub-Clause 1.4 [Law and
Language].
Each assistant, to whom duties have been assigned or authority has been delegated, shall only be authorised to issue
instructions to the Contractor to the extent defined by the Engineer’s Notice of delegation under this Sub-Clause. Any
act by an assistant, in accordance with the Engineer’s Notice of delegation, shall have the same effect as though the act
had been an act of the Engineer. However, if the Contractor questions any instruction or Notice given by an assistant, the
Contractor may by giving a Notice refer the matter to the Engineer. The Engineer shall be deemed to have confirmed the
assistant’s instruction or Notice if the Engineer does not respond, within 7 days after receiving the Contractor’s Notice,
reversing or varying the assistant’s instruction or Notice (as the case may be).
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922942 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.4 - Delegation by the Engineer
Overview of Key Features
3-012
•The Engineer can delegate functions to assistants and revoke such delegation by giving a Notice to the Parties, describing
the assigned duties and the delegated authority of each assistant.
•The Engineer cannot delegate the authority to act under Sub-Cl.3.7 (Agreement or Determination) or issue a Notice to
Correct under Sub-Cl.15.1.
•Assistants must be suitably qualified natural persons, experienced and competent to carry out the duties required and must
be fluent in the language for communications.
•Each assistant can only issue instructions to the Contractor to the extent defined by the Engineer’s Notice of delegation.
•The Contractor can question any Notice or instruction given by an assistant by giving a Notice referring the matter to
the Engineer.
•The Engineer will be deemed to have confirmed the assistant’s instruction or Notice if the Engineer does not respond
within seven days of receipt of the Contractor’s Notice, reversing or varying the assistant’s instruction or Notice.
End of Document
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Commentary, UKBC-UFIDIC 500922933 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.4 - Delegation by the Engineer
Commentary
3-013
The 2017 edns introduce a more formal notice requirement. The previous version of the sub-clause only required the assignment,
delegation or revocation to be in writing. The 2017 edns require the Engineer to give a Notice and to specify the assigned duties
and the delegated authority of each assistant.
The previous edns provided that an assistant could be a resident engineer or independent inspectors. This sentence has been
removed from the 2017 edns. The 2017 sub-clause does not provide any examples of persons that may fulfil the role. However,
the Guidance to the Special Provisions states that the Employer’s assistants may include design engineers, other construction
professionals, technicians, inspectors, specialist independent engineers and/or inspectors appointed to monitor and review the
execution of the Works.
The requirements for a person to be an assistant have been slightly enlarged. The 2017 sub-clause specifies that the assistant
must be suitably qualified, a natural person, sufficiently experienced and competent to perform the role as well as fluent in the
language for communications defined in Sub-Cl.1.4.
The Engineer remains unable to delegate the authority to make a determination and under the 2017 edns is also prohibited from
issuing a Notice to Correct under Sub-Cl.15.1.
Assistants are limited to issuing instructions in compliance with the Engineer’s Notice of delegation and any act in accordance
with such Notice will be as if the act had been performed by the Engineer.
In the 2017 edns there is no longer a provision specifying that any failure to disapprove any work, Plant or Materials will not
constitute approval and therefore not prejudice the right of the Engineer to reject such work, etc. This is likely because SubCl.3.2 provides that the absence of any disapproval by an assistant does not relieve the Contractor from any duty, obligation
or responsibility arising under the Contract.
The process for objecting to an instruction of an assistant has also become more prescribed. Under the previous Sub-Cl.3.2(b),
the Contractor was to refer a matter to the Engineer who would promptly confirm, reverse or vary the instruction. Under the
2017 edns the Contractor is to give a Notice referring the matter to the Engineer. The Engineer is then deemed to have confirmed
the instruction if the Engineer does not respond, within seven days of receipt of the Notice, reversing or varying the instruction.
End of Document
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Section 3.5 - Engineer’s Instructions, UKBC-UFIDIC 500922937 (2021)
Section 3.5 - Engineer’s Instructions
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.5 - Engineer’s Instructions
3-014
The Engineer may issue to the Contractor (at any time) instructions which may be necessary for the execution of the Works,
all in accordance with the Contract. The Contractor shall only take instructions from the Engineer, or from the Engineer’s
Representative (if appointed) or an assistant to whom the appropriate authority to give instruction has been delegated under
Sub-Clause 3.4 [Delegation by the Engineer].
Subject to the following provisions of this Sub-Clause, the Contractor shall comply with the instructions given by the
Engineer or the Engineer’s Representative (if appointed) or delegated assistant, on any matter related to the Contract.
If an instruction states that it constitutes a Variation, Sub-Clause 13.3.1 [Variation by Instruction] shall apply.
If not so stated, and the Contractor considers that the instruction:
(a)constitutes a Variation (or involves work that is already part of an existing Variation); or
(b)does not comply with applicable Laws or will reduce the safety of the Works or is technically impossible
the Contractor shall immediately, and before commencing any work related to the instruction, give a Notice to the Engineer
with reasons. If the Engineer does not respond within 7 days after receiving this Notice, by giving a Notice confirming,
reversing or varying the instruction, the Engineer shall be deemed to have revoked the instruction. Otherwise the Contractor
shall comply with and be bound by the terms of the Engineer’s response.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922925 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.5 - Engineer’s Instructions
Overview of Key Features
3-015
•The Contractor is obliged to comply with instructions given by the Engineer, the Engineer’s Representative or delegated
assistant on any matter related to the Contract, subject to the further provisions of the sub-clause.
•If an instruction states that it constitutes a Variation, Sub-Cl.13.3.1 applies.
•If the Contractor considers that the instruction:
i.constitutes a variation;
ii.involves work that is already part of an existing variation;
iii.does not comply with applicable Laws;
iv.will reduce the safety of the Works; or
v.is technically impossible;
the Contractor must immediately and before commencing any work related to the instruction give a Notice to the Engineer
with reasons.
•The Engineer is to give a Notice confirming, reversing or varying the instruction within seven days of receipt of the
Contractor’s Notice or the Engineer will be deemed to have revoked the instruction. Otherwise the Contractor has to comply
with and be bound by the terms of the Engineer’s response.
End of Document
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Commentary, UKBC-UFIDIC 500922935 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.5 - Engineer’s Instructions
Commentary
3-016
The 2017 edns no longer contain references to the Engineer issuing additional or modified drawings. The sub-clause only refers
to instructions.
The new sub-clause also attempts to achieve greater certainty with regards to variations. The 1999 edns provided that, if an
instruction constituted a variation, Cl.13 that dealt with variations applied. Under the 2017 books, Sub-Cl.13.3.1 only applies
if an instruction states that it is a variation.
In the event that an instruction is not expressly stated to be a variation, the Contractor under the 2017 edns has a new right to
“immediately” and “before commencing any work” give a Notice to the Engineer if it considers that one of the five circumstances
described in the sub-clause is applicable. This enables a Contractor to challenge what it views as the imposition of variations.
It has however been noted that the choice of the word “immediately” is problematic. 4 The natural and ordinary meaning of the
word “immediately” would suggest that the Contractor has to give a Notice at once or instantly. The inclusion of the word is
therefore likely to lead to Employers claiming that a Notice was provided too late.
The Engineer is to respond within seven days of receiving the Notice by giving a Notice confirming, reversing or varying the
instruction. If the Engineer fails to respond within the prescribed time, the instruction is deemed to be revoked. The short time
frame within which the Engineer is to respond and the deeming provision is therefore in the Contractor’s favour. If the Engineer
does respond, the Contractor is bound by the terms of the response.
The sub-clause does not fully set out the process to follow if the Contractor is adamant that the work is a Variation but the
Employer/Engineer disagrees and refuses to issue a Variation instruction. In those circumstances, if all persons were to comply
with the sub-clause, the Engineer would issue the instruction, the Contractor would serve a Notice stating that the instruction
constituted a variation and the Engineer would serve a Notice in response confirming the instruction. The sub-clause states that
the Contractor will comply with and be bound by the terms of the Engineer’s response and so must continue with the work
in order to avoid being in breach of contract. The Contractor would then have to pursue a Claim under Cl.20, which is not
mentioned in the sub-clause. Contractors may well be unsatisfied with this new procedure since the practical reality is that they
enjoy the greatest negotiating power before the works commence when the Employer is keen for the works to progress.
Footnotes
4
F. Gillion and M. Cottrell, “New FIDIC Yellow Book (2017): A Case of When More (Words) Mean Less
(Clarity)?” [2017] I.C.L.R. 349.
End of Document
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Section 3.6 - Replacement of the Engineer, UKBC-UFIDIC 500922928 (2021)
Section 3.6 - Replacement of the Engineer
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.6 - Replacement of the Engineer
3-017
If the Employer intends to replace the Engineer, the Employer shall, not less than 42 days before the intended date of
replacement, give a Notice to the Contractor of the name, address and relevant experience of the intended replacement
Engineer.
If the Contractor does not respond within 14 days after receiving this Notice, by giving a Notice stating an objection to
such replacement with reasons, the Contractor shall be deemed to have accepted the replacement.
The Employer shall not replace the Engineer with a person (whether a legal entity or a natural person) against whom the
Contractor has raised reasonable objection by a Notice under this Sub-Clause.
If the Engineer is unable to act as a result of death, illness, disability or resignation (or, in the case of an entity, the Engineer
becomes unable or unwilling to carry out any of its duties, other than for a cause attributable to the Employer) the Employer
shall be entitled to immediately appoint a replacement by giving a Notice to the Contractor with reasons and the name,
address and relevant experience of the replacement. This appointment shall be treated as a temporary appointment until
this replacement is accepted by the Contractor, or another replacement is appointed, under this Sub-Clause.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922926 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.6 - Replacement of the Engineer
Overview of Key Features
3-018
•The Employer must give a Notice of an intention to replace the Engineer not less than 42 days before the intended date
of replacement.
•If the Contractor does not respond within 14 days after receiving the Notice, by giving a Notice stating an objection to
the replacement, the Contractor will be deemed to have accepted the replacement.
•If the Contractor raises a reasonable objection by a Notice against the proposed replacement, the Employer must find
someone else.
End of Document
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Commentary, UKBC-UFIDIC 500922936 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.6 - Replacement of the Engineer
Commentary
3-019
Under the 2017 edns the Employer must still give 42 days’ notice and is unable to appoint a person against whom the Contractor
has raised reasonable objection.
However, if the Contractor does wish to object, it must now do so within 14 days of receiving the Employer’s Notice indicating
an intention to replace the Engineer. If the Contractor fails to adhere to this deadline then he will be deemed to have accepted
the replacement.
The final paragraph of the 2017 edns is completely new and caters for situations where the Engineer becomes unable to fulfil his
duties. If the Engineer is a natural person and is unable to act as a result of death, illness, disability or resignation, the Employer
can immediately appoint a replacement by giving a Notice to the Contractor.
Interestingly, if the Engineer is an entity that becomes unable or unwilling to carry out any of its duties, the Employer can
immediately appoint a replacement by giving a Notice, unless the Engineer is unwilling to act due to a cause attributable to
the Employer. The reference to “other than for a cause attributable to the Employer” is only contained in the brackets that deal
with the situation where the Engineer is an entity. A plain reading of the sub-clause would therefore suggest that if the Engineer
is a natural person and resigned due to a cause attributable to the Employer, the Employer could still immediately appoint a
replacement. It seems unlikely that the draftsmen intended to permit this outcome.
The sub-clause ends with an important reminder that any such immediate appointment is to be treated as temporary and will
only become permanent when the Contractor accepts the appointment or another replacement is appointed.
End of Document
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1
Section 3.7 - Agreement or Determination, UKBC-UFIDIC 500922940 (2021)
Section 3.7 - Agreement or Determination
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.7 - Agreement or Determination
3-020
When carrying out his/her duties under this Sub-Clause, the Engineer shall act neutrally between the Parties and shall not
be deemed to act for the Employer.
Whenever these Conditions provide that the Engineer shall proceed under this Sub-Clause to agree or determine any matter
or Claim, the following procedure shall apply:
3.7.1 Consultation to reach agreement
The Engineer shall consult with both Parties jointly and/or separately, and shall encourage discussion between the
Parties in an endeavour to reach agreement. The Engineer shall commence such consultation promptly to allow
adequate time to comply with the time limit for agreement under Sub-Clause 3.7.3 [Time limits]. Unless otherwise
proposed by the Engineer and agreed by both Parties, the Engineer shall provide both Parties with a record of the
consultation.If agreement is achieved within the time limit for agreement under Sub-Clause 3.7.3 [Time limits] the
Engineer shall give a Notice to both Parties of the agreement, which agreement shall be signed by both Parties. This
Notice shall state that it is a “Notice of the Parties’ Agreement” and shall include a copy of the agreement.If:
(a)no agreement is achieved within the time limit for agreement under Sub-Clause 3.7.3 [Time limits]; or
(bboth Parties advise the Engineer that no agreement can be achieved within this time limit
whichever is the earlier, the Engineer shall give a Notice to the Parties accordingly and shall immediately proceed
under Sub-Clause 3.7.2 [Engineer’s Determination].
3.7.2 Engineer’s Determination
The Engineer shall make a fair determination of the matter or Claim, in accordance with the Contract, taking due
regard of all relevant circumstances.Within the time limit for determination under Sub-Clause 3.7.3 [Time limits],
the Engineer shall give a Notice to both Parties of his/her determination. This Notice shall state that it is a “Notice
of the Engineer’s Determination”, and shall describe the determination in detail with reasons and detailed supporting
particulars.
3.7.3 Time limits
The Engineer shall give the Notice of agreement, if agreement is achieved, within 42 days or within such other
time limit as may be proposed by the Engineer and agreed by both Parties (the “time limit for agreement” in these
Conditions), after:
(a)in the case of a matter to be agreed or determined (not a Claim), the date of commencement of the time limit
for agreement as stated in the applicable Sub-Clause of these Conditions;
(b)in the case of a Claim under sub-paragraph (c) of Sub-Clause 20.1 [Claims], the date the Engineer receives
a Notice under Sub-Clause 20.1 from the claiming Party; or
(c)in the case of a Claim under sub-paragraph (a) or (b) of Sub-Clause 20.1 [Claims], the date the Engineer
receives:
(i)a fully detailed Claim under Sub-Clause 20.2.4 [Fully Detailed Claim]; or
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Section 3.7 - Agreement or Determination, UKBC-UFIDIC 500922940 (2021)
(ii)in the case of a Claim under Sub-Clause 20.2.6 [Claims of continuing effect], an interim or final fully
detailed Claim (as the case may be).
The Engineer shall give the Notice of his/her determination within 42 days or within such other time limit as may be
proposed by the Engineer and agreed by both Parties (the “time limit for determination” in these Conditions), after the
date corresponding to his/her obligation to proceed under the last paragraph of Sub-Clause 3.7.1 [Consultation to reach
agreement].If the Engineer does not give the Notice of agreement or determination within the relevant time limit:
(i)in the case of a Claim, the Engineer shall be deemed to have given a determination rejecting the Claim; or
(ii)in the case of a matter to be agreed or determined, the matter shall be deemed to be a Dispute which may
be referred by either Party to the DAAB for its decision under Sub-Clause 21.4 [Obtaining DAAB’s Decision]
without the need for a NOD (and Sub-Clause 3.7.5 [Dissatisfaction with Engineers determination] and subparagraph (a) of Sub-Clause 21.4.1 [Reference of a Dispute to the DAAB] shall not apply).
3.7.4 Effect of the agreement or determination
Each agreement or determination shall be binding on both Parties (and shall be complied with by the Engineer) unless
and until corrected under this Sub-Clause or, in the case of a determination, it is revised under Clause 21 [Disputes and
Arbitration].If an agreement or determination concerns the payment of an amount from one Party to the other Party,
the Contractor shall include such an amount in the next Statement and the Engineer shall include such amount in the
Payment Certificate that follows that Statement.If, within 14 days after giving or receiving the Engineer’s Notice of
agreement or determination, any error of a typographical or clerical or arithmetical nature is found:
(a)by the Engineer: then he/she shall immediately advise the Parties accordingly; or
(b)by a Party: then that Party shall give a Notice to the Engineer, stating that it is given under this Sub-Clause
3.7.4 and clearly identifying the error. If the Engineer does not agree there was an error, he/she shall immediately
advise the Parties accordingly.
The Engineer shall within 7 days of finding the error, or receiving a Notice under sub-paragraph (b) above (as the
case may be), give a Notice to both Parties of the corrected agreement or determination. Thereafter, the corrected
agreement or determination shall be treated as the agreement or determination for the purpose of these Conditions.
3.7.5 Dissatisfaction with Engineer’s determination
If either Party is dissatisfied with a determination of the Engineer:
(a)the dissatisfied Party may give a NOD to the other Party, with a copy to the Engineer;
(b)this NOD shall state that it is a “Notice of Dissatisfaction with the Engineer’s Determination” and shall set
out the reason(s) for dissatisfaction;
(c)this NOD shall be given within 28 days after receiving the Engineer’s Notice of the determination under SubClause 3.7.2 [Engineer’s Determination] or, if applicable, his/her Notice of the corrected determination under
Sub-Clause 3.7.4 [Effect of the agreement or determination] (or, in the case of a deemed determination rejecting
the Claim, within 28 days after the time limit for determination under Sub-Clause 3.7.3 [Time limits] has expired);
and
(d)thereafter, either Party may proceed under Sub-Clause 21.4 [Obtaining DAAB’s Decision].
If no NOD is given by either Party within the period of 28 days stated in sub-paragraph (c) above, the determination
of the Engineer shall be deemed to have been accepted by both Parties and shall be final and binding on them.If the
dissatisfied Party is dissatisfied with only part(s) of the Engineer’s determination:
(i)this part(s) shall be clearly identified in the NOD;
(ii)this part(s), and any other parts of the determination that are affected by such part(s) or rely on such part(s)
for completeness, shall be deemed to be severable from the remainder of the determination; and
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Section 3.7 - Agreement or Determination, UKBC-UFIDIC 500922940 (2021)
(iii)the remainder of the determination shall become final and binding on both Parties as if the NOD had not
been given.
In the event that a Party fails to comply with an agreement of the Parties under this Sub-Clause 3.7 or a final and
binding determination of the Engineer, the other Party may, without prejudice to any other rights it may have, refer the
failure itself directly to arbitration under Sub-Clause 21.6 [Arbitration] in which case the first and the third paragraphs
of Sub-Clause 21.7 [Failure to Comply with DAAB’s Decision] shall apply to such reference in the same manner as
these paragraphs apply to a final and binding decision of the DAAB.
End of Document
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3
Overview of Key Features, UKBC-UFIDIC 500922939 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.7 - Agreement or Determination
Overview of Key Features
3-021
•The Engineer must act neutrally between the Parties and is not deemed to act for the Employer.
Consultation
3-022
•The Engineer is to consult with both Parties and encourage discussion in an endeavour to reach agreement. The
consultation should commence promptly.
•If agreement is achieved within the time limit specified in Sub-Cl.3.7.3, the Engineer must give a Notice to both Parties
of the agreement. Both Parties must sign the agreement.
•The Notice of Agreement is to be given within 42 days, unless otherwise agreed, from the dates set out in Sub-Cl.3.7.3(a)–
(c).
•If no agreement is reached within the time limit or both Parties advise the Engineer that no agreement can be reached
within the time limit, whichever is the earlier, the Engineer must give a Notice to the Parties accordingly and proceed
immediately in accordance with Sub-Cl.3.7.2.
Determination
3-023
•The Engineer must make a fair determination, taking due regard of all relevant circumstances and shall give a Notice to
both Parties of the determination.
•The Engineer must give the Notice of his determination within 42 days, or some other agreed period, of proceeding to
determination in accordance with the last paragraph of Sub-Cl.3.7.1.
•If the Engineer fails to give the Notice of Agreement or determination within the relevant time limit, Sub-Cl.3.7.3(i)–
(ii) applies.
Effect of the agreement or determination
3-024
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Overview of Key Features, UKBC-UFIDIC 500922939 (2021)
•Each agreement or determination will be binding on both Parties and complied with by the Engineer unless and until it is
corrected or in the case of a determination, revised under Cl.21 (Disputes and Arbitration).
•If an agreement or determination concerns the payment of an amount from one Party to another, the Contractor will include
such an amount in the next Statement and the Engineer will include such amount in the Payment Certificate that follows
the Statement.
•The procedure for alerting and correcting a typographical, clerical or arithmetical error is contained in Sub-Cl.3.7.4.
Notice of dissatisfaction
3-025
•If either Party is dissatisfied with a determination of the Engineer, they must give a NOD to the other Party and the
Engineer.
•The NOD must be given within 28 days of receipt of the Engineer’s Notice of Determination, the Notice of corrected
determination or within 28 days of the Engineer being deemed to have rejected the Claim under Sub-Cl.3.7.3.
•Thereafter the Party may proceed under Sub-Cl.21.4 to obtain a DAAB’s decision.
•If the NOD is not given within the period stated, the determination of the Engineer will be deemed to have been accepted
by both Parties and shall be final and binding.
•A dissatisfied Party can issue a NOD that relates to only part of the determination.
•If a Party fails to comply with an agreement or a final and binding determination of the Engineers, the other Party may
refer the failure directly to arbitration.
•The arbitral tribunal will have the power by way of summary or other expedited procedure to order, whether by an interim
or provisional measure or an award, the enforcement of the agreement or determination.
•Any such award or measure may include an order or award of damages or other relief.
End of Document
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Commentary, UKBC-UFIDIC 500922945 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.7 - Agreement or Determination
Commentary
3-026
This sub-clause has been substantially extended from the 1999 version that only consisted of two paragraphs.
The number of sub-clauses in respect of which the Engineer may be required to make determinations has also increased
substantially to include the following:
1.9
1.13
2.1
4.6
4.7
4.12
4.15
4.23
7.4
7.5
7.6
8.5
8.6
8.7
8.8
8.10
9.2
9.4
10.2
10.3
11.2
11.3
11.4
11.7
11.8
11.11
12.1
12.3
13.3
13.5
13.6
14.4
14.5
14.6
15.3
15.4
15.6
16.1
16.2
Delayed Drawings or Instructions
Compliance with Laws
Right of Access to the Site
Co-operation
Setting Out
Unforeseeable Physical Conditions
Access Route
Archaeological and Geological Findings
Testing by the Contractor
Defects and Rejection
Remedial Work
Extension of Time for Completion
Delays Caused by Authorities
Rate of Progress
Delay Damages
Consequences of Employer’s Suspension
Delayed Tests
Failure to Pass Tests on Completion
Taking Over Parts
Interference with Tests on Completion
Cost of Remedying Defects
Extensions of Defects Notification Period
Failure to Remedy Defects
Right of Access after Taking Over
Contractor to Search
Clearance of Site
Works to be Measured
Valuation of the Works
Variation Procedure
Daywork
Adjustments for Changes in Laws
Schedule of Payments
Plant and Materials intended for the Works
Issue of IPC
Valuation after Termination for Contractor’s Default
Payment after Termination for Contractor’s Default
Valuation after Termination for Employer’s Convenience
Suspension by Contractor
Termination by Contractor
© 2025 Thomson Reuters.
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Commentary, UKBC-UFIDIC 500922945 (2021)
16.3
16.4
17.2
18.4
18.5
Contractor’s Obligations after Termination
Payment after Termination by Contractor
Liability for Care of the Works
Consequences of an Exceptional Event
Optional Termination
Neutrality
3-027
The 2017 sub-clause begins by stating that when making a determination, the Engineer shall act “neutrally” and “shall not be
deemed to act for the Employer”. This is in contrast to words such as “independently” and “impartially” that feature in previous
FIDIC forms.
“Neutrally” is not defined but the Guidance to the Special Provisions states that the intention behind the statements was to ensure
that “although the Engineer is appointed by the Employer and acts for the Employer in most other respects under the Contract
when acting under this Sub-Clause the Engineer treats both Parties, even-handedly, in a fair-minded and unbiased manner.” 5
The intention of the draftsmen was to clarify how the Engineer should approach its duties but the new formulation does not
appear to provide the desired clarity. Disputes may well arise as to the proper meaning of the term “neutrally”.
Consultation—Sub-Cl.3.7.1
3-028
Under the 1999 edns, the Engineer had to consult with each Party in an endeavour to reach agreement. Reflecting the increased
emphasis on dispute avoidance, the Engineer now has an express obligation to consult with both Parties jointly and/or separately
and to encourage discussion between the Parties to reach settlement. The Engineer also has to commence such consultation
promptly in order to provide the maximum time possible for an agreement to be reached within the time limits set out in SubCl.3.7.3.
The role of the Engineer is further increased since the Engineer has to provide both Parties with a record of the consultation
unless the Engineer proposes otherwise and the Parties agree to such an alternative arrangement.
If an agreement is reached within the time limits prescribed by Sub-Cl.3.7.3, the Engineer must give a Notice to both Parties
stating that it is a “Notice of the Parties’ Agreement” and include a copy of the agreement. Both parties must sign the agreement.
If no agreement is reached within the time limit or both Parties advise the Engineer that an agreement will not be possible within
the time limit, whichever is earlier, the Engineer must give a Notice to the Parties and immediately proceed under Sub-Cl.3.7.2.
Engineer’s determination—Sub-Cl.3.7.2
3-029
The Engineer must reach a fair determination. 6 It is important that the Engineer proceeds not to make a determination which
is simply fair 7 but one which is fair according to the requirements of the Contract.
It was notable that under the previous sub-clause no time limit was imposed on the Engineer for making a determination. The
2017 edns have responded to this by requiring the Engineer, within the time limit for determination specified in Sub-Cl.3.7.3,
© 2025 Thomson Reuters.
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Commentary, UKBC-UFIDIC 500922945 (2021)
to give a Notice to both parties stating that it is a “Notice of the Engineer’s Determination” and giving reasons and detailed
supporting particulars for the determination.
Time limits—Sub-Cl.3.7.3
3-030
The new 42-day time limit runs from a different starting point depending upon the circumstances and so the Engineer must pay
particular attention to the provisions of this sub-clause. The Engineer can propose an alternative time limit but this will only
take effect if both Parties agree to it.
If an agreement is reached, the 42 days within which the Engineer must issue a Notice of agreement runs from:
(a)in the case of a matter to be agreed or determined (not a Claim), the date of commencement of the time limit for agreement
as stated in the applicable sub-clause of the conditions;
(b)in the case of a Claim under Sub-Cl.20.1(c), i.e. a claim by either Party for an entitlement or relief other than an
Employer’s claim for additional payment or a Contractor’s claim for any additional payment and/or EOT, the date that the
Engineer receives a Notice under Sub-Cl.20.1 from the Claiming Party; and
(c)in the case of a Claim under Sub-Cl.20.1 (a) or (b), i.e. an Employer’s claim for additional payment or a Contractor’s
claim for any additional payment and/or to EOT, the date the Engineer receives:
i.a fully detailed Claim under Sub-Cl.20.2.4; or
ii.in the case of a Claim of continuing effect under Sub-Cl.20.2.6, an interim or final fully detailed claim.
An Engineer must give a Notice of his determination within 42 days, or another agreed time limit, of the date corresponding
to the Engineer’s obligation to proceed under the last paragraph of Sub-Cl.3.7.1. In effect, the determination should be given
within 42 days of the Engineer giving a Notice to the Parties specifying either that an agreement has not been reached within
the time limit or that both Parties have advised that an agreement will not be achieved within the time limit.
If the Engineer fails to give the Notice of agreement or determination within the relevant time limit:
(a)in the case of a Claim, the Engineer will be deemed to have rejected the Claim; or
(b)in the case of a matter to be agreed or determined, the matter is deemed to have become a Dispute that can be referred
by either Party to the DAAB without the need for a NOD. Since a NOD is not required, Sub-Cl.21.4.1(a) does not apply.
This is an important new provision which (along with the stipulation at Sub-Cl.3.2 that there is no requirement for the Engineer
to obtain the Employer’s consent before the Engineer exercises their authority under Sub-Cl.3.7), deals with the scenario where
an Engineer has been prevented by the Employer from issuing a determination. The introduction of the deemed rejection at
least means that the Contractor can proceed with procedural certainty to make a Cl.21 Referral to the Dispute Board.
Effect of the agreement or determination—Sub-Cl.3.7.4
3-031
An agreement or determination is binding on both Parties unless and until it is corrected or, in the case of a determination,
revised under Cl.21.
The sub-clause makes specific provision for what should occur if an agreement or determination concerns payment of an amount
from one Party to another. The Contractor is to include the amount in the next Statement and the Engineer is to include such
amount in the Payment Certificate that follows the Statement.
The third paragraph introduces provisions akin to a slip rule whereby the Engineer or a Party can highlight a typographical,
clerical or arithmetical error, within 14 days of giving or receiving the Engineer’s Notice of agreement or determination. If the
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Commentary, UKBC-UFIDIC 500922945 (2021)
Engineer discovers the error, then it must immediately be brought to the attention of the Parties. The Engineer should be aware
that the inclusion of the word “immediately” imposes a strict timeframe on such notification.
If a Party discovers the error, the Party must give a Notice to the Engineer that states that it is given under Sub-Cl.3.7.4 and that
identifies the error. The Engineer is to advise both Parties if it disagrees with the contents of the Notice.
If the Engineer finds the error or agrees with a Party’s Notice, a Notice can be given to both Parties, within seven days of the
discovery or receipt of the Notice, containing the corrected agreement or determination. Thereafter, the correct agreement or
determination will be treated as the only version for the purposes of the Conditions.
The Engineer must inform the Parties of the discovery of the error but the sub-clause contains no provision that enables the
Parties to block a correction. This produces the rather strange possibility that the Engineer could, of his own volition, correct
an agreement signed by both Parties.
Dissatisfaction with Engineer’s determination—Sub-Cl.3.7.5
3-032
This sub-clause introduces the Notice of Dissatisfaction and how it may be used in the event that a Party is dissatisfied with
a determination of the Engineer.
The NOD should be given to the other Party and the Engineer. It should state that it is a “Notice of Dissatisfaction with the
Engineer’s Determination” and set out the reasons for the dissatisfaction.
The NOD should be given within 28 days of:
(a)the Engineer’s Notice of the determination under Sub-Cl.3.7.2;
(b)the Engineer’s Notice of corrected determination under Sub-Cl.3.7.4; or
(c)the expiry of the time limit for determination under Sub-Cl.3.7.3, i.e. where the Engineer failed to give a Notice of
determination within the requisite time period and so a deemed determination rejected the Claim.
The Parties must be aware of these deadlines because a failure to give an NOD within the 28-day period will result in the
determination being deemed to have been accepted by both Parties and it will become final and binding on them. This is a
particularly important deeming provision as the definition of “Disputes” at Sub-Cl.1.1.29 refers to a claim against the other
party which is rejected in whole or in part and in respect of which the claiming party “does not acquiesce (by giving a NOD
under Sub-Clause 3.7.5 … or otherwise).” Only “Disputes” can be referred to the DAAB, in accordance with Sub-Cl.21.4, or to
arbitration, pursuant to Sub-Cl.21.6. A failure to issue a NOD within the prescribed time limit therefore results in the Engineer’s
determination becoming insurmountable.
An important addition to the 2017 edns is that it is made explicit that a Party can object to part of a determination. A Party can
specify the parts of a determination that it objects to in the NOD and that part and any other parts affected by it will be deemed
to be severable from the remainder of the determination. The remainder of the determination becomes final and binding on
both Parties as if the NOD had not been given. The result is that the undisputed parts of a determination can be implemented
whilst any contentious areas await resolution.
If a Party fails to comply with an agreement of the Parties or a final and binding determination of the Engineer, the other Party
may refer the failure directly to arbitration under Sub-Cl.21.6 and the first and third paragraphs of Sub-Cl.21.7 apply. This
means that the arbitral tribunal would have the power by way of summary or other expedited procedure to order, whether by an
interim or provisional measure or an award, the enforcement of the agreement or determination. Any such award or measure
could include an order or award of damages or other relief.
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Commentary, UKBC-UFIDIC 500922945 (2021)
Footnotes
5
6
7
FIDIC produce a Code of Ethics—http://fidic.org/about-fidic/fidic-policies/fidic-code-ethics [Accessed 10 October
2018] which sets out a number of principles that are said to be fundamental to the behaviour of a consulting engineer.
These include: the consulting engineer shall be “impartial” in the provision of professional advice and judgment, shall
act at all times in the legitimate interest of the client, shall provide all services with integrity and faithfulness, and
shall maintain knowledge and skill at levels consistent with development in technology. These principles only apply to
engineers who are members of FIDIC.
In Scheldebouw BV v St James Homes (Grosvenor Dock) Ltd [2006] EWHC 89 (TCC), Jackson J when asked to consider
the functions and duties of the construction manager, took the opportunity to look at the duties of certifiers generally.
Whilst observing that the precise role and duties of the decision-maker will be determined by the terms of the contract
under which he is required to act and that generally the decision-maker is not, and cannot be regarded as independent of
the Employer, the judge continued that: “When performing his decision-making function, the decision-maker is required
to act in a manner which has variously been described as independent, impartial, fair and honest. These concepts are
overlapping but not synonymous. They connote that the decision-maker must use his professional skills and his best
endeavours to reach the right decision, as opposed to a decision which favours the interests of the employer.” See also
Rix LJ in Amec Civil Engineering Ltd v Secretary of State for Transport [2005] EWCA Civ 291.
UAE law is silent on the impartiality of a certifier. However, taken together arts 246 and 106 of the Civil Code suggest
a degree of similarity with the common law approach. Article 246 provides that all contracts must be performed in
accordance with their contents and in a manner consistent with good faith, whilst art.106 provides that a party will be
prohibited from exercising its rights if, amongst other things, it intended to infringe the rights of another party or the
outcome is contrary to the rules of Islamic sharia, the law, public order, or morals. That said, there is often in civil law
jurisdictions a reluctance on Employers to give full authority for the Engineer to perform their duties.
End of Document
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5
Section 3.8 - Meetings, UKBC-UFIDIC 500922927 (2021)
Section 3.8 - Meetings
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.8 - Meetings
3-033
The Engineer or the Contractor’s Representative may require the other to attend a management meeting to discuss
arrangements for future work and/ or other matters in connection with execution of the Works.
The Employer’s other contractors, the personnel of legally constituted public authorities and/or private utility companies,
and/or Subcontractors may attend any such meeting, if requested by the Engineer or the Contractor’s Representative.
The Engineer shall keep a record of each management meeting and supply copies of the record to those attending and to
the Employer. At any such meeting, and in the record, responsibilities for any actions to be taken shall be in accordance
with the Contract.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500922931 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.8 - Meetings
Overview of Key Features
3-034
•The Engineer or the Contractor’s Representative may require the other to attend a management meeting to discuss future
work and/or other matters in connection with the execution of the Works.
•If requested by the Engineer or the Contractor’s Representative, the Employer’s other contractors, the personnel of legally
constituted public authorities and/or private utility companies, and/or subcontractors may attend any such meeting.
•The Engineer must keep a record of each management meeting and supply copies of the record to those attending and
the Employer.
•At any such meeting, and in the record, responsibilities for any actions agreed to be taken must be in accordance with
the Contract.
End of Document
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Commentary, UKBC-UFIDIC 500922948 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 3 - Clause 3—The Engineer
Section 3.8 - Meetings
Commentary
3-035
This is an elaboration on the optional clause that was contained in the 1999 edns. That optional clause permitted the Engineer
or Contractor’s Representative to require the other to attend a management meeting but that could only be for the purpose of
reviewing the arrangements for future work.
Under the 2017 edns, meetings can be required to discuss arrangements for future work and/or other matters in connection
with the execution of the Works. This reflects the greater emphasis on dispute avoidance since the Engineer and Contractor’s
Representative can require a meeting on any matter related to the execution of the Works.
The 2017 edns also make explicit that the further parties specified can attend on the request of the Engineer or the Contractor’s
Representative. It is notable that the Employer is not specified.
In line with the optional clause in the 1999 edns, the Engineer is to keep a record and supply copies to those attending and the
Employer. Any agreed responsibilities going forward must be in accordance with the Contract.
The sub-clause is silent on whether the Contractor’s Representative or another party has to agree the record. In order to avoid
subsequent evidential disputes, the Contractor’s Representative or any other attendee should inspect the records and promptly
raise any divergences from their own recollection of the meeting.
End of Document
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Chapter 4 - Clause 4—The Contractor, UKBC-UFIDIC 500923004 (2021)
Chapter 4 - Clause 4—The Contractor
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Differences between the Red and Yellow Books
4-001
As described in more detail below, there are a number of differences between the Red and Yellow Books. In Sub-Cl.4.1, these
reflect the different design obligations that the contracts impose upon the Contractor. Clause 5 of the Yellow Book deals with
design in more detail, which is why Sub-Cll.4.4 and 4.5 of the Yellow Book relate to the treatment of subcontractors and
nominated subcontractors, the subject of Cl.5 of the Red Book. In their place, Sub-Cll.4.4 and 4.5 of the Red Book deal with
Contractor’s Documents and Training. Finally, Sub-Cl.4.20 of the Yellow Book, requires the Contractor to provide details in
the Progress Report of the progress of trial operation and commissioning, work stages not usually required under constructiononly contracts.
End of Document
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Section 4.1 - Contractor’s General Obligations (Red Book), UKBC-UFIDIC 500923014...
Section 4.1 - Contractor’s General Obligations (Red Book)
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.1 - Contractor’s General Obligations (Red Book)
4-002
The Contractor shall execute the Works in accordance with the Contract. The Contractor undertakes that the execution of
the Works and the completed Works will be in accordance with the documents forming the Contract, as altered or modified
by Variations.
The Contractor shall provide the Plant (and spare parts, if any) and Contractor’s Documents specified in the Contract,
and all Contractor’s Personnel, Goods, consumables and other things and services, whether of a temporary or permanent
nature, required to fulfil the Contractor’s obligations under the Contract.
The Contractor shall be responsible for the adequacy, stability and safety of all the Contractor’s operations and activities, of
all methods of construction and of all the Temporary Works. Except to the extent specified in the Contract, the Contractor:
(i)shall be responsible for all Contractor’s Documents, Temporary Works, and such design of each item of Plant and
Materials as is required for the item to be in accordance with the Contract; and
(ii)shall not otherwise be responsible for the design or specification of the Permanent Works.
The Contractor shall, whenever required by the Engineer, submit details of the arrangements and methods which the
Contractor proposes to adopt for the execution of the Works. No significant alteration to these arrangements and methods
shall be made without this alteration having been submitted to the Engineer.
If the Contract specifies that the Contractor shall design any part of the Permanent Works, then unless otherwise stated
in the Particular Conditions:
(a)the Contractor shall prepare, and submit to the Engineer for Review, the Contractor’s Documents for this part
(and any other documents necessary to complete and implement the design during the execution of the Works and
to instruct the Contractor’s Personnel);
(b)these Contractor’s Documents shall be in accordance with the Specification and Drawings and shall include
additional information required by the Engineer to add to the Drawings for co-ordination of each Party’s designs. If the
Engineer instructs that further Contractor’s Documents are reasonably required to demonstrate that the Contractor’s
design complies with the Contract, the Contractor shall prepare and submit them promptly to the Engineer at the
Contractor’s cost;
(c)construction of this part shall not commence until a Notice of No-objection is given (or is deemed to have
been given) by the Engineer under sub-paragraph (i) of Sub-Clause 4.4.1 [Preparation and Review] for all the
Contractor’s Documents which are relevant to its design, and construction of such part shall be in accordance with
these Contractor’s Documents;
(d)the Contractor may modify any design or Contractor’s Documents which have previously been submitted for
Review, by giving a Notice to the Engineer with reasons. If the Contractor has commenced construction of the part
of the Works to which such design or Contractor’s Documents are relevant, work on this part shall be suspended, the
provisions of Sub-Clause 4.4.1 [Preparation and Review] shall apply as if the Engineer had given a Notice in respect
of the Contractor’s Documents under sub-paragraph (ii) of Sub-Clause 4.4.1, and work shall not resume until a Notice
of No-objection is given (or is deemed to have been given) by the Engineer for the revised documents;
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Section 4.1 - Contractor’s General Obligations (Red Book), UKBC-UFIDIC 500923014...
(e)the Contractor shall be responsible for this part and it shall, when the Works are completed, be fit for such purpose(s)
for which the part is intended as are specified in the Contract (or, where no purpose(s) are so defined and described,
fit for their ordinary purpose(s));
(f)in addition to the Contractor’s undertaking above, the Contractor undertakes that the design and the Contractor’s
Documents for this part will comply with the technical standards stated in the Specification and Laws (in force when
the Works are taken over under Clause 10 [Employer’s Taking Over]) and in accordance with the documents forming
the Contract, as altered or modified by Variations;
(g)if Sub-Clause 4.4.2 [As-built Records] and/or Sub-Clause 4.4.3 [Operation and Maintenance Manuals] apply,
the Contractor shall submit to the Engineer the Contractor’s Documents for this part in accordance with such SubClause(s) and in sufficient detail for the Employer to operate, maintain, dismantle, reassemble, adjust and repair this
part; and
(h)if Sub-Clause 4.5 [Training] applies, the Contractor shall carry out training of the Employer’s Personnel in the
operation and maintenance of this part.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922959 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.1 - Contractor’s General Obligations (Red Book)
Overview of Key Features
Contractor’s primary obligation
4-003
The Contractor’s primary obligation is to “execute the works,” which as per Sub-Cl.1.2(j) means the construction and completion
of the Works and the remedying of any defects. The completed Works must be in accordance with the Contract.
Provision of plant
4-004
The Contractor is responsible for ensuring the supply of the necessary plant, documents, personnel, and other goods and services
necessary for the completion of the Works in good time in accordance with the Contract.
Site operations
4-005
The Contractor is responsible for all site operations, construction methods and the Temporary Works. This includes all design
of plant and materials to the extent required by the Contract.
Method statements
4-006
•A Contractor must submit, whenever required by the Engineer, details of the methods and arrangements which the
Contractor proposes to adopt for the Works.
•The Contractor must submit to the Engineer any significant alterations to the method statement.
Design
4-007
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Overview of Key Features, UKBC-UFIDIC 500922959 (2021)
•The Contractor only has design responsibility to the extent specified in the Contract.
•If the Contractor undertakes any element of design, that design must be fit for the purpose for which the designed part
was intended as specified in the Contract or where no purpose is defined, fit for their ordinary purpose.
•The eight sub-paras (a)–(e) provide clear guidelines for the Contractor to follow when he is required to undertake design.
•The Contractor will be fully responsible for any element of design which he undertakes.
End of Document
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Commentary, UKBC-UFIDIC 500922983 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.1 - Contractor’s General Obligations (Red Book)
Commentary
General
4-008
Clause 4 is the longest clause in the Contract. It is also one of the most important. Sub-Clause 4.1 serves as a general wrap up
for the basic obligations of the Contractor as set out in Cl.4 as a whole.
In short, the Contractor’s primary obligation is to carry out the Works in accordance with the Contract, namely within the time
set out in the Contract Data (as may be extended in accordance with Cl.8) and for the agreed price (which again may be subject
to change in accordance with Cl.14).
The Works are defined at Sub-Cl.1.1.87 (Red Book) as being “The Permanent Works and the Temporary Works.” The obligation
is therefore to “complete” any item of work which is necessary to complete the works as a whole. The Contractor should consider
this obligation carefully. It might not be enough simply to carry out the work shown on the contract documents. Equally, there
may be items of either the permanent or the temporary works for which the Contractor is not fully responsible.
The first paragraph is not limited in any way and it is therefore submitted that it must be read as an absolute obligation. The
phrase “altered or modified by Variations” has been added to the first paragraph to reflect that the completed Works will be in
accordance with any variations instructed under the Contract.
The second paragraph requires the Contractor to provide everything necessary to carry out his Works. This includes personnel,
plant, goods, consumables, as well as the Contractor’s Documents which are widely-defined at Sub-Cl.1.1.15 as including
calculations, digital files, computer programs and other software, drawings, manuals, models, specifications, and other technical
documents. The Contractor’s Documents, unless otherwise stated, must be written in the language for communications defined
in Sub-Cl.1.4. It is important that the Contractor considers carefully what personnel and plant he will need and when, in order
to keep his promise.
The third paragraph is largely unchanged. In the 1999 edns the Contractor was responsible for the adequacy of the Site operations
and all construction methods. The 2017 sub-clause has added “all the Temporary Works” to these responsibilities.
The fourth paragraph provides that, upon request, the Contractor will submit details of the arrangements and methods of work
that the Contractor proposes to adopt. There is no time requirement imposed on requests by the Employer and so the Employer
appears to be capable of requesting such information whenever he chooses. Once the Contractor has submitted the information,
he cannot make any “significant” alteration to his arrangements and methods without submitting them to the Engineer. It is
notable that under the 1999 edns the Contractor was required to notify the Engineer of a significant alteration but the 2017
edns do not specify that the Contractor must give a Notice. Pursuant to Sub-Cl.1.3, the submission must be in writing. There
is no indication given either that the Engineer must approve the alteration or that he could reject the proposed alteration. The
Contractor should nevertheless remember that under Sub-Cl.3.2 any approval given by the Engineer will not relieve him of his
responsibilities under the Contract.
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Commentary, UKBC-UFIDIC 500922983 (2021)
Design
4-009
The Red Book is intended for use where it is the Employer who provides the design and where it is the Contractor who constructs
according to that design. Therefore, whilst it is unlikely that a Contractor will be required to carry out any design, it is important
that this is carefully checked. This means that it is important that the Contract as a whole (including the specification and any
drawings) is carefully checked to see if there are any design obligations contained therein.
Where the Contract specifies that the Contractor shall design any part of the permanent works, then the Contractor must submit to
the Engineer the Contractor’s Documents in relation to the designed portion of the Works and the Contractor shall be responsible
for this design. The 2017 edn expressly states that such documents are to be submitted to the Engineer for review. Sub-paragraph
(a) has also been extended to require the Contractor to submit any other documents necessary to complete and implement the
design and to instruct the Contractor’s Personnel.
Sub-paragraph (b) of the 2017 edns still requires the Contractor’s Documents to be in accordance with the Specification and
Drawings but adds that the documents must include additional information required by the Engineer to add to the Drawings for
co-ordination of each Party’s designs. The sub-paragraph also imposes a new obligation on the Contractor since the Engineer
can instruct that further Contractor’s Documents are reasonably required to demonstrate that the Contractor’s design complies
with the Contract. If the Engineer gives such an instruction, the Contractor must prepare and submit the additional documents
and submit them promptly to the Engineer at the Contractor’s cost.
Sub-paragraph (c) imposes a related procedural step. Construction of the Contractor’s designed portion cannot commence until
a Notice of No-Objection is given or is deemed to have been given, for all the Contractor’s Documents which are relevant to
its design. Construction of the part must also be in accordance with the accepted Contractor’s Documents.
Sub-paragraph (d) permits the Contractor to modify any design or Contractor’s Documents which have been previously
submitted for Review by giving a Notice to the Engineer with reasons. The Contractor is incentivised to submit any modifications
prior to construction because if the Contractor has commenced construction and submits a Notice to modify, then Works on the
designed portion must be suspended. The Contractor is required to revise the Contractor’s Documents and resubmit them to the
Engineer. The work cannot recommence until a Notice of No-Objection is given or deemed to have been given by the Engineer.
Sub-paragraph (e) retains the provision that the Contractor is responsible for its designed portion and for ensuring that the
completed Works are fit for the purpose for which they were intended as specified in the Contract. The absolute obligation that
the Works will be fit for purpose will obviously depend on the nature of the definition of the purposes of the Works contained
in the Contract. The 1999 Red Book contained no fall-back provision in the event that no purpose was specified. The 2017
edn now states that if no purpose is defined and described, then the Works must be fit for their ordinary purpose. It is in the
interests of both Parties to ensure that the purpose is defined precisely and in detail, e.g. in respect of maintenance and the
lifetime of the completed Works.
In the 2017 Red Book, sub-para.(f) requires the Contractor to provide a further undertaking that the design and Contractor’s
Documents comply with the technical standards in the Specification and Laws and with the documents forming the Contract.
Sub-paragraph (g) consists of an amended version of sub-para.(d) in the 1999 sub-clause. If the Contractor is required to prepare
and keep up-to-date as-built records and operation and maintenance manuals, then they must submit these to the Engineer in
sufficient detail for the Employer to operate, maintain and repair, etc. the relevant part of the Works. The 2017 Red Book has
removed the provision that the designed portion was not to be considered completed for the purposes of taking over until the
documents and manuals have been submitted to the Engineer. Sub-paragraph (g) provides no express sanction in the event that
the Contractor fails to comply with his obligations.
Sub-paragraph (h) represents an entirely new provision and merely provides that if, pursuant to Sub-Cl.4.5, the Contractor is
required to train the Employer’s Personnel in the operation and maintenance of the Works, the Contractor must also train them
in relation to the operation and maintenance of its designed portion. This sub-paragraph therefore appears to add very little.
The MDB version also includes a requirement that all equipment and materials shall orginate from an “eligible source country”
as defined by the lending Bank. The development banks tend to maintain lists of countries from which bidders, goods and
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Commentary, UKBC-UFIDIC 500922983 (2021)
services are not eligible to participate in procurement. The Contractor should also be aware, regardless of the Contract, of the
possibility that local law or regulation might impose sanctions or otherwise prohibit using equipment from certain Countries.
These sanctions can be imposed without warning during the currency of a project.
End of Document
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Section 4.1 - Contractor’s General Obligations (Yellow Book), UKBC-UFIDIC 500922999...
Section 4.1 - Contractor’s General Obligations (Yellow Book)
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.1 - Contractor’s General Obligations (Yellow Book)
4-010
The Contractor shall execute the Works in accordance with the Contract. When completed, the Works (or Section or Part
or major item of Plant, if any) shall be fit for the purpose(s) for which they are intended, as defined and described in the
Employer’s Requirements (or, where no purpose(s) are so defined and described, fit for their ordinary purpose(s)).
The Contractor shall provide the Plant (and spare parts, if any) and Contractor’s Documents specified in the Employer’s
Requirements, and all Contractor’s Personnel, Goods, consumables and other things and services, whether of a temporary
or permanent nature, required to fulfil the Contractor’s obligations under the Contract.
The Works shall include any work which is necessary to satisfy the Employer’s Requirements, Contractor’s Proposal and
Schedules, or is implied by the Contract, and all works which (although not mentioned in the Contract) are necessary for
stability or for the completion, or safe and proper operation, of the Works.
The Contractor shall be responsible for the adequacy, stability and safety of all the Contractor’s operations and activities,
of all methods of construction and of all the Works.
The Contractor shall, whenever required by the Engineer, submit details of the arrangements and methods which the
Contractor proposes to adopt for the execution of the Works. No significant alteration to these arrangements and methods
shall be made without this alteration having been submitted to the Engineer.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923010 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.1 - Contractor’s General Obligations (Yellow Book)
Overview of Key Features
4-011
•The Contractor shall design, construct and complete the Works in accordance with the Contract and remedy any defects
in the Works.
•When completed, the Works (or Section or Part) must be fit for the purpose defined in the Employer’s Requirements or
where no purpose is described, fit for their ordinary purpose.
End of Document
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Commentary, UKBC-UFIDIC 500922990 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.1 - Contractor’s General Obligations (Yellow Book)
Commentary
4-012
The first sentence of the 2017 sub-clause only refers to the execution of the Works but under Sub-Cl.1.2(j) “execute” the Works
means the design, construction and completion of the Works and the remedying of any defect. The sentence therefore bears
the same meaning as the 1999 sub-clause.
The significant change in the clause relates to the fitness for purpose provision. The 1999 sub-clause required the Works to
be fit for the purposes as defined in the Contract as a whole. Under the 2017 Yellow Book, the purpose of the Works is to be
included in the Employer’s Requirements. This change should promote greater certainty by encouraging the Parties to clearly
define the purpose in detail in the Employer’s Requirements.
The 2017 sub-clause provides a new default position in the event that no purpose is specified in the Employer’s Requirements.
In the absence of a purpose “so defined and described”, the Works are to be fit for their ordinary purpose. Whilst a default
position is welcomed in the event that a purpose is not specified, “fit for their ordinary purpose” appears to add very little clarity
to the obligations imposed on the Contractor. This should provide further incentive for the Parties to ensure that the intended
purpose is set out in the Employer’s Requirements. The Parties should be aware that a purpose defined elsewhere in the Contract
would be disregarded and so the default position would apply.
The 1999 sub-clause only referred to the Works being fit for the defined purposes whereas the 2017 sub-clause permits the
Parties to agree that the Works or Section or Part or major items of plant are fit for the specified purposes. This provides a
further reason why the Parties should ensure that it is described in detail exactly what is to be fit for the specified purposes.
The Contractor must also be aware of the newly framed indemnity at Sub-Cl.17.4 that provides:
“The Contractor shall also indemnify and hold harmless the Employer against all acts, errors or omissions by
the Contractor in carrying out the Contractor’s design obligations that result in the Works (or Section or Part or
major item of Plant, if any), when completed, not being fit for the purpose(s) for which they are intended under
Sub-Clause 4.1 [Contractor’s General Obligations].”
This indemnity is more limited in scope than the fitness for purpose obligation in Sub-Cl.4.1. The indemnity only covers design
obligations that result in the Works not being fit for purpose. The indemnity is further limited as the failure must be a result of
the acts, errors or omissions on the part of the Contractor. The fitness for purpose obligation does not impose such requirements.
The burden therefore falls on the Employer to identify a relevant act, error or omission as opposed to simply demonstrating
that the Works are not fit for purpose.
The impact of the indemnity is, however, counterbalanced to an extent by Sub-Cl.1.15 excluding liability for indirect or
consequential loss or damage and imposing a cap on the Contractor’s liability under the indemnity.
Contractors should also be aware that Sub-Cl.19.2.3 provides that, if so stated in the Contract Data, the Contractor’s professional
indemnity insurance must indemnify the Contractor against liability for any act, error or omission in carrying out the Contractor’s
design obligations that results in the failure to meet the fitness for purpose requirements. This will likely require discussions
with brokers as to the feasibility of such insurance.
The second paragraph requires the Contractor to provide everything necessary to carry out his Works. This includes personnel,
plant, goods, consumables, as well as the Contractor’s Documents which are widely-defined at Sub-Cl.1.1.14 as including
calculations, digital files, computer programs and other software, drawings, manuals, models, specifications, and other technical
documents. The only addition to the 1999 sub-clause is that the Contractor is expressly obliged to provide any spare parts,
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Commentary, UKBC-UFIDIC 500922990 (2021)
if any. The Contractor’s Documents, unless otherwise stated, must be written in the language for communications defined in
Sub-Cl.1.4. It is important that the Contractor considers carefully what personnel and plant he will need and when, in order
to keep his promise.
The third paragraph is exactly the same as the 1999 sub-clause and provides that the Works include any works:
(a)necessary to satisfy the Employer’s Requirements, Contractor’s Proposal and Schedules;
(b)implied by the Contract; and
(c)necessary for the stability or for the completion or safe and proper operation of the Works.
The fourth paragraph is again the same as the 1999 sub-clause and imposes responsibility on the Contractor for all the
Contractor’s operations and activities, all methods of construction and all the Works.
The final paragraph provides that, upon request, the Contractor will submit details of the arrangements and methods of work
that they propose to adopt. There is no time requirement imposed on requests by the Employer and so the Employer appears to
be capable of requesting such information whenever he chooses. Once the Contractor has submitted the information, he cannot
make any “significant” alteration to his arrangements and methods without submitting them to the Engineer. It is notable that
under the 1999 edns the Contractor was required to notify the Engineer of a significant alteration but the 2017 edns do not
specify that the Contractor must give a Notice. Pursuant to Sub-Cl.1.3, the submission must be in writing. There is no indication
given either that the Engineer must approve the alteration or that he could reject the proposed alteration. The Contractor should
nevertheless remember that under Sub-Cl.3.2 any approval given by the Engineer will not relieve him of his responsibilities
under the Contract.
Design obligations under common law
4-013
Under the common law, absent a contract, there is an important distinction between the two essential design obligations: the
use of reasonable skill and care and an obligation as to fitness for purpose. In the former case, negligence has to be proved,
whereas in the latter case there is an absolute obligation which is independent of negligence.
Fitness for purpose
4-014
Under English or common law, the fitness for purpose duty is stricter than the ordinary responsibility of an architect or other
consultant carrying out design where the implied obligation is one of reasonable competence to “exercise due care, skill and
diligence”. In Greaves and Co (Contractors) Ltd v Baynham Meikle and Partners, 1 Lord Denning said:
“Now, as between the building owners and the Contractors, it is plain that the owners made known to the
Contractors the purpose for which the building was required, so as to show that they relied on the Contractors’
skill and judgement. It was therefore, the duty of the Contractors to see that the finished work was reasonably fit
for the purpose for which they knew it was required. It was not merely an obligation to use reasonable care, the
Contractors were obliged to ensure that the finished work was reasonably fit for the purpose.”
The duty is, therefore, absolute.
Further, in Viking Grain Storage v T.H. White Installations Ltd, 2 Judge John Davies said:
“The virtue of an implied term of fitness for purpose is that it prescribes a relatively simple and certain standard
of liability based on the ‘reasonable’ fitness of the finished product, irrespective of considerations of fault and of
whether its unfitness derived from the quality of work or materials or design.”
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Commentary, UKBC-UFIDIC 500922990 (2021)
The effect of a fitness for purpose obligation is to impose a duty of result. Accordingly, if a warranty is given, that particular
Works or design will be fit for its intended purpose, the Contractor or designer (or design and build contractor) will be held to
that obligation, regardless of the reason why the works or design does not meet its intended purpose. In other words, matters
beyond the control of the Contractor or the designer will not, unless the contract stipulates otherwise, excuse the Contractor
or designer from that obligation.
There is one potential defence available to the Contractor, which is part of the FIDIC Form. The obligation to provide works that
are fit for their purpose will only be effective if the purpose has been clearly made known to the Contractor in the documentation.
A contractor under such an obligation should ensure that, there is a general description of any outputs that the Employer intends
to achieve, or an indication of how the Employer expects the plant to perform in a given number of years.
When one considers the number of documents that might comprise an EPC contract for a complex engineering project and
the documents that might be incorporated by reference into such a contract, the potential breadth of this clause is wide and
can lead to difficulty in construing exactly what the purpose of the works might said to be. A number of problems can
frequently arise through the use of design and build forms. These include the potential uncertain definition of the contract
due to lengthy pre-contract discussions/negotiations and ambiguity or discrepancy between Employer’s Requirements and
Contractor’s Submission or other technical documents.
The case of MT Højgaard A/S v E.ON Climate and Renewables UK Robin Rigg East Ltd 3 provides a good illustration of
this problem. Here, the foundation structures of two offshore wind farms, which were designed and installed by MTH, failed
shortly after completion of the project. The cause of the failure was an international standard for the design of offshore wind
turbines which contained an error of which MTH was unaware when it undertook the design. This error meant that although
the foundations were designed to the relevant standard, they were argued to be defective as they did not have a 20-year service
life, which was asserted as being an obligation of the contract.
The principal problem for the courts was how to construe the various documents which constituted or were incorporated into
the contract. There were three main categories of contractual document: international standards, technical requirements and the
contract conditions themselves. These contained contrasting obligations:
Paragraph 1.6 of the Technical Requirements stated:
“The Works elements shall be designed for a minimum site specific ‘design life’ of twenty (20) years without major
retrofits or refurbishments; all elements shall be designed to operate safely and reliably in the environmental
conditions that exist on the site for at least this lifetime.”
Clause 8.1 of the Contract set out the Contractor’s obligations including:
“The Contractor shall … design, manufacture, test, deliver and install and complete the Works:
(i)with due care and diligence expected of appropriately qualified and experienced designers, engineers and
constructors (as the case may require);
…”
The central question addressed to the Supreme Court was whether, in the light of the Technical Requirements, which refers to
ensuring a life for the foundations (and the Works) of 20 years, MTH was in breach of contract, despite the fact that it used due
care and professional skill, adhered to good industry practice, and complied with the relevant international requirements.
In the Supreme Court, Lord Neuberger considered that the natural meaning of the Technical Requirements involved MTH
warranting either that the foundations would have a lifetime of 20 years or agreeing that the design of the foundations would
be such as to give them a lifetime of 20 years. Lord Neuberger said that the law on the topic was “well summarised” by Lord
Wright in Cammell Laird and Co Ltd v The Manganese Bronze and Brass Co Ltd, 4 where he said that
“[i]t has been laid down that where a manufacturer or builder undertakes to produce a finished result according
to a design or plan, he may be still bound by his bargain even though he can show an unanticipated difficulty or
even impossibility in achieving the result desired with the plans or specification.”
Lord Neuberger considered that:
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Commentary, UKBC-UFIDIC 500922990 (2021)
“While each case must turn on its own facts, the message from decisions and observations of judges in the United
Kingdom and Canada is that the courts are generally inclined to give full effect to the requirement that the item as
produced complies with the prescribed criteria, on the basis that, even if the customer or employer has specified
or approved the design, it is the contractor who can be expected to take the risk if he agreed to work to a design
which would render the item incapable of meeting the criteria to which he has agreed.”
Although the two contract provisions imposed different or inconsistent requirements, rather than concluding that they were
inconsistent, the correct analysis was that the more rigorous or demanding of the two standards or requirements must prevail.
The less rigorous could then properly be treated as a minimum requirement. If there was an inconsistency between a design
requirement and the required criteria then even if MTH had complied with the design requirement, they would still be liable for
the failure to comply with the required criteria, as it was MTH’s duty to identify the need to improve on the design accordingly.
Whilst the judge accepted that the contractual arrangements were “certainly long, diffuse and multi-authored”, this did not alter
the fact that the court has to do its best to interpret the contractual arrangements by reference to normal principles. He referred
to the words of Lord Bridge of Harwich in the case of Mitsui Construction Co Ltd v Attorney General of Hong Kong, 5 that
“inelegant and clumsy” drafting of “a badly drafted contract” was not a:
“reason to depart from the fundamental rule of construction of contractual documents that the intention of the
parties must be ascertained from the language that they have used interpreted in the light of the relevant factual
situation in which the contract was made” .
These are important words that anyone creating a contract should consider. Whilst this book concentrates on the 21 core clauses
of the FIDIC Contract, the typical contract in final forms, including Contract Data or Employer’s Requirements, will run to
many hundreds of pages. Those putting contracts together should do well to heed the words of the South African judge, Jeffrey
AJ, in the case of Transnet Soc Ltd v Group Five Construction (Pty) Ltd 6 :
“This contract, in the result, contains a bewildering array of provisions derived from the various NEC options,
several of which were incorporated into the contract by the parties and which follow neither a numerical sequence
nor a uniform description. Also, the words used in the blanks completed by the parties are often couched in a
cryptic shorthand style. But, in construing this document, I am mindful of what Lord Wright said in Hillas & Co
Ltd v Arcos Ltd [1932] UKHL 2; [1932] All ER Rep 494 (HL) 499H that:
1‘Business men often record the most important agreements in crude and summary fashion; modes of
expression sufficient and clear to them in the course of their business may appear to those unfamiliar with
the business far from complete or precise. It is accordingly the duty of the Court to construe such documents
fairly and broadly, without being too astute or subtle in finding defects.’”
Fitness for purpose under the Civil Code
4-015
In the UAE, art.383(1) of the Civil Code provides that:
If that which is required of an obligor is the preservation of a thing, or the management thereof, or the exercise
of care in the performance of his obligation, he shall have discharged that obligation if, in the performance
thereof, he exercises all such care as the reasonable man would exercise, notwithstanding that the intended
object is not achieved, unless there is an agreement or a provision of law to the contrary.
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Commentary, UKBC-UFIDIC 500922990 (2021)
This suggests that it may be possible to argue that, if unlike FIDIC, there is nothing in the contract to the contrary, to suggest
that a Contractor only has to use reasonable skill and care when it comes to design. However, if the contract is silent, then that
silence will typically be viewed as a fitness for purpose obligation.
Further, under art.880 of the Civil Code, the Architect or Engineer (i.e. the designer) is jointly liable with the Contractor for
any total or partial collapse of a building occurring within 10 years. In other words, this obligation applies not just to the design
but to the supervision and construction itself. This concept of decennial liability is common in many, although not all, civil
law jurisdictions. For example, it is present in the Civil Codes of the other GCC states, except Saudi Arabia, which does not
have a Civil Code but does have a corresponding provision in art.76 of the Government Tenders and Procurement Law. It runs
for 10 years irrespective of what the contract says. Decennial liability, a mandatory local law provision, 7 provides that the
Contractor will be liable absolutely (i.e. there is no defence of using reasonable skill and care as there may be under common law
jurisdictions) for any hidden defects for a period of 10 years from completion or from the date of the Taking-Over Certificate. 8
For further discussion about decennial liability (and defects), see Sub-Cl.11.1 below.
Defect or design error?
4-016
Where an Employer has engaged a Contractor to construct a building in accordance with an architect’s (or other design
professional’s) design supplied by the Employer, then some limited design responsibility may, however, still be placed on
the Contractor. For example, if the design documents fail to specify all materials, the choice of materials is left to the skill
and judgement of the Contractor. The Contractor may also have to comply with statutory requirements which, depending on
the location, could have a design element. Where the Contract is silent as to the materials to be used in the construction, the
Contractor is still obliged to choose and apply materials in order to achieve the expressly agreed result: the completed building.
One issue that can arise in traditional contracts where the design is not the Contractor’s responsibility is the categorisation of a
particular defect. Is it a design defect or a defect of workmanship? To take two examples, the choice between a flat roof and a
pitched roof will be a matter of design. However, the choice between a screw and a nail may well be a matter of workmanship.
As indicated by the authors of Building Contract Disputes: Practice and Precedents 9 :
“As a rule of thumb, the shape, dimensions, choice of material and other matters apparent from the drawings are
generally regarded as design matters and the things left over for the good sense of the contractor are generally
regarded as matters of workmanship.”
This issue came to the fore in the Scottish case of SSE Generation Ltd v Hochtief Solutions AG. 10 Here, in April 2009, within
a few months of take-over, a tunnel suffered a major collapse. SSE instructed Hochtief to carry out remedial works. Hochtief
refused, stating that it was not liable under the contract for the cost of those works. SSE appointed others to carry out the
remedial works which cost £137m. The Contract was based on the NEC2 Form. Option M said this:
“Limitation of the Contractor’s liability for his design to reasonable skill and care. The Contractor’s design M1
M1.1. The Contractor is not liable for defects in the works due to his design so far as he proves that he used
reasonable skill and care to ensure that it complied with the works information.”
So, contrary to the scheme of the FIDIC Form, liability for design was not based on a fitness for purpose obligation. The question
for the court was what caused the collapse. Was it perhaps caused by a defect? A defect 11 under NEC2 Cl.11.2(15) comprises:
“(1)a part of the works which is not in accordance with the Works Information or
(2)a part of the works designed by the Contractor which is not in accordance with (the applicable law or)
the Contractor’s design which has been accepted by the Project Manager.”
However, the Works Information (the NEC equivalent of the Employer’s Requirements) specified a design life of 75 years for
the civil works. Lord Glennie, referring to the MTH case, said:
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Commentary, UKBC-UFIDIC 500922990 (2021)
“Such an interpretation meant that the contractor complied with his obligations if he handed over the works in such
a condition; and the employer had the whole of the two-year defects period within which to determine whether
the Works did in fact have a 20-year design life.”
So, was the Contractor protected by Option M? In short: no. There had been a failure of the shotcrete. The tunnel collapsed
because there was insufficient support. This amounted to a defect as it was not in accordance with the Works Information.
Option M only related to “defects in the works due to [the Contractor’s] design”. It did not apply as the Defect (the failure to
shotcrete or provide other protection to areas of erodible rock) was “… not one of design but rather implementation of that
design”. So, a consideration as to whether there was a lack of reasonable skill and care was not relevant.
In the English case of Trebor Bassett Holdings Ltd v ADT Fire and Security Plc, 12 a case involving a fire at a popcorn factory,
the court appeared to draw a distinction where bespoke systems or products were involved. Trebor argued that the usual terms
as to quality and fitness for purpose should be implied into the contract. The Court of Appeal disagreed, saying that:
•The system was not an off-the-shelf “good” but a bespoke system made up of component parts that had been selected
for use and therefore “designed”.
•Trebor had not communicated any particular purpose for the system or the hazardous nature of the factory’s process.
•There was no reliance by Trebor as required for this term to be implied. Cadbury decided to replicate the system at another
factory before it even approached ADT.
•It was impossible to assess whether or not the system was of good quality as it had no inherent characteristics that could
be independently assessed. The issues were of design, not quality.
•ADT agreed to supply design skills and to use care when exercising them, so the relevant implied term was to use
reasonable skill and care pursuant to s.13 of the UK Supply of Goods and Services Act 1982.
This distinction between “goods” and a “system” is important. It determines whether a supplier is obliged to provide something
which is fit for purpose or to use reasonable skill and care in its production which is less onerous. Being able to distinguish
between these two things is equally, if not more, important.
Duty to warn
4-017
Sub-Clause 4.1 attempts to clearly define where design responsibility lies. However, a Contractor should always take care to
consider the implications of the design even if he thinks he has no design responsibility whatsoever. In some jurisdictions a
Contractor is under a duty to warn the Employer of any problems with the design.
It has been held by the Supreme Court of Canada, in Brunswick Construction v Nowlan, 13 that a contractor executing work in
accordance with plans of the Employer’s architect is under a duty to warn the Employer of obvious design defects. The situation
in England is different. In Plant v Adams, 14 whilst the Court of Appeal expressly reserved its position as to such an obligation
where there was a design defect which the Subcontractor knew or ought to have known about which was not dangerous, where
there was potential danger, it held that it was clear that a subcontractor owed a duty of care to point out design faults and was
required to protest vigorously and even walk off site, unless a safe design was produced.
A slightly different approach was suggested by the subsequent case of Aurum Investments Ltd v Avonforce Ltd (in liquidation), 15
where an underpinning subcontractor was held not to be liable under the Duty to Warn principle when part of the excavation
work collapsed. The subcontractor could not know of the design and build Contractor’s method or work. Dyson J, as he then
was, said that:
“the law is moving with caution in this area … a court should not hold a contractor to be under a duty to warn
his client unless it is reasonable to do so.” 16
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Commentary, UKBC-UFIDIC 500922990 (2021)
Accordingly, the prudent Contractor would be advised to alert the Engineer to any obvious design defects which he comes
across. 17 In Goldswain v Beltec Ltd (t/a BCS Consulting), 18 it was held that a firm of engineers was not liable for the collapse of
a building following construction work to convert the cellar into living accommodation by lowering the floor and underpinning
the outer walls, since competent engineers were entitled to expect that builders would understand and act upon the construction
method indicated in the design. There was nothing in the design documentation produced by the Engineers which would prevent
the Contractor from doing its work in a reasonably safe way.
When considering the duty to warn, Akenhead J said:
“47. Drawing from the authorities, I can reach the following conclusions in relation to a duty to warn: (a) Where the
professionals (engineers in this case) are contractually retained, the Court must initially determine what the scope
of the contractual duties and services were. It is in the context of what the professional person is contractually
engaged to do that the scope of the duty to warn and the circumstances in which it may in practice arise should be
determined. (b) It will, almost invariably, be incumbent upon the professional to exercise reasonable care and skill.
That duty must be looked at in the context of what the professional person is engaged to do. The duty to warn is
no more than an aspect of the duty of a professional to act with the skill and care of a reasonably competent person
in that profession. (c) Whether, when and to what extent the duty will arise will depend on all the circumstances.
(d) The duty to warn will often arise when there is an obvious and significant danger either to life and limb or to
property. It can arise however when a careful professional ought to have known of such danger, having regard to all
the facts and circumstances. (e) In considering a case where it is alleged that the careful professional ought to have
known of danger, the Court will be unlikely to find liability merely because at the time that the professional sees
what is happening there was only a possibility in future of some danger (see Aurum); any duty to warn may well
not be engaged if all there is a possibility that the contractor in question may in future not do the works properly.”
The duty to warn may also apply to the use of materials. In the case of J Murphy & Sons Ltd v Johnston Prevast Ltd, 19 the
court found that there is an implied term in supply contracts such that, if a supplier knew or ought reasonably to have known
that there might be a problem if a particular material was used in conjunction with the supplier’s product, then the supplier
is under an obligation to warn the customer. This could equally apply to the Contractor if he is required by the Employer to
use particular materials. Further, this duty to warn a customer can continue after a contract has been concluded. In the Murphy
case, the judge held that the duty existed from the time the contract was concluded to the completion of post-installation testing,
almost a year later.
Footnotes
1
2
3
4
5
6
7
8
[1975] 1 W.L.R. 1095 at [1098].
[1986] 33 B.L.R. 103 at [117].
[2017] UKSC 59, [2015] EWCA Civ 407 and [2014] EWHC 1088 (TCC). Sensibly, E.ON and MTH had put on one
side the question of legal liability and agreed a scheme of remedial works. However, court proceedings were necessary
to decide who should bear the cost of those remedial works.
[1934] A.C. 402 at 425.
(1986) 33 B.L.R. 7 at 14.
[2016] ZAKZDHC 3. This was a case involving the NEC Form but the principle is a good one. Whilst the judge
here appears to have taken the line that he would adopt a “fair and broad” approach to deciding what the contract
actually meant, practitioners should not anticipate that such a potentially generous policy will be universally adopted. For
example, the UK courts, following the Supreme Court case of Arnold v Britain [2015] UKSC 36 no longer concentrate
on consideration of the “surrounding circumstances” or “commercial common sense” (Rainy Sky S.A. v Kookmin Bank
[2011] 1 W.L.R. 2100) in order to focus on the primacy of language, the words the parties have used and agreed as
part of their contract.
What matters is the location of the site, not the applicable law of the contract.
Grose argues that the omission of any provisions relating to decennial liability reflects the common law origins of the
FIDIC Conditions. See M. Grose, “Compatibility of FIDIC’s Drafting Principles with Contracting Practices in the Gulf:
A Perfect Match or a Marriage of Convenience?” [2017] I.C.L.R. 375.
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Commentary, UKBC-UFIDIC 500922990 (2021)
9
10
11
12
13
14
15
16
17
18
19
R. Fenwick Elliott and J. Glover, Building Contract Disputes: Practice and Precedents (London: Sweet and Maxwell,
looseleaf first published 1997), latest update released September 2018, at [1–142].
[2018] CSIH 26 CA162/12.
There is no formal definition of defect in the FIDIC Rainbow suite.
[2011] EWHC 1936 (TCC).
[1974] 21 B.L.R. 27.
[2000] B.L.R. 205.
[2001] 2 All E.R. 385.
It was not reasonable to do so, where a Sub-Contractor was asked to and duly did provide a cap to prevent dust falling
down a duct and where the Contractor who had put in the order for the cap, saw that it was fitted, knew that the cap
was not strong enough to take a man’s weight safely, and did not require any warning signs on the cap nor any form
of reinforcement (Chinery v Engineering with Excellence [2002] EWCA Civ 608). On the other hand, where there is a
potential danger to human beings, a failure to warn may well give rise to a breach of any duty of care owed to a third
party by a party who knows of the danger (Cleightonhills v Bembridge Marine Ltd [2012] EWHC 3449).
There is, unsurprisingly a similar duty on the Engineer. In Hart Investments Ltd v Fidler 112 Con. L.R. 33, the judge
noted that: “If an Engineer employed by an owner in respect of permanent works observes a state of temporary works
which is dangerous and causing immediate peril to the temporary works in respect of which he is employed, he is obliged
to take such steps as are open to him to obviate that danger. It seems to me that that follows, partly as a matter of common
sense, but also because the Engineer is, after all, instructed in relation to the permanent works as a whole. It would
appear strange if he is under a duty to take such steps as he can to see that they survive for say, the next 25 years, or
whatever the design life for the building is, but is not obliged to take any steps to warn of an immediate danger to those
works caused by an imperilling act by the Contractor.”
[2015] EWHC 556 (TCC).
[2008] EWHC 3024 (TCC).
End of Document
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Section 4.2 - Performance Security, UKBC-UFIDIC 500923006 (2021)
Section 4.2 - Performance Security
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.2 - Performance Security
4-018
The Contractor shall obtain (at the Contractor’s cost) a Performance Security to secure the Contractor’s proper performance
of the Contract, in the amount and currencies stated in the Contract Data. If no amount is stated in the Contract Data, this
Sub-Clause shall not apply.
4.2.1 Contractor’s obligations
The Contractor shall deliver the Performance Security to the Employer, with a copy to the Engineer, within 28 days
after receiving the Letter of Acceptance. The Performance Security shall be issued by an entity and from within a
country (or other jurisdiction) to which the Employer gives consent and shall be in the form annexed to the Particular
Conditions, or in another form agreed by the Employer (but such consent and/or agreement shall not relieve the
Contractor from any obligation under this Sub-Clause).The Contractor shall ensure that the Performance Security
remains valid and enforceable until the issue of the Performance Certificate and the Contractor has complied with
Sub-Clause 11.11 [Clearance of Site]. If the terms of the Performance Security specify an expiry date, and the
Contractor has not become entitled to receive the Performance Certificate by the date 28 days before the expiry date,
the Contractor shall extend the validity of the Performance Security until the issue of the Performance Certificate
and the Contractor has complied with Sub-Clause 11.11 [Clearance of Site].Whenever Variations and/or adjustments
under Clause 13 [Variations and Adjustments] result in an accumulative increase or decrease of the Contract Price by
more than twenty percent (20%) of the Accepted Contract Amount:
(a)in the case of such an increase, at the Employer’s request the Contractor shall promptly increase the amount of
the Performance Security in that currency by a percentage equal to the accumulative increase. If the Contractor
incurs Cost as a result of this Employer’s request, Sub-Clause 13.3.1 [Variation by Instruction] shall apply as if
the increase had been instructed by the Engineer; or
(b)in the case of such a decrease, subject to the Employer’s prior consent the Contractor may decrease the amount
of the Performance Security in that currency by a percentage equal to the accumulative decrease.
4.2.2 Claims under the Performance Security
The Employer shall not make a claim under the Performance Security, except for amounts to which the Employer is
entitled under the Contract in the event of:
(a)failure by the Contractor to extend the validity of the Performance Security, as described in this Sub-Clause, in
which event the Employer may claim the full amount (or, in the case of previous reduction(s), the full remaining
amount) of the Performance Security;
(b)failure by the Contractor to pay the Employer an amount due, as agreed or determined under Sub-Clause 3.7
[Agreement or Determination] or agreed or decided under Clause 21 [Disputes and Arbitration], within 42 days
after the date of the agreement or determination or decision or arbitral award (as the case may be);
(c)failure by the Contractor to remedy a default stated in a Notice given under Sub-Clause 15.1 [Notice to Correct]
within 42 days or other time (if any) stated in the Notice;
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Section 4.2 - Performance Security, UKBC-UFIDIC 500923006 (2021)
(d)circumstances which entitle the Employer to terminate the Contract under Sub-Clause 15.2 [Termination for
Contractor’s Default], irrespective of whether a Notice of termination has been given; or
(e)if under Sub-Clause 11.5 [Remedying of Defective Work off Site] the Contractor removes any defective or
damaged Plant from the Site, failure by the Contractor to repair such Plant, return it to the Site, reinstall it and
retest it by the date of expiry of the relevant duration stated in the Contractor’s Notice (or other date agreed by
the Employer).
The Employer shall indemnify and hold the Contractor harmless against and from all damages, losses and expenses
(including legal fees and expenses) resulting from a claim under the Performance Security to the extent that the
Employer was not entitled to make the claim.Any amount which is received by the Employer under the Performance
Security shall be taken into account:
(i)in the Final Payment Certificate under Sub-Clause 14.13 [Issue of FPC]; or
(ii)if the Contract is terminated, in payment due to the Contractor under Sub-Clause 15.4 [Payment
after Termination for Contractor’s Default], Sub-Clause 15.7 [Payment after Termination for Employer’s
Convenience], Sub-Clause 16.4 [Payment after Termination by Contractor], Sub-Clause 18.5 [Optional
Termination], or Sub-Clause 18.6 [Release from Performance under the Law] (as the case may be).
4.2.3 Return of the Performance Security
The Employer shall return the Performance Security to the Contractor:
(a)within 21 days after the issue of the Performance Certificate and the Contractor has complied with Sub-Clause
11.11 [Clearance of Site]; or
(b)promptly after the date of termination if the Contract is terminated in accordance with Sub-Clause 15.5
[Termination for Employer’s Convenience], Sub-Clause 16.2 [Termination by Contractor], Sub-Clause 18.5
[Optional Termination] or Sub-Clause 18.6 [Release from Performance under the Law].
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923027 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.2 - Performance Security
Overview of Key Features
4-019
•The Contractor must provide Performance Security in the amount specified in the Contract Data.
•If Performance Security is required, then the Contractor must, at his own cost, provide that security to the Employer no
later than 28 days after receiving the Letter of Acceptance.
•At the same time as the Performance Security is supplied to the Employer, a copy must be sent to the Engineer.
•The Performance Security must:
i.be in the form annexed to the Particular Conditions or in a form agreed by the Employer;
ii.be issued by an entity and from a country to which the Employer gives consent; and
iii.remain valid until the issue of the Performance Certificate and the Contractor has complied with Sub-Cl.11.11
(Clearance of Site).
•By Sub-Cl.14.6, if the Performance Security has not been received and accepted by the Employer, then the Engineer will
not issue an Interim Payment Certificate.
•Whenever variations and/or adjustments under Cl.13 result in an accumulative increase of the Contract Price by more
than 20 per cent of the Accepted Contract Amount, the Contractor, if requested to do so by the Employer, must promptly
increase the amount of the Performance Security by a percentage equal to the accumulative increase. If the Contractor
incurs additional cost as a result of this request, Sub-Cl.13.3.1 shall apply as if the Engineer had instructed the increase.
•If there is an accumulative decrease of the Contract Price by more than 20 per cent of the Accepted Contract Amount,
subject to the Employer’s prior consent, the Contractor may decrease the amount of the Performance Security by a
percentage equal to the accumulative decrease.
•The Employer may only make a call on the Performance Security under the circumstances listed in Sub-Cl.4.2.2(a)–(e).
•If the Employer makes a claim when he is not entitled to do so, the Contractor is entitled to an indemnity.
•Any amount received by the Employer under the Performance Security will be taken into account in the Final Payment
Certificate under Sub-Cl.14.13 or if the Contract is terminated, in payment due to the Contractor under the five sub-clauses
specified in Sub-Cl.4.2.2(ii).
End of Document
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Sub-Clause 4.2.1: Contractor’s Obligations, UKBC-UFIDIC 500923002 (2021)
Sub-Clause 4.2.1: Contractor’s Obligations
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.2 - Performance Security
Commentary
Sub-Clause 4.2.1: Contractor’s Obligations
4-020
The Contractor must, if required by the Employer, obtain at his own cost, Performance Security in the amount specified by
the Employer.
The Contractor has only 28 days from receiving the Letter of Acceptance to provide the Performance Security. This is a relatively
short period of time in which to obtain the security and it is important that the Contractor moves swiftly to obtain it. By SubCl.2.1 the Employer may withhold access to the Site until the Performance Security has been obtained. Any delay in obtaining
the Performance Security might have an adverse impact upon the Contractor’s Programme. In addition, by Sub-Cl.14.6, the
Employer may withhold payment if the Performance Security has not been provided within the contractual timescale.
The Performance Security must be in a form approved by the Employer. The Employer is free to choose his own form of security,
although care must be taken to ensure that it complies with the Contract (as amended). Given the relatively tight timescale, if
the Employer’s preferred form is not one of those set out in the Contract Annex, then this should be made clear in the tender
documentation.
Care must also be taken to ensure that the Performance Security complies with any applicable law. The Guidance to the Special
Provisions suggests the addition of the following paragraph at the end of the first paragraph of Sub-Cl.4.2.1:
“If the Performance Security is in the form of a bank guarantee, it shall be issued either (i) by a bank located in
the Country, or (ii) directly by a foreign bank to which the Employer gives consent. If the Performance Security is
not in the form of a bank guarantee, it shall be issued by a financial entity registered, or licensed to do business
in the Country.”
The Annexes to the 2017 edns set out seven recommended forms of security of which six relate to different types of security
which the Contractor might be required to provide. These are:
i.
ii.
iii.
iv.
v.
vi.
vii.
Annex A
Annex B
Annex C
Annex D
Annex E
Annex F
Annex G
Parent Company Guarantee
Tender Security
Demand Guarantee
Surety Bond
Advance Payment Guarantee
Retention Money Guarantee
Payment Guarantee by Employer
Annexes B, C, E, F and G are all securities which are callable on demand. Annexes A and D are surety bonds payable on default.
An on-demand security bond is an unconditional obligation to pay when a demand has been made. 20 A surety bond or
performance guarantee requires certain conditions to be met before payment is made.
One reason why FIDIC has chosen to annex particular forms of security to the contract is because the terms “performance bond”
and “guarantee” are often used synonymously in the construction industry. However, they are in fact quite different forms of
security. Because a document is headed a “guarantee” does not mean that it actually is one. In the case of Wuhan Guoyu Logistics
Group Co Ltd v Emporiki Bank of Greece SA, 21 Longmore LJ cited Paget’s Law of Banking, (11th edn) which provides that:
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Sub-Clause 4.2.1: Contractor’s Obligations, UKBC-UFIDIC 500923002 (2021)
“where an instrument (i) relates to an underlying transaction between the parties in different jurisdictions, (ii)
is issued by a bank, (iii) contains an undertaking to pay ‘on demand’ (with or without the words ‘first’ and/or
‘written’) and (iv) does not contain clauses excluding or limiting the defences available to a guarantor, it will
almost always be construed as a demand guarantee.”
The most important are Annexes C and D, which are designed primarily to provide protection against any failure to complete
the Works as a consequence of default on the part of the Contractor, for example through insolvency. Under the 2017 sub-clause,
the Contractor only has to maintain the Performance Security until the issue of the Performance Certificate and the Contractor
has complied with Sub-Cl.11.11 (Clearance of Site). The Performance Security does not therefore provide protection in relation
to latent defects.
These standard securities incorporate the following Rules produced by the International Chamber of Commerce:
(i)ICC Publication No.524, Uniform Rules for Contract Bonds (1993)
(ii)ICC Publication No.758, Uniform Rules for Demand Guarantees (URDG 2010 Revision)
One advantage of incorporating these rules is that it will mean that there can be no argument over what laws govern the security
or which jurisdiction will be competent to hear disputes in connection with it. However, the rules are not identical.
By art.34 of the Uniform Rules for Demand Guarantees, unless provided otherwise in the guarantee, the law governing the
guarantee will be the law of the location of the guarantor’s branch or office that issued the guarantee. By art.35, unless otherwise
provided in the guarantee, any dispute between the guarantor and beneficiary relating to the guarantee shall be settled exclusively
by a court in the country of the guarantor’s branch or office that issued the guarantee.
Thus, if a guarantee under the Uniform Rules for Demand Guarantees (“UDRG”) is issued by the Taipei branch of a French
bank, the beneficiary will not be allowed to start proceedings against the bank in France and will have no option but to bring
its claim in the Taiwanese courts.
However, under the Uniform Rules for Contract Bonds, art.8(a) provides that the applicable law, if not otherwise chosen by
the parties, shall be the law governing the Contract. Also by art.8(c), unless the parties agree otherwise, disputes between the
guarantor and the beneficiary shall be settled by the competent court of the Guarantor’s principal place or business or, at the
option of the Beneficiary, the competent court of the country in which the branch of the Guarantor which issued the Bond is
situated.
Thus, using the example set out above, the beneficiary would have the option to choose between the French and Taiwanese
courts to hear the claim.
The demand guarantees in favour of the Employer (Annexes B, C, E and F) are all similar in nature. Annex C, the Demand
Guarantee provides that:
“At the request of the Applicant, we … hereby irrevocably undertake to pay you, the Beneficiary/Employer, any
sums or sums not exceeding in total the amount of … upon receipt by us of your demand in writing and your
written statement indicating in what respect the Applicant is in breach of its obligations under the Contract.”
In other words, the Employer has to do no more than simply state that there has been default. The fact that the Employer
must set out details of the breach has probably been inserted to pressure an Employer to only seek to call the bond in genuine
circumstances. Nevertheless, the Employer is under no obligation to provide any evidence of that default by the Contractor.
A similar requirement can be found in Annex G, which is the only demand guarantee in favour of the Contractor. However, it
has been drafted somewhat differently. As well as providing a demand in writing confirming that the Employer has failed to
pay in full, the Contractor must provide evidence as to that failure. This suggests that the evidence supplied by the Contractor
is liable to be checked and so Annex G is not in the same category of guarantee as Annexes B, C, E and F.
There is no obligation to use any of the options suggested in the Annexes, however the Annexes have been drafted to ensure
that when taken with the ICC rules, they conform with the requirements of the contract. Care should be taken if other forms of
bond or performance security, which are in a different form, are used to ensure that they reflect the terms of the contract.
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Sub-Clause 4.2.1: Contractor’s Obligations, UKBC-UFIDIC 500923002 (2021)
Under the 1999 sub-clause, the Contractor had to ensure that the Performance Security remained valid until the Contractor
had executed and completed the Works and remedied any defects. Under the 2017 sub-clause, the Contractor must ensure that
the Performance Security remains valid until the issue of the Performance Certificate and the Contractor has complied with
Sub-Cl.11.11.
The Performance Certificate, pursuant to Sub-Cl.11.9, is issued by the Engineer and states the date on which the Contractor
fulfilled the Contractor’s obligations under the Contract. The Performance Certificate is to be issued within 28 days after the later
of the expiry dates of the Defects Notifications Period or as soon thereafter as the Contractor has supplied all the Contractor’s
Documents and completed and tested all the Works. Pursuant to Sub-Cl.11.11, the Contractor must promptly after the issue of
the Performance Certificate, remove any remaining equipment, surplus material, etc. reinstate all parts of the Site affected by the
Contactor’s activities during the execution of the Works and leave the Site and Works in the condition stated in the Specification.
Sub-Clause 4.2.1 also makes clear that if the terms of the Performance Security specify an expiry date, and the Contractor
has not become entitled to receive the Performance Certificate by the date 28 days before the expiry date, the Contractor must
extend the validity of the Performance Security until the issue of the Performance Certificate and the Contractor has complied
with Sub-Cl.11.11.
The 2017 sub-clause provides a completely new provision in relation to variations and adjustments under Cl.13.
If there is an accumulative increase of the Contract Price by more than 20 per cent of the Accepted Contract Amount, at
the Employer’s request, the Contractor must promptly increase the amount of the Performance Security in that currency by a
percentage equal to the increase. If the Contractor incurs cost as a result of the Employer’s request, Sub-Cl.13.3.1 applies as
if the Employer had instructed the increase.
If there is a decrease of the Contract Price by more than 20 per cent of the Accepted Contract Amount, subject to the Employer’s
prior consent, the Contractor may decrease the amount of the Performance Security in that currency by a percentage equal to
the decrease.
Comparable amendments are often made to the FIDIC conditions to allow for this. The new sub-clause had therefore likely
rendered such amendments unnecessary. Employers may well still wish to make amendments such as adjusting the percentage
change to the Contract Price that triggers this provision or providing a sanction in the event that the Contractor fails to make
the necessary increase.
Footnotes
20
21
In the English case of Murphy and Sons v Beckton Energy Ltd [2016] EWHC 607 (TCC), a case involving an amended
1999 Yellow Book, Carr J held: “The trigger for a performance bond is a belief on the part of the drawing party in its
entitlement, not such entitlement having been subject to a final determination giving rise to a payment obligation.”
[2012] EWCA Civ 1629. See also, Autoridad Del Canal De Panamá v Sacyr, S.A., [2017] EWHC 2228.
End of Document
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3
Sub-Clause 4.2.2: Claims under the Performance Security, UKBC-UFIDIC 500922984...
Sub-Clause 4.2.2: Claims under the Performance Security
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.2 - Performance Security
Commentary
Sub-Clause 4.2.2: Claims under the Performance Security
4-021
Sub-Clause 4.2.2 provides that the Employer shall not make a call on the Performance Security except in the circumstances
listed in items (a)–(e). The fact that these circumstances might not apply would not stop the Employer from making a call on
the Demand Guarantee. The bond is an entirely separate document from the Contract. The guarantor must pay if the conditions
of payment have been satisfied.
However, the prudent Employer would be advised to exercise caution before making a call on the Bond if the circumstances
set out in Sub-Cl.4.1(a)–(e) do not apply, as the sub-clause also requires that the Employer shall indemnify the Contractor if he
makes a call on the Performance Security to which he is not entitled under the Contract.
The same would apply in respect of the surety bonds. This is even though they are very different in nature to the demand
guarantees. To take Annex D as an example. This states:
“Upon Default by the Principal to perform any contractual obligation, or upon the occurrence of any of the
events and circumstances listed in Sub-Clause 15.2.1 of the Conditions of Contract, the Guarantor shall satisfy
and discharge the damages sustained by the Beneficiary due to such Default, event or circumstances.”
Therefore, there must be default by the Contractor under the Contract. It is not enough for the Employer merely to provide a
written notice that there has been default.
It can be seen that the demand guarantees tend to favour the Employer, whilst the surety bond is more favourable to the
Contractor. However, what form, if any, of Performance Security is chosen will be a matter for commercial negotiation and
whatever form is chosen, the Contractor and Employer must be aware of the restrictions imposed on the Employer by SubCl.4.2(a)–(e).
Sub-Clauses 4.2(a)–(d) are the same in substance as in the 1999 edn and provide that the Employer can make a claim in the
event of:
(a)Failure by the Contractor to extend the validity of the Performance Security as described in the sub-clause. The Employer
may claim the full amount or the remaining amount if previous reductions have taken place.
(b)Failure by the Contractor to pay the Employer an amount due, as agreed or determined under Sub-Cl.3.7 (Agreement or
Determination) or agreed or decided under Cl.21 (Disputes and Arbitration), within 42 days of the date of the agreement,
determination, decision or arbitral award.
(c)Failure by the Contractor to remedy a default stated in a Notice to Correct under Sub-Cl.15.1 within 42 days or such
other time stated in the Notice.
(d)Circumstances which entitle the Employer to terminate for Contractor’s Default under Sub-Cl.15.2, irrespective of
whether a Notice of termination has been given.
Sub-Clause 4.2(e) is a new addition to the 2017 Red Book. It permits a claim where the Contractor has removed any defective
or damaged Plant from the Site under Sub-Cl.11.5 and has failed to repair such Plant, return it to the Site, reinstall it and retest
it by the date specified in the Contractor’s Notice (or such other date agreed by the Employer).
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Sub-Clause 4.2.2: Claims under the Performance Security, UKBC-UFIDIC 500922984...
The final paragraph of Sub-Cl.4.2.2 makes it explicit that any amount received by the Employer under the Performance Security
must be taken into account in the Final Payment Certificate under Sub-Cl.14.13 or if the Contract is terminated, in payment
due to the Contractor under the following five sub-clauses:
(a)Sub-Cl.15.4 (Payment after Termination for Contractor’s Default).
(b)Sub-Cl.15.7 (Payment after Termination for Employer’s Convenience).
(c)Sub-Cl.16.4 (Payment after Termination by Contractor).
(d)Sub-Cl.18.5 (Optional Termination).
(e)Sub-Cl.18.6 (Release from Performance under the Law).
End of Document
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2
Sub-Clause 4.2.3: Return of the Performance Security, UKBC-UFIDIC 500922987 (2021)
Sub-Clause 4.2.3: Return of the Performance Security
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.2 - Performance Security
Commentary
Sub-Clause 4.2.3: Return of the Performance Security
4-022
The obligation to maintain the Performance Security does come to an end. In the 1999 version the Performance Security was
to be returned within 21 days after receiving a copy of the Performance Certificate.
The 2017 version has been amended and extended. The Employer has to return the Performance Security to the Contractor either:
(a)within 21 days after the issue of the Performance Certificate and the Site clearance pursuant to Sub-Cl.11.11; or
(b)promptly after the date of termination if the Contract is terminated in accordance with:
(i)Sub-Cl.15.5 (Termination for Employer’s Convenience);
(ii)Sub-Cl.16.2 (Termination by Contractor);
(iii)Sub-Cl.18.5 (Optional Termination); or
(iv)Sub-Cl.18.6 (Release from Performance under the Law).
End of Document
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1
Section 4.3 - Contractor’s Representative, UKBC-UFIDIC 500922968 (2021)
Section 4.3 - Contractor’s Representative
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.3 - Contractor’s Representative
4-023
The Contractor shall appoint the Contractor’s Representative and shall give him/her all authority necessary to act on the
Contractor’s behalf under the Contract, except to replace the Contractor’s Representative.
The Contractor’s Representative shall be qualified, experienced and competent in the main engineering discipline
applicable to the Works and fluent in the language for communications defined in Sub-Clause 1.4 [Law and Language].
Unless the Contractor’s Representative is named in the Contract, the Contractor shall, before the Commencement Date,
submit to the Engineer for consent the name and particulars of the person the Contractor proposes to appoint as Contractor’s
Representative. If consent is withheld or subsequently revoked, or if the appointed person fails to act as Contractor’s
Representative, the Contractor shall similarly submit the name and particulars of another suitable replacement for such
appointment. If the Engineer does not respond within 28 days after receiving this submission, by giving a Notice to the
Contractor objecting to the proposed person or replacement, the Engineer shall be deemed to have given his/her consent.
The Contractor shall not, without the Engineer’s prior consent, revoke the appointment of the Contractor’s Representative
or appoint a replacement (unless the Contractor’s Representative is unable to act as a result of death, illness, disability
or resignation, in which case his/her appointment shall be deemed to have been revoked with immediate effect and the
appointment of a replacement shall be treated as a temporary appointment until the Engineer gives his/her consent to this
replacement, or another replacement is appointed, under this Sub-Clause).
The whole time of the Contractor’s Representative shall be given to directing the Contractor’s performance of the Contract.
The Contractor’s Representative shall act for and on behalf of the Contractor at all times during the performance of the
Contract, including issuing and receiving all Notices and other communications under Sub-Clause 1.3 [Notices and Other
Communications] and for receiving instructions under Sub-Clause 3.5 [Engineer’s Instructions].
The Contractor’s Representative shall be based at the Site for the whole time that the Works are being executed at the Site.
If the Contractor’s Representative is to be temporarily absent from the Site during the execution of the Works, a suitable
replacement shall be temporarily appointed, subject to the Engineer’s prior consent.
The Contractor’s Representative may delegate any powers, functions and authority except:
(a)the authority to issue and receive Notices and other communications under Sub-Clause 1.3 [Notices and Other
Communications]; and
(b)the authority to receive instructions under Sub-Clause 3.5 [Engineer’s Instructions]),
to any suitably competent and experienced person and may at any time revoke the delegation. Any delegation or revocation
shall not take effect until the Engineer has received a Notice from the Contractor’s Representative, naming the person,
specifying the powers, functions and authority being delegated or revoked, and stating the timing of the delegation or
revocation.
All these persons shall be fluent in the language for communications defined in Sub-Clause 1.4 [Law and Language].
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500922988 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.3 - Contractor’s Representative
Overview of Key Features
4-024
•The Contractor must appoint a Contractor’s Representative.
•The Contractor’s Representative will either be named in the Contract or the Engineer will give consent or be deemed to
have given consent to the proposed person.
•The Contractor’s Representative must devote the whole of his time on site to directing the performance of the Contractor.
•The Contractor is to act for and on behalf of the Contractor at all times, including issuing and receiving all Notices and
other Communications under Sub-Cl.1.3 and for receiving instructions under Sub-Cl.3.5.
•The Contractor’s Representative must be based at the Site for the whole time that the Works are being executed at the Site.
•The Contractor’s Representative may delegate any powers, functions and authority except the authority to issue and receive
Notices and other Communications under Sub-Cl.1.3 and receive instructions under Sub-Cl.3.5.
•Any delegation or revocation does not take effect until the Engineer has received a Notice from the Contractor’s
Representative naming the person, specifying the powers, etc. delegated and stating the timing of the delegation or
revocation.
End of Document
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1
Commentary, UKBC-UFIDIC 500922950 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.3 - Contractor’s Representative
Commentary
4-025
This sub-clause is concerned with the criteria that the Contractor’s Representative must fulfil and the obligations imposed on
the Contractor’s Representative.
The Contractor’s Representative is defined at Sub-Cl.1.1.18 as “the natural person named by the Contractor in the Contract or
appointed by the Contractor under Sub-Clause 4.3, who acts on behalf of the Contractor”. The requirement that the Contractor’s
Representative must be a natural person is new. The 1999 edns merely referred to a person named by the Contractor.
The 1999 edns were silent on any criteria that the Contractor’s Representative must fulfil. In contrast, the 2017 edns require
the Contractor’s Representative to be qualified, experienced and competent in the main engineering discipline applicable to
the Works and fluent in the language for communications stated in Sub-Cl.1.4. The Guidance to the Special Provisions states
that the “main engineering discipline applicable to the Works” should be the engineering discipline of the Works which is of
highest value proportionate to the value of the Works. The Guidance suggests an amendment if the parties wish to specify
the engineering discipline. The Guidance also provides amended sub-clauses if the parties agree that interpreters should be
provided during all working hours because the Contractor’s Representative or his delegates are not fluent in the language of
communications defined in Sub-Cl.1.4.
The procedure for appointing the Contractor’s Representative has also been amended to include a deeming provision. In the
1999 edns the Contractor’s Representative was either named in the Contract or approved before the Commencement Date. If
consent was withheld, the Contractor was to submit the name and particulars of another suitable person for such appointment.
Under the 2017 edns, the Contractor’s Representative may still either be named in the Contract or the Contractor can submit
to the Engineer for consent the name and particulars of the proposed person prior to the Commencement Date. The Contractor
also still has to submit the details of a replacement if consent is withheld. However, if the Engineer does not respond within 28
days of receiving the submission, by giving a Notice objecting to the proposed person, the Engineer is deemed to have given
consent. This therefore represents another new notice requirement that the Engineer must be aware of.
The Engineer should also be aware that pursuant to Sub-Cl.1.3 all Notices and other types of communications must not be
unreasonably withheld or delayed.
The 2017 sub-clause retains the provision that the Contractor cannot, without the prior consent of the Engineer, revoke the
appointment of the Contractor’s Representative or appoint a replacement. However, in line with the new additions under SubCl.3.6 that provide for the replacement of the Engineer in the event of illness or death, new provisions have been introduced to
provide a process to follow in the event that a Contractor’s Representative is unable to perform their role due to death, illness,
disability or resignation. In those circumstances, the appointment is deemed to have been revoked with immediate effect and
the appointment of a replacement is to be treated as temporary until the Engineer gives consent to the replacement or another
replacement is appointed in accordance with the sub-clause.
The Contractor’s Representative is required to spend his “whole time” directing the performance for the Contractor. Whereas
previously it could only be inferred that the intention was for the Contractor’s Representative to be based on site, the 2017
sub-clause makes it explicit that the Contractor’s Representative must be based at the Site for the whole time that the Works
are being executed.
If the Contractor’s Representative is to be temporarily absent from the Site, a suitable replacement must be temporarily
appointed, subject to the Engineer’s prior consent.
© 2025 Thomson Reuters.
1
Commentary, UKBC-UFIDIC 500922950 (2021)
The 1999 edns state that the Contractor’s Representative was to receive instructions from the Engineer on behalf of the
Contractor. Under the 2017 edns, the Contractor’s Representative is expressly required to issue and receive all Notices and other
communications under Sub-Cl.1.3 and receive instructions from the Engineer under Sub-Cl.3.5.
The new sub-clause provides that any powers, functions and authority can be delegated to a suitably competent and experienced
person except the issuing and receipt of Notices and the receipt of instructions from the Engineer. Such a delegation can be
revoked at any time.
Any delegation or revocation by the Contractor’s Representative does not take effect until the Engineer has received a Notice.
Under the 1999 edns, the notice had to specify the name of the person and the powers, function and authority being delegated
or revoked. The 2017 edns also require the Notice to state the timing of the delegation or revocation.
The final paragraph of the sub-clause provides that all persons delegated to must be fluent in the language for communications
defined in Sub-Cl.1.4.
End of Document
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2
Section 4.4 - Contractor’s Documents (Red Book), UKBC-UFIDIC 500923029 (2021)
Section 4.4 - Contractor’s Documents (Red Book)
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.4 - Contractor’s Documents (Red Book)
4-026
4.4.1 Preparation and Review
The Contractor’s Documents shall comprise the documents:
(a)stated in the Specification;
(b)required to satisfy all permits, permissions, licences and other regulatory approvals which are the Contractor’s
responsibility under Sub-Clause 1.13 [Compliance with Laws];
(c)described in Sub-Clause 4.4.2 [As-Built Record] and Sub-Clause 4.4.3 [Operation and Maintenance Manuals],
where applicable; and
(d)required under sub-paragraph (a) of Sub-Clause 4.1 [Contractor’s General Obligations], where applicable.
Unless otherwise stated in the Specification, the Contractor’s Documents shall be written in the language for
communications defined in Sub-Clause 1.4 [Law and Language].The Contractor shall prepare all Contractor’s
Documents and the Employer’s Personnel shall have the right to inspect the preparation of all these documents,
wherever they are being prepared.If the Specification or these Conditions specify that a Contractor’s Document is to
be submitted to the Engineer for Review, it shall be submitted accordingly, together with a Notice from the Contractor
stating that the Contractor’s Document is ready for Review and that it complies with the Contract.The Engineer shall,
within 21 days after receiving the Contractor’s Document and this Notice from the Contractor, give a Notice to the
Contractor:
(i)of No-objection (which may include comments concerning minor matters which will not substantially affect
the Works); or
(ii)that the Contractor’s Document fails (to the extent stated) to comply with the Contract, with reasons.
If the Engineer gives no Notice within this period of 21 days, the Engineer shall be deemed to have given a Notice of
No-objection to the Contractor’s Document.After receiving a Notice under sub-paragraph (ii), above, the Contractor
shall revise the Contractor’s Document and resubmit it to the Engineer for Review in accordance with this Sub-Clause
and the period of 21 days for Review shall be calculated from the date that the Engineer receives it.
4.4.2 As-Built Records
If no as-built records to be prepared by the Contractor are stated in the Specification, this Sub-Clause shall not
apply.The Contractor shall prepare, and keep up-to-date, a complete set of “as-built” records of the execution of the
Works, showing the exact as-built locations, sizes and details of the work as executed by the Contractor. The format,
referencing system, system of electronic storage and other relevant details of the as-built records shall be as stated
in the Specification (if not stated, as acceptable to the Engineer). These records shall be kept on the Site and shall
be used exclusively for the purposes of this Sub-Clause.The as-built records shall be submitted to the Engineer for
Review, and the Works shall not be considered to be completed for the purposes of taking-over under Sub-Clause
10.1 [Taking Over the Works and Sections] until the Engineer has given (or is deemed to have given) a Notice of
No-objection under sub-paragraph (i) of Sub-Clause 4.4.1 [Preparation and Review].The number of copies of as-built
© 2025 Thomson Reuters.
1
Section 4.4 - Contractor’s Documents (Red Book), UKBC-UFIDIC 500923029 (2021)
records to be submitted by the Contractor under this Sub-Clause shall be as required under Sub-Clause 1.8 [Care and
Supply of Documents].
4.4.3 Operation and Maintenance Manuals
If no operation and maintenance manuals to be prepared by the Contractor are stated in the Specification, this SubClause shall not apply.The Contractor shall prepare, and keep up-to-date, the operation and maintenance manuals in
the format and other relevant details as stated in the Specification.The operation and maintenance manuals shall be
submitted to the Engineer for Review, and the Works shall not be considered to be completed for the purposes of
taking-over under Sub-Clause 10.1 [Taking Over the Works and Sections] until the Engineer has given (or is deemed
to have given) a Notice of No-objection under sub-paragraph (i) of Sub-Clause 4.4.1 [Preparation and Review].
End of Document
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2
Overview of Key Features, UKBC-UFIDIC 500922980 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.4 - Contractor’s Documents (Red Book)
Overview of Key Features
4-027
•The Contractor’s Documents consist of the documents:
(a)stated in the Specification;
(b)required to satisfy all permits, permissions, licences and other regulatory approvals which are the Contractor’s
responsibility under Sub-Cl.1.13;
(c)where applicable, as-built records under Sub-Cl.4.4.2 and Operation and Maintenance Manuals under Sub-Cl.4.4.3;
and
(d)where applicable, the documents required under Sub-Cl.4.1(a), i.e. documents in relation to the Contractor’s
designed portion.
•The Contractor must prepare all Contractor’s Documents and the Employer’s Personnel have the right to inspect the
preparation of these documents, whenever they are being prepared.
•If the Specification or Conditions specify that a Contractor’s Document must be submitted to the Engineer for review, it
must be submitted together with a Notice from the Contractor stating that the document is ready for review and complies
with the Contract.
•Within 21 days of receipt of the Notice, the Engineer is to give a Notice to the Contractor of No-objection or that the
Contractor’s Document fails to comply with the Contractor, with reasons.
•If the Engineer fails to give a Notice within the 21-day period, the Engineer shall be deemed to have given a Notice of
No-objection to the Contractor’s Document.
•Upon receiving a notice from the Engineer that a document does not comply with the Contract, the Contractor must revise
the document and resubmit it in accordance with the sub-clause. The period of 21 days is calculated from the date the
Engineer receives it.
•The Contractor need not prepare as-built records and operation and maintenance manuals unless they are stated in the
Specification.
•The as-built records and/or operation and maintenance manuals must be submitted to the Engineer for review and the
Works will not be considered to be completed for the purposes of taking-over under Sub-Cl.10.1 until the Engineer has
given or is deemed to have given a Notice of No-objection under Sub-Cl.4.4.1(i).
End of Document
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1
Sub-Clause 4.4.1: Preparation and Review, UKBC-UFIDIC 500923035 (2021)
Sub-Clause 4.4.1: Preparation and Review
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.4 - Contractor’s Documents (Red Book)
Commentary
Sub-Clause 4.4.1: Preparation and Review
4-028
This is a new sub-clause in the 2017 Red Book that specifies which documents constitute Contractor’s Documents and the
procedure that the Contractor must follow in relation to such documents.
A preliminary point is that the definition of “Contractor’s Documents” at Sub-Cl.1.1.15 has been extended to refer to the
documents “prepared by the Contractor as described in Sub-Clause 4.4, including calculations, digital files, computer programs
and other software, drawings, manuals, models, specifications and other documents of a technical nature.”
The first paragraph of the sub-clause supplements this by specifying documents that form the Contractor’s Documents. It is
important that any documents that do not fall under sub-paras (b)–(d) of Sub-Cl.4.4.1 are clearly identified in the Specification.
All such documents must be written in the language for communications specified in Sub-Cl.1.4.
The Contractor must prepare all Contractor’s Documents and the Employer’s Personnel shall have the right to inspect the
preparation of all these documents, whenever they are being prepared. There appears to be no limit on the number of inspections
that can take place since the Employer’s Personnel are entitled to inspect whenever the documents are being prepared.
If the Specification or Conditions specify that a Contractor’s Document is to be submitted to the Engineer for review, it must
be submitted together with a Notice stating that the Document is ready for review and complies with the Contract.
The Engineer then has 21 days from receiving the document and the Notice to give a Notice of No-objection or a Notice stating
that the document fails to comply with the Contract. The provision gives the Engineer some latitude as it specifies that a Notice
of No-objection may include “comments concerning minor matters which will not substantially affect the Works”. The Engineer
can therefore still issue a Notice of No-objection provided that he is satisfied that any minor issues with the documents will
not substantially affect the Works. If an issue is to substantially affect the Works, the Engineer should give a Notice that the
document fails to the extent specified to comply with the Contract and give reasons.
If the Engineer fails to give any Notice within 21 days, the Engineer will be deemed to have given a Notice of No-objection
to the document.
If the Engineer gives a Notice specifying that the document fails to comply with the Contract, the Contractor must revise the
document and resubmit it in accordance with the sub-clause. The Engineer has a further 21 days to consider the document,
calculated from the date of receipt of the document and the accompanying Notice. This process continues until the Engineer
gives or is deemed to give a Notice of No-objection to the document.
End of Document
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1
Sub-Clause 4.4.2–4.4.3: As-Built Records and Operation..., UKBC-UFIDIC...
Sub-Clause 4.4.2–4.4.3: As-Built Records and Operation and
Maintenance Manuals
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.4 - Contractor’s Documents (Red Book)
Commentary
Sub-Clause 4.4.2–4.4.3: As-Built Records and Operation and Maintenance Manuals
4-029
The 1999 Red Book only mentioned as-built documents and operation and maintenance manuals once in Sub-Cl.4.1(d). If the
Contract specified that the Contractor was to design any part of the Permanent Works, prior to the commencement of the Tests on
Completion, the Contractor had to submit to the Engineer the “as built” documents and the operation and maintenance manuals
in accordance with the Specification and in sufficient detail for the Employer to operate, maintain, adjust and repair this part of
the Works. The Contractor’s designed portion was not considered to be completed for the purposes of taking-over under SubCl.10.1 until the documents and manuals had been submitted to the Engineer.
Under the 2017 Red Book, if as-built records and manuals are stated in the Specification, the Contractor must prepare the
records and manuals and comply with the more extensive obligations contained in Sub-Cll.4.4.2 and 4.4.3. If as-built records
and manuals are not stated in the Specification, the sub-clauses do not apply.
If as-built records are stated, the Contractor must prepare such records and keep up-to-date a complete set of as-built records
of the execution of the Works. The Contractor is therefore under a continuing obligation to update the records. Such records
must show the “exact as-built locations, sizes and details of the work as executed by the Contractor.” The 1999 Red Book was
silent on what the as-built records had to show.
The format, referencing system, system of electronic storage, and other relevant details of the as-built records must be as stated
in the Specification. If such details are not stated, the details must be acceptable to the Engineer.
The as-built records must be kept on Site and be used exclusively for the purpose of the sub-clause.
Pursuant to Sub-Cl.1.8, the Contractor must supply one paper-original, one electronic copy (in the form stated in the
Specification, or if not stated, a form acceptable to the Engineer) and any additional paper copies as stated in the Contract Data
of the as-built records.
Similarly, if operation and maintenance manuals are stated in the Specification, the Contractor must prepare and keep up-todate the manuals in the format and other relevant details as stated in the Specification. There is no fall-back provision in the
event that the format and other details are not specified and so the Parties must make sure that the details are stated in the
Specification, if the Contractor is to prepare the manuals.
The as-built records and the manuals must be submitted to the Engineer for review and the Works will not be considered to be
completed for the purposes of taking over under Sub-Cl.10.1 until the Engineer has given or is deemed to have given a Notice
of No-objection under Sub-Cl.4.4.1(i).
End of Document
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Section 4.4 - Subcontractors (Yellow Book), UKBC-UFIDIC 500922981 (2021)
Section 4.4 - Subcontractors (Yellow Book)
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.4 - Subcontractors (Yellow Book)
The Contractor shall not subcontract:
4-030
(a)works with a total accumulated value greater than the percentage of the Accepted Contract Amount stated in the
Contract Data (if not stated, the whole of the Works); or
(b)any part of the Works for which subcontracting is not permitted as stated in the Contract Data.
The Contractor shall be responsible for the work of all Subcontractors, for managing and coordinating all the
Subcontractors’ works, and for the acts or defaults of any Subcontractor, any Subcontractor’s agents or employees, as if
they were the acts or defaults of the Contractor.
The Contractor shall obtain the Engineer’s prior consent to all proposed Subcontractors, except:
(i)suppliers of Materials; or
(ii)a subcontract for which the Subcontractor is named in the Contract.
Where the Contractor is required to obtain the Engineer’s consent to a proposed Subcontractor, the Contractor shall
submit the name, address, detailed particulars and relevant experience of such Subcontractor and the work intended to be
subcontracted to the Engineer and further information which the Engineer may reasonably require. If the Engineer does not
respond within 14 days after receiving this submission (or further information if requested), by giving a Notice objecting
to the proposed Subcontractor, the Engineer shall be deemed to have given his/her consent.
The Contractor shall give a Notice to the Engineer not less than 28 days before the intended date of the commencement of
each Subcontractor’s work, and of the commencement of such work on the Site. 22
Footnotes
22
See also commentary under Cl.5 of the Yellow Book for further discussion about Subcontractors.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922967 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.4 - Subcontractors (Yellow Book)
Overview of Key Features
4-031
•The Contractor shall not subcontract:
i.works with a total value greater than the percentage of the Accepted Contract Amount stated in the Contract Data;
ii.if no percentage is stated, the whole of the Works; and
iii.any part of the Works not permitted to be subcontracted pursuant to the Contract Data.
•The Contractor is responsible for the work of subcontractors, for managing and co-ordinating their work and for any acts
or defaults by subcontractors or their employees or agents.
•The Contractor must obtain the Engineer’s prior consent to proposed subcontractors unless they are suppliers of materials
or named in the Contract.
•The Contractor must follow the prescribed procedure for obtaining consent.
•The Contractor must give a Notice to the Engineer not less than 28 days before the intended commencement of each
subcontractor’s work, and of the commencement of such work on site.
End of Document
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Commentary, UKBC-UFIDIC 500922966 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.4 - Subcontractors (Yellow Book)
Commentary
4-032
By Sub-Cl.1.1.80, Subcontractor is defined as being any person named in the Contract as a subcontractor, or any person
appointed by the Contractor as a subcontractor or designer, for a part of the Works, and the legal successors in title to each of
these persons. By Sub-Cl.1.1.16, Subcontractors are included within the definition of Contractor’s Personnel. It is therefore not
surprising, and indeed entirely common practice, that the Contractor is wholly responsible for the work of all Subcontractors.
The 1999 sub-clause only prohibited the Contractor from subcontracting the whole of the Works. The 2017 sub-clause provides
the opportunity for further prohibitions to be imposed. Based on feedback received by FIDIC, the sub-clause allows a percentage
of the Accepted Contract Amount to be specified in the Contract Data that limits the value of the subcontracting possible.
The same provision can be found in Sub-Cl.5.1 of the Red Book and Sub-Cl.4.4 of the Silver Book. This reflects common
international practice where a percentage limit or restriction will often be placed on the Contractor’s ability to do this in the
tender documentation. 23 If nothing is stated in the Contract Data, the default maximum limit stated in the sub-clause is the
“whole of the Works”. The Contract Data can also specify parts of the Works that cannot be subcontracted.
The second paragraph imposes further responsibilities on the Contractor. Under the 1999 sub-clause, the Contractor was
only made responsible for the acts or defaults of any subcontractor, his agents or employees. Under the 2017 sub-clause, the
Contractor is expressly responsible for the work of all subcontractors, for managing and co-ordinating all their works and for the
acts and defaults of any subcontractors, their employees and agents. The Contractor must appreciate how wide these obligations
are. The Contractor is responsible for all the acts and defaults of the subcontractors. This imposes strict contractual liability for
any subcontractor. Any breach of contract by a subcontractor may therefore lead to the Contractor being considered in breach
of contract.
The 2017 sub-clause retains the requirement for the Contractor to obtain the Employer’s prior consent unless the proposed
subcontractor is the supplier of materials or named in the Contract.
The 1999 sub-clause was, however, silent on the requirements for the Contractor to obtain such consent. The 2017 sub-clause
provides a procedure for this. The Contractor is required to submit the name, address, detailed particulars and relevant experience
of the subcontractor, as well as the work intended to be subcontracted and any further information which the Engineer may
reasonably require. This suggests that the Engineer may make reasonable requests for further information and the Contractor
is obliged to comply. This may well lead to disputes if a Contractor feels that the information requested is not necessary for
consent to be granted.
The sub-clause also imposes a further deeming provision in the Contractor’s favour. A failure by the Engineer to respond within
14 days of receipt of the Contractor’s submission results in the Engineer being deemed to have given his consent. The Engineer
should be aware that, under Sub-Cl.1.3, the Engineer’s consent to any proposed subcontracting cannot be unreasonably withheld
or delayed. A prolonged approval process might become a breach of this sub-clause and may well cause delay to the overall
project. Contractors should keep a close eye on when Subcontractors need to be appointed and when they need to start.
The Guidance to the Special Provisions includes a sample paragraph suggesting that prior consent may not be required in all
circumstances, i.e. if the value of the proposed subcontract is very small (less than 1 per cent) of the Accepted Contract Amount.
The 2017 sub-clause ends with the same notice requirement as the 1999 sub-clause. The Contractor must give a Notice to the
Engineer at least 28 days before the intended commencement date of each subcontractor’s work, and of the commencement of
such work on site. This clause enables the Engineer to keep an independent check on progress.
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Commentary, UKBC-UFIDIC 500922966 (2021)
Footnotes
23
Potential Employers should take care that they are complying with the local regulations. In the case of Wrocław—
Miasto na prawach powiatu v Minister Infrastruktury i Rozwoju (C-406/14), Advocate General Sharpston said that the
City of Wroceaw could not impose a requirement on its tenderers to perform at least 25% of the works using its own
resources. Although the case had been brought under 2004 Procurement Directive, the Advocate General said that the
same principles were reinforced by the 2014 Public Procurement Directive.
End of Document
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Section 4.5 - Training (Red Book), UKBC-UFIDIC 500922976 (2021)
Section 4.5 - Training (Red Book)
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.5 - Training (Red Book)
4-033
If no training of employees of the Employer (and/or other identified personnel) by the Contractor is stated in the
Specification, this Sub-Clause shall not apply.
The Contractor shall carry out training of the Employer’s employees (and/or other personnel identified in the Specification)
in the operation and maintenance of the Works, and any other aspect of the Works, to the extent stated in the Specification.
The timing of the training shall be as stated in the Specification (if not stated, as acceptable to the Employer). The Contractor
shall provide qualified and experienced training staff, training facilities and all training materials as necessary and/or as
stated in the Specification.
If the Specification specifies training which is to be carried out before taking over, the Works shall not be considered to be
completed for the purposes of taking over under Sub-Clause 10.1 [Taking Over the Works and Sections] until this training
has been completed in accordance with the Specification.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923003 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.5 - Training (Red Book)
Overview of Key Features
4-034
•If the Specification includes the provision of training, the Contractor is to provide training to the employees of the
Employer and/or other identified personnel.
•The timing of the training must be as stated in the Specification. If not stated, the timing must be as acceptable to the
Employer.
•The Contractor must provide qualified and experienced training staff, training facilities and all training materials as
necessary and/or as stated in the Specification.
•If the Specification specifies that training is to be carried out before taking over, the Works will not be considered to be
completed for the purposes of taking over under Sub-Cl.10.1 until the training has been completed in accordance with
the Specification.
End of Document
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Commentary, UKBC-UFIDIC 500923008 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.5 - Training (Red Book)
Commentary
4-035
The 1999 Red Book was silent on training and so this is a completely new sub-clause.
The Contractor only has to provide training to the employees of the Employer and/or other identified personnel if it is stated
in the Specification.
The training is to be in the operation and maintenance of the Works and any other aspect of the Works stated in the Specification.
The timing of the training must be as stated in the Specification and if not stated, as acceptable to the Employer.
The Contractor has to be aware that the inclusion of the training provision may impose significant costs since the Contractor is
required to provide qualified and experienced training staff, training facilities and all training materials as he deems necessary
and/or as stated in the Specification.
The Contractor must also recognise the importance of completing the training within the specified time. If the Specification
specifies training which is to be carried out before taking over, the Works will not be considered to be completed for the purposes
of taking over under Sub-Cl.10.1 until the training has been completed in accordance with the Specification.
End of Document
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1
Section 4.5 - Nominated Subcontractors (Yellow Book), UKBC-UFIDIC 500923016 (2021)
Section 4.5 - Nominated Subcontractors (Yellow Book)
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.5 - Nominated Subcontractors (Yellow Book)
4-036
In this Sub-Clause, nominated Subcontractor means a Subcontractor named as such in the Employer’s Requirements or
whom the Engineer, under Sub-Clause 13.4 [Provisional Sums], instructs the Contractor to employ as a Subcontractor.
4.5.1 Objection to Nomination
The Contractor shall not be under any obligation to employ a nominated Subcontractor whom the Engineer instructs
and against whom the Contractor raises reasonable objection by giving a Notice to the Engineer, with detailed
supporting particulars, no later than 14 days after receiving the Engineer’s instruction. An objection shall be deemed
reasonable if it arises from (among other things) any of the following matters, unless the Employer agrees to indemnify
the Contractor against and from the consequences of the matter:
(a)there are reasons to believe that the Subcontractor does not have sufficient competence, resources or financial
strength;
(b)the subcontract does not specify that the nominated Subcontractor shall indemnify the Contractor against and
from any negligence or misuse of Goods by the nominated Subcontractor, the nominated Subcontractor’s agents
and employees; or
(c)the subcontract does not specify that, for the subcontracted work (including design, if any), the nominated
Subcontractor shall:
(i)undertake to the Contractor such obligations and liabilities as will enable the Contractor to discharge the
Contractor’s corresponding obligations and liabilities under the Contract; and
(ii)indemnify the Contractor against and from all obligations and liabilities arising under or in connection
with the Contract and from the consequences of any failure by the Subcontractor to perform these obligations
or to fulfil these liabilities.
4.5.2 Payments to nominated Subcontractors
The Contractor shall pay to the nominated Subcontractor the amounts due in accordance with the subcontract. These
amounts plus other charges shall be included in the Contract Price in accordance with sub-paragraph (b) of Sub-Clause
13.4 [Provisional Sums], except as stated in Sub-Clause 4.5.3 [Evidence of Payments].
4.5.3 Evidence of Payments
Before issuing a Payment Certificate which includes an amount payable to a nominated Subcontractor, the Engineer
may request the Contractor to supply reasonable evidence that the nominated Subcontractor has received all amounts
due in accordance with previous Payment Certificates, less applicable deductions for retention or otherwise. Unless
the Contractor:
(a)submits this reasonable evidence to the Engineer, or
(i)satisfies the Engineer in writing that the Contractor is reasonably entitled to withhold or refuse to pay
these amounts, and
(ii)submits to the Engineer reasonable evidence that the nominated Subcontractor has been notified of the
Contractor’s entitlement,
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Section 4.5 - Nominated Subcontractors (Yellow Book), UKBC-UFIDIC 500923016 (2021)
then the Employer may (at the Employer’s sole discretion) pay, directly to the nominated Subcontractor, part or all
of such amounts previously certified (less applicable deductions) as are due to the nominated Subcontractor and for
which the Contractor has failed to submit the evidence described in sub-paragraphs (a) or (b) above.Thereafter, the
Engineer shall give a Notice to the Contractor stating the amount paid directly to the nominated Subcontractor by
the Employer and, in the next IPC after this Notice, shall include this amount as a deduction under sub-paragraph
(b) of Sub-Clause 14.6.1 [The IPC].
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922993 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.5 - Nominated Subcontractors (Yellow Book)
Overview of Key Features
Definition
4-037
Nominated Subcontractor means a subcontractor named as such in the Employer’s Requirements or whom the Engineer, under
Sub-Cl.13.4, instructs the Contractor to employ as a subcontractor.
Objection
4-038
If the Contractor wishes to object to such an instruction, he must give a Notice to the Engineer with detailed supporting
particulars, no later than 14 days after receiving the Engineer’s instruction.
An objection is deemed to be reasonable if, amongst other things, one of the circumstances in Sub-Cl.4.5.1(a)–(c) is made out,
unless the Employer agrees to indemnify the Contractor against and from the consequences of the matter.
Payments
4-039
The amounts due to the nominated Subcontractor under the subcontract are to be included in the Contract Price unless the
Contractor fails to respond to a request by the Employer to provide reasonable assistance that such sums have been paid to
the nominated subcontractor.
If the Contractor fails to respond to such a request, the Employer may, at the Engineer’s sole discretion, pay the nominated
Subcontractor directly part or all of such amounts previously certified as due to the nominated Subcontractor.
If such payment is made, the Engineer must give a Notice to the Contractor stating the amount paid directly and must include
this as a deduction in the next IPC.
End of Document
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Commentary, UKBC-UFIDIC 500922991 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.5 - Nominated Subcontractors (Yellow Book)
Commentary
4-040
The 1999 sub-clause only consisted of a paragraph. The sub-clause has been substantially extended in the 2017 Yellow Book.
The 1999 sub-clause provided that the nominated Subcontractor was a subcontractor whom the Engineer instructed the
Contractor to employ as a subcontractor. Under the 2017 Yellow Book, a nominated subcontractor can be named in the
Employer’s Requirements or instructed to be appointed by the Engineer under Sub-Cl.13.4. Sub-Clause 13.4(b) provides that
for each provisional sum the Engineer may instruct plant, materials, works or services to be purchased by the Contractor from a
nominated subcontractor. If there are to be nominated subcontractors, it is preferable for the Employer to make this clear in the
tender documents so that the Contractor will know exactly where he stands when pricing for the project. That said, the Contractor
should be aware that at the time he enters into the Contract, he might not know of the identity of all the subcontractors.
The 1999 sub-clause provided that the Contractor was not required to employ a nominated subcontractor as long as he had
raised reasonable objection by notice to the Engineer as soon as practicable, with supporting particulars.
Sub-Clause 4.5.1 of the 2017 Yellow Book has provided significantly more detail on what constitutes a reasonable objection
and has amended the process to follow. The Contractor is required to give a Notice to the Engineer not less than 14 days after
receiving the Engineer’s instruction, with supporting particulars. The objection must therefore include sufficient detail. The
time limit provides greater certainty than the previous words “as soon as practicable”.
The sub-clause makes clear by stating “amongst other things” that the matters set out at sub-paras (a)–(c) are only examples
of matters that can form the basis of a reasonable objection.
The examples of grounds for reasonable objections are:
(a)There are reasons to believe that the Subcontractor does not possess sufficient competence, resources or financial
strength.
(b)The subcontract does not require the nominated Subcontractor to indemnify the Contractor against and from any
negligence or misuse of goods by the nominated Subcontractor, his agents or employees.
(c)The subcontract does not mirror the obligations and liabilities imposed on the Contractor and does not require the
nominated Subcontractor to indemnify the Contractor against and from all obligations and liabilities arising in connection
with the Contract and from the consequences of any failure by the Subcontractor to perform the obligations or fulfil the
liabilities.
The Employer has the option, even if one of these grounds or another ground is present, to require the Contractor to employ
the nominated Subcontractor. In order to do so the Employer has to agree to indemnify the Contractor against and from the
consequences of the specified ground for reasonable objection.
No specific provision is made for the resolution of any dispute which might arise over the issue. It is possible that a dispute may
arise if the reasons the Contractor puts forward as to why he believes that the nominated Subcontractor does not have sufficient
competence, resources or financial strength are challenged.
At first glance the first sentence of Sub-Cl.4.5.2 appears to be an odd inclusion since it requires the Contractor to pay to
the nominated Subcontractor the amounts due under the subcontract. Payment under a separate contract is a matter between
the Contractor and the nominated Subcontractor. The relevance of the sentence is only revealed in Sub-Cl.4.5.3. The more
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Commentary, UKBC-UFIDIC 500922991 (2021)
significant aspect of the sub-clause is therefore that the amounts plus other charges are to be included in the Contract Price,
pursuant to Sub-Cl.13.4(b), unless the Contractor fails to comply with the requirements contained in Sub-Cl.4.5.3.
Sub-Clause 4.5.3 provides that the Engineer may request, before issuing a Payment Certificate that includes an amount payable
to a nominated Subcontractor, the Contractor to supply reasonable evidence that the nominated Subcontractor has received all
amounts due in accordance with previous Payment Certificates, less applicable deductions. The purpose of this sub-clause is
to enable the Employer to keep a check on whether the Contractor is paying the nominated Subcontractor. There appears to
be no limit on the Engineer’s ability to make requests. There is no requirement that the Engineer has to have any evidence or
reasonable suspicion that the Contractor has not paid such sums.
In response to such a request the Contractor must either:
(a)submit reasonable evidence to the Engineer; or
(b)satisfy the Engineer in writing that the Contractor is reasonably entitled to withhold or refuse to pay these amounts and
submit reasonable evidence that the nominated Subcontractor is aware of the Contractor’s entitlement.
A failure to do so may, at the Engineer’s sole discretion, result in the Employer paying directly to the nominated Subcontractor,
part or all of any amounts previously certified less applicable deductions to the nominated Subcontractor.
If such payments are made directly, the Engineer must give a Notice to the Contractor specifying the amounts paid directly to
the nominated Subcontractor and must include the amount as a deduction in the next IPC after the Notice, pursuant to SubCl.14.6.1(b). The requirement that the Contractor repay the Employer in these circumstances is therefore a mandatory one.
End of Document
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2
Section 4.6 - Co-operation, UKBC-UFIDIC 500923023 (2021)
Section 4.6 - Co-operation
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.6 - Co-operation
4-041
The Contractor shall, as specified in the Employer’s Requirements or as instructed by the Engineer, co-operate with and
allow appropriate opportunities for carrying out work by:
(a)the Employer’s Personnel;
(b)any other contractors employed by the Employer; and
(c)the personnel of any legally constituted public authorities and private utility companies,
who may be employed in the carrying out, on or near the Site, of any work not included in the Contract. Such appropriate
opportunities may include the use of Contractor’s Equipment, Temporary Works, access arrangements which are the
responsibility of the Contractor, and/or other Contractor’s facilities or services on the Site.
The Contractor shall be responsible for the Contractor’s construction activities on the Site, and shall use all reasonable
endeavours to co-ordinate these activities with those of other contractors to the extent (if any) specified in the Employer’s
Requirements or as instructed by the Engineer.
If the Contractor suffers delay and/or incurs Cost as a result of an instruction under this Sub-Clause, to the extent (if any)
that co-operation, allowance of opportunities and coordination was Unforeseeable having regard to that specified in the
Employer’s Requirements, the Contractor shall be entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT]
to EOT and/ or payment of such Cost Plus Profit.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922957 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.6 - Co-operation
Overview of Key Features
4-042
•The Contractor shall co-operate with the Employer’s Personnel, other contractors and personnel from public authorities
to enable them to carry out their work on or near to the site.
•The Contractor is responsible for his construction activities on Site and must use all reasonable endeavours to co-ordinate
those activities with those of other contractors to the extent (if any) stated in the Specification or as instructed by the
Engineer.
•If the Contractor suffers delay and/or incurs Cost as a result of an instruction under this sub-clause, to the extent (if any)
that co-operation, allowance of opportunities and co-ordination was Unforeseeable having regard to the Specification, the
Contractor will be entitled, subject to Sub-Cl.20.2, to EOT and/or payment of such Cost Plus Profit.
End of Document
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Commentary, UKBC-UFIDIC 500922949 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.6 - Co-operation
Commentary
4-043
Despite being headed “co-operation”, the 1999 sub-clause did not seem to refer to co-operation in the partnering sense of the
word, or arguably in any real sense at all. The Contractor was only required to allow appropriate opportunities for carrying out
work, as specified in the Contract or as instructed by the Engineer.
It is notable that the 2017 version of the sub-clause requires the Contractor to “co-operate with” and allow appropriate
opportunities for carrying out work. The sub-clause therefore imposes a stand-alone obligation on the Contractor to co-operate
with the persons specified. The obligation required by Sub-Cl.4.6 specifically refers to both work near the site and work not
included in the Contract.
The 1999 sub-clause states that the “services” to be provided to Employer’s personnel and other contractors included the use of
Contractor’s Equipment, Temporary Works, and access arrangements which are the Contractor’s responsibility. The 2017 subclause has made it explicit that these are examples of “appropriate opportunities” and also provides the use of “other Contractor’s
facilities and services on the site” as a further example.
Pursuant to Sub-Cl.2.3, the only related obligation imposed on the Employer is to ensure that the Employer’s Personnel and
other contractors on or near the Site co-operate with the Contractor’s efforts under Sub-Cl.4.6. The onus therefore still lies with
the Contractor to find the appropriate opportunities to enable the others to carry out the works.
The second paragraph of the 2017 sub-clause is very similar to the third paragraph of the sub-clause in the 1999 Yellow Book.
The paragraph was not included in the 1999 Red Book. The inclusion of the paragraph is notable because it requires the
Contractor to use all reasonable endeavours to co-ordinate his construction activities on the Site with other contractors, to the
extent stated in the Specification or as instructed by the Engineer. It is not readily apparent why such an obligation is necessary
when the Contractor is required to co-operate and allow appropriate opportunities to work. It would seem that co-operating
and allowing appropriate opportunities for carrying out work would require co-ordination of the Contractor’s activities with
those of other contractors.
The 1999 Red Book provided that any instruction by an Engineer in relation to the sub-clause constituted a Variation if and to
the extent that it caused the Contractor to incur Unforeseeable Cost.
The 2017 Red Book has removed the reference to a Variation and instead provided the Contractor with a claims opportunity.
If the Contractor suffers delay and/or incurs cost as a result of an instruction under this sub-clause, to the extent that any cooperation, allowance of opportunities or co-ordination was Unforeseeable with regard to the Specification, then the Contractor
is entitled to EOT and/or payment of Cost Plus Profit, subject to the Sub-Cl.20.2 (Claims for Payment and/or EOT).
Notably, the definition of “Unforeseeable” has been amended. Under the 1999 Red Book, it meant “not reasonably foreseeable
by an experienced contractor by the date for submission of the Tender.” Under Sub-Cl.1.1.85 of the 2017 Red Book (SubCl.1.1.87 of the Yellow Book), Unforeseeable means not reasonably foreseeable by an experienced contractor by the “Base
Date”. Pursuant to Sub-Cl.1.1.4 the Base Date is the date “28 days before the latest date for submission of the Tender.” The
reference point for the term “Unforeseeable” has therefore been made earlier. See further Sub-Cl.4.12 for further discussion.
Considering the width of the definition of “Unforeseeable”, it is submitted that it may be difficult for the Contractor to
demonstrate that such a situation was not foreseeable by an experienced contractor. As a result, the prudent contractor should
make enquiries of the Employer during the tender stage.
It could be argued that the sub-clause is really saying:
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Commentary, UKBC-UFIDIC 500922949 (2021)
(i)if the Contractor is going to have to make appropriate allowances for those listed in Sub-Cl.4.6(a)–(c), it will be noted in
the Contract and the Contractor will be expected to have made the appropriate allowance for this in preparing his tender;
alternatively
(ii)if it becomes apparent during the course of the Contract that the Contractor is going to have to make appropriate
allowances for those listed in Sub-Cl.4.6(a)–(c), the Engineer shall issue an instruction. The Contractor will be entitled to
an EOT and Cost Plus Profit provided an experienced contractor would not have foreseen, at the Base Date, the need for
those listed to carry out Works at or near the Site. The Contractor would also have to comply with the Claims procedure
contained in Sub-Cl.20.2.
The final paragraph of the 1999 sub-clause required the Employer to give the Contractor possession of any foundation, structure,
plant or means of access in accordance with the Contractor’s Documents and the Contractor had to submit such documents to
the Engineer in the time and manner stated in the Specification.
Sub-Clause 2.1 of the 1999 and 2017 Red Books requires the Employer, if expected by the Contract, to give to the Contractor
possession of any foundation, structure, plant or means of access in the time and manner stated in the Specification. The first
part of the final paragraph of the 1999 sub-clause was therefore superfluous and has been removed.
In the 2017 Red Book Sub-Cl.4.4 covers the provision of Contractor’s Documents to the Engineer and so the final part of the
final paragraph of the 1999 sub-clause is no longer necessary.
End of Document
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2
Section 4.7 - Setting Out, UKBC-UFIDIC 500923034 (2021)
Section 4.7 - Setting Out
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.7 - Setting Out
4-044
The Contractor shall set out the Works in relation to the items of reference under Sub-Clause 2.5 [Site Data and Items
of Reference].
4.7.1 Accuracy
The Contractor shall:
(a)verify the accuracy of all these items of reference before they are used for the Works;
(b)promptly deliver the results of each verification to the Engineer;
(c)rectify any error in the positions, levels, dimensions or alignment of the Works; and
(d)be responsible for the correct positioning of all parts of the Works.
4.7.2 Errors
If the Contractor finds an error in any items of reference, the Contractor shall give a Notice to the Engineer describing
it:
(a)within the period stated in the Contract Data (if not stated, 28 days) calculated from the Commencement Date,
if the items of reference are specified in the Employer’s Requirements; or
(b)as soon as practicable after receiving the items of reference, if they are issued by the Engineer under SubClause 2.5 [Site Data and Items of Reference].
4.7.3 Agreement or Determination of rectification measures, delay and/or Cost
After receiving a Notice from the Contractor under Sub-Clause 4.7.2 [Errors], the Engineer shall proceed under SubClause 3.7 [Agreement or Determination] to agree or determine:
(a)whether or not there is an error in the items of reference;
(b)whether or not (taking account of cost and time) an experienced contractor exercising due care would have
discovered such error
—when examining the Site and the Employer’s Requirements before submitting the Tender; or
—when scrutinising the Employer’s Requirements under Sub-Clause 5.1 [General Design Obligations], if
the items of reference are specified in the Employer’s Requirements and the Contractor’s Notice is given
after the expiry of the period stated in sub-paragraph (a) of Sub-Clause 4.7.2; and
(c)what measures (if any) the Contractor is required to take to rectify the error
(and, for the purpose of Sub-Clause 3.7.3 [Time limits], the date the Engineer receives the Contractor’s Notice under
Sub-Clause 4.7.2 [Errors] shall be the date of commencement of the time limit for agreement under Sub-Clause
3.7.3).If, under sub-paragraph (b) above, an experienced contractor would not have discovered the error:
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Section 4.7 - Setting Out, UKBC-UFIDIC 500923034 (2021)
(i)Sub-Clause 13.3.1 [Variation by Instruction] shall apply to the measures that the Contractor is required to take
(if any); and
(ii)if the Contractor suffers delay and/or incurs Cost as a result of the error, the Contractor shall be entitled subject
to Sub-Clause 20.2 [Claims For Payment and/or EOT] to EOT and/or payment of such Cost Plus Profit.
End of Document
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2
Overview of Key Features, UKBC-UFIDIC 500923030 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.7 - Setting Out
Overview of Key Features
4-045
•The Contractor shall set out the Works in relation to the items of reference under Sub-Cl.2.5.
•The Contractor must verify the accuracy of all the items of reference before they are used for the Works and promptly
deliver the results of each verification to the Employer.
•If the Contractor finds an error in any items of reference, the Contractor must give a Notice to the Engineer describing it:
(i)within the period stated in the Contract Data (if not stated, 28 days) calculated from the Commencement Date, if
the items of reference are specified on the Drawings and/or in the Specification; or
(ii)as soon as practicable after receiving them, if they were issued by the Engineer under Sub-Cl.2.5.
•After receiving a Notice, the Engineer must proceed under Sub-Cl.3.7 to agree or determine:
(a)whether or not there is an error in the items of reference;
(b)whether or not, taking account of cost and time, an experienced contractor exercising due care would have
discovered such an error:
(i)when examining the Site, the Drawings and the Specification before submitting the Tender, or
(ii)if the items of reference were specified in the Drawings and/or in the Specification and the Contractor’s Notice
was given after the expiry of the period stated in Sub-Cl.4.7.2(a),
(c)what measures (if any) the Contractor is required to take to rectify the error.
•If an experienced contractor would not have discovered the error, Sub-Cl.13.3.1 (Variation by Instruction) applies to the
measures required to be taken by the Contractor and if the Contractor suffers delay and/or incurs Cost as a result of the
error, subject to Sub-Cl.20.2, the Contractor is entitled to EOT and/or payment of Cost Plus Profit.
End of Document
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1
Commentary, UKBC-UFIDIC 500922995 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.7 - Setting Out
Commentary
4-046
Under the 1999 sub-clause, the Contractor was responsible for the correct positioning of all parts of the Works and rectifying
any error in the positions, levels, dimensions or alignment of the Works. The Contractor only had to use reasonable efforts to
verify the accuracy of the items of reference before they are used. The Employer was responsible for any errors in the specified
or notified items of reference.
The regime has been substantially changed under the 2017 sub-clause. The Contractor remains responsible for the correct
positioning of the Works and for rectifying errors but is also under an express obligation to verify the accuracy of all items of
reference before they are used for the Works and to promptly deliver results of each verification to the Engineer. This is a far
more onerous obligation than having to use reasonable efforts to verify the accuracy of the items.
The Contractor also faces new time limits within which a Notice must be given to the Engineer describing the error. If the items
of reference are specified on the Drawings and/or in the Specification, the Notice must be provided within the period stated in
the Contract Data or if no period is stated, within 28 days. The period is to be calculated with reference to the Commencement
Date. If the Engineer issued the items of reference under Sub-Cl.2.5, the Notice must be given as soon as practicable.
The Parties and the Engineer should also be aware that the date the Engineer receives the Contractor’s Notice under Sub-Cl.4.7.2
marks the date of commencement of the time limit for agreement under Sub-Cl.3.7.3.
The 1999 sub-clause only required the Engineer to consider whether and to what extent an error could reasonably have been
discovered and whether any additional costs and delay stemmed from the error.
The 2017 sub-clause is more prescriptive in terms of what the Engineer must consider. The Engineer must begin by considering
whether there is in fact an error and then progress to consider whether an “experienced contractor” exercising due care would
have discovered such an error within the periods specified. The reference to an “experienced contractor” imposes a stricter
obligation than can be found under English law where the usual criteria would be a requirement that the Contractor exercise
reasonable skill and care. McNair J famously described the usual test as the “standard of the ordinary skilled man exercising
and professing to have that special skill.” 24 The Engineer is then to consider what remedial steps are required to rectify the
error. If an experienced contractor would not have discovered the error, Sub-Cl.13.3.1 (Variation by Instruction) applies to the
measures that the Contractor is required to take.
The provisions in relation to the Contractor incurring delay and/or additional costs are largely the same. The only real difference
is that the 1999 sub-clause provided that a Contractor was only entitled to EOT and/or Cost Plus Profit if an experienced
contractor could not have reasonably discovered the error and avoided the delay and/or Cost.
The 2017 sub-clause provides that the Contractor is entitled to EOT and/or Cost Plus Profit, subject to Sub-Cl.20.2, if the
Contractor suffers delay and/or incurs Cost as a result of the error and an experienced contractor would not have discovered
the error. The words “reasonably” and “avoided this delay” have therefore been removed. It is unclear what the motivation for
these deletions was. Presumably the question of whether an experienced contractor would not have discovered the error would
still be resolved by considering whether the reasonable experienced contractor would not have discovered the error. If this is
the case then the deletions appear to have little effect.
© 2025 Thomson Reuters.
1
Commentary, UKBC-UFIDIC 500922995 (2021)
The Contractor must therefore demonstrate that he has suffered delay as a result of a setting out error which an experienced
Contractor would not have discovered. This appears to be a difficult hurdle to overcome as the experienced contractor, arguably,
will be aware of the potential for delay if there are errors in the setting out and will accordingly make thorough checks.
Footnotes
24
Bolam v Friern Hospital Management Committee [1957] 1 W.L.R. 582.
End of Document
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2
Section 4.8 - Health and Safety Obligations, UKBC-UFIDIC 500923019 (2021)
Section 4.8 - Health and Safety Obligations
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.8 - Health and Safety Obligations
4-047
The Contractor shall:
(a)comply with all applicable health and safety regulations and Laws;
(b)comply with all applicable health and safety obligations specified in the Contract;
(c)comply with all directives issued by the Contractor’s health and safety officer (appointed under Sub-Clause 6.7
[Health and Safety of Personnel]);
(d)take care of the health and safety of all persons entitled to be on the Site and other places (if any) where the Works
are being executed;
(e)keep the Site, Works (and the other places (if any) where the Works are being executed) clear of unnecessary
obstruction so as to avoid danger to these persons;
(f)provide fencing, lighting, safe access, guarding and watching of:
(i)the Works, until the Works are taken over under Clause 10 [Employer’s Taking Over]; and
(ii)any part of the Works where the Contractor is executing outstanding works or remedying any defects during
the DNP; and
(g)provide any Temporary Works (including roadways, footways, guards and fences) which may be necessary, because
of the execution of the Works, for the use and protection of the public and of owners and occupiers of adjacent land
and property.
Within 21 days of the Commencement Date and before commencing any construction on the Site, the Contractor shall
submit to the Engineer for information a health and safety manual which has been specifically prepared for the Works, the
Site and other places (if any) where the Contractor intends to execute the Works. This manual shall be in addition to any
other similar document required under applicable health and safety regulations and Laws.
The health and safety manual shall set out all the health and safety requirements:
(i)specified in the Employer’s Requirements;
(ii)that comply with all the Contractor’s health and safety obligations under the Contract; and
(iii)that are necessary to effect and maintain a healthy and safe working environment for all persons entitled to be on
the Site and other places (if any) where the Works are being executed.
This manual shall be revised as necessary by the Contractor or the Contractor’s health and safety officer, or at the reasonable
request of the Engineer. Each revision of the manual shall be submitted promptly to the Engineer.
In addition to the reporting requirement of sub-paragraph (g) of Sub-Clause 4.20 [Progress Reports], the Contractor shall
submit to the Engineer details of any accident as soon as practicable after its occurrence and, in the case of an accident
causing serious injury or death, shall inform the Engineer immediately.
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Section 4.8 - Health and Safety Obligations, UKBC-UFIDIC 500923019 (2021)
The Contractor shall, as specified in the Employer’s Requirements and as the Engineer may reasonably require, maintain
records and make reports (in compliance with the applicable health and safety regulations and Laws) concerning the health
and safety of persons and any damage to property.
End of Document
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2
Overview of Key Features, UKBC-UFIDIC 500923032 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.8 - Health and Safety Obligations
Overview of Key Features
4-048
•The Contractor must comply with all applicable health and safety regulations and Laws, all health and safety obligations
specified in the Contract and all directives issued by the Contractor’s health and safety officer.
•The Contractor must keep the Site, Works and any other places where the Works are being executed clear of unnecessary
obstruction so as to avoid danger.
•The Contractor must provide site security until the Works are taken over under Cl.10 and for any parts of the Works where
the Contractor is executing outstanding works or remedying any defects during the DNP.
•The Contractor must provide any Temporary Works which may be necessary as a consequence of the execution of the
Works on the areas surrounding the site.
•The Contractor must submit a specifically prepared health and safety manual to the Engineer within 21 days of the
Commencement Date and before commencing construction on the Site.
•The Contractor must submit to the Engineer details of any accident as soon as practicable after its occurrence and, in the
case of an accident causing serious injury or death, inform the Engineer immediately.
•The Contractor must, as stated in the Specification and as the Engineer may reasonably require, maintain records and
make reports, in compliance with health and safety regulations and Laws, concerning the health and safety of persons and
damage to any property.
End of Document
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1
Commentary, UKBC-UFIDIC 500922962 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.8 - Health and Safety Obligations
Commentary
4-049
This sub-clause has been substantially enlarged since the 1999 edns reflecting the rise in health and safety legislation worldwide.
The 1999 sub-clause required the Contractor to comply with all applicable safety regulations and did not refer to any obligations
specified in the Contract. It was therefore advised in the previous edition of this book that an Employer would be well advised,
particularly when dealing with foreign contractors, to include specific provision in the tender documentation in relation to the
relevant health and safety legislation.
The 2017 sub-clause has heeded this advice by requiring the Contractor, pursuant to sub-para.(b), to comply with all applicable
health and safety obligations specified in the Contract. The Contractor should in any event remember that he is obliged to
comply with all applicable laws by Sub-Cl.1.13. The Contractor is also able under Sub-Cl.2.2(a) to ask the Employer for copies
of any health and safety laws which may be relevant to the Contract.
The Contractor should also remember that by Sub-Cl.2.1 they are not necessarily given exclusive possession of the site. The
fact that the Contractor’s possession might not be exclusive does not free the Contractor from his obligations under this subclause. The Guidance to the Special Provisions recommends that if the Contractor is sharing occupation of the Site with others,
it may not be appropriate for the Contractor to provide some of the listed items. In such circumstances the sub-clause should be
amended to specify exactly what health and safety obligations are the Contractor’s under the Contract. The health and safety
obligations to be fulfilled by the Employer and/or others should be stated in the Specification. This is to ensure that each party
is aware of the health and safety obligations that it must comply with for the Site and the Works.
The 1999 sub-clause, pursuant to Sub-Cl.6.7, required the Contractor to appoint an accident prevention officer at the Site who is
responsible for maintaining safety and protecting against accidents. The Contractor was only to provide whatever was required
to the officer to exercise their responsibility and authority.
The 2017 sub-clause, pursuant to Sub-Cl.6.7, requires the Contractor to appoint a health and safety officer who is responsible
for maintaining health, safety and protecting against accidents. This officer has the power to issue directives for the purpose of
maintaining health and safety and to take protective measures to protect accidents. Sub-paragraph (c) requires the Contractor
to comply with any such directives.
Sub-paragraph (b) of the 1999 sub-clause required the Contractor to take care for the safety of all persons entitled to be on the
Site. The new sub-para.(d) extends this obligation by requiring the Contractor to take care of the safety of all persons entitled to
be on the Site and any other places where the Works are being executed. The Contractor therefore has to be aware of any other
areas where work is being executed and ensure that the same health and safety standards are in place.
Sub-paragraph (e) in the 2017 sub-clause is a more onerous version of sub-para.(c) in the 1999 sub-clause. The 1999 subparagraph only required the Contractor to use “reasonable efforts” to keep the Site and Works clear of unnecessary obstruction.
The new sub-paragraph requires the Contractor to keep the Site, Works and any other places where the Works are being executed
clear of unnecessary obstruction. The Contractor therefore has an absolute obligation to ensure that there are no unnecessary
obstructions and must bear in mind any other places where the Works are being executed.
By Sub-Cl.2.3(b) the Employer is responsible for ensuring that the Employer’s Personnel and the Employer’s other contractors
on or near the site comply with the obligations imposed by sub-paras (a)–(e).
Sub-paragraph (f) in the 2017 sub-clause is an enlarged version of sub-para.(d) in the 1999 sub-clause. In addition to providing
fencing, lighting, guarding and watching, as specified in the previous sub-paragraph, the Contractor must also now provide safe
© 2025 Thomson Reuters.
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Commentary, UKBC-UFIDIC 500922962 (2021)
access. The Contractor must provide such items until the Works are taking over under Cl.10, as was required under the previous
sub-paragraph and, in addition, for any part of the Works where the Contractor is executing outstanding works or remedying
any defect during the DNP.
Sub-paragraph (f) requires the Contractor to provide fencing of the Works. Such fencing must be adequate to keep intruders
out. This is both to protect the Works but also for reasons of safety. Whilst sub-para.(d) only refers to the need to take care for
people entitled to be on the Site or other places where Work is being executed, the Contractor might find himself under a duty
to take care for the trespassers, or those not entitled to be on site.
It could be argued that as the Contractor must accept the responsibility for the security of the site, that responsibility must include
the security of the site against trespassers (a term more easily understood by use of the phrase “non-visitor”). Accordingly, the
Contractor should bear the consequences of trespassers’ presence.
Under English law that potential liability is encapsulated in the Occupiers’ Liability Act 1984. The 1984 Act imposes a duty
on an occupier where:
(a)the state of the premises poses a danger;
(b)the danger is one that poses a risk of causing injury to a trespasser if he comes into the vicinity of the danger;
(c)there are reasonable grounds for believing that the trespasser is or may come into the vicinity of the danger; and
(d)in all the circumstances of the case it is reasonable to afford the trespasser some protection against the risk.
The obvious situation where a duty under the 1984 Act is likely to arise is where the occupier knows that a trespasser may
come upon a danger that is latent. Occupiers of sites that contain equipment that may be regarded as allurements, (for example
diggers or tractors) should be careful to guard against the risk of injury to trespassers should they be enticed onto the site as a
result of such allurements. In such a case the trespasser may be exposed to the risk of injury without realising that the danger
exists. The Contractor should take care to minimise the risk of injuring not only the trespasser whose presence on the premises
is envisaged but also those who are entitled to be on site. These are relevant considerations regardless of the jurisdiction. Noone wants anyone to suffer injury and in addition the Contractor must consider the potential consequences to progress of anyone
suffering an injury.
Sub-paragraph (g) of the 2017 sub-clause is exactly the same as sub-para.(e) of the 1999 sub-clause. The Contractor is required
to consider the impact of the Works on the surrounding area. If necessary, the Contractor must construct temporary roads, fences
and bridges both to protect those who use adjacent land but also for the use of those who use that adjacent land. It is submitted
that the use of the word necessary means that this obligation would extend to providing an alternative means of access if the
Works blocked off a road or pathway which was previously in use.
The rest of the sub-clause contains new provisions and imposes further obligations on the Contractor.
The Contactor must submit to the Engineer, within 21 days of the Commencement Date and before commencing any construction
on the Site, a health and safety manual which has been specifically prepared for the Works, the Site and any other places where
the Contractor intends to execute the Works. This manual is in addition to any other similar document required under health
and safety regulations or laws.
The manual must set out all the health and safety requirements stated in the Specification and that comply with the Contractor’s
health and safety obligations under the Contract. The manual must also set out all the health and safety requirements that
are necessary to effect and maintain a healthy and safe working environment for all persons entitled to be on site or working
elsewhere.
The Contractor or the health and safety officer has to revise the manual as necessary or at the reasonable request of the Engineer.
Each revision of the manual must be submitted promptly to the Engineer. The Contractor should be clear as to who is responsible
for the revision and submission of the manual.
The Contractor must submit to the Engineer details of any accident as soon as practicable after its occurrence. In the event of
an accident causing serious injury or death, the Contractor must inform the Engineer immediately. The Contractor must heed
the inclusion of the word “immediately” and provide the details as soon as a serious injury or death occurs.
© 2025 Thomson Reuters.
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Commentary, UKBC-UFIDIC 500922962 (2021)
The Contractor must also, as stated in the Specification or as the Engineer may reasonably require, maintain records and make
reports, in compliance with the applicable health and safety regulations and laws, concerning the health and safety of persons
and any property damage.
End of Document
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3
Section 4.9 - Quality Management and Compliance..., UKBC-UFIDIC...
Section 4.9 - Quality Management and Compliance Verification
Systems
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.9 - Quality Management and Compliance Verification Systems
4-050
4.9.1 Quality Management System
The Contractor shall prepare and implement a QM System to demonstrate compliance with the requirements of
the Contract. The QM System shall be specifically prepared for the Works and submitted to the Engineer within
28 days of the Commencement Date. Thereafter, whenever the QM System is updated or revised, a copy shall
promptly be submitted to the Engineer.The QM System shall be in accordance with the details stated in the Employer’s
Requirements (if any) and shall include the Contractor’s procedures:
(a)to ensure that all Notices and other communications under Sub-Clause 1.3 [Notices and Other
Communications], Contractor’s Documents, as-built records, O&M Manuals, and contemporary records can be
traced, with full certainty, to the Works, Goods, work, workmanship or test to which they relate;
(b)to ensure proper coordination and management of interfaces between the stages of execution of the Works,
and between Subcontractors; and
(c)for the submission of Contractor’s Documents to the Engineer for Review.
The Engineer may Review the QM System and may give a Notice to the Contractor stating the extent to which it does
not comply with the Contract. Within 14 days after receiving this Notice, the Contractor shall revise the QM System to
rectify such non-compliance. If the Engineer does not give such a Notice within 21 days of the date of submission of
the QM System, the Engineer shall be deemed to have given a Notice of No-objection.The Engineer may, at any time,
give a Notice to the Contractor stating the extent to which the Contractor is failing to correctly implement the QM
System to the Contractor’s activities under the Contract. After receiving this Notice, the Contractor shall immediately
remedy such failure.The Contractor shall carry out internal audits of the QM System regularly, and at least once every
6 months. The Contractor shall submit to the Engineer a report listing the results of each internal audit within 7 days
of completion. Each report shall include, where appropriate, the proposed measures to improve and/or rectify the QM
System and/or its implementation.If the Contractor is required by the Contractor’s quality assurance certification to
be subject to external audit, the Contractor shall immediately give a Notice to the Engineer describing any failing(s)
identified in any external audit. If the Contractor is a JV, this obligation shall apply to each member of the JV.
4.9.2 Compliance Verification System
The Contractor shall prepare and implement a Compliance Verification System to demonstrate that the design,
Materials, Employer-Supplied Materials (if any), Plant, work and workmanship comply in all respects with the
Contract.The Compliance Verification System shall be in accordance with the details stated in the Employer’s
Requirements (if any) and shall include a method for reporting the results of all inspections and tests carried out by
the Contractor. In the event that any inspection or test identifies a non-compliance with the Contract, Sub-Clause
7.5 [Defects and Rejection] shall apply.The Contractor shall prepare and submit to the Engineer a complete set of
compliance verification documentation for the Works or Section (as the case may be), fully compiled and collated in
the manner described in the Employer’s Requirements or, if not so described, in a manner acceptable to the Engineer.
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Section 4.9 - Quality Management and Compliance..., UKBC-UFIDIC...
4.9.3 General provision
Compliance with the QM System and/or Compliance Verification System shall not relieve the Contractor from any
duty, obligation or responsibility under or in connection with the Contract.
End of Document
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2
Overview of Key Features, UKBC-UFIDIC 500922954 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.9 - Quality Management and Compliance Verification Systems
Overview of Key Features
4-051
•If required by the Contract, the Contractor must prepare and implement a QM system.
•The QM system must be submitted to the Engineer within 28 days of the Commencement Date and the Engineer may
review the QM system and give a Notice stating the extent to which it does not comply with the Contract.
•If the Engineer does not give such a Notice within 21 days of the submission of the QM system, the Engineer is deemed
to have given a Notice of No-objection.
•If the Engineer does give a Notice, within 14 days of receiving the Notice the Contractor must revise the QM system to
rectify the non-compliance.
•The Contractor must regularly audit the QM system and at least once every six months. The Contractor must submit to
the Engineer a report setting out the results of each audit within seven days of completion.
•If required by the Contract, the Contractor must prepare and implement a Compliance Verification System.
•The Contractor must submit a complete set of compliance verification documentation for the Works or Section.
•Compliance with the QM system and/or Compliance Verification System does not relieve the Contractor from any duty,
obligation or responsibility arising from the Contract.
End of Document
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Commentary, UKBC-UFIDIC 500922998 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.9 - Quality Management and Compliance Verification Systems
Commentary
4-052
It may be that this sub-clause is unnecessary. If the Employer does not require the Contractor to implement a quality management
system or compliance verification system then this sub-clause will not be required. If this is the case then, as with any subclause which is not used, both parties should ensure that the sub-clause is deleted.
The benefits of such systems for the Employer may include an increased level of checking and monitoring which should lead
to a high-quality project, with a reduced risk of latent defects. The downside will be increased cost. In deciding whether such
systems are necessary, and if so at what level of detail, the Employer should remember that the Contractor has to prepare detailed
monthly progress reports pursuant to Sub-Cl.4.20.
End of Document
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1
Sub-Clause 4.9.1: Quality Management System, UKBC-UFIDIC 500922951 (2021)
Sub-Clause 4.9.1: Quality Management System
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.9 - Quality Management and Compliance Verification Systems
Commentary
Sub-Clause 4.9.1: Quality Management System
4-053
A preliminary point is that the 1999 sub-clause referred to Quality Assurance and the quality assurance system. In the 2017
edns references are to Quality Management and the Quality Management System. The 2017 sub-clause requires the Contractor
to implement such a system to demonstrate compliance with the results of the Contract.
The 1999 sub-clause was silent on the timeframe within which this must be prepared. The 2017 sub-clause requires the system
to be submitted to the Engineer within 28 days of the Commencement Date. The Contractor also has to promptly submit to the
Engineer a copy of any updates or revisions to the QM system.
The 1999 sub-clause required the system to be in accordance with the details stated in the Contract. The 2017 sub-clause inserts
the phrase “(if any)” to recognise that no such details may be included in the Contract. The 2017 sub-clause also includes new
requirements on what the QM system must include. The QM system must include the Contractor’s procedures:
(a)To ensure that all Notices and other communications under Sub-Cl.1.3, Contractor’s Documents, as-built records (if
applicable), operation and maintenance manuals (if applicable), and contemporary records can be traced, with full certainty,
to the Works, Goods, work, workmanship or test to which they relate.
(b)To ensure proper co-ordination and management of interfaces between the stages of execution of the Works, and between
Subcontractors.
(c)For the submission of Contractor’s Documents to the Engineer for Review.
The 1999 sub-clause provided that the Engineer was entitled to “audit” any aspect of the system but was silent on the procedure
to be followed if the Engineer objected to an aspect of the system.
Under the 2017 sub-clause the Engineer may review the QM system and may give a Notice to the Contractor setting out the
extent to which it does not comply with the Contract. The Contractor has 14 days from receipt of such a Notice to revise the
QM system to rectify the non-compliance. If the Engineer does not give such a Notice within 21 days of the date of submission
of the QM system, the Engineer shall be deemed to have given a Notice of No-objection.
The Engineer may also give a Notice if the Contractor is failing to correctly implement the QM system to the Contractor’s
activities under the Contract. After receiving such a Notice, the Contractor must immediately remedy such failure. The inclusion
of the word “immediately” may lead to disputes as its natural and ordinary meaning would suggest that the Contractor must
remedy the failure at once or instantly. This provides the opportunity for the Employer to argue that steps were taken too late.
The sub-clause is silent however on the consequences of failing to remedy the failure immediately.
The 2017 sub-clause also imposes additional obligations on the Contractor since he must regularly audit the QM system, at least
once every six months. The Contractor has to submit to the Employer a report listing the results of each internal audit within
seven days of completion. Each report has to include, where appropriate, the proposed measures to improve and/or rectify the
QM system and/or its implementation.
If the Contractor is required by its own quality assurance certification to be subject to external audit, the Contractor must
immediately give a Notice to the Engineer describing any failing(s) identified in any external audit. If the Contractor is a JV,
this obligation applies to each member of the JV.
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Sub-Clause 4.9.1: Quality Management System, UKBC-UFIDIC 500922951 (2021)
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Sub-Clause 4.9.2: Compliance Verification System, UKBC-UFIDIC 500923020 (2021)
Sub-Clause 4.9.2: Compliance Verification System
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.9 - Quality Management and Compliance Verification Systems
Commentary
Sub-Clause 4.9.2: Compliance Verification System
4-054
Sub-Clause 4.9.2 contains new provisions for the 2017 edns and requires the Contractor to implement a Compliance Verification
System to demonstrate that the design (if any), Materials, Employer Supplied Materials (if any), Plant, work and workmanship
comply in all respects with the Contract.
The system must be in accordance with the details stated in the Specification (if any) and must include a method for reporting
the results of all inspections and tests carried out by the Contractor. If any inspection or test identifies a non-compliance with
the Contract, Sub-Cl.7.5 applies.
Sub-Clause 7.5 requires the Engineer to give a Notice to the Contractor describing the item of Plant, Materials, design or
workmanship that has been found to be defective. In response, the Contractor must promptly prepare and submit a proposal
for necessary remedial work. The Engineer then gives or is deemed to give a Notice of No-objection or gives a Notice to the
Contractor stating the extent to which the proposed work would not result in compliance with the Contract. If the Engineer fails
to promptly submit a proposal for remedial work or fails to carry out the proposed remedial work to which the Engineer has
given or is deemed to have given a Notice of No-objection, the Engineer may:
(a)instruct the Contractor under Sub-Cl.7.6(a) and/or (b); or
(b)reject the Plant, Materials, Contractor’s Design (if any) or workmanship by giving a Notice to the Contractor, with
reasons, in which case Sub-Cl.11.4(a) applies.
The 2017 edns also impose further obligations on the Contractor as he must prepare and submit to the Engineer a complete set
of compliance verification documentation for the Works or Section, collated in the manner described in the Specification or, if
not so described, in a manner acceptable to the Engineer.
End of Document
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Sub-Clause 4.9.3: General Provision, UKBC-UFIDIC 500922955 (2021)
Sub-Clause 4.9.3: General Provision
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.9 - Quality Management and Compliance Verification Systems
Commentary
Sub-Clause 4.9.3: General Provision
4-055
This short provision replicates the 1999 edns and only serves to remind the Contractor that compliance with the QM system
and/or Compliance Verification System does not relieve the Contractor from any duty, obligation or responsibility arising from
the Contract.
End of Document
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1
Section 4.10 - Use of Site Data, UKBC-UFIDIC 500923013 (2021)
Section 4.10 - Use of Site Data
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.10 - Use of Site Data
4-056
The Contractor shall be responsible for interpreting all data referred to under Sub-Clause 2.5 [Site Data and Items of
Reference].
To the extent which was practicable (taking account of cost and time), the Contractor shall be deemed to have obtained
all necessary information as to risks, contingencies and other circumstances which may influence or affect the Tender or
Works. To the same extent, the Contractor shall be deemed to have inspected and examined the Site, access to the Site, its
surroundings, the above data and other available information, and to have been satisfied before submitting the Tender as
to all matters relevant to the execution of the Works, including:
(a)the form and nature of the Site, including sub-surface conditions;
(b)the hydrological and climatic conditions, and the effects of climatic conditions at the Site;
(c)the extent and nature of the work and Goods necessary for the execution of the Works;
(d)the Laws, procedures and labour practices of the Country; and
(e)the Contractor’s requirements for access, accommodation, facilities, personnel, power, transport, water and any
other utilities or services.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922974 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.10 - Use of Site Data
Overview of Key Features
4-057
•The Contractor is responsible for interpreting the data.
•It will be assumed that the Contractor has both examined and inspected the site and all the available information provided
to the Employer about the site and taken that information into account when compiling and submitting his Tender.
End of Document
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Commentary, UKBC-UFIDIC 500922982 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.10 - Use of Site Data
Commentary
4-058
The 1999 sub-clause contained obligations imposed on the Employer. These have been moved to Sub-Cl.2.5 in the 2017 edns
and the sub-clause has been renamed the “Use of Site Data” to reflect this.
The remaining part of the sub-clause is almost identical to the second paragraph in the 1999 sub-clause. The sub-clause provides
that the Contractor is deemed to have obtained all necessary information to prepare his tender and that the Contractor shall be
deemed to have taken into account all the risks which might impact on his tender. Ignorance will be no defence.
As a consequence of this obligation, it will come as no surprise that by Sub-Cl.4.11, the Contractor will be deemed to consent
to the “correctness and sufficiency” of the Accepted Contract Amount. The Contractor must carry out his own investigations
in order to ensure that his tender sum will be an adequate one.
Further, the data and information referred to in the sub-clause is a much wider list than the data the Employer is required to
make available in Sub-Cl.2.5. Whilst sub-paras (a) and (b) refer to the form and nature of the Site and hydrological and climatic
conditions, sub-para.(c) talks about the nature of the work and the goods necessary to complete that Work. Sub-paragraph (d)
refers to the laws, procedures and labour practices of the Country where the project is based. Finally, sub-para.(e) refers to the
Contractor’s own requirements.
The only change to the sub-paragraphs from the previous edition is the addition of “and the effects of climatic conditions at
the Site” to sub-para.(c). The Contractor therefore must consider the climatic conditions and the practical implications that they
will have on the site.
Sub-Clause 4.15 provides further clarification about the Contractor’s access obligations, repeating that the Contractor shall be
deemed to have satisfied himself as to the suitability and availability of access routes to the Site.
The old sub-clause qualified sub-paras (a)–(e) by stating that they were listed “without limitation.” This is no longer necessary.
Sub-Clause 1.2(h) has been introduced to the 2017 edns and clarifies that “including” should not be interpreted as being limited
to the stated items that follow.
The Employer is required to provide limited assistance in relation to sub-para.(d). By Sub-Cl.2.2, the Employer shall, if the
Contractor requests, provide copies of the Laws of the Country which are relevant to the Contract but which are not readily
available. The sub-clause also provides that the Employer will provide assistance to the Contractor in obtaining permits and
licences.
The only limit on the Contractor’s obligations, as provided by this sub-clause, is that the Contractor will be deemed to have
obtained all necessary information “to the extent” it was “practicable (taking account of cost and time)”. The prudent Contractor
should keep a record of the pre-tender period in order to be in a position, should it be necessary, to demonstrate that he acted
reasonably in obtaining all the necessary information relevant to the preparation of his tender as required by this sub-clause.
The question therefore arises as to whether a local contractor would be treated any differently to his foreign counterpart. It
may be far easier and cheaper for those with local contacts to carry out a more thorough investigation. Given the qualifications
imposed here, it is likely that different contractors would be treated differently and this is why keeping the records is to be
encouraged. What type of investigations could be carried out given the timescale of the tender period or the locality of the
project? This is very much an area which will depend on the particular facts of each individual situation.
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Commentary, UKBC-UFIDIC 500922982 (2021)
End of Document
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Section 4.11 - Sufficiency of the Accepted Contract Amount, UKBC-UFIDIC 500922975...
Section 4.11 - Sufficiency of the Accepted Contract Amount
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.11 - Sufficiency of the Accepted Contract Amount
4-059
The Contractor shall be deemed to:
(a)have satisfied himself/herself as to the correctness and sufficiency of the Accepted Contract Amount; and
(b)have based the Accepted Contract Amount on the data, interpretations, necessary information, inspections,
examinations and satisfaction as to all relevant matters described in Sub-Clause 4.10 [Use of Site Data] and any further
data relevant to the Contractor’s design.
Unless otherwise stated in the Contract, the Accepted Contract Amount shall be deemed to cover all the Contractor’s
obligations under the Contract and all things necessary for the proper execution of the Works in accordance with the
Contract.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923021 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.11 - Sufficiency of the Accepted Contract Amount
Overview of Key Features
4-060
•The Contractor will be deemed to have based his tender sum on the basis of the information provided by the Employer
under Sub-Cl.2.5 and on the basis of the Contractor’s own checks on that information as required by Sub-Cl.4.10.
•It is for the Contractor to ensure that his tender sum covers everything the Contractor needs to be able to carry out the
Works as required by Sub-Cl.4.1.
End of Document
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Commentary, UKBC-UFIDIC 500922961 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.11 - Sufficiency of the Accepted Contract Amount
Commentary
4-061
Sub-Clause 4.11 provides that it is for the Contractor to satisfy himself as to the adequacy of the tender. Although it must be
read in close conjunction with Sub-Cl.4.10, the basis of the Contractor’s tender is not limited to the information obtained in
accordance with Sub-Cl.4.10.
This is because whilst under Sub-Cl.4.11(b) the Contractor is deemed to have based the Contract Amount on the information
obtained by the Contractor under Sub-Cl.4.10, the list of items referred to in Sub-Cl.4.10(a)–(e) is not exclusive. If the Contractor
discovers any potential discrepancies in the information provided by the Employer, these should be raised prior to the tender
being submitted.
The Contractor would only be entitled to EOT and/or Cost Plus Profit incurred as a result of an error with the data provided
by the Employer if the requirements in Sub-Cl.4.7 are met.
The question of whether, as with Sub-Cl.4.10 (and therefore unlike Sub-Cl.4.7), the relevant standard by which the Contractor
will be judged is the “ordinary” or the “experienced” 25 contractor is a difficult one. There is nothing within the wording of the
sub-clause to suggest that the Contractor will be judged according to the standards of the “experienced” contractor. Therefore, it
is submitted that the Contractor will, following the “Bolam” test, be judged (in English jurisdictions) as an “ordinary” contractor.
That said, some care is necessary. Under Sub-Cl.8.5(d), the Contractor is entitled to an extension of time, subject to Sub-Cl.20.2,
in relation to unforeseeable shortages in the availability of personnel or goods caused by epidemic or governmental actions.
Such shortages, if deemed foreseeable, would have an obvious impact on the Contractor’s tender price. By Sub-Cl.1.1.85, the
foreseeability test is judged according to the standards of the experienced Contractor.
However, this sub-clause also provides a shield for the Employer to potential claims made by the Contractor for additional
payment. By the final paragraph, the Contractor warrants that the Accepted Contract Amount will be deemed to cover everything
necessary for the proper execution of the Works. Pursuant to Sub-Cl.1.2(j), the execution of the Works includes the construction
and completion of the Works and the remedying of any defects. When making any claim, a Contractor must bear in mind that
his claim may be met with the defence that the Contractor should have taken the subject matter of the claim into account when
preparing his tender.
It is therefore important that the Contractor keeps adequate records of everything that led him to submit his tender in the form
he did. For example, by Sub-Cl.4.12, the Engineer may take account of evidence provided by the Contractor in relation to the
physical conditions he foresaw when submitting the Contract Sum. The Contractor should take this suggestion as a starting
point for the type of information to keep.
Footnotes
25
See Sub-Cll.4.7 and 4.12 for a discussion on what ‘‘experienced’’ contractor means.
End of Document
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Section 4.12 - Unforeseeable Physical Conditions, UKBC-UFIDIC 500923025 (2021)
Section 4.12 - Unforeseeable Physical Conditions
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.12 - Unforeseeable Physical Conditions
4-062
In this Sub-Clause, physical conditions means natural physical conditions and physical obstructions (natural or man-made)
and pollutants, which the Contractor encounters at the Site during execution of the Works, including sub-surface and
hydrological conditions but excluding climatic conditions at the Site and the effects of those climatic conditions.
If the Contractor encounters physical conditions which the Contractor considers to have been Unforeseeable and that will
have an adverse effect on the progress and/or increase the Cost of the execution of the Works, the following procedure
shall apply:
4.12.1 Contractor’s Notice
After discovery of such physical conditions, the Contractor shall give a Notice to the Engineer, which shall:
(a)be given as soon as practicable and in good time to give the Engineer opportunity to inspect and investigate
the physical conditions promptly and before they are disturbed;
(b)describe the physical conditions, so that they can be inspected and/ or investigated promptly by the Engineer;
(c)set out the reasons why the Contractor considers the physical conditions to be Unforeseeable; and
(d)describe the manner in which the physical conditions will have an adverse effect on the progress and/or
increase the Cost of the execution of the Works.
4.12.2 Engineer’s inspection and investigation
The Engineer shall inspect and investigate the physical conditions within 7 days, or longer period agreed with the
Contractor, after receiving the Contractor’s Notice.The Contractor shall continue execution of the Works, using such
proper and reasonable measures as are appropriate for the physical conditions and to enable the Engineer to inspect
and investigate them.
4.12.3 Engineer’s instructions
The Contractor shall comply with any instructions which the Engineer may give for dealing with the physical
conditions and, if such an instruction constitutes a Variation, Sub-Clause 13.3.1 [Variation by Instruction] shall apply.
4.12.4 Delay and/or Cost
If and to the extent that the Contractor suffers delay and/or incurs Cost due to these physical conditions, having
complied with Sub-Clauses 4.12.1 to 4.12.3 above, the Contractor shall be entitled subject to Sub-Clause 20.2 [Claims
For Payment and/or EOT] to EOT and/or payment of such Cost.
4.12.5 Agreement or Determination of Delay and/or Cost
The agreement or determination, under Sub-Clause 20.2.5 [Agreement or determination of the Claim], of any Claim
under Sub-Clause 4.12.4 [Delay and/or Cost] shall include consideration of whether and (if so) to what extent the
physical conditions were Unforeseeable.The Engineer may also review whether other physical conditions in similar
parts of the Works (if any) were more favourable than could reasonably have been foreseen by the Base Date. If and to
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Section 4.12 - Unforeseeable Physical Conditions, UKBC-UFIDIC 500923025 (2021)
the extent that these more favourable conditions were encountered, the Engineer may take account of the reductions in
Cost which were due to these conditions in calculating the additional Cost to be agreed or determined under this SubClause 4.12.5. However, the net effect of all additions and reductions under this Sub-Clause 4.12.5 shall not result
in a net reduction in the Contract Price.The Engineer may take account of any evidence of the physical conditions
foreseen by the Contractor by the Base Date, which the Contractor may include in the supporting particulars for the
Claim under Sub-Clause 20.2.4 [Fully detailed Claim], but shall not be bound by any such evidence.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923022 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.12 - Unforeseeable Physical Conditions
Overview of Key Features
4-063
•Physical conditions means both natural phenomena and natural or man-made obstructions and pollutants.
•Unforeseeable is defined by Sub-Cl.1.1.85 (Red Book) as being “not reasonably foreseeable by an experienced Contractor
by the Base Date.” See Sub-Cl.1.1.87 of the Yellow Book for its definition.
•The Contractor must give a Notice to the Engineer if he encounters adverse physical conditions which he considers to
have been unforeseeable.
•The Notice must describe the physical conditions, set out the reasons why the Contractor considers it to be unforeseeable
and describe the manner in which the physical conditions will have an adverse effect on progress and/or increase the Cost
of the execution of the Works.
•The Engineer is to inspect the physical conditions within seven days of receiving the Contractor’s Notice or longer if
the Contractor agrees.
•The Contractor must comply with any instructions given by the Engineer in relation to dealing with the physical conditions.
•If the Engineer so determines, the Contractor may be entitled to an extension of time and to Payment of Cost.
•Before the Engineer finally agrees any cost that may be due, the Engineer may take account of whether any physical
conditions were more favourable to the Contractor than had been anticipated.
End of Document
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Commentary, UKBC-UFIDIC 500922977 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.12 - Unforeseeable Physical Conditions
Commentary
4-064
The question of who is responsible for unforeseen physical conditions is unsurprisingly a contentious one. Sub-Clause 4.12
provides that a Contractor might be entitled to an extension of time for delay and the recovery of Cost incurred as a consequence
of that delay, if he encounters physical conditions which were unforeseeable by the Base Date. It is therefore a particularly
important sub-clause and one which will inevitably be the focus of many Contractor claims.
The sub-clause begins with a definition of “physical conditions.” The definition is largely the same in substance. For example,
the 1999 sub-clause refers to “man-made and other physical obstructions” whereas the 2017 sub-clause refers to “physical
obstructions (natural or man-made).” This therefore presumably includes geological and archaeological findings. 26
The 1999 definition ended by excluding “climatic conditions”, whereas the 2017 definition excludes “climatic conditions at the
Site and the effects of those climatic conditions.” At first glance this seems surprising, as in many areas of the world one needs
to be aware of the risks caused by hurricanes in the Caribbean or tropical rains in Asia. However, these tend to be seasonal
and so foreseeable. In addition, exceptionally adverse climatic conditions are a ground for claiming an extension of time under
Sub-Cl.8.5(c).
The immediate difficulty for the Contractor if he is delayed by such a condition will be to demonstrate that the physical conditions
encountered were unforeseeable. We discussed in relation to Sub-Cl.4.7, some of the potential hurdles the Contractor must
overcome. The same obstacles can be found here.
Sub-Clause 1.1.85 of the Red Book defines “unforeseeable” as “not reasonably foreseeable by an experienced Contractor by
the Base Date”. The 1999 sub-clause referred to the “date for submission of tender”. The Base Date is the date 28 days before
the latest date for submission of the Tender and so the Contractor should be aware that the 2017 sub-clause provides an earlier
reference point. In addition to this definition, Sub-Cl.4.10 details the very wide scope of information the Contractor will be
deemed to have taken into account when compiling the Tender. Taking these two sub-clauses together, on one view, it is difficult
to see from an Employer’s point of view, what physical conditions might not be foreseeable by an experienced contractor.
This, it is submitted, is not the intended result of this sub-clause. Presumably the idea behind the sub-clause is to impart to the
Employer, the risk of those physical conditions which could not have reasonably been foreseen by an experienced contractor
by the Base Date. Otherwise why does the clause exist?
As the clause stands, the burden of proof lies with the Contractor who must demonstrate successfully not only that the reasonable
contractor would not have foreseen the “physical condition” which caused the delay, but also that the experienced contractor
would not have included the risks of encountering such a physical condition in preparing his programme and tender. Does
this mean that an event will only be regarded as unforeseeable when adequate precautions could not have been reasonably
taken by an experienced contractor? If something is foreseeable then the experienced contractor would be expected to take the
appropriate precautions and to price for them in his tender.
Although this is a difficult issue, the answer according to FIDIC appears to be no. We say this because the May 2005 amendment
to Sub-Cl.1.1.68 of the MDB Harmonised Edition specifically introduced the phrase “and against which adequate preventative
precautions could not be taken” thereby suggesting that this could not be implied into the original clause as drafted. The removal
of that phrase from the March 2006 and June 2010 MDB Harmonised edns also suggests that the intention of FIDIC is not that
an event will only be regarded as unforeseeable if adequate preventative precautions could not have been taken.
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Commentary, UKBC-UFIDIC 500922977 (2021)
The experienced contractor
4-065
The English Court of Appeal’s decision in Obrascon Huarte Lain SA v Her Majesty’s Attorney General for Gibraltar 27 provides
an informative example of how the courts might approach the question of how an experienced Contractor should approach
Sub-Cl.4.12.
Obrascon (“OHL”), a Spanish civil engineering contractor, was engaged, under an amended 1999 Yellow Book, to construct a
road around Gibraltar Airport. OHL said that they were entitled to an extension of time and/or additional payment under SubCl.4.12 in respect of contamination which was not foreseeable.
The definition of physical conditions was slightly different to the 2017 edns:
“natural physical conditions and man-made other physical obstructions and pollutants, which the Contractor
encounters at the Site when executing the Works, including sub-surface and hydrological conditions but excluding
climatic conditions” .
Here, there was ground contamination which arose from the military activities on the site over previous centuries and from the
use of the site as an airfield in the twentieth century. Airfield activities generated further contamination. For example, aircraft
fuel and substances used for de-icing runways. All these matters were clearly spelt out in the desk study provided to tenderers
in 2008. The study included a plan showing a rifle range at the north-east corner of the isthmus, where the tunnel was due to
be built. Most of the contamination was confined to the made ground, although some of the hydrocarbons penetrated deeper.
In the tunnel area (where the most significant excavation was required) the depth of made ground varied between 1 metre and
5.4 metres, with an average depth of 2.5 metres.
The borehole logs showed that the made ground was not uniformly contaminated. Some areas were free from contamination,
while other areas were contaminated at a high level.
The depth to which OHL initially stripped the site was a matter for their choice. They chose to strip the top layer of the whole
site to a depth of 2 metres. Following that, the principal area of excavation was the tunnel and the ramps leading down to the
tunnel at both ends. OHL prepared a Construction Environmental Management Plan (“CEMP”), which stated that there would
be “correct separation of wastes” and that contaminated materials would be “removed off site, stored and dispersed to a licensed
site”. However, OHL did not adhere to the CEMP and they stockpiled all excavated materials indiscriminately, without any
attempt to differentiate between contaminated and inert materials. Inevitably there was cross-contamination. The result was that
all the stockpiled excavation materials were progressively being exported to landfill sites in Spain.
This made it difficult for the experts instructed by the parties to estimate the actual quantity of contamination on the site. The
preferred report calculated the total volume of contaminated soils to be 15,243m 3 ; this was higher than the figure of 10,000m 3
shown in the Environmental Statement.
What contamination would therefore be “reasonably foreseeable by an experienced contractor” at the date of tender (the test
under Cll.1.1.6.8 and 4.12 of the Conditions)? The approach of the expert accepted by Akenhead J at first instance was to suggest
a figure of 15,000m 3 . The basic reasoning was that an experienced contractor would not “slavishly” accept the figure. Instead
an experienced contractor would make its own assessment of all available data. Jackson LJ in the Court of Appeal agreed. The
FIDIC conditions require the Contractor at tender stage to make its own independent assessment of the available information:
“The contractor must draw upon its own expertise and its experience of previous civil engineering projects. The
contractor must make a reasonable assessment of the physical conditions which it may encounter. The contractor
cannot simply accept someone else’s interpretation of the data and say that is all that was foreseeable.”
The Court of Appeal also noted that the historical material provided to the Contractor made it clear that very extensive
contamination was foreseeable across the site. The Contractor needed to make provision for a possible worst-case scenario; he
should have made allowance for a proper investigation and removal of all contaminated material. The estimate of 10,000m 3 of
contaminated materials contained in the Environmental Statement was one person’s interpretation of the data. Tenderers were
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Commentary, UKBC-UFIDIC 500922977 (2021)
bound to take that assessment into account, although they remained under a duty to make their own independent assessment
of the physical conditions likely to be encountered.
Accordingly, OHL’s claim for unforeseeable ground conditions under Sub-Cl.4.12 of the FIDIC conditions failed.
In another English case, Van Oord UK Ltd v Allseas UK Ltd 28 a case arising out of an onshore gas pipe line laying contract in
the Shetland Islands, the Contractor alleged that peat had been encountered over a section of the works at a greater depth than
could reasonably have been foreseen. Coulson J rejected the claim saying that:
“Every experienced contractor knows that ground investigations can only be 100% accurate in the precise locations
in which they are carried out. It is for an experienced contractor to fill in the gaps and take an informed decision
as to what the likely conditions would be overall.”
The Civil Codes tend not to provide examples such as the above when it comes to defining the duties and obligations of
an experienced contractor. Remember that art.246 of the UAE Civil Code, in the same way of most codes, provides that
contracts must be carried out in accordance with their contents and in a way consistent with the requirements of good faith.
Therefore, the provisions of Sub-Cl.4.12 and the manner in which risk is allocated will, as a starting point, be likely to be
upheld, with it being a question of fact as to whether or not the physical conditions in question would have been foreseeable to
an objectively experienced Contractor in possession of the geotechnical information provided by the Employer. In Dubai or the
Shetlands, regard would also be had to the obligation (or opportunity) the Contractor was given to carry out their own additional
investigations. In Dubai, the Contractor may, depending on the circumstances, be able to say that the Employer could not, in
good faith, refuse to grant relief, or perhaps that under art.106, it would be unlawful for the Employer to refuse to grant relief
because the desired gain would be disproportionate to the harm that would be suffered by the Contractor.
Footnotes
26
27
28
See discussion under Sub-Cl.4.23 below.
[2015] EWCA 712.
[2015] EWCA 3074 (TCC). See discussion under Sub-Cl.4.23 below.
End of Document
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Sub-Clause 4.12.1: Contractor’s Notice, UKBC-UFIDIC 500923000 (2021)
Sub-Clause 4.12.1: Contractor’s Notice
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.12 - Unforeseeable Physical Conditions
Commentary
Sub-Clause 4.12.1: Contractor’s Notice
4-066
The Contractor must give a Notice to the Engineer describing the physical conditions, explaining why the Contractor considers
the conditions to be unforeseeable and describing the manner in which the conditions will have an adverse effect on the progress
and cost of the Works. This is one reason why we suggested in relation to Sub-Cl.4.10 that a prudent Contractor should keep
records of the pre-tender investigations.
Helpfully for the Contractor, Sub-Cl.4.12.5 ends by noting that the Contractor may provide evidence of the physical conditions
foreseen by the Contractor by the Base Date. Whether a Contractor should do this is a difficult question to answer. In compiling
such a list, the Contractor is nailing his colours to the mast. On balance it might be better to do so, as any failure is likely to be
seized on as evidence that no such physical condition was foreseen. Whatever course is chosen, less helpfully for the Contractor,
Sub-Cl.4.12.5 spells out that the Engineer is not bound by this when making his decision.
The Contractor must establish in his Notice that based on the information that was available at the relevant time, a reasonably
thorough investigation would not have brought to light the particular adverse physical condition that caused the delay.
The 1999 sub-clause did not require the Contractor to describe in the Notice the manner in which the physical conditions will
have an adverse effect on progress and the Cost of the Works. The 2017 sub-clause does require this and this is welcomed since
it enables all parties to be aware of what is in dispute.
The 1999 sub-clause only required the Contractor to give Notice “as soon as practicable” whereas the 2017 sub-clause also
requires the Contractor to give Notice “in good time” to give the Engineer opportunity to inspect and investigate the physical
conditions promptly and before they are disturbed. No definition is provided as what soon as soon as practicable means because
that will inevitably depend on the circumstances of the discovery. Nevertheless, a contractor is advised not to delay issuing
such a Notice.
End of Document
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Sub-Clause 4.12.2: Engineer’s Inspection and Investigation, UKBC-UFIDIC 500922997...
Sub-Clause 4.12.2: Engineer’s Inspection and Investigation
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.12 - Unforeseeable Physical Conditions
Commentary
Sub-Clause 4.12.2: Engineer’s Inspection and Investigation
4-067
Even though the 1999 sub-clause required the notice to describe the physical conditions so that the Engineer could inspect them,
the sub-clause did not prescribe a time limit by which the Engineer had to complete such investigations.
The 2017 sub-clause requires the Engineer to investigate the physical conditions within seven days of receipt of the Contractor’s
Notice or within a longer period agreed with the Contractor.
The 1999 sub-clause specifically noted that the Contractor was to continue executing the Works and take such measures as are
reasonable in the circumstances to take account of the problem. The 2017 sub-clause imposes a further requirement that the
reasonable measures taken should be appropriate to enable the Engineer to inspect and investigate the physical conditions. The
Contractor may need to change his programme or method of working as a result. A prudent contractor would be advised to
work with the Engineer to resolve the problem and facilitate the investigations.
End of Document
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Sub-Clause 4.12.3: Engineer’s Instructions, UKBC-UFIDIC 500923038 (2021)
Sub-Clause 4.12.3: Engineer’s Instructions
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.12 - Unforeseeable Physical Conditions
Commentary
Sub-Clause 4.12.3: Engineer’s Instructions
4-068
This sub-clause repeats the 1999 provisions. The Contractor is required to comply with any instructions that the Engineer gives
for dealing with the physical conditions. The sub-clause also specifies that, if such an instruction constitutes a variation, SubCl.13.3.1 applies.
End of Document
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Sub-Clause 4.12.4: Delay and/or Cost, UKBC-UFIDIC 500923039 (2021)
Sub-Clause 4.12.4: Delay and/or Cost
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.12 - Unforeseeable Physical Conditions
Commentary
Sub-Clause 4.12.4: Delay and/or Cost
4-069
This sub-clause largely mirrors the 1999 provisions but adds that the Contractor must have complied with Sub-Cll.4.12.1-4.12.3
in order to be entitled to EOT and/or payment of Cost.
End of Document
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Sub-Clause 4.12.5: Agreement or Determination of Delay..., UKBC-UFIDIC...
Sub-Clause 4.12.5: Agreement or Determination of Delay and/or
Cost
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.12 - Unforeseeable Physical Conditions
Commentary
Sub-Clause 4.12.5: Agreement or Determination of Delay and/or Cost
4-070
In line with the 1999 provisions, an agreement or determination of any claim under Sub-Cl.4.12.4 must include consideration
of whether and (if so) to what extent the physical conditions were unforeseeable.
If the Engineer agrees, that the physical conditions encountered were unforeseeable, the Contractor will be entitled to an
extension of time and payment of Cost. However, before any additional cost is agreed, the Engineer may review other physical
conditions in similar parts of the Works to see if these are more favourable to the Contractor than could have been reasonably
foreseen by the Base Date. If the Engineer considers they are more favourable, he may determine a reduction in Cost, although
any such reduction must not lead to a reduction in Contract Price. A typical example of this might be a tunnel where conditions
at both ends have changed, one to the detriment of the Contractor, the other to his advantage.
This provision was new to the 1999 Red Book. In reality it provides for a balancing exercise which suggests a degree of fairness
to all parties to the Contract. However, it is important for the Contractor that the Engineer understands, if it is appropriate, that
physical conditions which appear to be more favourable to the Contractor might in fact not be so. Any conditions which are
different to those envisaged will not have been taken into account when the tender was prepared.
Where the Contractor recovers additional costs, the sub-clause is clear that these costs do not include an element of profit, even
though it is likely to have been necessary to carry out additional works and possibly to employ additional plant and labour.
By way of contrast, under the Silver Book all risk is transferred to the Contractor who, except as otherwise stated in the Particular
Conditions, is “deemed to have obtained all necessary information as to risks, contingencies and other circumstances which
may influence or affect the Works.” By signing the Contract, the Contractor “accepts total responsibility for having foreseen
all difficulties and costs of successfully completing the Works.” The Contractor also accepts that the Contract Price will not be
adjusted to take account of any Unforeseeable or unforeseen difficulties or costs.
The Guidance to the Special Provisions includes a sample clause for use where the allocation of risk of sub-surface conditions
is shared.
End of Document
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Section 4.13 - Rights of Way and Facilities, UKBC-UFIDIC 500923040 (2021)
Section 4.13 - Rights of Way and Facilities
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.13 - Rights of Way and Facilities
4-071
The Contractor shall bear all costs and charges for special and/or temporary rights-of-way which may be required for the
purposes of the Works, including those for access to the Site.
The Contractor shall also obtain, at the Contractor’s risk and cost, any additional facilities outside the Site which may be
required for the purposes of the Works.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923001 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.13 - Rights of Way and Facilities
Overview of Key Features
4-072
•The Contractor is responsible for site access.
•The Contractor is responsible for special and/or temporary rights of way. This includes those routes outside the Site but
which are necessary for Access to the Site.
•The Contractor is responsible for obtaining any facilities outside of the Site which he needs to execute his Works at his
own cost and risk.
End of Document
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Commentary, UKBC-UFIDIC 500923011 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.13 - Rights of Way and Facilities
Commentary
4-073
The only change to the 1999 sub-clause is the addition of the phrase “for the purpose of the Works.” This clarifies that the
Contractor only bears costs and charges for special and/or temporary rights-of-way that may be required for the purposes of
the Works.
The Contractor is responsible for (in terms of risk and cost) providing and maintaining site access. These risks and costs should
be taken into account in arriving at the tender sum. The Contractor should remember that he must not only organise and secure
the access routes but maintain them during the currency of the Works. Sub-Clause 4.13 must be read in conjunction with SubCl.4.15 which confirms that it is for the Contractor to satisfy himself as to the suitability and availability of access.
The Contractor should also remember that, in accordance with Sub-Cl.2.2, the Employer must only provide reasonable assistance
(nothing more) in obtaining any permits, licences or approvals which might be necessary to obtain rights of way or access. This
assistance will only be provided if actually requested by the Contractor.
Finally, Sub-Cl.4.13 confirms that the Contractor is responsible both in terms of cost and risk for any additional facilities (for
example design and manufacturing) which may be needed to carry out the Works.
End of Document
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Section 4.14 - Avoidance of Interference, UKBC-UFIDIC 500922969 (2021)
Section 4.14 - Avoidance of Interference
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.14 - Avoidance of Interference
4-074
The Contractor shall not interfere unnecessarily or improperly with:
(a)the convenience of the public; or
(b)the access to and use and occupation of all roads and footpaths, irrespective of whether they are public or in the
possession of the Employer or of others.
The Contractor shall indemnify and hold the Employer harmless against and from all damages, losses and expenses
(including legal fees and expenses) resulting from any such unnecessary or improper interference.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923033 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.14 - Avoidance of Interference
Overview of Key Features
4-075
•The Contractor shall not unnecessarily or improperly interfere with the convenience of the public or access to all roads
and footpaths.
•The Contractor shall indemnify the Employer against any claims resulting from any such unnecessary or improper
interference.
End of Document
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Commentary, UKBC-UFIDIC 500923031 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.14 - Avoidance of Interference
Commentary
4-076
This sub-clause is unchanged in the 2017 edns.
By Sub-Cl.4.13, the Contractor is responsible for the costs of maintaining any access routes and temporary rights of way. By
Sub-Cl.4.14 here, the Contractor is responsible for costs arising out of unnecessary or improper interference with the public
and roads and footpaths.
No definition is provided as to what unnecessary or improper means. This meaning will vary according to local laws. However,
it is submitted that the words relate to the public and not the Contractor. For example, it would be no defence for the Contractor
to say that the interference with the public came about because it was necessary for the carrying out of his Works.
An example of what might constitute “unnecessary or improper” interference is provided by Sub-Cl.4.22, which provides that
the Contractor shall confine their operations to the Site and any additional working areas and that the Contractor shall take all
necessary precautions to keep his equipment within the Site and the additional areas and to keep them off adjacent land.
The third-party indemnity in respect of third party claims to be provided to the Employer is all-embracing, including damages
and legal expenses. The Contractor would be well advised to take account of the possibility of public access to the site and site
access roads and routes when preparing his tender.
The sub-clause itself will also have a wide implication as it refers to the “convenience of the public”. It does not therefore
differentiate between the public on-and-off site. Therefore, the Contractor should read this clause together with the health and
safety obligations of Sub-Cl.4.8, the requirement under Sub-Cl.4.18 to protect the environment and the need to maintain site
security required by Sub-Cl.4.21. All these sub-clauses might lead to the public being “inconvenienced”. The Contractor would
then be liable to indemnify the Employer in respect of any claims that may be made.
End of Document
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Section 4.15 - Access Route, UKBC-UFIDIC 500922992 (2021)
Section 4.15 - Access Route
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.15 - Access Route
4-077
The Contractor shall be deemed to have been satisfied, at the Base Date, as to the suitability and availability of the access
routes to the Site. The Contractor shall take all necessary measures to prevent any road or bridge from being damaged
by the Contractor’s traffic or by the Contractor’s Personnel. These measures shall include the proper use of appropriate
vehicles (conforming to legal load and width limits (if any) and any other restrictions) and routes.
Except as otherwise stated in these Conditions:
(a)the Contractor shall (as between the Parties) be responsible for repair of any damage caused to, and any maintenance
which may be required for the Contractor’s use of, access routes;
(b)the Contractor shall provide all necessary signs or directions along access routes, and shall obtain any permissions
or permits which may be required from the relevant authorities, for the Contractor’s use of routes, signs and directions;
(c)the Employer shall not be responsible for any third party claims which may arise from the Contractor’s use or
otherwise of any access route;
(d)the Employer does not guarantee the suitability or availability of particular access routes; and
(e)all Costs due to non-suitability or non-availability, for the use required by the Contractor, of access routes shall
be borne by the Contractor.
To the extent that non-suitability or non-availability of an access route arises as a result of changes to that access route by the
Employer or a third party after the Base Date, and as a result the Contractor suffers delay and/or incurs Cost, the Contractor
shall be entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to EOT and/or payment of such Cost.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922986 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.15 - Access Route
Overview of Key Features
4-078
•It is for the Contractor to satisfy himself as to the suitability and availability of access to the Site.
•The Contractor is responsible for obtaining permissions to use the access route and all necessary signage.
•The clause expressly provides that the Employer does not guarantee the suitability or availability of particular access
routes.
•The Contractor bears all the costs and risks associated with access.
•The Contractor can only claim for an EOT and/or Cost if an access route becomes unsuitable or unavailable as a result of
changes to the access route by the Employer or a third party after the Base Date.
End of Document
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Commentary, UKBC-UFIDIC 500922953 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.15 - Access Route
Commentary
4-079
Sub-Clause 4.13 confirms that the Contractor is responsible for access to the site. Sub-Clause 4.15 sets out the Contractor’s
obligations in relation to access.
Whilst the Employer by Sub-Cl.2.1 must provide the Contractor with access to the site, this is entirely different to the obligation
here on the Contractor to ensure that access routes to the site are adequate and suitable to enable him to carry out his Work in
accordance with the contract. The sub-clause cross-refers to Sub-Cl.4.10(e) which notes that the Contractor will be deemed to
have taken into account any requirements for access before submitting the tender.
In the 2017 edns the words “at the Base Date” have been added to the first sentence. By Sub-Cl.1.1.4 the base date means the
date 28 days before the latest date for submission of the Tender. This addition therefore adds some certainty should a dispute
arise about the suitability of the access routes since the relevant date of the Contractor’s knowledge is fixed in time.
The 1999 sub-clause requires the Contractor to use reasonable efforts to prevent any road or bridge from being damaged by
the Contractor’s traffic or by the Contractor’s Personnel. In the 2017 edns the Contractor must use “all necessary measures”
to achieve the same aim. This change, if anything, suggests a stricter obligation for the Contractor who must take all steps
necessary to achieve the prescribed outcome as opposed to simply using reasonable efforts.
The 2017 edns also expand on what is meant by the proper use of appropriate vehicles. Vehicles must conform to legal load
and width limits (if any) and any other restrictions. The Contractor should therefore consider the likely effects of any heavy
loads that need to be brought to site.
Sub-paragraph (a) of the 2017 edns imposes an obligation on the Contractor, as between the Parties, to repair any damage
caused to the access route. This is in addition to the obligation under the 1999 sub-paragraph to carry out any maintenance
required for the Contractor’s use of the access route. The Contractor should therefore be aware that under the 2017 edns, if
a Contractor’s lorry causes damage to roads and bridges, the Contractor must repair the damage and cannot make any claim
against the Employer arising from the use or otherwise of any access route.
The addition of “permits” is the only change to sub-para.(b). The words “third party” have been added to sub-para.(c) to reflect
that the Employer is not responsible for claims by third parties but may be responsible, in line with the new final paragraph, if
the Employer has caused the access route to be unsuitable after the Base Date.
Sub-paragraphs (d) and (e) remain identical to the 1999 sub-clause. The Contractor therefore bears all the costs and risks
associated with the non-suitability or non-availability of access routes.
The final paragraph of the 2017 sub-clause is a significant addition since it provides the Contractor with a claims opportunity.
The Contractor can make a claim if he suffers delay or incurs cost as a result of the access route being unsuitable or unavailable
due to changes to the route made by the Employer or a third party, after the Base Date. This entitlement is subject to SubCl.20.2 (Claims for Payment and/or EOT).
End of Document
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Section 4.16 - Transport of Goods, UKBC-UFIDIC 500923015 (2021)
Section 4.16 - Transport of Goods
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.16 - Transport of Goods
4-080
The Contractor shall:
(a)give a Notice to the Engineer not less than 21 days before the date on which any Plant, or a major item of other
Goods (as specified in the Employer’s Requirements), will be delivered to the Site;
(b)be responsible for packing, loading, transporting, receiving, unloading, storing and protecting all Goods and other
things required for the Works;
(c)be responsible for customs clearance, permits, fees and charges related to the import, transport and handling of all
Goods, including all obligations necessary for their delivery to the Site; and
(d)indemnify and hold the Employer harmless against and from all damages, losses and expenses (including legal
fees and expenses) resulting from the import, transport and handling of all Goods, and shall negotiate and pay all third
party claims arising from their import, transport and handling.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923012 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.16 - Transport of Goods
Overview of Key Features
4-081
•The Contractor must give the Engineer a Notice not less than 21 days before the delivery of Plant or major items of other
Goods.
•The Contractor is responsible for the transportation, storage and protection of all Goods necessary to carry out the Works.
•The Contractor is responsible for customs clearance, permits, fees and charges, relating to the import, transport and
handling of all goods.
•The Contractor shall indemnify the Employer against any claims arising from the import, transport and handling of all
Goods.
End of Document
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Commentary, UKBC-UFIDIC 500922964 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.16 - Transport of Goods
Commentary
4-082
This sub-clause confirms that the Contractor is responsible for the costs and risk associated with the transfer of Goods to site.
Goods are defined in Sub-Cl.1.1.44 as being the “Contractor’s Equipment, Materials, Plant and Temporary Works,” in short
everything the Contractor needs to carry out his work on site.
Sub-paragraph (c) is a new addition under the 2017 edns and makes it explicit that the Contractor is responsible for customs
clearance, permits, fees and charges and all obligations necessary for delivery to the Site. The Contractor cannot therefore seek
to hold the Employer responsible for delays or additional expenses caused by customs hold-ups.
The Contractor’s responsibility extends to indemnifying the Employer as a result of any claims that might arise. The words
“third party” have been added to describe the claims that the Contractor is responsible for negotiating and paying. The indemnity
presumably includes claims following accidents whilst Goods are being transported. The Contractor cannot hold the Employer
responsible for delays or additional expenses caused by Goods being damaged or deteriorating whilst being stored.
The obligations under Sub-Cl.4.16 should be read in conjunction with a number of other sub-clauses, particularly Sub-Cll.4.13
and 4.15. This is an important obligation. If the Contractor cannot transport his Goods, his progress might become delayed
which will impact on his programme. Where Goods are stored will equally impact on the programme.
Notwithstanding that the Contractor is responsible for the delivery and storage of Goods, the Contractor must give a Notice
at least 21 days before the delivery of Plant or other major items to the Site. The giving of notices required by this clause
will provide a mechanism whereby the Engineer can keep an eye on the extent to which the Contractor is keeping up with his
programme, since delivery is one of the items which must be recorded in the monthly progress reports required by Sub-Cl.4.20.
Therefore, a Contractor would be well advised to keep detailed records of the progress of any shipments or planned deliveries
including planned and actual dates.
End of Document
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Section 4.17 - Contractor’s Equipment, UKBC-UFIDIC 500923024 (2021)
Section 4.17 - Contractor’s Equipment
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.17 - Contractor’s Equipment
4-083
The Contractor shall be responsible for all Contractor’s Equipment. When brought on to the Site, Contractor’s Equipment
shall be deemed to be exclusively intended for the execution of the Works. The Contractor shall not remove from the Site
any major items of Contractor’s Equipment without the Engineer’s consent. However, consent shall not be required for
vehicles transporting Goods or Contractor’s Personnel off Site.
In addition to any Notice given under Sub-Clause 4.16 [Transport of Goods], the Contractor shall give a Notice to the
Engineer of the date on which any major item of Contractor’s Equipment has been delivered to the Site. This Notice shall
be given within 7 days of the delivery date, shall identify whether the item of Contractor’s Equipment is owned by the
Contractor or a Subcontractor or another person and, if rented or leased, shall identify the rental or leasing entity.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923009 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.17 - Contractor’s Equipment
Overview of Key Features
4-084
•The Contractor is responsible for his own equipment.
•All the Contractor’s Equipment is for the exclusive use of the Works on site.
•Major items of Contractor’s Equipment may only be moved off site with the consent of the Engineer.
•The Contractor must give a Notice to the Engineer of the date on which any major item of Contractor’s Equipment has
been delivered to the Site, within seven days of the delivery date.
End of Document
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Commentary, UKBC-UFIDIC 500923026 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.17 - Contractor’s Equipment
Commentary
4-085
By Sub-Cl.1.1.16 of the Red Book and Sub-Cl.1.15 of the Yellow Book, Contractor’s Equipment means all apparatus,
equipment, machinery, construction plant, vehicles and other items required for the execution and completion of the works and
the remedying of any defects. The definition, however, specifically excludes Temporary Works, Plant, Materials and anything
else intended to form part of the Permanent Works. Sub-Clause 2.6 now specifies that the Employer is to provide to the
Contractor the Employer-Supplied Materials and/or Employer’s Equipment listed in the Specification. The Guidance to the
Special Provisions states that if the Contractor is not to provide all the Contractor’s Equipment necessary to execute the Works,
the Employer’s obligations should be specified.
Unsurprisingly, the Contractor is responsible for his own equipment. In addition, any equipment which is brought on site must
be used exclusively to carry out the Works which are the subject of the Contract. Therefore, a Contractor cannot make use of
equipment (for example by manufacturing items) on site for the benefit of other projects.
It is unclear why the Contractor is prohibited from removing any major items of equipment from site without the consent of the
Engineer. Presumably this requirement can be used as a check on progress as the Engineer will be aware whether the equipment
which the Contractor wants to remove from the site is no longer needed.
In addition, if the Engineer is aware that particular tasks will need to be carried out imminently, he will be able to prevent
the Contractor from removing the equipment, thereby potentially ensuring that progress is kept on schedule. Therefore, if a
Contractor needs particular equipment on two different projects, he should take care to ensure that the programme demands of
the two projects are such that he is able to switch equipment between projects.
The Guidance to the Special Provisions provides the following sub-clause, if any vesting of the Contractor’s Equipment is
required:
‘Each item of Contractor’s Equipment shall become the property of the Employer (free from liens and other
encumbrances) when it arrives on the Site.
This vesting of property from the Contractor to the Employer shall not:
(a)affect the responsibility or liability of the Employer under the Contract;
(b)prejudice the Contractor’s right to exclusive use of all items of Contractor’s Equipment for the purpose
of the Works; and/or
(c)relieve the Contractor from any duty, obligation or responsibility to operate and maintain all items of
Contractor’s Equipment.
The property in each item of Contractor’s Equipment shall be deemed to re-vest in the Contractor (free from
liens and other encumbrances) when he/she is entitled to remove it from the Site or to receive the Taking-Over
Certificate for the Works, whichever is the earlier.’
The second paragraph is a new addition to the 2017 edns and requires the Contractor to give a Notice to the Engineer of the
date on which a major item has been delivered to the Site. The Notice must be given within seven days of the delivery date and
identify who owns the item of Contractor’s Equipment and if it is rented or leased, identify the rental or leasing entity. This
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Commentary, UKBC-UFIDIC 500923026 (2021)
Notice is in addition to the Notice that the Contractor must provide under Sub-Cl.4.16(a) stating that Plant or a major item of
other Goods will be delivered to the Site. The requirement to provide both Notices appears to be onerous on the Contractor
but is likely intended to ensure that the Engineer can keep an eye on the extent to which the Contractor is keeping up with his
programme, since delivery is one of the items which must be recorded in the monthly progress reports in Sub-Cl.4.20.
End of Document
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2
Section 4.18 - Protection of the Environment, UKBC-UFIDIC 500922965 (2021)
Section 4.18 - Protection of the Environment
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.18 - Protection of the Environment
4-086
The Contractor shall take all necessary measures to;
(a)protect the environment (both on and off the Site);
(b)comply with the environmental impact statement for the Works (if any); and
(c)limit damage and nuisance to people and property resulting from pollution, noise and other results of the
Contractor’s operations and/ or activities.
The Contractor shall ensure that emissions, surface discharges, effluent and any other pollutants from the Contractor’s
activities shall exceed neither the values indicated in the Employer’s Requirements nor those prescribed by applicable
Laws.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922972 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.18 - Protection of the Environment
Overview of Key Features
4-087
•The Contractor shall take all necessary measures to protect the environment.
•That obligation includes the environment both on and off the site.
•The Contractor has to comply with the environmental impact statement for the Works, if any.
•Emissions, surface discharges and effluent caused by the Contractor’s activities must not exceed the greater of the values
set out in the Specification or that allowed for by the applicable laws.
End of Document
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Commentary, UKBC-UFIDIC 500922985 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.18 - Protection of the Environment
Commentary
4-088
The obligation provided by this sub-clause is a simple yet wide-ranging one. The Contractor is responsible for taking all
necessary measures to protect the environment whilst carrying out his Works.
In fact, there are a number of potential difficulties with this clause. The first part of the sub-clause is perhaps too wide-ranging.
The 2017 edns have replaced the phrase “reasonable” steps with “necessary measures” but fail to define “necessary measures”. It
is unclear whether this alters the nature of the obligation imposed on the Contractor. A simple reading of the words would suggest
that this is a more onerous obligation since the Contractor must now take all measures necessary to protect the environment as
opposed to merely taking reasonable steps to achieve that aim.
Equally there is considerable scope for disagreement both about what protecting the environment means and what it is necessary
to do to ensure that the environment is protected.
However, it is possible to gain an understanding of what the requirements of this sub-clause mean.
The sub-clause should be read in conjunction with Sub-Cl.4.10(d) which provides that the Contractor shall be deemed to have
inspected and examined the Laws and procedures of the Country where the Work is to be carried out before submitting the tender.
The reason for this is two-fold. First, the Contractor needs to take account of the effect of the environmental legislation on the
programme and likely costs. Secondly, by Sub-Cl.1.13, the Contractor must comply with all local laws when executing his work.
The sub-clause should also be read in conjunction with Sub-Cl.4.14(a) which provides that the Contractor shall not
“unnecessarily or improperly” interfere with the convenience of the public and that the Contractor shall indemnify the Employer
as a consequence of any such interference. It is entirely feasible that a claim might be made by the public as a consequence
of pollution or noise. It might well be said that such a claim had arisen as a result of interference with the convenience of the
public. Hence, if a claim was made against the Employer as owner of the site, the Contractor would have to indemnify him.
Sub-paragraph (b) in the 2017 sub-clause imposes a further obligation on the Contractor to comply with the environmental
impact statement, if any. “Environmental impact statement” is not a defined term.
The second paragraph of the sub-clause is far more specific. The Contractor should check the specification and other contractual
requirements carefully as these should set out limits for emissions, surface discharges and effluent. If they are not, the Contractor
should make enquiry before submitting the tender as to what these levels are. The Contractor must also ensure that these levels
exceed neither those required by the Specification nor the applicable laws. It may be that the applicable laws will provide a
more stringent standard than that required in the Specification.
By Sub-Cl.4.21, the Contractor is responsible for site security and ensuring that unauthorised personnel are kept away from
site. The prudent Contractor would therefore need to consider the likely environmental impact of the project and the extent to
which it might lead to protests. Not only might the impact of such a protest on the programme be significant, the Contractor
should also bear in mind his health and safety obligations under Sub-Cl.4.8.
The Guidance to the Special Provisions also notes that if the applicable environmental law requires the Contractor to prepare
project-specific environmental plans, for review by the Engineer and/or the Employer and approval by regulatory authorities,
then these plans should be clearly described in detail in the Specification together with the review/approval process associated
with each plan.
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1
Commentary, UKBC-UFIDIC 500922985 (2021)
End of Document
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2
Section 4.19 - Temporary Utilities, UKBC-UFIDIC 500923007 (2021)
Section 4.19 - Temporary Utilities
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.19 - Temporary Utilities
4-089
The Contractor shall, except as stated below, be responsible for the provision of all temporary utilities, including electricity,
gas, telecommunications, water and any other services the Contractor may require for the execution of the Works.
The following provisions of this Sub-Clause shall only apply if, as stated in the Employer’s Requirements, the Employer
is to provide utilities for the Contractor’s use. The Contractor shall be entitled to use, for the purposes of the Works, the
utilities on the Site for which details and prices are given in the Employer’s Requirements. The Contractor shall, at the
Contractor’s risk and cost, provide any apparatus necessary for the Contractor’s use of these services and for measuring
the quantities consumed. The apparatus provided for measuring quantities consumed shall be subject to the Engineer’s
consent. The quantities consumed (if any) during each period of payment stated in the Contract Data (if not stated, each
month) shall be measured by the Contractor, and the amount to be paid by the Contractor for such quantities (at the prices
stated in the Employer’s Requirements) shall be included in the relevant Statement.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922952 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.19 - Temporary Utilities
Overview of Key Features
4-090
•The Contractor is responsible for the provision of all services needed to carry out the Works.
•If the Specification provides for the Employer to offer utilities for the Contractor’s use, the Contractor is entitled to use
them at his own cost.
•The prices of such utilities will be stated in the Specification and the Contractor will measure the quantities used and
include the amount to be paid by the Contractor for such quantities in the relevant Statement.
End of Document
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1
Commentary, UKBC-UFIDIC 500923037 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.19 - Temporary Utilities
Commentary
4-091
The 1999 sub-clause was titled “Electricity, Water and Gas” and only referred to the provision of power, water and other services.
The 2017 sub-clause has been renamed “Temporary Utilities” and the Contractor is responsible for the provision of all temporary
utilities, including electricity, gas, telecommunications, water and any other services.
The Contractor must check the Specification and the other information provided to him during the tender stage to ensure that
adequate supplies of temporary utilities will be available. If not, the Contractor must provide such utilities at his own risk.
Sometimes, an Employer will specifically provide that no electricity or gas supplies will be available on site for the Works. If
the Employer does this, there should be no scope whatsoever for any subsequent disagreement.
If the Employer is to provide utilities for the Contractor’s use this should be stated in the Specification. The Specification should
include the details and prices of such utilities and the Contractor will be entitled to use the specified utilities. The Guidance to
the Special Provisions states that if services are to be available on the Site for the Contractor to use, details of such services
should be stated in the Specification. This includes a description of each utility, the capacity of each utility that is available for
the Contractor’s use, its location, and the price per unit of consumption.
As in the 1999 sub-clause, the Contractor must, at his own risk and cost, provide any apparatus necessary to use the utilities
and measure the quantities consumed. The 2017 sub-clause provides that the apparatus for measuring the quantities is at the
Engineer’s consent.
The main difference between the sub-clauses is that the 1999 sub-clause stated that the quantities consumed and amounts due for
utilities provided by the Employer were to be agreed or determined by the Engineer. Under the 2017 sub-clause, the Contractor
is to measure the quantities consumed during each period of payment stated in the Contract Data, or if not stated, each month.
The Contractor is to include the amount to be paid for such quantities, at the prices stated in the Specification, in the relevant
Statement.
End of Document
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1
Section 4.20 - Progress Reports, UKBC-UFIDIC 500923005 (2021)
Section 4.20 - Progress Reports
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.20 - Progress Reports
4-092
Monthly progress reports, in the format stated in the Employer’s Requirements (if not stated, in a format acceptable to the
Engineer), shall be prepared by the Contractor and submitted to the Engineer. Each progress report shall be submitted in
one paper-original, one electronic copy and additional paper copies (if any) as stated in the Contract Data. The first report
shall cover the period up to the end of the first month following the Commencement Date. Reports shall be submitted
monthly thereafter, each within 7 days after the last day of the month to which it relates.
Reporting shall continue until the Date of Completion of the Works or, if outstanding work is listed in the TakingOver Certificate, the date on which such outstanding work is completed. Unless otherwise stated in the Employer’s
Requirements, each progress report shall include:
(a)charts, diagrams and detailed descriptions of progress, including each stage of design, 29 Contractor’s Documents,
procurement, manufacture, delivery to Site, construction, erection, testing, commissioning and trial operation;
(b)photographs and/or video recordings showing the status of manufacture and of progress on and off the Site;
(c)for the manufacture of each main item of Plant and Materials, the name of the manufacturer, manufacture location,
percentage progress, and the actual or expected dates of:
(i)commencement of manufacture,
(ii)Contractor’s inspections,
(iii)tests, and
(iv)shipment and arrival at the Site;
(d)the details described in Sub-Clause 6.10 [Contractor’s Records];
(e)copies of quality management documents, inspection reports, test results, and compliance verification
documentation (including certificates of Materials);
(f)a list of Variations, and any Notices given (by either Party) under Sub-Clause 20.2.1 [Notice of Claim];
(g)health and safety statistics, including details of any hazardous incidents and activities relating to environmental
aspects and public relations; and
(h)comparisons of actual and planned progress, with details of any events or circumstances which may adversely
affect the completion of the Works in accordance with the Programme and the Time for Completion, and the measures
being (or to be) adopted to overcome delays.
However, nothing stated in any progress report shall constitute a Notice under a Sub-Clause of these Conditions.
Footnotes
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Section 4.20 - Progress Reports, UKBC-UFIDIC 500923005 (2021)
29
In the Red Book, “design” is qualified by the addition of the words “if any”.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922970 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.20 - Progress Reports
Overview of Key Features
4-093
•The Contractor must provide regular progress reports.
•The provision of the progress report amounts to a condition of payment.
•These reports shall be in the detail outlined in this sub-clause.
•The first report shall be produced at the end of the calendar month following the Commencement Date.
•Thereafter, the reports shall be provided on a monthly basis until the Date of Completion or if outstanding work is listed
in the Taking-Over Certificate, the date on which such outstanding work is completed.
End of Document
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Commentary, UKBC-UFIDIC 500923017 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.20 - Progress Reports
Commentary
4-094
The 1999 sub-clause begins, “Unless otherwise stated in the Particular Conditions,” monthly progress reports were to be
prepared by the Contractor. The 2017 sub-clause has removed those words and therefore requires the parties to amend the
contract if they wish to remove the requirement to produce progress reports.
The 2017 sub-clause also provides that the reports are to be in the format stated in the Specification or if not, in a format
acceptable to the Engineer. The parties should therefore endeavour to agree a format so as to avoid time spent discussing an
acceptable format with the Engineer.
The 1999 sub-clause required six copies to be submitted to the Engineer whereas the 2017 sub-clause only requires the
Contractor to submit one paper-original, one electronic copy and any additional paper copies stated in the Contract Data.
A Contractor must ensure that he is aware of the very detailed requirements of this sub-clause. It is essential that adequate
procedures are put in place from the beginning of the Contract to ensure that the information can be collected and collated in
good time. The reports are to be provided monthly within seven days after the last day of the month to which it relates. Given
the nature of the information required by the sub-clause, it is likely that the Contractor will need to make use not just of his own
internal records but also of information which can only be provided by others.
In the 1999 sub-clause the reports were to continue until the completion of all outstanding work at the completion date stated
in the Taking-Over Certificate. The 2017 sub-clause clarifies that the reports may only have to continue until the Date of
Completion if there is no outstanding work listed in the Taking-Over Certificate. If there is any such outstanding work, the
reports have to continue until the date on which the outstanding work is completed.
The content of the reports was prescribed in great detail in the 1999 sub-clause and this has been expanded even further in the
2017 version. The word “diagrams” have been added to sub-para.(a) of the 2017 sub-clause and it is also made explicit that
the reference to design denotes design by the Contractor, if any. The references to nominated subcontractors are also removed.
“Video recordings” have been added to sub-para.(b). Sub-paragraphs (c) and (d) are unchanged.
Sub-paragraph (e) has been amended to reflect the new nomenclature of the 2017 Red Book and so requires copies of quality
management documents and compliance verification documentation. The new sub-paragraph also requires copies of inspection
reports to be included in each progress report.
Sub-paragraph (f) has been amended to reflect the new claims procedure whereby both parties make claims under the same
sub-clause—Sub-Cl.20.2.1. Each progress report must include any Notices given under this sub-clause. A notable addition to
sub-para.(f) is that a list of Variations is required to be included in each progress report. This was a notable omission from the
list of items in the 1999 sub-clause.
Sub-paragraph (g) is the same in substance and sub-para.(h) has only been amended to require the inclusion of any events or
circumstances which may adversely affect the completion of the works “in accordance with the Programme and the Time for
Completion” as opposed to “in accordance with the Contract” as was previously the case.
By Sub-Cl.8.3 the Contractor is required to submit an initial programme to the Engineer within 28 days of receiving the
Notice from the Engineer under Sub-Cl.8.1 stating the start date. The Engineer is to review the initial programme or a revised
programme, and that programme will become, once the Engineer is deemed to have given a Notice of No-objection to the
submitted programme, the Programme that the Contractor must follow. The Contractor is likely to be able to make use of this
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Commentary, UKBC-UFIDIC 500923017 (2021)
programme, as adapted, to demonstrate progress to fulfil the requirement of this sub-clause, including sub-para.(h) to compare
actual and planned progress.
Pursuant to Sub-Cl.14.3, the Contractor must submit the progress report as part of the Statement supporting his application
for interim payment. Under Sub-Cl.14.6 an Interim Payment Certificate will only be issued within 28 days of receiving the
Statement and supporting documents. The provision of the progress reports is therefore a condition of payment.
An Employer will need accurate information of the likely completion date, as well as the costs, because this would affect his
pre-commencement preparation and financing costs. Any change to the likely completion date would give an Employer the
chance to adjust his operational dates. If the Employer and Engineer are aware of the true position they might be able to bring
their combined resources to improve the position on site and so assist the Contractor. The Contractor must also be aware that,
under the new Sub-Cl.8.4, he is required to advise in advance of any known or probable future events or circumstances which
may increase the Contract Price or delay the execution of the Works or a Section.
The Parties should also bear in mind that, even though Sub-Cl.3.8 provides the Engineer or the Contractor’s Representative with
the option to require the other to attend a management meeting, regular meetings between the Parties are of obvious benefit to
all concerned and would provide a further means to check on progress. If meetings are held, all parties should ensure that any
minutes are an accurate record of matters discussed. This might be particularly important if any claim is made. In addition, in
some jurisdictions it is not unusual to find clauses imposed which make any arrangements recorded in meeting minutes binding
on all concerned if no objection is raised.
The final paragraph of the 2017 sub-clause is a further addition and makes clear that nothing included in a progress report will
constitute a Notice under a sub-clause of these Conditions. This prevents the Contractor from claiming that he had given a
Notice by providing a progress report that contained the relevant information.
End of Document
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2
Section 4.21 - Security of the Site, UKBC-UFIDIC 500922956 (2021)
Section 4.21 - Security of the Site
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.21 - Security of the Site
4-095
The Contractor shall be responsible for the security of the Site, and:
(a)for keeping unauthorised persons off the Site; and
(b)authorised persons shall be limited to the Contractor’s Personnel, the Employer’s Personnel, and to any other
personnel identified as authorised personnel (including the Employer’s other contractors on the Site), by a Notice
from the Employer or the Engineer to the Contractor.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923036 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.21 - Security of the Site
Overview of Key Features
4-096
•The Contractor is responsible for the security of the Site and for keeping unauthorised personnel off site.
•Authorised persons are limited to the Contractor’s Personnel and the Employer’s Personnel unless otherwise notified to
the Contractor by the Employer or the Engineer.
End of Document
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Commentary, UKBC-UFIDIC 500922994 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.21 - Security of the Site
Commentary
4-097
This sub-clause should be considered together with Sub-Cl.4.8 which deals with health and safety and confirms that the
Contractor must provide fencing, guarding and watching of the Works until they are taken over under Cl.10 and any part of the
Works where the Contractor is executing outstanding works or remedying any defects during the DNP. If the site is shared with
other contractors, then presumably this obligation will also be shared. If so, the contract must make this clear.
The definition of personnel is a wide one and the Contractor should ensure that he knows who is in fact authorised to be on site.
By Sub-Cl.1.1.33 (Red Book), Employer’s Personnel means: the Engineer, the Engineer’s Representative (if appointed), the
assistants described in Sub-Cl.3.4 and all other staff, labour and other employees of the Engineer and of the Employer engaged
in fulfilling the Employer’s obligations under the Contract, and any other personnel notified to the Contractor, by the Employer
or the Engineer, as Employer’s Personnel.
By Sub-Cl.1.1.17 of the Red Book (Sub-Cll.1.1.16 and 1.1.32 respectively of the Yellow Book), Contractor’s Personnel means
the Contractor’s Representative and all personnel whom the Contractor utilises on Site or other places where the Works are being
carried out, including the staff, labour and other employees of the Contractor and each subcontractor and any other personnel
assisting the Contractor in the execution of the Works.
Whilst in theory there should be little difficulty initially for the Contractor in establishing both who are his own personnel
and who are the Employer’s personnel, the Contractor should ensure that an adequate procedure is in place so that he is kept
informed of any additional personnel who might be brought on to the site.
Sub-Clause 4.6 provides that the Contractor must co-operate with and allow appropriate opportunities for work to any other
contractors employed by the Employer who may be working on or near the Site. This raises one of the potential problems where
there is more than one contractor working on the site. The employees of other contractors do not automatically fall within the
definition of Employer’s Personnel unless they have been notified as such by the Employer or the Engineer. Unless they have
been so notified, strictly, they should be treated as unauthorised.
In addition, if there is more than one contractor on site, it is suggested that the responsibility for keeping unauthorised persons
off the site should be a joint and several one as between all the contractors.
The Guidance to the Special Provisions states that if the Contractor is sharing occupation of the Site with others it is
recommended that:
(a)this sub-clause should be amended to specify exactly what security obligations are the Contractor’s under the Contract,
and
(b)the security obligations which are to be fulfilled by the Employer and/or others should be stated in the Specification so
that it is clear which Party is responsible for what in respect of the security of the Site.
End of Document
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Section 4.22 - Contractor’s Operations on Site, UKBC-UFIDIC 500922971 (2021)
Section 4.22 - Contractor’s Operations on Site
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.22 - Contractor’s Operations on Site
4-098
The Contractor shall confine the Contractor’s operations to the Site, and to any additional areas which may be obtained by
the Contractor and acknowledged by the Engineer as working areas. The Contractor shall take all necessary precautions
to keep Contractor’s Equipment and Contractor’s Personnel within the Site and these additional areas, and to keep them
off adjacent land.
At all times, the Contractor shall keep the Site free from all unnecessary obstruction, and shall properly store or remove from
the Site any Contractor’s Equipment (subject to 4.17 [Contractor’s Equipment]) and/or surplus materials. The Contractor
shall promptly clear away and remove from the Site any wreckage, rubbish, hazardous waste and Temporary Works which
are no longer required.
Promptly after the issue of a Taking-Over Certificate, the Contractor shall clear away and remove, from that part of the Site
and Works to which the Taking-Over Certificate refers, all Contractor’s Equipment, surplus material, wreckage, rubbish,
hazardous waste and Temporary Works. The Contractor shall leave that part of the Site and the Works in a clean and safe
condition. However, the Contractor may retain at locations on the Site agreed with the Engineer, during the DNP, such
Goods as are required for the Contractor to fulfil obligations under the Contract.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500922979 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.22 - Contractor’s Operations on Site
Overview of Key Features
4-099
•The Contractor’s operations are confined to the site and any additional areas agreed by the Engineer.
•The Contractor’s Equipment and Personnel should keep to those areas.
•The Contractor is responsible for keeping the site tidy and otherwise free from obstruction.
•On issue of the Taking-Over Certificate, the Contractor should remove its equipment.
•When the Contractor removes his equipment, he should leave the site in a safe and clean condition.
•The Contractor is permitted to retain on site such goods and equipment as are required to enable him to fulfil his obligations
under the Defects Notification Period.
End of Document
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1
Commentary, UKBC-UFIDIC 500922973 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.22 - Contractor’s Operations on Site
Commentary
4-100
Although this sub-clause requires that the Contractor confine his operations to the Site, by Sub-Cl.4.13 the Contractor is
responsible for obtaining any temporary rights of way that might be required in order to obtain access to the site.
As part of Sub-Cl.4.22, the Contractor must keep unauthorised personnel off site. By this sub-clause, the Contractor must take
steps to keep his own personnel within the site. Sub-Clause 4.23 is also closely related to the obligation under Sub-Cl.4.14 that
the Contractor must not unnecessarily or improperly interfere with the convenience of the public and access to public roads.
This sub-clause also requires that the Contractor keep the site free from all unnecessary obstruction and properly store or remove
from the site any Contractor’s Equipment (subject to Sub-Cl.4.17) and/or surplus materials. This has obvious close links with
the health and safety requirements of Sub-Cl.4.8 that require the Contractor to keep the Site clear of unnecessary obstruction
so as to avoid danger to persons.
The 1999 sub-clause required the Contractor to clear away and remove wreckage, rubbish and temporary works from the site
and the 2017 sub-clause adds hazardous waste to this list. It is also notable that the 2017 sub-clause introduces the requirement
that the Contractor clears away and removes such items “promptly”. The 1999 sub-clause was silent on the time under which
this task should be performed. The Contractor should therefore perform the clear up without delay.
Once the Contractor has completed the execution of the works and the Taking-Over Certificate has been issued, the Contractor
must remove all the items described above from the site and leave that part of the Site and the Works in a clean and safe
condition. The 2017 sub-clause again imposes the requirement that such tasks be performed “promptly”.
The removal of rubbish might also have environmental considerations and the Contractor should remember the obligations
imposed by Sub-Cl.4.18 to protect the environment. For example, in the summer of 2005 30 the UK introduced regulations
dealing with the management of hazardous waste. This was part of a worldwide trend of increasing regulation of waste
management and environmental protection. The Contractor will be expected through Sub-Cl.2.2, to have obtained details of all
local legislation dealing with the disposal of rubbish. As a consequence, the Contractor will also have been expected to take
account of the availability of landfill sites necessary to dispose of that rubbish when compiling his tender and programme.
The Guidance to the Special Provisions recommends that if the Contractor is sharing occupation of the site with others, the
sub-clause is amended by identifying and allocating responsibility for clearance and removal from the site of any wreckage,
rubbish, hazardous waste, temporary works and surplus material.
Footnotes
30
Hazardous Waste Regulations July 2005.
End of Document
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1
Section 4.23 - Archaeological and Geological Findings, UKBC-UFIDIC 500923028 (2021)
Section 4.23 - Archaeological and Geological Findings
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.23 - Archaeological and Geological Findings
4-101
All fossils, coins, articles of value or antiquity, and structures and other remains or items of geological or archaeological
interest found on the Site shall be placed under the care and authority of the Employer. The Contractor shall take all
reasonable precautions to prevent Contractor’s Personnel or other persons from removing or damaging any of these
findings.
The Contractor shall, as soon as practicable after discovery of any such finding, give a Notice to the Engineer in good time
to give the Engineer opportunity to promptly inspect and/or investigate the finding before it is disturbed. This Notice shall
describe the finding and the Engineer shall issue instructions for dealing with it.
If the Contractor suffers delay and/or incurs Cost from complying with the Engineer’s instructions, the Contractor shall be
entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to EOT and/or payment of such Cost.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500922978 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.23 - Archaeological and Geological Findings
Overview of Key Features
4-102
•All fossils and other antiquities are to be placed under the control of the Employer.
•The Contractor shall, as soon as practicable after discovery, give a Notice to the Engineer of the discovery.
•If the Contractor suffers delay and/or incurs Cost from complying with the Engineer’s instructions on how to proceed, the
Contractor will be entitled, subject to Sub-Cl.20.2, to EOT and/or payment of such Cost.
End of Document
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Commentary, UKBC-UFIDIC 500922958 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 4 - Clause 4—The Contractor
Section 4.23 - Archaeological and Geological Findings
Commentary
4-103
Even though the items that the sub-clause refers to are the same, the sub-clause has been named “Archaeological and Geological
Findings” as opposed to the previous heading of “Fossils”.
Leaving aside the potential value of such antiquities, the discovery of fossils or items of archaeological interest might have
a significant impact on the Contractor’s programme. This is the reason why the Contractor is required to give Notice to the
Engineer as soon as practicable. The Notice must describe the finding. The 1999 sub-clause required notice to be given promptly
whereas the 2017 sub-clause has been amended to require the notice to be given “as soon as practicable” and “in good time”.
Whilst the Contractor would not be encouraged to delay giving the Notice, the 2017 wording provides the Contractor with
more leeway.
The 2017 sub-clause also provides that such Notice is necessary to enable the Engineer to promptly inspect and/or investigate
the finding before it is disturbed. The sub-clause is silent on the timeframe within which an inspection should take place or the
duration of such an inspection. It is also unclear whether the Engineer is to issue instructions for dealing with the discovery
before or after the completion of the inspection.
The Contractor, subject to the claims procedures required by Sub-Cl.20.2, may be entitled to an extension of time and payment
of subsequent cost as a consequence of the impact of the finding of fossils or other antiquities. However, can the Employer
suggest that the Contractor should have been aware of the possibility of finding fossils or other such artefacts?
By Sub-Cl.4.10, the Contractor shall be deemed to have inspected and examined the site, its surroundings, any data supplied by
the Employer and other available information, and to have been satisfied before submitting his Tender as to all relevant matters,
including at sub-para.(a) the form and nature of the site, including sub-surface conditions.
Further, “physical conditions” are defined at Sub-Cl.4.12 as:
“Natural physical conditions and physical obstructions (natural or man-made) and pollutants, which the
Contractor encounters at the Site during execution of the Works, including sub-surface and hydrological
conditions but excluding climatic conditions at the Site and the effects of those climatic conditions.”
This would seem to include quite possibly fossils (a natural physical condition) and archaeological artefacts (man-made
obstructions). By Sub-Cl.4.12, if the physical condition was foreseeable, the Contractor is not entitled to any relief. Under SubCl.1.1.85 (Red Book), the standard by which the Contractor is judged when considering whether any physical condition was
unforeseeable or not is that of the experienced Contractor.
Clearly, the Employer might think that the experienced contractor, if the site and position of the site demanded, should make
enquiries of the nature of any archaeological investigations that may have been carried out or contemplated by the Employer
as part of his tender investigations.
This is why Sub-Cl.4.23 clearly sets out that, provided the Contractor complies with the requirements of Sub-Cl.20.2, the
Contractor will be entitled to an extension of time and/or cost in respect of any delay that might arise as a consequence of
finding any archaeological or geological items. The risk lies with the Employer.
End of Document
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1
Chapter 5R - Clause 5—Subcontracting (Red Book), UKBC-UFIDIC 500923050 (2021)
Chapter 5R - Clause 5—Subcontracting (Red Book)
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5R - Clause 5—Subcontracting (Red Book)
Differences between the Red and Yellow Books
5-001R Here, there are two completely different Clauses, which are treated separately. The Red Book deals with Subcontractors and
the Yellow Book with design.
End of Document
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1
Section 5.1 - Subcontractors, UKBC-UFIDIC 500923052 (2021)
Section 5.1 - Subcontractors
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5R - Clause 5—Subcontracting (Red Book)
Section 5.1 - Subcontractors
5-002R
The Contractor shall not subcontract:
(a)works with a total accumulated value greater than the percentage of the Accepted Contract Amount stated in the
Contract Data (if not stated, the whole of the Works); or
(b)any part of the Works for which subcontracting is not permitted as stated in the Contract Data.
The Contractor shall be responsible for the work of all Subcontractors, for managing and co-ordinating all the
Subcontractors’ works, and for the acts or defaults of any Subcontractor, any Subcontractor’s agents or employees, as if
they were the acts or defaults of the Contractor.
The Contractor shall obtain the Engineer’s prior consent to all proposed Subcontractors, except:
(i)suppliers of Materials; or
(ii)a subcontract for which the Subcontractor is named in the Contract.
Where the Contractor is required to obtain the Engineer’s consent to a proposed Subcontractor, the Contractor shall
submit the name, address, detailed particulars and relevant experience of such a subcontractor and the work intended to
be subcontracted to the Engineer in addition to further information which the Engineer may reasonably require. If the
Engineer does not respond within 14 days after receiving this submission (or further information if requested), by giving
a Notice objecting to the proposed subcontractor, the Engineer shall be deemed to have given his consent.
The Contractor shall give a Notice to the Engineer not less than 28 days before the intended date of the commencement
of each subcontractor’s work, and of the commencement of such work on the Site.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923046 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5R - Clause 5—Subcontracting (Red Book)
Section 5.1 - Subcontractors
Overview of Key Features
5-003R
•The Contract may impose limits on the amount of work that can be subcontracted.
•Unless otherwise agreed the Contractor shall not subcontract the whole of the Works.
•The Contractor is responsible for the actions of every subcontractor.
•Unless named in the Contract, the Contractor must obtain the consent from the Engineer for a particular subcontractor.
•The Contractor must give the Engineer 28 days’ Notice of both the intended and actual commencement date of any
subcontractor’s work.
End of Document
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Commentary, UKBC-UFIDIC 500923043 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5R - Clause 5—Subcontracting (Red Book)
Section 5.1 - Subcontractors
Commentary
5-004R By Sub-Cl.1.1.78, Subcontractor is defined as being any person named in the Contract as a subcontractor, or any person
appointed by the Contractor as a subcontractor or designer, for a part of the Works; and the legal successors in title to each of
these persons. By Sub-Cl.1.1.17, subcontractors are included within the definition of Contractor’s Personnel. It is therefore not
surprising, and indeed entirely common practice, that the Contractor is wholly responsible for the work of all subcontractors.
Under the 1999 Red Book, Cl.5 dealt solely with Nominated Contractors. As a result of the recasting of this clause, the
information previously found in Sub-Cll.4.5 and 4.5 has been moved to Cl.5 here.
The change in emphasis perhaps reflects the trend away from nomination. 1 Nominated subcontractors are selected by the
Employer and the Employer negotiates the terms of the subcontract with the subcontractors. The Contractor is then instructed to
employ the subcontractor in question. With subcontractors appointed under Sub-Cl.5.1, the Contractor has much more freedom
of choice over which subcontractor to contract with and the terms of the relevant subcontract.
However, there are limits to this. The appointment of subcontractors is subject to the approval of the Engineer. If the Engineer
does not respond within 14 days, then he is deemed to have given consent. Also, remember that in accordance with Sub-Cl.1.3
the Engineer’s consent to any proposed subcontracting cannot be unreasonably withheld or delayed. In other words, it is not
enough for the Engineer to simply respond and object within 14 days, a prolonged approval process might become a breach of
Sub-Cl.1.3. A prolonged approval process might also cause delay to the overall project process and Contractors should keep a
careful eye on when subcontractors need to be appointed and when they need to start.
The sub-clause also requires the Contractor to give the Engineer not less than 28 days’ notice of the intended and actual start
date for every subcontractor. This is another clause which will enable the Engineer to keep an independent check on progress.
The Special Provisions include a sample paragraph suggesting that prior consent may not be required in all circumstances,
perhaps if the value of the proposed sub-contract is very small compared with the overall contract value.
It is important that the Contractor appreciates how wide the obligations here are. The Contractor is responsible for all the acts and
defaults of the Subcontractors. This is why under Sub-Cl.2.2 of the FIDIC Subcontract 2011, 2 the Subcontractor is to assume
the duties and obligations of the Contractor under the Main Contract which relate to the Subcontract Works. This is in contrast
to the position under English law whereby a contractor is not necessarily responsible for any design carried out by a nominated
subcontractor or compliance with performance specification and selection of goods and materials. In those circumstances the
Contractor would only be liable for poor workmanship and poor quality of goods and materials.
Here the Contractor has strict contractual liability for any subcontractor. Therefore, if a subcontractor commits a breach of
contract, this might lead to the Contractor being considered to be in breach of contract.
Based on feedback received by FIDIC, Sub-Cl.5.1 includes a new provision which provides for the possibility of limiting the
value of subcontracted work for a particular contract. The same provision can be found in Sub-Cl.4.4 of the 2017 Yellow and
Silver Books. This reflects common international practice where a percentage limit or restriction will often be placed on the
Contractor’s ability to do this in the tender documentation. 3 The agreed percentage limit should be set out in the Contract Data.
If nothing is stated in the Contract Data, the default maximum limit stated in this sub-clause is “the whole of the Works”. Under
the 1999 Red Book, it was clearly stated that the Contractor could not subcontract the whole of the Works.
Outside of Cl.5, the following clauses make reference to subcontractors:
© 2025 Thomson Reuters.
1
Commentary, UKBC-UFIDIC 500923043 (2021)
1.1.17
1.1.78
3.8
4.9
4.17
13.4
13.5
15.2
18.1
19.2.5
Contractor’s Personnel
Subcontractor
Meetings
Quality Management and Compliance Verification Systems
Contractor’s Equipment
Provisional Sums
Daywork
Termination for Default
Exceptional Events
Injury to Employees
Footnotes
1
2
3
Indeed, in the UK at least, the nomination system has long been in decline. For example, nominated contractors were
excluded from the ambit of the JCT 2005 form, which instead introduced a scheme whereby the contract bills can
provide that certain work is carried out by persons named on a list with the Contractor being given the discretion to
select from the list.
At the time of writing, FIDIC have not yet published a Subcontract to go with the 2017 edn.
Potential Employers should take care that they are complying with the local regulations. In the case of Wrocław —
Miasto na prawach powiatu v Minister Infrastruktury i Rozwoju (C-406/14), Advocate General Sharpston said that the
City of Wrocław could not impose a requirement on its tenderers to perform at least 25% of the works using its own
resources. Although the case had been brought under 2004 Procurement Directive, the Advocate General said that the
same principles were reinforced by the 2014 Public Procurement Directive.
End of Document
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2
Section 5.2 - Nominated Subcontractors, UKBC-UFIDIC 500923045 (2021)
Section 5.2 - Nominated Subcontractors
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5R - Clause 5—Subcontracting (Red Book)
Section 5.2 - Nominated Subcontractors
5-005R
5.2.1 Definition of “nominated Subcontractor”
In this sub-clause, nominated Subcontractor means a Subcontractor named as such in the Specification or whom the
Engineer, under Sub-Cl.13.4 [Provisional Sums], instructs the Contractor to employ as a subcontractor.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923044 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5R - Clause 5—Subcontracting (Red Book)
Section 5.2 - Nominated Subcontractors
Overview of Key Features
5-006R A nominated subcontractor is someone who is either so-named in the Contract or who the Engineer has instructed the Contractor
to employ as a subcontractor.
End of Document
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1
Commentary, UKBC-UFIDIC 500923042 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5R - Clause 5—Subcontracting (Red Book)
Section 5.2 - Nominated Subcontractors
Commentary
5-007R This straightforward sub-clause merely provides a definition of the “nominated Subcontractor”. A fuller definition, which gives
a better feel of the place occupied by the “nominated Subcontractor”, could be found at Cl.59 of the old FIDIC Red Book
(4th edn):
“All specialists, merchants, tradesmen and others executing any work or supplying goods, materials, plant or
services for which provisional sums are included in the contract, who may have been nominated, selected or
approved by the employer or engineer. Plus all persons to whom by virtue of the contract terms that a company
is required to subcontract shall, in the execution of this work or the supply of such goods or services, be deemed
to be subcontractors and will be referred to as nominated subcontractors.”
The reason for the inclusion of this clause is not because the use of nominated subcontractors is recommended but because they
are sometimes necessary. 4 The 1999 FIDIC Guide sets out three potential advantages to the Employer or Engineer:
(i)involvement in the choice of a specialist subcontractor;
(ii)involvement in the choice of plant; and
(iii)the avoidance of participation in the co-ordination of the interface between the nominated subcontractors and the
Contractors’ Works. 5
If there are to be nominated subcontractors, it is preferable for the Employer to make this clear in the tender documents. Then
the Contractor will know exactly where he stands when pricing for the project. That said, the Contractor should be aware that
at the time he enters into the Contract, he might not know of the identity of all the subcontractors.
If there are to be no nominated subcontractors, this clause should be deleted.
5-008R
5.2.2 Objection to Nomination
The Contractor shall not be under any obligation to employ a nominated Subcontractor whom the Engineer instructs and
against whom the Contractor raises reasonable objection by giving a Notice to the Engineer, with supporting particulars,
no later than 14 days after receiving the Engineer’s instruction. An objection shall be deemed reasonable if it arises from
(among other things) any of the following matters, unless the Employer agrees to indemnify the Contractor against and
from the consequences of the matter:
(a)there are reasons to believe that the Subcontractor does not have sufficient competence, resources or financial
strength;
(b)the subcontract does not specify that the nominated Subcontractor shall indemnify the Contractor against and
from any negligence or misuse of Goods by the nominated Subcontractor, the nominated Subcontractor’s agents and
employees; or
(c)the subcontract does not specify that, for the subcontracted work (including design, if any), the nominated
Subcontractor shall:
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1
Commentary, UKBC-UFIDIC 500923042 (2021)
(i)undertake to the Contractor such obligations and liabilities as will enable the Contractor to discharge the
Contractor’s corresponding obligations and liabilities under the Contract; and
(ii)indemnify the Contractor against and from all obligations and liabilities arising under or in connection with
the Contract and from the consequences of any failure by the Subcontractor to perform these obligations or to
fulfil these liabilities.
Footnotes
4
5
P.L. Booen, “The Four FIDIC 1999 Contract Conditions: Their Principles, Scope and Details”. See http://www.fidic.org/
resources [Accessed 10 September 2018].
Although the Guide concedes that this is frequently not achieved.
End of Document
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2
Overview of Key Features, UKBC-UFIDIC 500923048 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5R - Clause 5—Subcontracting (Red Book)
Section 5.2 - Nominated Subcontractors
Overview of Key Features
5-009R If the Contractor objects to the employment of a nominated Subcontractor, the Contractor must do so by Notice to the Engineer
as soon as possible.
An objection will be deemed to be reasonable if:
(a)There are reasons to believe that the nominated Subcontractor lacks competence or sufficient finances or resources.
(b)The subcontract does not specify that the nominated Subcontractor shall provide the Contractor with an appropriate
indemnity in relation to any negligence.
(c)The subcontract does not specify that the nominated Subcontractor will undertake to perform its work in such a way so
as to ensure that the Contractor will discharge his obligations under the Contract.
(d)The subcontract does not say that the nominated Subcontractor will indemnify the Contractor in respect of any failure
to perform its obligations.
An objection will be deemed reasonable if the Employer does not agree to indemnify the Contractor in respect of (amongst
other things) any of the matters above.
End of Document
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1
Commentary, UKBC-UFIDIC 500923051 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5R - Clause 5—Subcontracting (Red Book)
Section 5.2 - Nominated Subcontractors
Commentary
5-010R This clause sets out what a Contractor must do if the Contractor objects to the attempted nomination of a subcontractor by the
Employer. The Contractor should remember that in accordance with Sub-Cl.5.1, they are responsible for the acts and defaults
of all subcontractors.
Any objection must be made as soon as practicable. A bare objection will not suffice. It must be reasoned and detailed. The
objection will be deemed to be reasonable if it falls within the items listed within Sub-Cll.(a)–(d).
The Employer can, if they so choose, overcome any objection to a subcontractor of his choosing by agreeing to provide an
indemnity to the Contractor in respect of the specific objection made by the Contractor.
No specific provision is made for the resolution of any dispute which might arise over the issue. It is possible that a dispute may
arise if the reasons the Contractor puts forward as to why he believes that the nominated Subcontractor does not have sufficient
competence, resources or financial strength, are challenged.
The 2010 Pink Book, has a paragraph noting that the nominated Subcontractor will
“be paid only if and when the Contractor has received from the Employer payments for sums due under the
Subcontract referred to under Sub-Clause 5.3 [Payment to nominated Subcontractors].”
In other words, the nominated Subcontractor has to accept this “pay when paid” clause, which gives potentially significant
protection to the Contractor. Another view is that this does give added protection to the Contractor. In putting this sub-clause
in FIDIC and the Banks are moving against the trend at least in common law countries. 6
5.2.3 Payments to nominated Subcontractors
The Contractor shall pay to the nominated Subcontractor the amounts which the Engineer certifies to be due in accordance
with the subcontract. These amounts plus other charges shall be included in the Contract Price in accordance with subpara.(b) of Sub-Cl.13.4 [Provisional Sums], except as stated in Sub-Cl.5.2.4 [Evidence of Payments].
5-011R
Footnotes
6
New Zealand, Singapore and Australia have followed the UK, where pay-when-paid clauses are prohibited by s.113 of
the Housing Grants, Construction and Regeneration Act 1996.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500923047 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5R - Clause 5—Subcontracting (Red Book)
Section 5.2 - Nominated Subcontractors
Overview of Key Features
5-012R
•The Engineer will certify sums due under any subcontract.
•The Contractor shall pay the nominated Subcontractor the sums certified.
•Any sums certified will form part of the Contract Price.
End of Document
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1
Commentary, UKBC-UFIDIC 500923054 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5R - Clause 5—Subcontracting (Red Book)
Section 5.2 - Nominated Subcontractors
Commentary
5-013R This sub-clause deals with the payment of nominated Subcontractors by the Contractor.
The requirement to pay the sums certified by the Employer is a mandatory one. It is also a requirement which is policed by the
requirements of Sub-Cl.5.2.4 which enable the Engineer to require evidence of payment by the Contractor of sums previously
certified.
5-014R
5.2.4 Evidence of Payments
Before issuing a Payment Certificate which includes an amount payable to a nominated Subcontractor, the Engineer
may request the Contractor to supply reasonable evidence that the nominated Subcontractor has received all amounts
due in accordance with previous Payment Certificates, less applicable deductions for retention or otherwise. Unless the
Contractor:
(a)Submits this reasonable evidence to the Engineer, or
(i)satisfies the Engineer in writing that the Contractor is reasonably entitled to withhold or refuse to pay these
amounts, and
(ii)submits to the Engineer reasonable evidence that the nominated
Subcontractor has been notified of the Contractor’s entitlement, then the Employer may (at the Employer’s sole
discretion) pay, directly to the nominated Subcontractor, part or all of such amounts previously certified (less
applicable deductions) as are due to the nominated Subcontractor and for which the Contractor has failed to submit
the evidence described in sub-paras (a) or (b) above.
Thereafter, the Engineer shall give Notice to the Contractor stating the amount paid directly to the nominated Subcontractor
by the Employer and, in the next IPC after this Notice, shall include this amount as a deduction under sub-para.(b) of SubCl.14.6.1 [The IPC].
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500923053 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5R - Clause 5—Subcontracting (Red Book)
Section 5.2 - Nominated Subcontractors
Overview of Key Features
5-015R The Engineer may request from the Contractor evidence that it has paid the nominated Subcontractor all sums due under previous
Payment Certificates.
Unless the Contractor can provide evidence that the nominated Subcontractor has been paid or satisfies the Engineer that the
Contractor is reasonably entitled to withhold money and has notified the Subcontractor of this, then the Employer will pay the
Subcontractor direct.
If the Employer is forced to pay the nominated Subcontractor direct then the sums will be deducted from the next Interim
Payment Certificate.
End of Document
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1
Commentary, UKBC-UFIDIC 500923049 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5R - Clause 5—Subcontracting (Red Book)
Section 5.2 - Nominated Subcontractors
Commentary
5-016R The purpose of this clause is to enable the Employer to keep a check on whether the Contractor is paying the nominated
Subcontractor.
If the Engineer chooses, he can require the Contractor to provide evidence that the Subcontractor has been paid the sums due
under the payment certificates or if he has not paid the sums due, that he has served the appropriate notices on the Subcontractor
entitling the Contractor to withhold payment.
If the Contractor has failed to do this the Employer may, at their own discretion, choose to pay the nominated Subcontractor
direct. If the Employer does that, the Employer can recover the money from the Contractor. The requirement that the Contractor
repay the Employer in these circumstances is a mandatory one.
End of Document
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Chapter 5Y - Clause 5—Design (Yellow Book), UKBC-UFIDIC 500923066 (2021)
Chapter 5Y - Clause 5—Design (Yellow Book)
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Differences between the Red and Yellow Books
5-001Y Here, there are two completely different Clauses, which are treated separately. The Yellow Book deals with design, the Red
Book with subcontractors.
End of Document
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Section 5.1 - General Design Obligations, UKBC-UFIDIC 500923070 (2021)
Section 5.1 - General Design Obligations
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.1 - General Design Obligations
5-002Y
The Contractor shall carry out, and be responsible for, the design of the Works. Design shall be prepared by designers who:
(a)are engineers or other professionals, qualified, experienced and competent in the disciplines of the design for which
they are responsible;
(b)comply with the criteria (if any) stated in the Employer’s Requirements; and
(c)are qualified and entitled under applicable Laws to design the Works.
Unless otherwise stated in the Employer’s Requirements, the Contractor shall submit to the Engineer for consent the name,
address, detailed particulars and relevant experience of each proposed designer/design Subcontractor.
The Contractor warrants that the Contractor, the Contractor’s designers and design Subcontractors have the experience,
capability and competence necessary for the design. The Contractor undertakes that the designers and design
Subcontractors shall be available to attend discussions with the Engineer and/or the Employer at all reasonable times (on
or off the Site), until the issue of the Performance Certificate.
Promptly after receiving a Notice under Sub-Clause 8.1 [Commencement of Works], the Contractor shall scrutinise the
Employer’s Requirements (including design criteria and calculations, if any). If the Contractor discovers any error, fault or
other defect in the Employer’s Requirements, Sub-Clause 1.9 [Errors in the Employer’s Requirements] shall apply (unless
it is an error in the items of reference specified in the Employer’s Requirements, in which case Sub-Clause 4.7 [Setting
Out] shall apply).
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923057 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.1 - General Design Obligations
Overview of Key Features
5-003Y
•The Contractor shall carry out and be responsible for the design of the Works.
•The Contractor warrants that it, the Contractor’s designers and design Subcontractors have the experience, capability and
competence necessary for the design.
•The Contractor undertakes that those carrying out the design will be available to attend discussions with the Engineer and/
or the Employer at all reasonable times until the issue of the Performance Certificate.
•The Contractor must “promptly”, after receiving a Notice under Sub-Cl.8.1 [Commencement of Works], scrutinise the
Employer’s Requirements.
•If the Contractor discovers any error in the Employer’s Requirements, Sub-Cl.1.9 [Errors in the Employer’s Requirements]
shall apply and the Contractor must give the Engineer a Notice within 42 days of the Commencement Date or within
the period stated in the Contract Data, that is unless it is an error in the items of reference specified in the Employer’s
Requirements, in which case in accordance with Sub-Cl.4.7 [Setting Out] the Contractor must give a Notice within the
period stated in the Contract Data or if no period is stated within 28 days of the Commencement Date.
End of Document
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Commentary, UKBC-UFIDIC 500923063 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.1 - General Design Obligations
Commentary
5-004Y Sub-Clause 5.1 must be read together with Sub-Cl.4.1 which confirms that:
•the Contractor shall execute the Works in accordance with the Contract; and
•when completed, the Works shall be fit for the purpose for which they are intended, as defined and described in the
Employer’s Requirements or, where no purpose is so defined and described, fit for their ordinary purpose.
Sub-Clause 5.1 sets out increased requirements in relation to the qualifications, skill and experience of those who prepare the
design. These requirements have in part been introduced to reflect the mandatory requirements that can be found in many
jurisdictions. The Special Provisions recommend that the Instructions to Tenderers require tenderers to include the name and
details of the relevant experience of each proposed designer/design subcontractor. This is so that the Employer can assess the
extent to which the proposed design team complies with the three conditions set out in Sub-Cl.5.1(a)–(c).
It is a feature of the 2017 Yellow Book that there is a greater reference to and reliance upon the information that is required
to be set out in the Employer’s Requirements. The more precisely these are drafted, the less scope there should be for dispute.
Sometimes the Employer’s Requirements include an outline design, perhaps because it is necessary to establish the feasibility
of the project. Where the Employer’s Requirements include such an outline design, the Special Provisions recommend that
tenderers should be advised of the extent to which the Employer’s outline design is a suggestion or a requirement.
As Sub-Cl.5.1 advises and requires, the Contractor must “scrutinise” the Employer’s Requirements with some care. To scrutinise
is to examine something closely and thoroughly. The scrutiny must also take place promptly. In accordance with Sub-Cl.1.9
[Errors in the Employer’s Requirements] essentially the Contractor only has a period of 42 days from the Commencement Date
to provide a Notice to the Engineer of any errors. If the errors relate to setting out information then, under Sub-Cl.4.9, the
Contractor only has 28 days from the Commencement Date to give Notice.
As described in more detail above, under Sub-Cl.1.9, if the Contractor finds an error, fault or defect in the Employer’s
Requirements, then the Contractor must give Notice whenever it finds the error. The Engineer shall proceed under Sub-Cl.3.7
to determine:
•whether or not there was such an error;
•whether “taking into account cost and time”, an experienced contractor exercising due care would have discovered the
error when examining the Site and the Employer’s Requirements before submitting the Tender; or
•if the Notice was given outside the period set out in the Contract Data, an experienced contractor would have discovered
the error when scrutinising the Employer’s Requirements.
If an experienced Contractor would not have found the errors at the relevant time (and remember that an experienced
Contractor 1 will be judged by a higher standard that an ordinary or reasonable one), then Sub-Cl.13.3.1 [Variation by
Instruction] shall apply to the measures that the Contractor is required to take and the Contractor, subject to Sub-Cl.20.2 shall be
entitled to an extension of time and/or payment of Cost plus Profit. There is a similar process for setting out errors, as described
above at Sub-Cl.4.9.
The 2017 Silver Book does not contain similar provisions to this effect. Here, Contractor will be deemed to have scrutinised
and therefore be deemed to be responsible for, the Employer’s Requirements prior to the Base Date.
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Commentary, UKBC-UFIDIC 500923063 (2021)
Footnotes
1
See discussion at Sub-Cll.4.12 and 17.2 for further consideration of what is expected of an “experienced contractor”.
End of Document
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2
Section 5.2 - Contractor’s Documents, UKBC-UFIDIC 500923061 (2021)
Section 5.2 - Contractor’s Documents
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.2 - Contractor’s Documents
5-005Y
The Contractor’s Documents shall comprise the documents:
(a)specified in the Employer’s Requirements;
(b)required to satisfy all permits, permissions, licences and other regulatory approvals which are the Contractor’s
responsibility under Sub-Clause 1.13 [Compliance with Laws]; and
(c)described in Sub-Clause 5.6 [As-Built Records] and Sub-Clause 5.7 [Operation and Maintenance Manuals].
5.2.1 Preparation by Contractor
Unless otherwise stated in the Employer’s Requirements, the Contractor’s Documents shall be written in the language
for communications defined in Sub-Clause 1.4 [Law and Language].The Contractor shall prepare all Contractor’s
Documents, and any other documents necessary to complete and implement the design during execution of the Works
and to instruct the Contractor’s Personnel. The Employer’s Personnel shall have the right to inspect the preparation
of all these documents (including any investigation, modelling and testing), wherever they are being prepared.
5.2.2 Review by Engineer
In this Sub-Clause 5.2.2:
–Review Period means the period not exceeding 21 days, or as otherwise stated in the Employer’s Requirements,
calculated from the date on which the Engineer receives a Contractor’s Document and a Contractor’s Notice;
–Contractor’s Document excludes any of the Contractor’s Documents which are not specified in the Employer’s
Requirements or these Conditions as being required to be submitted for Review, but includes all documents on
which a specified Contractor’s Document relies for completeness; and
–Contractor’s Notice means the Notice which shall state that the relevant Contractor’s Document is considered
by the Contractor to be ready for Review under this Sub-Clause 5.2.2 and for use, and that it complies with the
Employer’s Requirements and these Conditions, or the extent to which it does not do so.
If the Employer’s Requirements or these Conditions specify that a Contractor’s Document is to be submitted to the
Engineer for Review, it shall be submitted accordingly, together with a Contractor’s Notice.The Engineer shall, within
the Review Period, give a Notice to the Contractor:
(a)of No-objection (which may include comments concerning minor matters which will not substantially affect
the Works); or
(b)that the Contractor’s Document fails (to the extent stated) to comply with the Employer’s Requirements and/
or the Contract, with reasons.
If the Engineer gives no Notice within the Review Period, the Engineer shall be deemed to have given a Notice of Noobjection to the Contractor’s Document (provided that all other Contractor’s Documents on which that Contractor’s
Document relies (if any) have been given, or are deemed to have been given, a Notice of No-objection).If the Engineer
instructs that further Contractor’s Documents are reasonably required to demonstrate that the Contractor’s design
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Section 5.2 - Contractor’s Documents, UKBC-UFIDIC 500923061 (2021)
complies with the Contract, the Contractor shall prepare and submit them promptly to the Engineer at the Contractor’s
cost.If the Engineer gives a Notice under sub-paragraph (b) above, the Contractor shall:
(i)revise the Contractor’s Document;
(ii)resubmit it to the Engineer for Review in accordance with this Sub-Clause 5.2.2, and the Review Period shall
be calculated from the date that the Engineer receives it; and
(iii)not be entitled to EOT for any delay caused by any such revision and resubmission and/or by subsequent
Review by the Engineer.
If the Employer incurs additional costs as a result of such resubmission and subsequent Review, the Employer shall
be entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to payment by the Contractor of the costs
reasonably incurred.
5.2.3 Construction
Except for Contractor’s Documents under Sub-Clause 5.6 [As-Built Records] and Sub-Clause 5.7 [Operation and
Maintenance Manuals], for each part of the Works requiring Contractor’s Documents to be submitted for Review:
(a)construction of such a part shall not commence until a Notice of No-objection is given (or is deemed to have
been given) by the Engineer for all the Contractor’s Documents which are relevant to its design and execution;
(b)construction of such a part shall be in accordance with these Contractor’s Documents; and
(c)the Contractor may modify any design or Contractor’s Documents which have previously been submitted for
Review, by giving a Notice to the Engineer with reasons. If the Contractor has commenced construction of the
part of the Works to which such design or Contractor’s Documents are relevant:
(i)work on this part shall be suspended;
(ii)the provisions of Sub-Clause 5.2.2 [Review by Engineer] shall apply as if the Engineer had given a Notice
in respect of the Contractor’s Documents under sub-paragraph (b) of Sub-Clause 5.2.2; and
(iii)work on this part shall not resume until a Notice of No-objection is given (or is deemed to have been
given) by the Engineer for the revised documents.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923078 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.2 - Contractor’s Documents
Overview of Key Features
5-006Y
•The Contractor’s Documents shall comprise the documents: (a) specified in the Employer’s Requirements; (b) necessary
for the Contractor to comply with Sub-Cl.1.13 [Compliance with Laws]; and (c) described in Sub-Cll.5.6 [As-Built
Records] and 5.7 [Operation and Maintenance Manuals].
•The Contractor’s Documents shall be written in the language for communications defined in Sub-Cl.1.4 [Law and
Language].
•The Contractor shall prepare all Contractor’s Documents, including those documents necessary to complete and implement
the design.
•The Employer’s Personnel shall have the right to inspect the preparation of all these documents (including any
investigation, modelling and testing), wherever they are being prepared.
•If specified by the Employer’s Requirements or Contract, the Contractor must submit a Contractor’s Document to the
Engineer for Review, together with a Contractor’s Notice.
•The Engineer must carry out the Review within the Review Period, a period not exceeding 21 days, unless otherwise stated
in the Employer’s Requirements and give to the Contractor a Notice of No-objection or that the Contractor’s Document
fails (to the extent stated) to comply with the Employer’s Requirements.
•If no Notice is given within the specified time, the Engineer will be deemed to have served a Notice of No-Objection.
•If the Engineer instructs that further Contractor’s Documents are reasonably required to demonstrate that the Contractor’s
design complies with the Contract, these must be prepared promptly at the Contractor’s cost. If the Employer incurs cost
as a result of this, then the Employer may make a claim for that cost, subject to Sub-Cl.20.2.
•For each part of the Works requiring Contractor’s Documents to be submitted for Review, no construction can commence
until a Notice of No-objection has been given (deemed or otherwise).
•Whilst the Contractor may modify any design or Contractor’s Documents by giving a Notice to the Engineer with reasons,
construction must be suspended and the Review process gone through again.
End of Document
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1
Commentary, UKBC-UFIDIC 500923077 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.2 - Contractor’s Documents
Commentary
5-007Y As with the 1999 Yellow Book, this remains one of the longest sub-clauses within the Contract. The essential scheme of the
sub-clause remains, and the Engineer retains the right to reject, approve with comments or simply approve the Contractor’s
Documents, albeit that the word “approve” has been replaced with “no-objection”. The review process only applies where the
Employer’s Requirements or these Conditions specify that a Contractor’s Document is to be submitted to the Engineer for
Review.
By Sub-Cl.1.1.71, Review means the examination and consideration by the Engineer of a Contractor’s submission in order to
assess whether (and to what extent) it complies with the Contract and/or with the Contractor’s obligations under or in connection
with the Contract. Although the basic Review Period is stated to be 21 days, different parts of the Contractor’s Documents might
require more review time. If so, this must be clearly set out in the Contract Data. The Employer must ensure that the Engineer
has the capability and capacity to carry out the required review within the timescales provided for.
In the 2003 EIC Contractor’s Guide to the Yellow Book, the EIC drew attention to one particular problem with the review
period, namely the potential for the design period to be disrupted and delayed by the need for repeated review and revision of
the Contractor’s Documents. That risk remains, although presumably under the 2017 scheme the Contractor would be expected
to use the Sub-Cl.20.2 claims process if it disagreed with the Engineer’s conclusions.
In many jurisdictions there are mandatory requirements for the review and/or checking of certain elements of design. Often this
checking must be carried out and formally verified by a particular legally recognised individual or company who must confirm
that the design is in accordance with the required design standards. This can be time consuming and may need to be undertaken
in addition to the Review Process provided for here at Sub-Cl.5.2. The Special Provisions recommend that where this is the
case, it is “essential” that it is drawn to the tenderers’ attention in the Instruction to Tenderers. It may also be necessary to amend
Sub-Cl.5.2, to use FIDIC’s words, in a “clear and unambiguous” way to explain:
(a)the mandatory review/checking and/or verification process(es) required by the applicable law, and details of the
submission procedure(s) associated with such process(es);
(b)which element(s) of design, and which type(s) of Contractor’s Documents associated with such element(s), shall be
subject to the mandatory review/checking and/or verification process(es);
(c)whether, and to what extent, the mandatory review/checking and/or verification process(es) of an element of design (and
the Contractor’s Documents associated with such element) shall replace the Engineer’s review under this sub-clause; and
(d)a statement that any Notice of No-objection (or deemed Notice of No-objection) from the Engineer with respect to any
Contractor’s Document shall not replace the mandatory review/checking and/or verification of the design (or a revised
design).
As set out at Sub-Cl.1.1.14, the Contractor’s Documents mean the documents prepared by the Contractor as described in SubCl.5.2 and may comprise the addition of calculations, digital files, computer programs and other software, drawings, manuals,
models, specifications, and other documents of a technical nature. Under Sub-Cl.5.2, the Employer has a general right of
inspection wherever these documents are being prepared.
The Special Provisions openly state that the Employer’s Requirements should clearly specify which Contractor’s Documents
the Employer requires the Contractor to prepare. By way of example, FIDIC note that it may be appropriate for the Employer’s
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Commentary, UKBC-UFIDIC 500923077 (2021)
Requirements for a plant contract to specify that the Contractor’s Documents shall include drawings showing how the Plant is
to be installed and any other information required for:
•preparing suitable foundations or other means of support,
•providing suitable access on the Site, for the Plant and any necessary equipment, to the place where the Plant is to be
erected, and/or
•making necessary connections to the Plant.
End of Document
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2
Section 5.3 - Contractor’s Undertaking, UKBC-UFIDIC 500923065 (2021)
Section 5.3 - Contractor’s Undertaking
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.3 - Contractor’s Undertaking
5-008Y
The Contractor undertakes that the design, the Contractor’s Documents, the execution of the Works and the completed
Works will be in accordance with:
(a)the Laws of the Country; and
(b)the documents forming the Contract, as altered or modified by Variations.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923073 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.3 - Contractor’s Undertaking
Overview of Key Features
5-009Y
•The Contractor undertakes that performance of the Contractor’s Works, including design, shall comply with the Contract
(in its final form) and the Laws of the Country where the Works are carried out.
End of Document
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1
Commentary, UKBC-UFIDIC 500923072 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.3 - Contractor’s Undertaking
Commentary
5-010Y This short, but important sub-clause, reinforces the obligations of the Contractor as set out within Cl.4. The design obligation
set out in the Contract is one of fitness for purpose and in accordance with this, the obligation set out here, and indeed in SubCl.5.4 below is strict. If there is a difference in standards between the Laws of the Country and the documents forming the
Contract, then the standards set out by the Laws of Country should prevail and it is important that the Contractor and equally
the Employer are properly advised in order to be able to clarify any potential ambiguity.
End of Document
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1
Section 5.4 - Technical Standards and Regulations, UKBC-UFIDIC 500923059 (2021)
Section 5.4 - Technical Standards and Regulations
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.4 - Technical Standards and Regulations
5-011Y
The Contractor’s Documents, the execution of the Works and the completed Works (including defects remedied by the
Contractor) shall comply with the Country’s technical standards, building, construction and environmental Laws, Laws
applicable to the product being produced from the Works, and other standards specified in the Employer’s Requirements,
applicable to the Works, or defined by applicable Laws.
All these technical or other standards and Laws shall, in respect of the Works, and each Section and Part, be those in force
when the Works or Section or Part are taken over under Clause 10 [Employer’s Taking Over].
References in the Contract to published standards shall be understood to be references to the edition applicable on the
Base Date, unless stated otherwise. If changed or new applicable standards come into force in the Country after the Base
Date, the Contractor shall promptly give a Notice to the Engineer and (if appropriate or requested by the Engineer) submit
proposals for compliance. To the extent that:
(a)the Engineer considers that compliance is required and such compliance requires change(s) to the execution of
the Works; and
(b)the Contractor’s proposals for compliance constitute a Variation;
then the Engineer shall initiate a Variation in accordance with Clause 13 [Variations and Adjustments].
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500923068 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.4 - Technical Standards and Regulations
Overview of Key Features
5-012Y
•The Contractor’s Documents must comply with technical standards and all building, construction and environmental laws
and regulations applicable to the project as at the date of Taking Over, whether set out in the Employer’s Requirements
or defined by applicable laws.
•If the standards published as at the Base Date change, or if new standards come into force during the contract period, the
Contractor shall promptly give Notice to the Engineer. If the Engineer considers that complying with the new standard
constitutes a change then the Cl.13 variation procedures shall be put into action.
End of Document
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1
Commentary, UKBC-UFIDIC 500923079 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.4 - Technical Standards and Regulations
Commentary
5-013Y Like Sub-Cl.5.3, this sub-clause, reinforces the obligations of the Contractor as set out within Cl.4. Again, strict compliance
is required. If the design standards change after the Base Date, then the risk lies with the Employer, although the Contractor
should check that the Special Provisions do not amend or override this sub-clause. Again, it is important that the Contractor
and equally the Employer are properly advised in order to be able to clarify any potential ambiguity between the local technical
standards and the Employer’s Requirements.
End of Document
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1
Section 5.5 - Training, UKBC-UFIDIC 500923055 (2021)
Section 5.5 - Training
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.5 - Training
5-014Y
The Contractor shall carry out training of employees of the Employer (and/or other personnel identified in the Employer’s
Requirements) in the operation and maintenance of the Works, and any other aspect of the Works, to the extent specified
in the Employer’s Requirements.
If the Employer’s Requirements specify training which is to be carried out before taking over, the Works shall not be
considered to be completed for the purposes of taking over under Sub-Clause 10.1 [Taking Over the Works and Sections]
until this training has been completed in accordance with the Employer’s Requirements.
The timing of the training shall be as stated in the Employer’s Requirements (if not stated, as acceptable to the Employer).
The Contractor shall provide qualified and experienced training staff, training facilities and all training materials as
necessary and/or as stated in the Employer’s Requirements.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923076 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.5 - Training
Overview of Key Features
5-015Y
•If required by the Employer’s Requirements, the Contractor must provide properly qualified and experienced staff to train
the Employer’s personnel.
•If the Employer’s Requirements demand that this training is carried out before Taking-Over, then a failure to carry out
the training will delay completion.
End of Document
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1
Commentary, UKBC-UFIDIC 500923074 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.5 - Training
Overview of Key Features
Commentary
5-016Y The need for training is a frequent requirement for many Employers, particularly where the plant or equipment is new to the
location in question or innovative. Sometimes insurance or warranties will only apply if operatives have been given proper
training. The Employer must ensure that it has sufficient staff available to be trained otherwise delay might be caused to the
project. Contractors sometimes (rightly or wrongly) consider that an Employer will look to delay training because it is not ready
to take-over operation of the Works.
Ideally, the type of training that is needed should be agreed in discussion with the Contractor. By way of example of the issues
that may need to be considered the Special Provisions, note that if the Works comprise of Plant that includes new or innovative
technology in the Country or at the Employer’s location, then the Parties may wish to consider adding provison into the Contract
for training at the location of another plant facility, which is similar in nature to the Works.
Whatever form of training is agreed, this must be clearly set-out as part of the Contract. The Contractor must give careful
consideration to the timing of the training as, by Sub-Cl.10.1(d) the Works cannot be taken over until the Contractor has carried
out the training (if any) as described under Sub-Cl.5.5.
End of Document
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Section 5.6 - As-Built Records, UKBC-UFIDIC 500923062 (2021)
Section 5.6 - As-Built Records
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.6 - As-Built Records
5-017Y
The Contractor shall prepare, and keep up-to-date, a complete set of ‘as-built’ records of the execution of the Works,
showing the exact as-built locations, sizes and details of the work as executed by the Contractor. The format, referencing
system, system of electronic storage and other relevant details of the as-built records shall be as stated in the Employer’s
Requirements (if not stated, as acceptable to the Engineer). These records shall be kept on the Site and shall be used
exclusively for the purposes of this Sub-Clause.
The Contractor shall submit to the Engineer under Sub-Clause 5.2.2 [Review by Engineer]:
(a)the as-built records for the Works or Section (as the case may be) before the commencement of the Tests on
Completion; and
(b)updated as-built records to the extent that any work is executed by the Contractor:
(i)during and/or after the Tests on Completion, before the issue of any Taking-Over Certificate under Sub-Clause
10.1 [Taking Over the Works and Sections]; and
(ii)after taking over under Sub-Clause 10.1 [Taking Over the Works and Sections], before the issue of the
Performance Certificate.
The number of copies of as-built records to be submitted by the Contractor under this Sub-Clause shall be as required
under Sub-Clause 1.8 [Care and Supply of Documents].
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923067 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.6 - As-Built Records
Overview of Key Features
5-018Y
•The Contractor must prepare and keep on site, an up-to-date complete set of “as-built” records.
•The as-built records must be submitted to the Engineer for Review under Sub-Cl.5.2.2.
•The number of copies of the as-built records that the Contractor is required to produce will be as specified by Sub-Cl.1.8.
End of Document
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Commentary, UKBC-UFIDIC 500923069 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.6 - As-Built Records
Commentary
5-019Y As-built drawings or records are the drawings prepared once the works are complete, to record the as-built construction. The asbuilt drawings should be different from the drawings used for design and fabrication as they document all revisions to previous
drawings, instructions given to the Contractor and the effects of unanticipated site conditions. The records can be used by the
Employer or subsequent building owner for future maintenance, operations or alteration of the building or structure. Here, in
common with many contract forms, the as-built records must be completed and supplied by the Contractor prior to taking over.
By Sub-Cl.10.1(b) the Works cannot be taken over until the Engineer has given (or is deemed to have given) a Notice of Noobjection to the as-built records submitted under sub-para.(a) of Sub-Cl.5.6.
The precise format of the as-built records must be clearly set out in the Employer’s Requirements. As for the number of sets of
records that must be kept, Sub-Cl.1.8 says that the Contractor shall supply to the Engineer one paper-original, one electronic
copy (in the form as specified in the Employer’s Requirements or, if not stated, a form acceptable to the Engineer) and additional
paper copies (if any) as stated in the Contract Data of each of the Contractor’s Documents.
End of Document
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Section 5.7 - Operation and Maintenance Manuals, UKBC-UFIDIC 500923071 (2021)
Section 5.7 - Operation and Maintenance Manuals
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.7 - Operation and Maintenance Manuals
5-020Y
The Contractor shall prepare, and keep up-to-date, a complete set of operation and maintenance manuals for the Works
(the ‘O&M Manuals’ in these Conditions).
The format and other relevant details of the O&M Manuals shall be as stated in the Employer’s Requirements and, in any
case, these manuals shall:
(a)be in sufficient detail for the Employer to:
(i)operate, maintain and adjust the Works to ensure that the performance of the Works, Section and/or Plant (as
the case may be) continues to comply with the performance criteria specified in the Employer’s Requirements
and the Schedule of Performance Guarantees; and
(ii)operate, maintain, dismantle, reassemble, adjust and repair the Plant; and
(b)include an inventory of spare parts required for the Employer’s future operation and maintenance of the Plant.
Before commencement of the Tests on Completion, the Contractor shall submit provisional O&M Manuals for the Works
or Section (as the case may be) to the Engineer under Sub-Clause 5.2.2 [Review by Engineer].
If during the Tests on Completion any error or defect is found in the provisional O&M Manuals, the Contractor shall
promptly rectify the error or defect at the Contractor’s risk and cost.
Before the issue of any Taking-Over Certificate under Sub-Clause 10.1 [Taking Over the Works and Sections], the final
O&M Manuals shall be submitted to the Engineer under Sub-Clause 5.2.2 [Review by Engineer].
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923064 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.7 - Operation and Maintenance Manuals
Overview of Key Features
5-021Y
•The Contractor must prepare and keep a set of operation and maintenance manuals (“O&M Manuals”) for the Works in
the format required by the Employer’s Requirements.
•The format of the O&M Manuals should be set out in the Employer’s Requirements but as the name suggests they
should provide the information an Employer needs to operate, maintain and run the Works in accordance with the required
performance criteria.
•The Tests on Completion cannot commence until the Contractor has submitted the provisional O&M Manuals for the
Works to the Engineer under Sub-Cl.5.2.2.
•Taking Over under Sub-Cl.10.1 cannot take place until the final O&M manuals have been submitted for Review to the
Engineer.
End of Document
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Commentary, UKBC-UFIDIC 500923056 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.7 - Operation and Maintenance Manuals
Commentary
5-022Y There is no formal definition of O&M Manuals under the Contract. O&M Manuals define the requirements and procedures
for the effective operation, maintenance, decommissioning and demolition of a building or project. Typically, they will provide
details of the building’s construction, history and/or maintenance as well as instructions for operation and maintenance of any
systems within the building as well as guarantees and warranties.
Whilst, Sub-cl.5.7 explains when the draft and final O&M Manuals must be submitted to the Engineer, Contractors should note
that by Sub-Cl.10.1(c) the Works cannot be taken over until the Engineer has given (or is deemed to have given) a Notice of
No-objection to the provisional O&M Manuals for the Works submitted under Sub-Cl.5.7.
The way in which Contractors produce As-Built Records and O&M manuals is subject to rapid change following the advent of
BIM or Digital Design. The Advisory Note on BIM to be found as part of the Special Provisions notes that BIM is well suited
for integrated project delivery, including Design Build and especially Design Build Operate projects. FIDIC also note that:
“if advanced levels of BIM are anticipated for the project, the possibility of adding operation and maintenance
elements of the constructed facility might be considered.”
In the UK, British Standard PAS 1192-3: 2014 was introduced in March 2014 to provide a specification for information
management for the operational phase (i.e. handover onwards) of construction projects, a sign of the growing importance that is
being attached to BIM and facilities management. PAS 1192-3: 2014 encourages greater engagement with BIM from the outset
of the project by ensuring that the data and information required: (i) to achieve the organisational information’s objectives; and
(ii) to support the organisation’s asset management system are linked to the Employer’s Information Requirements (“EIR”).
The EIRs form part of the appointment and tender documents on a BIM Project to which the BIM model also links. This will
include consideration as to how the O&M manuals and other information needed to operate a facility should be provided.
End of Document
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1
Section 5.8 - Design Error, UKBC-UFIDIC 500923075 (2021)
Section 5.8 - Design Error
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.8 - Design Error
5-023Y
If errors, omissions, ambiguities, inconsistencies, inadequacies or other defects are found in the Contractor’s design and/
or the Contractor’s Documents, they and the Works shall be corrected in accordance with Sub-Clause 7.5 [Defects and
Rejection]. If such Contractor’s Documents were previously the subject of a Notice of No-objection given (or deemed to
be given) by the Engineer under Sub-Clause 5.2.2 [Review by Engineer], the provisions of Sub-Clause 5.2.2 shall apply as
if the Engineer had given a Notice in respect of the Contractor’s Documents under sub-paragraph (b) of Sub-Clause 5.2.2.
All corrections and resubmissions under this Sub-Clause shall be at the Contractor’s risk and cost.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923060 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.8 - Design Error
Overview of Key Features
5-024Y
•If errors are found in the Contractor’s design or Documents, they (and any Works constructed in accordance with the
defective design) must be corrected, at the Contractor’s cost, in accordance with Sub-Cl.7.5.
•If the design had been the subject of a Notice of No-objection, the design must be re-submitted, again at the Contractor’s
cost in accordance with Sub-Cl.5.2.2.
End of Document
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1
Commentary, UKBC-UFIDIC 500923058 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 5Y - Clause 5—Design (Yellow Book)
Section 5.8 - Design Error
Commentary
5-025Y This sub-clause has been expanded from the 1999 version to incorporate the Sub-Cl.5.2 Review process. There is no change
to the essential position that the fact that the design may have been approved, or subject to a Notice of No-objection, does not
prevent the Contractor from being responsible for the original design error in the first place.
End of Document
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Chapter 6 - Clause 6—Staff and Labour, UKBC-UFIDIC 500923106 (2021)
Chapter 6 - Clause 6—Staff and Labour
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Differences between the Red and Yellow Books
6-001
There are no differences between the two Contract Forms.
End of Document
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1
Section 6.1 - Engagement of Staff and Labour, UKBC-UFIDIC 500923084 (2021)
Section 6.1 - Engagement of Staff and Labour
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.1 - Engagement of Staff and Labour
6-002
Except as otherwise stated in the Specification, the Contractor shall make arrangements for the engagement of all
Contractor’s Personnel, and for their payment, accommodation, feeding, transport and welfare.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923109 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.1 - Engagement of Staff and Labour
Overview of Key Features
6-003
The Contractor is responsible for all its staff and shall make arrangements for their welfare, payment, housing, feeding and
transport unless stated otherwise in the Specification.
End of Document
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1
Commentary, UKBC-UFIDIC 500923123 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.1 - Engagement of Staff and Labour
Commentary
6-004
Compared with some of the other changes to the 2017 Form, the changes to Cl.6 are less wide-ranging, although the Contractor
should note the increased record keeping responsibilities in the new Sub-Cl.6.10 and the introduction of Key Personnel found
in new Sub-Cl.6.12.
The Contractor should remember that Sub-Cl.4.1 makes the Contractor responsible for providing all the necessary personnel to
carry out the design, execution and completion of his works as well as to remedy any defects.
This sub-clause places a wider responsibility onto the shoulders of the Contractor to ensure not only that the Contractor engages
the labour and staff but also makes welfare arrangements for them. It should be noted that the obligation in this sub-clause now
only relates to “Contractor’s Personnel” and not the more wide-ranging “all staff and labour” as under the 1999 Form.
The obligations in Cl.6 reflect the international flavour of the projects and the type of projects for which FIDIC contracts are
often used. In particular, with overseas projects where the Contractor may employ staff from his own country and also where
those projects are in remote locations (for example, process plants), then this provision of welfare is key. The Contractor will
therefore need to allow for such provision in the tender and take into account in doing so the particular location of the works
and the difficulties that might be encountered in making arrangements for payment (e.g. local currency conversion), housing
(e.g. location), feeding (e.g. local laws/religious customs), and transport (e.g. local infrastructure).
As to the cost of the labour itself, Sub-Cl.13.7 provides for the adjustment of the amount paid to the Contractor due to the rise
or fall in the cost of labour, goods or other inputs to the works.
Although the Contractor’s prima facie responsibility extends to local staff and labour, in engaging local staff and labour, the
Contractor should also be aware of local labour laws (which may not be the same as the law governing the Contract) and, in
particular, aspects of that law which might conflict with the obligations of the Contract (see below). Where problems such as this
arise, the Contractor will have to ascertain whether it is possible to “contract out” of local, conflicting labour laws or whether the
Contractor is bound by them. In either case, the ensuing risk must be built into the Contractor’s price for the Works. It is noted
that the Contractor has, in any event, an obligation to comply with applicable laws (which include local laws) pursuant to SubCl.1.13 of the Contract. The Contractor should also consider whether insurance should or must be taken out in relation to his
obligations to engage all staff and labour and provide for their welfare. (This also applies to some of the later sub-clauses of Cl.6).
The Guidance provided in the 1999 Edition for the preparation of Particular Conditions, sets out some examples of sub-clauses
that can be added to Cl.6 to take account of particular circumstances and the locality of the Site. This also applies to the 2017
Form. These, for example, cover matters such as the provision and importation of foreign staff and labour, measures against
insect and pest nuisance, alcoholic liquor and drugs, arms and ammunition, and festivals and religious customs. These provisions
will come as no surprise to those familiar with the optional Particular Conditions which also made similar, although more wideranging 1 provision for particular circumstances and locality.
The 2010 Pink Book 2 includes 12 of these “particular locality” clauses as part of the General Conditions covering, for example,
supply of foodstuffs, supply of water, alcoholic liquor and drugs and funeral arrangements. The 2010 Contract also includes
a sentence encouraging the Contractor, to the extent that it is practicable and reasonable, to employ staff and labour with
appropriate qualifications and experience from sources within the Country. This sentiment is often used on international projects
and reflects a desire to encourage local enterprise.
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1
Commentary, UKBC-UFIDIC 500923123 (2021)
If a party is planning to include particular locality clauses as Special Provisions, then they should note that the Special Provisions
have priority over the General Conditions in the case of conflict.
There may be situations where the Employer wishes to engage certain staff or labour and/or provide facilities for them. In such
cases, as noted in the FIDIC Guide, the obligations that the Employer undertakes should be specified precisely. Any confusion
over the shared responsibility of engaging labour could not only lead to a dispute between the Employer and the Contractor but
may also have the undesirable effect of disaffecting staff and labour who may not get paid as a result of the dispute.
It is noted that, by stating that this clause is subject to the Specification, this reverses the order of priority of documents at SubCl.1.5 of the Contract where the General Conditions are stated to take precedence over the Specification.
Footnotes
1
2
See, for example, in relation to epidemics, burial of the dead and repatriation.
The FIDIC Pink Books 2005 and 2006 only included the first 10, i.e. Sub-Cll.6.12–22.
End of Document
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2
Section 6.2 - Rates of Wages and Conditions of Labour, UKBC-UFIDIC 500923100 (2021)
Section 6.2 - Rates of Wages and Conditions of Labour
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.2 - Rates of Wages and Conditions of Labour
6-005
The Contractor shall pay rates of wages, and observe conditions of labour, which comply with all applicable Laws and are
not lower than those established for the trade or industry where the work is carried out. If no established rates or conditions
are applicable, the Contractor shall pay rates of wages and observe conditions which are not lower than the general level
of wages and conditions observed locally by employers whose trade or industry is similar to that of the Contractor.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500923082 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.2 - Rates of Wages and Conditions of Labour
Overview of Key Features
6-006
•The Contractor must pay wages at a rate comparable with local labour rates and must comply with all local labour
legislation.
•The Contractor must ensure that labour conditions on site are no lower than local labour conditions.
•If the Contractor has no comparators for wages and conditions then the Contractor shall maintain wages and conditions
which are not lower than those observed locally by employers in a similar trade or industry.
End of Document
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1
Commentary, UKBC-UFIDIC 500923086 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.2 - Rates of Wages and Conditions of Labour
Commentary
6-007
One concern about the 1999 Form was that the obligations upon the Contractor were subjective and therefore open to much
interpretation. Under the 2017 Form, instead of relying upon the notion that the spirit of this sub-clause was in keeping with the
obligation on the Contractor to comply with local laws under Sub-Cll.1.13 and 6.4 (see below), a positive obligation requiring
this has been introduced. There is very likely to be legislation in the country where the Works are being carried out that restricts
the minimum wage that the Contractor can pay and which specifies particular work conditions, for example in relation to health
and safety. 3
There are also likely to be limits on the age of potential local labour. For example, over 140 countries are signed up to art.182
of the International Labour Organisation 4 which provides for minimum labour ages.
This sub-clause appears to be designed to ensure compatibility with other employers so that local labour and trade markets are
not adversely affected by the Contract Works. However, the clause does not refer to the Contractor paying higher wages than
those locally and, where this happens, this too could adversely affect local trade conditions.
Whilst this clause gives guidance to the Contractor, if there is no comparable local labour; there is no fall-back if there is
no comparable industry locally. It is submitted that if this were to occur then the Contractor should look at the payment and
conditions prevalent in that industry in that particular country.
If the Contractor were to breach this obligation, as the Guide points out, the Employer may have difficulty proving any loss.
However, this would not stop the Employer from using the breach to resist a claim from the Contractor for payment due to the
consequences of the non-compliance.
Given the importance of this sub-clause in projects where funders such as the World Bank operate, it is worth recording that
the following additional paragraph is included in the 2010 Pink Book:
“The Contractor shall inform the Contractor’s Personnel about their liability to pay personal income taxes in the
Country in respect of such of their salaries, wages and allowances as are chargeable under the Laws of the Country
for the time being in force, and the Contractor shall perform such duties in regard to such deductions thereof as
may be imposed on him by such Laws.”
This addition serves to take the obligation on the Contractor one step further by imposing upon him an obligation to inform the
Contractor’s Personnel about income tax liability in the country where the works are being carried out and further states that
the Contractor shall perform his duties in relation to the deduction of taxes as may be imposed by the law of that country.
Footnotes
3
For example, see the Construction (Design and Management) Regulations 2007 and the National Minimum Wages Act
1998 in England and Wales.
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1
Commentary, UKBC-UFIDIC 500923086 (2021)
4
http://www.ilo.org [Accessed 10 September 2018]. A number of countries require compliance with the various
conventions which include rights of freedom of association, freedom from forced labour, freedom from discrimination
on the grounds of race, colour, gender, religion, political opinion, and social origin.
End of Document
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2
Section 6.3 - Recruitment of Persons, UKBC-UFIDIC 500923081 (2021)
Section 6.3 - Recruitment of Persons
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.3 - Recruitment of Persons
6-008
The Contractor shall not recruit, or attempt to recruit, staff and labour from amongst the Employer’s Personnel.
Neither the Employer nor the Engineer shall recruit, or attempt to recruit, staff and labour from amongst the Contractor’s
Personnel.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500923090 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.3 - Recruitment of Persons
Overview of Key Features
6-009
The Contractor shall not recruit or try to recruit the Employer’s Personnel as part of his own workforce.
The Employer and Engineer shall not recruit or try to recruit the Contractor’s Personnel as part of his own workforce.
End of Document
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1
Commentary, UKBC-UFIDIC 500923128 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.3 - Recruitment of Persons
Commentary
6-010
Employer’s Personnel is defined at Sub-Cl.1.1.32 (Yellow Book) of the Contract as: the Engineer, the Engineer’s Representative
(if appointed), the assistants described in Sub-Cl.3.4 [Delegation by the Engineer] and all other staff, labour and other employees
of the Engineer and of the Employer engaged in fulfilling the Employer’s obligations under the Contract; and any other personnel
identified as Employer’s Personnel, by a Notice from the Employer or the Engineer to the Contractor. Sub-Clause 6.3 is therefore
a very wide clause encompassing more than just those directly employed by the Employer.
It is easy to see the purpose of the clause. It guards against conflicts of interest and the misappropriation of ideas and resources. It
also assists in maintaining commercial confidentiality. However, the weight of this clause in practice is another matter altogether.
The construction and engineering industry may be vast but it is split into a number of specialised sectors. Those using this type
of contract are likely to be based in the process plant sectors and in oil and gas. Movement between key contractors, consultants
and employers is inevitable.
Under the 1999 Form, the obligation only prevented the Contractor from hiring the Employer’s Personnel. Under the 2017
Form, that obligation has been extended to include the Employer and Engineer.
It may well be that this clause is not really intended to militate against commercial movement within the industry but instead
it is set up to protect the Employer from the “poaching” of its key staff by the Contractor. Typically, an Employer will be
based in the locality where the project is being undertaken, whereas a Contractor is more likely to be based elsewhere. Local
knowledge can be key.
The parties might want to consider a short amendment to the effect that the parties shall agree a procedure in the event that
an employee expresses a desire to be employed by the Contractor or Employer. However, we do query the extent to which the
Employer or Contractor could prove and quantify damage for a breach of this sub-clause in any event.
End of Document
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1
Section 6.4 - Labour Laws, UKBC-UFIDIC 500923124 (2021)
Section 6.4 - Labour Laws
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.4 - Labour Laws
6-011
The Contractor shall comply with all the relevant labour Laws applicable to the Contractor’s Personnel, including Laws
relating to their employment (including wages and working hours), health, safety, welfare, immigration and emigration,
and shall allow them all their legal rights.
The Contractor shall require the Contractor’s Personnel to obey all applicable Laws, including those concerning health
and safety at work.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500923120 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.4 - Labour Laws
Overview of Key Features
6-012
•The Contractor shall comply with all relevant labour laws which apply to the Contractor’s Personnel.
•The Contractor shall not do anything which might prevent the Contractor’s personnel from exercising their legal rights.
•The Contractor must take steps to require employees to obey all applicable laws, in particular those concerning health
and safety at work.
End of Document
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1
Commentary, UKBC-UFIDIC 500923125 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.4 - Labour Laws
Commentary
6-013
“Contractor’s Personnel” is defined at Sub-Cl.1.1.16 (Yellow Book) as “the Contractor’s Representative and all personnel whom
the Contractor utilises on Site, or other places where the Works are being carried out, including the staff, labour and other
employees of the Contractor and of each Subcontractor; and any other personnel assisting the Contractor in the execution of
the Works”. This is very wide. The last phrase “any other personnel assisting the Contractor” could almost be read to include
the Employer’s employees.
The sub-clause here also appears to be very broad in scope referring to all applicable labour laws. In fact, this is doing no more
than confirming the requirement of Sub-Cl.1.13 whereby the Contractor must comply with all local laws.
However, it is sensible to define the type of legislation that typically affects staff. Accordingly, the Contractor must ensure that it
is acting in accordance with the applicable laws in relation to employment, health, safety, welfare, immigration and emigration.
This is followed by a catch-all provision whereby the Contractor must allow “personnel” their “legal rights”. This is quite
nebulous and would almost certainly encompass the Human Rights legislation that has been put in place in many parts of Europe.
The flip side to this obligation is that the Contractor must also keep in mind, when preparing his tender, the extent to which
the local laws may not afford the protection to his employees that they might otherwise expect. This is particularly so if the
Contractor is a company foreign to the place of works and is employing staff from his own country. To an extent this should
be able to be overcome by ensuring that the relevant contracts of employment are subject to the laws of the Contractor’s
country. However, if this is the case, then the Contractor must also ensure that those contracts of employment do not in any
way contravene local labour laws.
The law of the Contract may not be the same as the law of the local area. The Contractor will have to research his obligations
before tendering in order to price the risk that this obligation will impose upon him. Whilst the 1999 FIDIC Guide queries the
extent to which the Employer would be able to claim for loss arising out of a breach of this clause, it is clear that a breach could
have serious consequences for the Contractor. If the Contractor does not allow the Contractor’s Personnel their rights and there
is then a strike, causing delay to the project and causing cost to be incurred by the Employer in relation to the effects of that
strike, then, in English law at least, the Contractor would be liable for those costs as damages.
Therefore, this is another risk that the Contractor must carefully consider when tendering as the variables will change from
country to country and knowledge of local labour laws, including health and safety, will be paramount.
It is noted that the obligation relates to laws “applicable” to the Contractor’s Personnel. This sub-clause does not make the
Contractor liable for breaches of the applicable laws by the Contractor’s Personnel, although it does state that the Contractor
must “require” its employees to comply with the applicable laws.
Finally, Sub-Cl.13.7 provides for the adjustment of the Contract Price if the applicable laws change (including by way of judicial
or governmental interpretation) after the Base Date and the Contractor suffers (or will suffer) delay or incurs (or will incur)
additional cost as a result of the change.
End of Document
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1
Section 6.5 - Working Hours, UKBC-UFIDIC 500923110 (2021)
Section 6.5 - Working Hours
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.5 - Working Hours
6-014
No work shall be carried out on the Site on locally recognised days of rest, or outside the normal working hours stated
in the Contract Data, unless:
(a)otherwise stated in the Contract;
(b)the Engineer gives consent; or
(c)the work is unavoidable or necessary for the protection of life or property or for the safety of the Works, in which
case the Contractor shall immediately give a Notice to the Engineer with reasons and describing the work required.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923085 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.5 - Working Hours
Overview of Key Features
6-015
No work is to be carried out on Site on:
(i)locally recognised days of rest;
(ii)outside the normal working hours stated in the Contract Data;
unless:
(a)the Contract states otherwise;
(b)the Engineer gives consent; or
(c)the work is unavoidable or necessary for the protection of life or property or for the safety of the works.
If the work is unavoidable or necessary, then the Contractor must give an appropriate Notice to the Engineer.
End of Document
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Commentary, UKBC-UFIDIC 500923114 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.5 - Working Hours
Commentary
6-016
This sub-clause is designed to protect the rights of local workers, particularly in areas of strong religious traditions. The
Contractor therefore should have due regard to all recognised festivals, days of rest and religious/other customs.
The sub-clause is, however, subject to three exceptions, set out at Sub-Cll.6.4(a), 6.4(b) and 6.4(c) and is also subject to what
the Contract Data states. Under Sub-Cl.1.5, the Contract Data takes priority over the General Conditions in any event (as it
forms part of the Letter of Tender).
Therefore, whilst there is some scope for conflict between Sub-Cl.6.5 and the Contract Data, the Contract Data takes precedence.
It is submitted that Sub-Cl.6.4 could be read as either: (a) subject to/qualified by the Contract Data; or (b) amended by the
Contract Data by virtue of Sub-Cll.6.4(a) and 1.5. It will depend upon the extent to which the sub-clause and the Contract Data
are inconsistent. The most practical way to avoid inconsistency, however, is to ensure that the parties to the Contract are aware
of local conditions in relation to hours to be worked and that these are correctly reflected in the Contract Data.
The 1999 FIDIC Guide states that when the tender documents are being prepared, consideration should be given as to whether
this clause is in fact needed, otherwise it may be deleted. However, in our view, specifying working hours in advance in the
Contract Data can be very helpful for the management and planning of activities. Either the Contractor or the Employer can fill
in the working hours part of the Contract Data if it suits their purposes.
If hours are to be worked on locally recognised days of rest outside normal working hours, then Sub-Cl.6.5(b) allows this to
be achieved by the Contractor obtaining consent from the Engineer. Under Cl.1.3, such consent should be given in writing and
should not be unreasonably withheld or delayed. It is also noted that under Sub-Cl.8.7 the Contractor may be instructed to adopt
measures to expedite the progress of the Works, which may include working outside of normal working hours.
The parties will need to bear in mind local legislation which might affect the number of hours that can be worked. For example,
members of the EU will have adopted variants of the Working Time Directive.
As to the Contractor’s programming obligations, it is clear from Sub-Cl.8.3 that the Contractor must take this sub-clause into
account when drafting the programme that it will submit to the Engineer.
Sub-Clause 6.4(c), the last exception, states that work can be carried out outside of the defined hours if it is unavoidable and
necessary because of danger to life, property or the works. The Contractor must provide a formal Notice to the Engineer when
such circumstances arise. Previously under the 1999 Form, the Contractor merely had to advise the Engineer. The change is
recognition of the danger that this part of the sub-clause could be open to abuse as an excuse to work longer hours.
End of Document
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1
Section 6.6 - Facilities for Staff and Labour, UKBC-UFIDIC 500923129 (2021)
Section 6.6 - Facilities for Staff and Labour
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.6 - Facilities for Staff and Labour
6-017
Except as otherwise stated in the Employer’s Requirements, the Contractor shall provide and maintain all necessary
accommodation and welfare facilities for the Contractor’s Personnel.
If such accommodation and facilities are to be located on the Site, except where the Employer has given the Contractor prior
permission, they shall be located within the areas identified in the Employer’s Requirements. If any such accommodation
or facilities are found elsewhere within the Site, the Contractor shall immediately remove them at the Contractor’s risk and
cost. The Contractor shall also provide facilities for the Employer’s Personnel as stated in the Employer’s Requirements.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923103 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.6 - Facilities for Staff and Labour
Overview of Key Features
6-018
•The Contractor shall provide all necessary accommodation and welfare facilities for the Contractor’s personnel.
•This accommodation must be provided in the locations specified.
•If required by the Employer’s Requirements, the Contractor shall provide similar facilities for the Employer’s Personnel.
End of Document
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Commentary, UKBC-UFIDIC 500923111 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.6 - Facilities for Staff and Labour
Commentary
6-019
This sub-clause should be read in conjunction with Sub-Cl.6.1 which provides for the Contractor to make arrangements for, inter
alia, the housing of all staff and labour. This sub-clause relates to the “Contractor’s Personnel” and, in part, the “Employer’s
Personnel” which, as noted previously in this chapter, is a very wide range of people.
It is submitted that in order to ensure that this obligation is not unduly onerous on the Contractor then the Employer’s
Requirements 5 should be used to specify exactly what the Contractor will provide as accommodation and welfare facilities and
what, if anything, the Employer will provide. This will ensure a measure of certainty which, in the absence of any definition
of “necessary”, is welcome. Otherwise we envisage that whether or not a particular facility is necessary could easily become
a matter of dispute.
In any event, the sub-clause is clear that no-one is allowed to camp out on authorised parts of the Site, which as defined in
Sub-Cl.1.1.77 (Yellow Book) means anywhere where the Permanent Works are being carried out. Therefore, the area of the
Permanent Works might be quite vast, for example if a lengthy road is being constructed. There may be very good reasons
for limiting the areas where site accommodation is allowed. In potentially hostile regions, it will be easier to maintain proper
security if personnel are grouped together in clearly defined areas.
Footnotes
5
It is noted that the order of priority of documents in this sub-clause, as in Sub-Cl.6.1 is reversed with the Specification
taking precedence over the General Conditions.
End of Document
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Section 6.7 - Health and Safety of Personnel, UKBC-UFIDIC 500923083 (2021)
Section 6.7 - Health and Safety of Personnel
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.7 - Health and Safety of Personnel
6-020
In addition to the requirements of Sub-Clause 4.8 [Health and Safety Obligations], the Contractor shall at all times take all
necessary precautions to maintain the health and safety of the Contractor’s Personnel. In collaboration with local health
authorities, the Contractor shall ensure that:
(a)medical staff, first aid facilities, sick bay, ambulance services and any other medical services stated in the
Employer’s Requirements are available at all times at the Site and at any accommodation for Contractor’s and
Employer’s Personnel; and
(b)suitable arrangements are made for all necessary welfare and hygiene requirements and for the prevention of
epidemics.
The Contractor shall appoint a health and safety officer at the Site, responsible for maintaining health, safety and protection
against accidents. This officer shall:
(i)be qualified, experienced and competent for this responsibility; and
(ii)have the authority to issue directives for the purpose of maintaining the health and safety of all personnel authorised
to enter and/ or work on the Site and to take protective measures to prevent accidents.
Throughout the execution of the Works, the Contractor shall provide whatever is required by this person to exercise this
responsibility and authority.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923096 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.7 - Health and Safety of Personnel
Overview of Key Features
6-021
•The Contractor is at all times to take all necessary precautions to look after the health and safety of his personnel.
•The Contractor shall ensure that necessary medical and first aid facilities are available at all times on site and any
accommodation for both the Contractor’s and the Employer’s Personnel.
•The Contractor shall appoint a health and safety officer at site who must be suitably qualified and will be responsible for
maintaining safety and protection.
•The health and safety officer will have authority to issue instructions and take protective measures to prevent accidents.
End of Document
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Commentary, UKBC-UFIDIC 500923094 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.7 - Health and Safety of Personnel
Commentary
6-022
This sub-clause was an amalgam of a number of Old Red Book FIDIC 4th edn Particular Conditions. Sub-Clauses 6.4 and 6.7
mirror the obligations of Sub-Cl.4.8 whereby the Contractor shall comply with all applicable safety regulations and take care
for the safety of all persons entitled to be on the Site.
By Sub-Cl.6.4, the Contractor shall comply with all relevant labour laws. These specifically include laws in relation to Health
and Safety. The Contractor is also required to ensure that his employees obey all applicable laws including those concerning
Safety at Work. Sub-Clause 6.7 spells out those duties in more detail. The sub-clause is very different to clauses in typical UK
domestic building contracts. However, whilst, for example, in the UK there is a body of health and safety legislation which will
either be incorporated into the contract or which will govern what happens on site, this is not always the case.
The Contractor must check the relevant health and safety legislation that could be binding whether by virtue of the governing
law of the contract or by virtue of the fact that the parties are carrying out work in a particular country.
Of particular importance is the health and safety officer (formerly the accident prevention officer). The health and safety officer,
who must be suitably qualified, has wide-ranging responsibilities and must be given the authority to issue instructions and/
or take protective measures to prevent accidents. The Contractor is required to ensure that the health and safety officer is not
prevented from carrying out his responsibilities.
By Sub-Cl.4.20(g), the regular Progress Reports which the Contractor is required to prepare must include details of safety
statistics including details of any hazardous incidents or activities relating to environmental aspects or public relations. This
obligation may be why the obligation, under Sub-Cl.6.7 of the 1999 edns, that the Contractor shall following any accident,
maintain records and reports in relation to Health and Safety and welfare issues, has been deleted. The 1999 Form also required
the Contractor to maintain records in relation to damage to property. The keeping of these records is subject to what is reasonably
required by the Engineer.
Whatever is required by Sub-Cl.6.7 must be carried out at the Contractor’s cost. They could be quite considerable. The 1999
Guide goes so far as to note that if local facilities seem likely to be insufficient, the Contractor must overcome the shortfall and
even, if necessary, provide a properly equipped hospital.
This sub-clause is not just confined to health and safety in terms of accident prevention. For example, the Contractor should
give consideration to the possibility of an outbreak of illness or epidemic and the prevention thereof. 6 In such circumstances the
Contractor will need to comply with any regulations or orders made by the government or local health authorities. The Contractor
will however, in accordance with Sub-Cl.8.3(d) be entitled to an extension of time in respect of unforeseeable shortages in the
availability of goods or personnel by reason of epidemic.
Similarly, other health and safety considerations might include insect infestation, rats or other wild animals. Stagnant pools or
water might increase the threat from malaria.
The fact that the Contractor must provide suitable arrangements for all welfare and hygiene requirements will include the
necessity to provide an adequate supply of drinking water—a simple sounding but not always straightforward task.
Further “particular locality” clauses (see commentary below on Sub-Cll.6.12–6.24 of the MDB Harmonised Editions) can also
be added to assist this sub-clause. The Contractor must tailor this form to the particular conditions that he expects to encounter
at the site in question in order to manage his economic and contractual risks effectively.
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Commentary, UKBC-UFIDIC 500923094 (2021)
In the 2010 Pink Book there is an additional paragraph which made detailed and specific provision for the prevention of HIV
and AIDS transfer. This included a requirement that the Contractor incorporate in the programme an alleviation programme for
Site staff and labour and their families in respect of Sexually Transmitted Infections (“STI”) and Sexually Transmitted Diseases
(“STD”) including HIV/AIDS. Again, this type of clause is often added to contracts where the FIDIC Form is adopted.
Footnotes
6
Avian flu is one such scenario, also (and perhaps more common) cholera and typhoid.
End of Document
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2
Section 6.8 - Contractor’s Superintendence, UKBC-UFIDIC 500923118 (2021)
Section 6.8 - Contractor’s Superintendence
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.8 - Contractor’s Superintendence
6-023
From the Commencement Date until the issue of the Performance Certificate, the Contractor shall provide all necessary
superintendence to plan, arrange, direct, manage, inspect, test and monitor the execution of the Works.
Superintendence shall be given by a sufficient number of persons:
(a)who are fluent in or have adequate knowledge of the language for communications (defined in Sub-Clause 1.4
[Law and Language]); and
(b)who have adequate knowledge of the operations to be carried out (including the methods and techniques required,
the hazards likely to be encountered and methods of preventing accidents),
for the satisfactory and safe execution of the Works.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923098 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.8 - Contractor’s Superintendence
Overview of Key Features
6-024
•For as long as is necessary to undertake his obligations under the Contract,the Contractor shall provide all necessary
supervision to plan, direct and manage the work.
•The supervision must be provided by a sufficient number of people to ensure the satisfactory and safe execution of the
works.
•Those supervising must be fluent in the language for communications, as defined in Sub-Cl.1.4 and have adequate
knowledge of the likely work that will be carried out.
End of Document
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Commentary, UKBC-UFIDIC 500923122 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.8 - Contractor’s Superintendence
Commentary
6-025
The prime purpose of this sub-clause is to help ensure the “satisfactory and safe” execution of the works. Therefore, unlike the
preceding sub-clause, it is not solely related to health and safety.
This superintendence obligation is a wide one. It might also be felt to be an obvious one. However, by spelling out the obligations
in the Contract, the Employer, through the Engineer, is provided with a means to keep a check on the Contractor’s performance.
Unfortunately, no definition is provided of “superintendence”, “necessary” or “sufficient”. In relation to “superintendence”,
those providing the superintendence will be in addition to the Contractor’s Representative who by Sub-Cl.4.3 shall direct
performance of works. The lack of a definition of “necessary” and “sufficient” is more problematic and this is likely to cause
difficulties if a breach of this sub-clause is ever alleged. It is submitted that what is “necessary” and “sufficient” will very much
depend on the individual circumstances of each project.
By Sub-Cl.1.4, the language for communication shall be that stated in the Contract Data. If no language is stated, then the
language for communications shall be the language in which the Contract (or most of it) is written. There is a potential here
for problems if the language for communication is not specified. It is possible, if not highly likely in certain circumstances,
that the language spoken by the majority of personnel on site may differ from the language in which the Contract is written.
An experienced Contractor should be alive to the potential problems and ensure that those supervising have an adequate level
of communication skills.
The guidance in the 1999 edn of the Red Book for the drafting of the Particular Conditions suggested that if it was necessary
to stipulate that the superintending staff shall be fluent in a particular language then a sentence to this effect (set out in the
guidance) can be added to this sub-clause.The 2017 Form now stipulates that the superintending staff shall be fluent in the
language of communications.
End of Document
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1
Section 6.9 - Contractor’s Personnel and Key Personnel, UKBC-UFIDIC 500923102...
Section 6.9 - Contractor’s Personnel and Key Personnel
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.9 - Contractor’s Personnel and Key Personnel
6-026
The Contractor’s Personnel (including Key Personnel, if any) shall be appropriately qualified, skilled, experienced and
competent in their respective trades or occupations
The Engineer may require the Contractor to remove (or cause to be removed) any person employed on the Site or Works,
including the Contractor’s Representative and Key Personnel (if any), who:
(a)persists in any misconduct or lack of care;
(b)carries out duties incompetently or negligently;
(c)fails to comply with any provision of the Contract;
(d)persists in any conduct which is prejudicial to safety, health, or the protection of the environment;
(e)is found, based on reasonable evidence, to have engaged in corrupt, fraudulent, collusive or coercive practice; or
(f)has been recruited from the Employer’s Personnel in breach of Sub-Clause 6.3 [Recruitment of Persons].
If appropriate, the Contractor shall then promptly appoint (or cause to be appointed) a suitable replacement. In the case of
the replacement of the Contractor’s Representative, Sub-Clause 4.3 [Contractor’s Representative] shall apply. In the case
of the replacement of Key Personnel (if any), Sub-Clause 6.12 [Key Personnel] shall apply.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923087 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.9 - Contractor’s Personnel and Key Personnel
Overview of Key Features
6-027
•The Contractor’s Personnel (including Key Personnel) shall be of the appropriate qualifications and experience for their
profession.
•The Engineer may require the Contractor to remove anyone employed on the site or works who persists in misconduct,
is incompetent, fails to conform with the provisions of the Contract, persists in conduct which is prejudicial to Health and
Safety or protection of the environment, has been engaged in corrupt practices, or has been recruited in breach of SubCl.6.3.
•If someone is removed, the Contractor shall then promptly appoint a suitable replacement.
End of Document
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1
Commentary, UKBC-UFIDIC 500923088 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.9 - Contractor’s Personnel and Key Personnel
Commentary
6-028
This sub-clause is self-explanatory. First, it confirms that the Contractor’s Personnel must be suitably qualified and experienced.
It further provides that the Engineer may require the removal from site of any person employed on the site who acts in a way
prejudicial to the carrying out of the Contract. As this sub-clause applies to “any person employed on the site”, it is also likely
that the clause will relate to not only the Contractor’s Personnel, but any of the Subcontractor’s personnel as well. This right
of the Engineer will be in addition to the obvious rights of the Contractor to remove or deal with his employees in the manner
he sees fit. However, it is important that there is a procedure in place for the removal of personnel in order to prevent abuse
and also possible non-compliance with any local legislation.
The sub-clause provides six categories of behaviour which might constitute grounds for removal. However, there is no definition
of, for example, the term “misconduct” and the parties may have to have recourse to the relevant legislation under the law of
the Contract in order to properly interpret this sub-clause.
Further, the sub-clause does not provide for what might happen if the Contractor disagrees with the Engineer and does not want
to lose the personnel in question. This is particularly important where the Contractor’s Representative is concerned. Presumably
the Contractor could invoke the contract dispute procedures. However, this could cause delay and slow the project down. The
pragmatic approach in such circumstances might be to comply with any such instructions to remove personnel and then seek
to demonstrate that such removal was unjustified and seek appropriate recompense. The only difficulty with this would be
ascertaining what the recompense would be.
It will not always be the case that the Contractor will incur great financial loss in such a situation. Whilst an Arbitrator may
not have the power to reinstate the person who was removed from site, he should be able to make an order that the particular
Engineer’s instruction is invalid. However, even if this happens, the Contractor may not want to reinstate the employee as doing
so may adversely affect cordial relations with the Employer. Therefore, once an employee has been removed from site, in all
likelihood, they will not return.
End of Document
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1
Section 6.10 - Contractor’s Records, UKBC-UFIDIC 500923099 (2021)
Section 6.10 - Contractor’s Records
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.10 - Contractor’s Records
6-029
Unless otherwise proposed by the Contractor and agreed by the Engineer, in each progress report under Sub-Clause 4.20
[Progress Reports], the Contractor shall include records of:
(a)occupations and actual working hours of each class of Contractor’s Personnel;
(b)the type and actual working hours of each of the Contractor’s Equipment;
(c)the types of Temporary Works used;
(d)the types of Plant installed in the Permanent Works; and
(e)the quantities and types of Materials used
for each work activity shown in the Programme, at each work location and for each day of work.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500923101 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.10 - Contractor’s Records
Overview of Key Features
6-030
•The Contractor shall include in the regular Progress Reports details showing the number of personnel and actual working
hours.
•The Contractor shall also include in the Progress Reports, details of the Temporary Works, Plant and Materials used on site.
End of Document
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1
Commentary, UKBC-UFIDIC 500923104 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.10 - Contractor’s Records
Commentary
6-031
This clause is particularly important as the information required by the sub-clause will form part of the regular Progress Reports
required by Sub-Cl.4.20. As discussed above in relation to Sub-Cl.4.20, the submission of this Progress Report appears to be a
condition of payment. The reporting obligations under the 2017 Form have been enhanced from the 1999 FIDIC Form.
The Contractor should ensure that he takes the appropriate steps to establish the book-keeping necessary to comply with the
requirement of this sub-clause at an early stage in the contract. Reference should also be made to Sub-Cl.1.8 which deals with
the care and supply of documents. If one of the particular locality sub-clauses, which deals with employment records or workers
is part of the Contract, these records form part of the information required to be included as part of Sub-Cl.6.10 here. In addition,
the data required here may form the basis of information necessary to evaluate any claims and variations made pursuant to
Sub-Cll.13 and 20.2.
It is also important that the records are contemporary. 7 Contemporary records are defined in Sub-Cl.20.2.3 as meaning “records
that are prepared or generated at the same time, or immediately after, the event or circumstance giving rise to the Claim.” Whilst
the record keeping obligation here does not just refer to claims, requiring a Contractor to maintain these records should assist
a contractor if it becomes necessary to prepare a claim.
The Contractor’s records may be monitored by the Engineer who can instruct the Contractor to keep additional contemporary
records. Further, any award of additional payment or EOT shall take into account the extent to which a failure to comply with
“new” Cl.20 has prejudiced proper investigation of the claim. Contractors should also take care to ensure that their subcontractors
are also keeping proper records.
The Parties may want to consider agreeing how the project records should be kept. Core Principle B1 of the SCL Delay &
Disruption Protocol, 2nd edn, 2017 (https://www.sd.org.uk/resources/delay-disruption-protocol [Accessed 30 October 2018])
states that:
“Contracting parties should reach a clear agreement on the type of records to be kept and allocate the necessary
resources to meet that agreement.”
The Protocol further notes that by Cl.1.5 the parties should consider:
-the types of records to be produced, the format in which they are to be kept, and the frequency with which they are to
be updated; and
-who is responsible for keeping and checking those records?
Further, by Cl.1.6, an Employer should:
–Set out its requirements in the tender to enable a contractor to consider these. Any change to these might be considered
to be a variation.
This may be an ideal, an aspiration which comes at a cost in terms of time and resources. However, the Parties should remember
that that the enhanced claims mechanisms introduced in the 2017 FIDIC set out a number of detailed, step-by-step processes
that need to be followed. Parties should think about how they are going to deal with that generally and not just in terms of claims.
In Attorney General for the Falklands Island v Gordon Forbes Construction (Falklands) Ltd, 8 Forbes and the Government
entered into a FIDIC 4th edn contract. A dispute arose that was referred to arbitration. Clause 53.4 of the FIDIC conditions
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Commentary, UKBC-UFIDIC 500923104 (2021)
required claims to be verified by contemporary records. Forbes wanted to introduce witness statements to cover those parts of
a claim where no contemporary records existed. The Arbitrator refused an application by the Attorney General inviting him to
rule on the meaning of “contemporary records”, and also the extent to which statements could cover the absence of such records.
The issue for determination was whether, on the true meaning of Cl.53, witness statements could be introduced into evidence to
supplement contemporary records. Acting Judge Sanders held that “contemporary records” meant original or primary documents
or copies produced or prepared on or about the time giving rise to the claim. These documents could be produced by the parties.
However, contemporary records did not mean witness statements that were produced long after the event. Thus, where there
were no such contemporary records in support of a claim, that claim must fail. Witness statements could only be used to identify
or clarify contemporary records but not substitute them.
Clause 53 therefore required the Contractor to keep contemporary records in order to support his claim. Any failure to keep
those contemporary records may mean that the Contractor is unable to support his claim and that the claim will fail.
The Falkland Islands’ case, however, involved a claim under the old FIDIC Red Book, 4th edn, where Sub-Cl.53.4 specifically
provided that a Contractor’s right to payment could not exceed such amount as the Arbitrator considered had been verified
by the contemporary records. The requirement to keep contemporary records as expressed in the FIDIC Red Book 1999 is
slightly different. Indeed as Judge Jones in the case of National Insurance Property Development Co Ltd v NH International
(Caribbean) Ltd heard in Trinidad & Tobago, 9 specifically noted, under Sub-Cl.53.4, the Contractor’s entitlement to payment is
particularly contingent on the claim being verified by contemporary records. Here, whilst Sub-Cl.20.2.3 requires the Contractor
to keep contemporary records to the satisfaction of the Engineer, who can now instruct a Contractor to keep additional records,
it was not a specific requirement of the sub-clause that the full supporting particulars which made up the Contractor’s claim
comprise or be substantiated solely by contemporary records. Judge Jones also made the following useful comments about the
meaning of “contemporaneous records”:
“It is clear what is required here is the maintaining of records or evidence necessary for substantiating the
Contractor’s claim for an extension of time for completion and/or additional payment … The word ‘records’ in the
phrase therefore must be taken to refer to evidence, that is, documents: written, printed or electronic, evidencing
matters that have occurred in the past.
The word ‘contemporary’ on the other hand deals with time … The records to be kept therefore must be
contemporary, that is created, obtained or produced, at the same time with the facts or events upon which the claim
is based. In other words the records must have been made or obtained or produced contemporaneously with or at
or around the same time as the relevant event. In this regard I agree with Sanders Acting Judge in the Falklands
case when, in this context, he equates ‘contemporary’ with ‘contemporaneous’.”
Both these cases remain relevant under the 2017 Form, Of course this still means that the particulars supplied with a claim must
be sufficient to substantiate the whole claim or part of that claim. If they substantiate only a part of the claim then payment can
only be authorised with respect to that part substantiated.
Footnotes
7
8
9
See Cl.20.2.7 for further discussion on this topic.
(2003) 6 B.L.R. 280, a case in the Falklands Island Supreme Court.
Claim No. CV2008-04881/CV2008-04998.
End of Document
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2
Section 6.11 - Disorderly Conduct, UKBC-UFIDIC 500923095 (2021)
Section 6.11 - Disorderly Conduct
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.11 - Disorderly Conduct
6-032
The Contractor shall at all times take all necessary precautions to prevent any unlawful, riotous or disorderly conduct by
or amongst the Contractor’s Personnel, and to preserve peace and protection of persons and property on and near the Site.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923115 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.11 - Disorderly Conduct
Overview of Key Features
6-033
•The Contractor shall at all times take necessary precautions to ensure there is no unlawful, riotous or disorderly conduct
by the Contractor’s Personnel on or near the site.
•The failure by the Contractor to ensure this good behaviour could lead to a claim in relation to Sub-Cll.4.14, 17.1 and 19.2.
End of Document
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Commentary, UKBC-UFIDIC 500923105 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.11 - Disorderly Conduct
Commentary
6-034
The requirement for the Contractor to take “necessary precautions” appears to impose a more onerous obligation on the
Contractor than the 1999 edns that only required the Contractor to take reasonable precautions. Under the 1999 edns, provided
the Contractor can demonstrate that he has taken reasonable precautions, he will escape any liability should any riots or other
such disturbances break out. Under the 2017 edns this would seem to be insufficient as the Contractor has to take the precautions
“necessary” to prevent any such conduct.
It is submitted that what constitutes “necessary precautions” will depend on the circumstances of the individual case as the
likelihood or unlawful, riotous and disorderly conduct is higher is some countries than in others (compare the likelihood of
unlawful or riotous behaviour in say Afghanistan as opposed to say Canada). So, when allowing for and planning necessary
precautions, the Contract must take this into account.
End of Document
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Section 6.12 - Key Personnel, UKBC-UFIDIC 500923112 (2021)
Section 6.12 - Key Personnel
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.12 - Key Personnel
6-035
If no Key Personnel are specified in the Employer’s Requirements this Sub-Clause shall not apply.
The Contractor shall appoint the natural persons named in the Tender to the positions of Key Personnel. If not so named,
or if an appointed person fails to act in the relevant position of Key Personnel, the Contractor shall submit to the Engineer
for consent the name and particulars of another person the Contractor proposes to appoint to such position. If consent is
withheld or subsequently revoked, the Contractor shall similarly submit the name and particulars of a suitable replacement
for such position.
If the Engineer does not respond within 14 days after receiving any such submission, by giving a Notice stating his/her
objection to the appointment of such person (or replacement) with reasons, the Engineer shall be deemed to have given
his/her consent.
The Contractor shall not, without the Engineer’s prior consent, revoke the appointment of any of the Key Personnel or
appoint a replacement (unless the person is unable to act as a result of death, illness, disability or resignation, in which case
the appointment shall be deemed to have been revoked with immediate effect and the appointment of a replacement shall
be treated as a temporary appointment until the Engineer gives his/her consent to this replacement, or another replacement
is appointed, under this Sub-Clause).
All Key Personnel shall be based at the Site (or, where Works are being executed off the Site, at the location of the Works)
for the whole time that the Works are being executed. If any of the Key Personnel is to be temporarily absent during
execution of the Works, a suitable replacement shall be temporarily appointed, subject to the Engineer’s prior consent.
All Key Personnel shall be fluent in the language for communications defined in Sub-Clause 1.4 [Law and Language].
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923121 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.12 - Key Personnel
Overview of Key Features
6-036
•Where an Employer considers that a Contractor should appoint Key Personnel then this must be specified in the Employer’s
Requirements.
•The named Key Personnel are expected to be based on Site and work on the project for its duration.
•The Contractor must appoint the Key Personnel named in the tender documents.
•All Key Personnel must be fluent in the language for communications.
•The Contractor must obtain the prior consent of the Engineer to change the appointment of any of the Key Personnel.
•If the Engineer fails to respond, with reasons, within 14 days, then the Engineer will be deemed to have given consent
to any proposed change.
End of Document
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1
Commentary, UKBC-UFIDIC 500923089 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.12 - Key Personnel
Commentary
6-037
This is a new sub-clause, which will only apply if the need for Key Personnel is specified by the Employer in the Employer’s
Requirements.
If the Employer does require Key Personnel then individuals must be named in the Tender. All Key Personnel must be fluent in
the language for communications. There is no apparent restriction on the number of Key Personnel that an Employer can require
or on the particular role or type of role that would qualify for Key Personnel status. The idea is that the individual named in the
Tender actually works on the Site, for the duration of the project. It can be frustrating for an Employer to find that key members
of the Contractor’s tender team, who it is said will be part of the project team, then do not appear. It can be equally frustrating
if there are frequent changes of personnel in key positions, during the project. This lack of continuity can (or least appear to
many Employers to) adversely affect a Contractor’s performance. This new sub-clause is designed to address these concerns.
The Special Provisions suggest that if the Employer requires the Contractor to have a Quality Manager employed on the Site,
then this position should be specified in the Employer’s Requirements as one of the positions of Key Personnel.
If a Contractor wants to replace someone with Key Personnel status, then the consent of the Engineer is required in advance.
If no response is provided, with reasons, by the Engineer to any such request within 14 days, then that consent is deemed to
have been provided. Consent cannot be unreasonably withheld.
Sensibly, if someone who is part of the Key Personnel dies, falls ill or is otherwise incapacitated then a temporary replacement
may be appointed, until formal consent for a full-time replacement is obtained. To avoid objection, any replacement personnel
should be of equivalent qualification and experience.
The particular locality clauses
6-038
As set out above, 10 the Special Provisions include a number of sub-clauses that could be added to Cl.6 primarily to take account
of particular local circumstances. These are optional. The 2010 FIDIC Pink Book, lists 12 sub-clauses as part of the Contract
and not as optional sub-clauses at the end of the Contract. These 12 sub-clauses are all part of the 2017 Special Provisions. As
can be seen, the provisions set out below are largely self-explanatory. It is also unlikely that they add any significant obligation
to the Contractor as they will be reflected in the requirements of local labour and health and safety legislation—the Contractor
being required by the provisions of Cl.6 and Sub-Cl.1.13 to comply with the applicable laws.
By the way of reference, the 12 sub-clauses listed by the 2010 Pink Book are as follows (the numbering following the numbering
of the 2010 Pink Book):
Footnotes
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1
Commentary, UKBC-UFIDIC 500923089 (2021)
10
See discussion under Sub-Cl.6.1.
End of Document
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2
Section 6.12 - Foreign Personnel (Pink Book), UKBC-UFIDIC 500923126 (2021)
Section 6.12 - Foreign Personnel (Pink Book)
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.12 - Foreign Personnel (Pink Book)
6-039
The Contractor shall be responsible for the return of these personnel to the place where they were recruited or to their
domicile. In the event of the death in the Country of any of these personnel or members of their families, the Contractor
shall similarly be responsible for making the appropriate arrangements for their return or burial.
The 2017 Special Provisions also includes the following:
“The Contractor may bring into the Country any foreign personnel who are necessary for the execution of the
Works to the extent allowed by the applicable Laws. The Contractor shall ensure that these personnel are provided
with the required residence visas and work permits. The Employer shall, if requested by the Contractor, use all
reasonable endeavours in a timely and expeditious manner to assist the Contractor in obtaining any local, state,
national, or government permission required for bringing in the Contractor’s personnel.”
End of Document
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1
Section 6.13 - Supply of Foodstuffs, UKBC-UFIDIC 500923113 (2021)
Section 6.13 - Supply of Foodstuffs
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.13 - Supply of Foodstuffs
6-040
The Contractor shall arrange for the provision of a sufficient supply of suitable food as may be stated in the Specification
at reasonable prices for the Contractor’s Personnel for the purposes of or in connection with the Contract.
End of Document
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1
Section 6.14 - Supply of Water, UKBC-UFIDIC 500923127 (2021)
Section 6.14 - Supply of Water
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.14 - Supply of Water
6-041
The Contractor shall, having regard to local conditions, provide on the Site an adequate supply of drinking and other water
for the use of the Contractor’s Personnel.
End of Document
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Section 6.15 - Measures Against Insect and Pest Nuisance, UKBC-UFIDIC 500923108...
Section 6.15 - Measures Against Insect and Pest Nuisance
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.15 - Measures Against Insect and Pest Nuisance
6-042
The Contractor shall at all times take the necessary precautions to protect the Contractor’s Personnel employed on the Site
from insect and pest nuisance, and to reduce the danger to their health. The Contractor shall comply with all the regulations
of the local health authorities, including use of appropriate insecticide.
End of Document
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1
Section 6.16 - Alcoholic Liquor or Drugs, UKBC-UFIDIC 500923091 (2021)
Section 6.16 - Alcoholic Liquor or Drugs
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.16 - Alcoholic Liquor or Drugs
6-043
The Contractor shall not, otherwise than in accordance with the laws of the Country, import, sell, give, barter or otherwise
dispose of any alcoholic liquor or drugs, or permit or allow importation, sale, gift, barter or disposal thereto by Contractor’s
Personnel.
End of Document
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1
Section 6.17 - Arms and Ammunition, UKBC-UFIDIC 500923097 (2021)
Section 6.17 - Arms and Ammunition
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.17 - Arms and Ammunition
6-044
The Contractor shall not give, barter, or otherwise dispose of, to any person, any arms or ammunition of any kind, or allow
Contractor’s Personnel to do so.
End of Document
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1
Section 6.18 - Festivals and Religious Customs, UKBC-UFIDIC 500923080 (2021)
Section 6.18 - Festivals and Religious Customs
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.18 - Festivals and Religious Customs
6-045
The Contractor shall respect the Country’s recognised festivals, days of rest and religious or other customs.
End of Document
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1
Section 6.19 - Funeral Arrangements, UKBC-UFIDIC 500923116 (2021)
Section 6.19 - Funeral Arrangements
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.19 - Funeral Arrangements
6-046
The Contractor shall be responsible, to the extent required by local regulations, for making any funeral arrangements for
any of his local employees who may die while engaged upon the Works.
End of Document
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1
Section 6.20 - Forced Labour, UKBC-UFIDIC 500923107 (2021)
Section 6.20 - Forced Labour
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.20 - Forced Labour
6-047
The Contractor shall not employ ‘forced or compulsory labour’ in any form. ‘Forced or compulsory labour’ consists of all
work or service, not voluntarily performed, that is extracted from an individual under threat of force or penalty.
End of Document
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1
Section 6.21 - Child Labour, UKBC-UFIDIC 500923117 (2021)
Section 6.21 - Child Labour
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.21 - Child Labour
6-048
The Contractor shall not employ children in a manner that is economically exploitative, is likely to be hazardous, or to
interfere with, the child’s education, or to be harmful to the child’s health or physical, mental, spiritual, moral, or social
development. Where the relevant labour laws of the Country have provisions for employment of minors, the Contractor
shall follow those laws applicable to the Contractor. Children below the age of 18 years shall not be employed in dangerous
work.
End of Document
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1
Section 6.22 - Employment Records of Workers, UKBC-UFIDIC 500923093 (2021)
Section 6.22 - Employment Records of Workers
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.22 - Employment Records of Workers
6-049
The Contractor shall keep complete and accurate records of the employment of labour at the Site. The records shall include
the names, ages, genders, hours worked and wages paid to all workers. These records shall be summarised on a monthly
basis and submitted to the Engineer. The records shall be included in the details to be submitted by the Contractor under
Sub-Cl.6.10 [Records of Contractor’s Personnel and Equipment].
End of Document
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1
Section 6.23 - Workers’ Organisations, UKBC-UFIDIC 500923092 (2021)
Section 6.23 - Workers’ Organisations
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.23 - Workers’ Organisations
6-050
In countries where the relevant labour laws recognise workers’ rights to form and to join workers’ organisations of
their choosing without interference and to bargain collectively, the Contractor shall comply with such laws. Where the
relevant labour laws substantially restrict workers’ organisations, the Contractor shall enable alternative means for the
Contractor’s Personnel to express their grievances and protect their rights regarding working conditions and terms of
employment. In either case described above, and where the relevant labour laws are silent, the Contractor shall not
discourage the Contractor’s Personnel from forming or joining workers’ organisations of their choosing or from bargaining
collectively, and shall not discriminate or retaliate against the Contractor’s Personnel who participate, or seek to participate,
in such organisations and bargain collectively. The Contractor shall engage with such workers’ representatives. Workers’
organisations are expected to fairly represent the workers in the workforce.
End of Document
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1
Section 6.24 - Non-discrimination and Equal Opportunity, UKBC-UFIDIC 500923119...
Section 6.24 - Non-discrimination and Equal Opportunity
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 6 - Clause 6—Staff and Labour
Section 6.24 - Non-discrimination and Equal Opportunity
6-051
The Contractor shall not make employment decisions on the basis of personal characteristics unrelated to inherent job
requirements. The Contractor shall base the employment relationship on the principle of equal opportunity and fair
treatment and shall not discriminate with respect to aspects of the employment relationship, including recruitment and
hiring, compensation (including wages and benefits), working conditions and terms of employment, access to training,
promotion, termination of employment or retirement, and discipline. In countries where the relevant labour laws provide
for non-discrimination in employment, the Contractor shall comply with such laws. When the relevant labour laws are
silent on non-discrimination in employment, the Contractor shall meet this sub-clause’s requirements. Special measures of
protection or assistance to remedy past discrimination or selection for a particular job based on the inherent requirements
of the job shall not be deemed discrimination.
End of Document
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Chapter 7 - Clause 7—Plant, Materials and Workmanship, UKBC-UFIDIC 500923133...
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Differences between the Red and Yellow Books
7-001
There are no differences between the two contract forms.
End of Document
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1
Section 7.1 - Manner of Execution, UKBC-UFIDIC 500923144 (2021)
Section 7.1 - Manner of Execution
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.1 - Manner of Execution
7-002
The Contractor shall carry out the manufacture, supply, installation, testing and commissioning and/or repair of Plant, the
production, manufacture, supply and testing of Materials, and all other operations and activities during the execution of
the Works:
(a)in the manner (if any) specified in the Contract;
(b)in a proper workmanlike and careful manner, in accordance with recognised good practice; and
(c)with properly equipped facilities and non-hazardous Materials, except as otherwise specified in the Contract.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923139 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.1 - Manner of Execution
Overview of Key Features
7-003
•The Contractor shall carry out the work required to carry out the Contract in the manner specified in the Contract.
•The Contractor shall carry out the required work in a workmanlike and careful manner.
•The Contractor shall carry out the required work in accordance with recognised good practice.
•The Contractor must ensure the Contractor’s facilities are properly equipped.
•The Contractor shall carry out the required work using non-hazardous materials, unless otherwise specified in the Contract.
End of Document
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1
Commentary, UKBC-UFIDIC 500923154 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.1 - Manner of Execution
Commentary
7-004
Sub-Clause 7.1 deals with the way in which the Contractor carries out his work. It should be read in conjunction with SubCl.4.1. Under the 2017 Form, the list of activities that the Contractor must carry out in the manner specified by the sub-clause
has been extended to include “supply, installation, testing, commissioning and repair”.
Materials are defined under Sub-Cl.1.1.53 as “things of all kinds (other than Plant), whether on the Site or otherwise allocated
to the Contract and intended to form or forming part of the Permanent Works, including the supply-only materials (if any) to be
supplied by the Contractor under the Contract”. Plant is defined under Sub-Cl.1.1.65 (Red Book) as “the apparatus, equipment,
machinery and vehicles (including components) whether on the Site or otherwise allocated to the Contract and intended to form
or forming part of the Permanent Works”.
Sub-Clause 7.1(a) is a reminder to the Contractor that quality and performance standards are likely to be found elsewhere in
the Contract. If there is reference to local standards which cannot be easily obtained, a Contractor can by reference to SubCl.2.1 seek the assistance of the Employer.
Employers, those putting together contract documentation (and those responsible for designing and/or constructing the project
in question) would be well advised to take heed of the comments of Jackson LJ in the case of MT Højgaard A/S v E.On Climate
And Renewables UK Robin Rigg East Ltd 1 where he noted that:
“The court is confronted in this case with contractual documents of multiple authorship, which contain much loose
wording. The task of the court is to identify the precise extent of the obligations imposed upon [the Contractor].”
Sub-Clause 7.1(b) imposes upon the Contractor the obligation to demonstrate good workmanship (“proper workmanlike and
careful manner”) in executing the Works and manufacturing Materials and Plant. The standards imposed by this clause are
general in nature and their concrete meaning will vary from country to country. It is probable, therefore, that an Employer will
further define the standard of skills required from the Contractor within the Employer’s Requirements and other specifications.
In England and Wales, the extent of a contractor’s duty to demonstrate proper workmanship will depend on all the circumstances
of a particular case, including the degree of skill advertised by the Contractor to the employer. This duty may also be found
to include certain obligations with regard to the design of the works. In civil law jurisdictions, regard will be had to the actual
obligations set out under the contract.
In cases where the design carried out by others clearly appears to be flawed, the Contractor may well be under an obligation
to warn the employer of his findings 2 : an obligation strengthened by the introduction at Sub-Cl.8.4 of an advance warning
obligation. 3
A number of performance specifications have been developed for many construction operations. Rather than specifying the
required construction process, these specifications refer to the required performance or quality of the finished facility. The exact
method by which this performance is obtained is left to the construction contractor. Here, Sub-Cl.4.1 provides that the Contractor
must complete the Works in accordance with the Contract and that the Contractor shall, when required by the Employer, submit
details of the methods which it proposes to adopt. The Contractor is not to make any significant alternations to this without
notifying the Engineer.
This is important. Clause 8(3) of the ICE form of Contract provides that the Contractor shall take full responsibility for the
methods of construction. However, the English courts 4 have held that, notwithstanding this apparently clear provision, if a
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1
Commentary, UKBC-UFIDIC 500923154 (2021)
method statement was incorporated into the Contract, then the Contractor would be obliged to work in accordance with that
statement. Thus, entitling the Contractor to payment for works deemed to be over and above that required by the method
statement.
No definition is provided of either “properly equipped facilities” or “non-hazardous”. Whilst the meaning of “properly
equipped” is something which will become clear if the Contractor is in breach of the obligation (i.e. falling behind because he
did not have sufficient plant), the meaning of “non hazardous” is less clear-cut.
A typical definition of a hazardous material would be:
“Any material or artificial substance (whether solid, liquid, gas, ion, vapour, electro magnetic or radiation) which
whether alone or in combination with others is capable of causing harm or having a significant deleterious effect
on human health or the Environment.”
It is usually the case that a contract will forbid the use of prohibited or deleterious materials or as here require that materials
be “non-hazardous”. This is clearly the intention in this instance. However, in the interests of clarity both parties might want to
include a definition within the contract. Traditionally such a definition would have been provided by use of a list. Nevertheless,
the more recent approach recognises the dangers of the list approach, namely what happens if an item is left out. 5 For example:
“The Contractor shall ensure that the Works shall not, when completed, incorporate any goods, materials,
substances or equipment which contravene any relevant British and/or European Union Standards, Codes of
Practice or good building practice or techniques or which are stated in the Employer’s Requirements to be
prohibited or which are generally known at the time of use to be deleterious to health and safety or the durability
of the completed works or any part thereof in the particular circumstances in which they are to be used having
regard to the guidance note ‘Good Practice in Selection of Construction Materials’ (Ove Arup & Partners) current
at the date the works.” 6
The 1999 FIDIC Guide noted that the Engineer was not empowered to relax the requirements of this sub-clause and that
the Contractor would be in breach of this sub-clause even if the Engineer had consented to the use of Materials which were
subsequently found to be hazardous. Liability is therefore strict and the Contractor, following Sub-Cl.3.1(c), will have to replace
the material in question. The Contractor should also bear in mind the requirements of Sub-Cl.7.8.2 when it comes to the disposal
of surplus material, which could be or become hazardous.
Footnotes
1
2
3
4
5
6
[2015] EWCA Civ 407. Whilst this Court of Appeal decision was over-turned by the Supreme Court, [2017] UKSC 59,
LJ Jackson’s comments stand true of any contract.
See discussion in relation to Sub-Cl.4.1 and Plant v Adams.
Although there is apparently no sanction for not giving a warning in accordance with Sub-Cl.8.4, the obligation is
expressed as a mandatory “shall”.
Yorkshire Waste Authority v Sir Alfred McAlpine & Son (Northern) Ltd 32 B.L.R. 114 and Holland Dredging (UK)
Ltd v Dredging and Construction Courts Ltd 37 B.L.R. 1. Indeed, following the Yorkshire Water Authority case, parties
to the contract might want to confirm expressly that any pre-tender programme or other documents do not form part
of the contract itself.
Although, of course, care must be taken to ensure the definition is project specific. A chemical plant might have different
requirements to standard civil engineering works.
Obviously the guidance may vary from jurisdiction to jurisdiction.
End of Document
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2
Section 7.2 - Samples, UKBC-UFIDIC 500923140 (2021)
Section 7.2 - Samples
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.2 - Samples
7-005
The Contractor shall submit the following samples of Materials, and relevant information, to the Engineer for consent prior
to using the Materials in or for the Works:
(a)manufacturer’s standard samples of Materials and samples specified in the Contract, all at the Contractor’s cost; and
(b)additional samples instructed by the Engineer as a Variation. Each sample shall be labelled as to origin and intended
use in the Works.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923148 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.2 - Samples
Overview of Key Features
7-006
•The Contractor must submit to the Engineer, for approval, prior to use.
(i)manufacturer’s standard samples of Materials; and
(ii)samples specified in the Contract.
•The Contractor will supply these samples at his own cost.
•The Contractor must supply any other additional sample, which may be requested by the Engineer.
•The Contractor will supply these other samples at the Employer’s cost.
End of Document
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Commentary, UKBC-UFIDIC 500923130 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.2 - Samples
Commentary
7-007
Sub-Clause 7.2 introduces a system of “quasi-total quality control” with regard to the Materials. In this system, no defective
items are allowed anywhere in the construction process.
As the Contractor is responsible for the cost of testing both the manufacturer’s standard samples of Materials and the samples
specified in the Contract, the costs of these tests must be included in the contract sum.
By Sub-Cl.1.3, the Engineer cannot unreasonably withhold his consent to the use of Materials. Any decision by the Engineer
to reject certain materials will thus need to be supported by scientific evidence (e.g. laboratory test reports). Under the scheme
laid down by Sub-Cl.5.2.2, the Engineer has 21 days to carry out the review and if the Engineer fails to provide a Notice to the
Contractor within the Review Period, the Engineer shall be deemed to have given a Notice of No-objection.
End of Document
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1
Section 7.3 - Inspection, UKBC-UFIDIC 500923145 (2021)
Section 7.3 - Inspection
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.3 - Inspection
7-008
The Employer’s Personnel shall, during all the normal working hours stated in the Contract Data and at all other reasonable
times:
(a)have full access to all parts of the Site and to all places from which natural Materials are being obtained;
(b)during production, manufacture and construction (at the Site and elsewhere), be entitled to:
(i)examine, inspect, measure and test (to the extent stated in the Employer’s Requirements) the Materials, Plant
and workmanship,
(ii)check the progress of manufacture of Plant and production and manufacture of Materials, and
(iii)make records (including photographs and/or video recordings); and
(c)carry out other duties and inspections, as specified in these Conditions and the Employer’s Requirements.
The Contractor shall give the Employer’s Personnel full opportunity to carry out these activities, including providing safe
access, facilities, permissions and safety equipment.
The Contractor shall give a Notice to the Engineer whenever any Materials, Plant or work is ready for inspection, and
before it is to be covered up, put out of sight, or packaged for storage or transport. The Employer’s Personnel shall then
either carry out the examination, inspection, measurement or testing without unreasonable delay, or the Engineer shall
promptly give a Notice to the Contractor that the Employer’s Personnel do not require to do so. If the Engineer gives no
such Notice and/or the Employer’s Personnel do not attend at the time stated in the Contractor’s Notice (or such time as
may be agreed with the Contractor), the Contractor may proceed with covering up, putting out of sight or packaging for
storage or transport.
If the Contractor fails to give a Notice in accordance with this Sub-Clause, the Contractor shall, if and when required by
the Engineer, uncover the work and thereafter reinstate and make good, all at the Contractor’s risk and cost.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923150 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.3 - Inspection
Overview of Key Features
7-009
•The Employer is entitled to inspect the entire Site and anywhere where work is being carried out, even off-site.
•The purpose of the inspection is to examine materials and workmanship and check progress of the manufacture of Plant
or Materials.
•The Contractor cannot reasonably refuse a request to inspect and must give the Employer’s Personnel, including the
Engineer, full opportunity to carry out the inspection.
•The fact that an inspection has been carried out will not relieve the Contractor of any liability.
•The Contractor shall notify the Engineer when work is ready in order that the Engineer, if he chooses, may carry out
an inspection.
•If the Contractor fails to give notice, the Contractor must uncover the work to enable an inspection to take place, and then
reinstate and make it good at its own cost.
End of Document
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Commentary, UKBC-UFIDIC 500923151 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.3 - Inspection
Commentary
7-010
This is a wide-ranging sub-clause giving the Employer’s Personnel the right to inspect (upon reasonable notice) and test not
only any work achieved on site but also Materials or Plant produced or manufactured off-site before these are actually used
by the Contractor and incorporated in the works. It should be remembered that by Sub-Cl.1.1.32 (Yellow Book), Employer’s
Personnel has a wide-ranging definition including the Engineer and those employed by the Engineer. Unlike Sub-Cl.7.4 which
follows, these tests might be tests which are not specified in the contract or tender information.
In addition, the Contractor is under a strict obligation to give notice when any work is completed and ready for inspection prior
to it being covered up or put out of sight. No definition is provided of “any work” and there is scope for disagreement and
potential disruption at site if the Engineer wants to inspect work which may already have been covered up.
The purpose of this clause is to prevent defects before they actually occur. It reflects the current trend of total quality control
management adopted by the construction industry.
In practical terms, it will be sensible for the parties to agree on a specific notice procedure for informing the Engineer whenever
any work is ready for inspection. This, for example, can be done by means of weekly or monthly progress reports and/or any
regular site meetings which may take place.
End of Document
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Section 7.4 - Testing by the Contractor, UKBC-UFIDIC 500923138 (2021)
Section 7.4 - Testing by the Contractor
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.4 - Testing by the Contractor
7-011
This Sub-Clause shall apply to all tests specified in the Contract, other than the Tests after Completion (if any).
The Contractor shall provide all apparatus, assistance, documents and other information, temporary supplies of electricity
and water, equipment, fuel, consumables, instruments, labour, materials, and suitably qualified, experienced and competent
staff, as are necessary to carry out the specified tests efficiently and properly. All apparatus, equipment and instruments
shall be calibrated in accordance with the standards specified in the Employer’s Requirements or defined by applicable
Laws and, if requested by the Engineer, the Contractor shall submit calibration certificates before carrying out testing.
The Contractor shall give a Notice to the Engineer, stating the time and place for the specified testing of any Plant, Materials
and other parts of the Works. This Notice shall be given in reasonable time, having regard to the location of the testing,
for the Employer’s Personnel to attend.
The Engineer may, under Clause 13 [Variations and Adjustments], vary the location or timing or details of specified tests,
or instruct the Contractor to carry out additional tests. If these varied or additional tests show that the tested Plant, Materials
or workmanship is not in accordance with the Contract, the Cost and any delay incurred in carrying out this Variation shall
be borne by the Contractor.
The Engineer shall give a Notice to the Contractor of not less than 72 hours of his/her intention to attend the tests. If the
Engineer does not attend at the time and place stated in the Contractor’s Notice under this Sub-Clause, the Contractor may
proceed with the tests, unless otherwise instructed by the Engineer, which tests shall then be deemed to have been made
in the Engineer’s presence. If the Contractor suffers delay and/or incurs Cost from complying with any such instruction
or as a result of a delay for which the Employer is responsible, the Contractor shall be entitled subject to Sub-Clause 20.2
[Claims For Payment and/or EOT] to EOT and/or payment of Cost Plus Profit.
If the Contractor causes any delay to specified tests (including varied or additional tests) and such delay causes the
Employer to incur costs, the Employer shall be entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to
payment of these costs by the Contractor.
The Contractor shall promptly forward to the Engineer duly certified reports of the tests. When the specified tests have
been passed, the Engineer shall endorse the Contractor’s test certificate, or issue a test certificate to the Contractor, to that
effect. If the Engineer has not attended the tests, he/she shall be deemed to have accepted the readings as accurate.
Sub-Clause 7.5 [Defects and Rejection] shall apply in the event that any Plant, Materials and other parts of the Works
fails to pass a specified test.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923137 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.4 - Testing by the Contractor
Overview of Key Features
7-012
•The Contractor and Engineer will agree the time and place for any specified tests.
•The Contractor will provide everything necessary to carry out the tests at his own cost, including qualified personnel.
•If, pursuant to Cl.13, the Engineer varies a specified test or orders an additional test, the cost of this test will be borne by
the Employer, unless the varied or additional test shows that work is not in accordance with the Contract. In which case,
the Contactor will bear the cost of this varied or additional test as well as any delay incurred.
•The Engineer must give not less than 24 hours’ notice of his intention to attend any test.
•If the Engineer does not attend an agreed test, the test can nevertheless proceed and will be deemed to have been carried
out in the Engineer’s presence.
•If the Contractor suffers delay because of the tests, he must give notice to the Engineer who will then determine whether
or not to grant time and/or money to the Contractor in accordance with Sub-Cl.3.7 [Determinations].
•The Contractor must forward certified test reports to the Engineer.
End of Document
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Commentary, UKBC-UFIDIC 500923149 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.4 - Testing by the Contractor
Commentary
7-013
This sub-clause sets out how specified tests including Tests on Completion and tests instructed pursuant to Cl.13 should be
carried out. It does not deal with any tests that may be carried out after completion. This is covered by Cl.9.
The way this clause is intended to work is that the Contractor will give notice under Cl.7.3 that an item of work is ready to
be tested.
The time and date of the test will be agreed and the Engineer will give not less than 24 hours’ notice of his intention to attend.
In practice, it is likely that the parties will know well in advance when an item is due to be completed and so tests will often
be arranged ahead of completion.
Sub-Clause 7.5 deals with items which fail the tests and are rejected by the Engineer.
The costs of a test instructed pursuant to Cl.13 will normally be borne by the Employer, unless this test is unsuccessful. In
reality, however, most tests will be borne by the Contractor as they will fall within the wide ambit of Sub-Cl.7.3 or otherwise
will be specifically required elsewhere in the Contract. It is therefore of the utmost importance that the Contractor take the costs
of all possible tests into account when pricing the works in the tender.
End of Document
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Section 7.5 - Defects and Rejection, UKBC-UFIDIC 500923155 (2021)
Section 7.5 - Defects and Rejection
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.5 - Defects and Rejection
7-014
If, as a result of an examination, inspection, measurement or testing, any Plant, Materials, design or workmanship is
found to be defective or otherwise not in accordance with the Contract, the Engineer shall give a Notice to the Contractor
describing the item of Plant, Materials, design or workmanship that has been found to be defective. The Contractor shall
then promptly prepare and submit a proposal for necessary remedial work.
The Engineer may Review this proposal, and may give a Notice to the Contractor stating the extent to which the proposed
work, if carried out, would not result in the Plant, Materials, design or workmanship complying with the Contract. After
receiving such a Notice the Contractor shall promptly submit a revised proposal to the Engineer. If the Engineer gives no
such Notice within 14 days after receiving the Contractor’s proposal (or revised proposal), the Engineer shall be deemed
to have given a Notice of No-objection.
If the Contractor fails to promptly submit a proposal (or revised proposal) for remedial work, or fails to carry out the
proposed remedial work to which the Engineer has given (or is deemed to have given) a Notice of No-objection, the
Engineer may:
(a)instruct the Contractor under sub-paragraph (a) and/or (b) of Sub-Clause 7.6 [Remedial Work]; or
(b)reject the design, Plant, Materials or workmanship by giving a Notice to the Contractor, with reasons, in which
case sub-paragraph (a) of Sub-Clause 11.4 [Failure to Remedy Defects] shall apply.
After remedying defects in any Plant, Materials, design or workmanship, if the Engineer requires any such items to be
retested, the tests shall be repeated in accordance with Sub-Clause 7.4 [Testing by the Contractor] at the Contractor’s risk
and cost. If the rejection and retesting cause the Employer to incur additional costs, the Employer shall be entitled subject
to Sub-Clause 20.2 [Claims For Payment and/or EOT] to payment of these costs by the Contractor.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923136 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.5 - Defects and Rejection
Overview of Key Features
7-015
•If an item is defective or not in accordance with the Contract it may be rejected by notice from the Engineer.
•The Engineer must give reasons for the rejection.
•The Contractor must remedy the rejected item so that it complies with the Contract.
•The Engineer may require a retest.
•If any rejection or retesting causes the Employer to incur additional costs, these will be borne by the Contractor.
End of Document
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Commentary, UKBC-UFIDIC 500923141 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.5 - Defects and Rejection
Commentary
7-016
The heading of this sub-clause under the 1999 Form was just “Rejection”. Whilst headings do not usually form part of a contract,
when it comes to interpreting what they mean, the expansion of the title is a helpful reminder of the scope of this sub-clause.
There is no definition of “defect” in the FIDIC form, or, for example, the UAE Civil Code. 7 Generally, most observers would
accept the definition found in the NEC4 Engineering and Construction Contract (“ECC”) core Cl.11.2 (6) where a defect is
described as, “a part of the works which is not in accordance with the Scope”.
If any item of plant or workmanship fails or is found to be defective, the Contractor will bear the cost associated with this
failure. This is because the risk of such items failing will have been included in the Contract Sum and by virtue of Sub-Cll.4.1
and 7.1 the Contractor must carry out his work in accordance with the Contract.
The Contractor will also logically be responsible for the cost of retesting a defective item insofar as the Contractor is responsible
for the failure.
Although there is apparently nothing controversial in this clause, the Engineer must give reasons in a Notice for any rejection and
it is possible that these may be challenged. In addition, the Contractor might dispute whether the Employer has any entitlements
to additional costs. If a Contractor successfully challenges a rejection, then the question must be asked as to who is responsible
for the costs of any re-testing that may have taken place.
Further, the Contractor should remember that in accordance with Sub-Cl.15.2(c)(ii), the Employer is entitled to terminate the
Contract if the Contractor fails within 28 days, without reasonable excuse, to comply with any notice issued by the Engineer
under this clause.
Footnotes
7
Although like many civil codes, under art.880, contractors (and supervising engineers and architects) are obliged to
construct a building that is free from total or partial collapse and defects threatening its stability and safety for 10 years
after delivery of the works.
End of Document
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1
Section 7.6 - Remedial Work, UKBC-UFIDIC 500923132 (2021)
Section 7.6 - Remedial Work
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.6 - Remedial Work
7-017
In addition to any previous examination, inspection, measurement or testing, or test certificate or Notice of No-objection
by the Engineer, at any time before the issue of the Taking-Over Certificate for the Works the Engineer may instruct the
Contractor to:
(a)repair or remedy (if necessary, off the Site), or remove from the Site and replace any Plant or Materials which are
not in accordance with the Contract;
(b)repair or remedy, or remove and re-execute, any other work which is not in accordance with the Contract; and
(c)carry out any remedial work which is urgently required for the safety of the Works, whether because of an accident,
unforeseeable event or otherwise.
The Contractor shall comply with the instruction as soon as practicable and not later than the time (if any) specified in the
instruction, or immediately if urgency is specified under sub-paragraph (c) above.
The Contractor shall bear the cost of all remedial work required under this Sub-Clause, except to the extent that any work
under sub-paragraph (c) above is attributable to:
(i)any act by the Employer or the Employer’s Personnel. If the Contractor suffers delay and/or incurs Cost in carrying
out such work, the Contractor shall be entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to EOT
and/or payment of such Cost Plus Profit; or
(ii)an Exceptional Event, in which case Sub-Clause 18.4 [Consequences of an Exceptional Event] shall apply.
If the Contractor fails to comply with the Engineer’s instruction, the Employer may (at the Employer’s sole discretion)
employ and pay other persons to carry out the work. Except to the extent that the Contractor would have been entitled to
payment for work under this Sub-Clause, the Employer shall be entitled subject to Sub-Clause 20.2 [Claims For Payment
and/or EOT] to payment by the Contractor of all costs arising from this failure. This entitlement shall be without prejudice
to any other rights the Employer may have, under the Contract or otherwise.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923156 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.6 - Remedial Work
Overview of Key Features
7-018
•The Contractor must, within a reasonable time, comply with any Engineer’s instruction to:
(i)repair or remove and replace any Plant or materials which do not conform with the Contract; or
(ii)remedy or remove and re-execute any works which do not conform with the Contract.
•The Contractor must comply immediately with any Engineer’s instruction to execute works which are urgently required
for the safety of the works.
•If the Contractor fails to comply with the Engineer’s instruction, the Employer will be entitled to employ other persons
to carry out the instruction.
•In the event the Employer employs other persons to carry out the instruction, then, unless the works instructed by the
Engineer would have entitled the Contractor to payment under the Contract, the Contractor will pay the cost of these works.
End of Document
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1
Commentary, UKBC-UFIDIC 500923153 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.6 - Remedial Work
Commentary
7-019
This sub-clause which, uncontroversially, commences by confirming that the Engineer can instruct the Contractor to remove or
re-execute non-compliant or dangerous plant or materials, goes on to give the Engineer the option of instructing others, at the
Contractor’s cost, to remedy the work in question if the Contractor fails within a reasonable time to carry out the remedial work.
In addition, as with Sub-Cl.7.5, the Contractor should remember that in accordance with Sub-Cl.15.2(c)(ii), the Employer is
entitled to terminate the Contract if the Contractor fails within 28 days, without reasonable excuse, to comply with any notice
issued by the Engineer under this clause. Note however that this 28-day deadline does not mean that 28 days is a reasonable
period. What is reasonable will depend on the circumstances on Site. If a matter requires urgent or immediate attention, it would
be sensible if the Engineer made this clear in his instruction.
These options available to the Engineer pursuant to Cl.7.6 are radical ones and should only be used in situations where it would
be unreasonable to repair the defective material or works.
Under most, if not all applicable laws, if the Contractor is able to establish that an Engineer’s instruction under Cl.7.6 was
unreasonable as, for example, repairs could have successfully been undertaken, then the Employer will be responsible for the
costs arising from the replacement less the cost of what a reasonable repair would have cost.
The exact meaning of what constitutes a reasonable time for the Contractor to comply with the Engineer’s instruction will
therefore depend on the particular circumstances of the works and on the interpretation under the applicable law.
End of Document
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Section 7.7 - Ownership of Plant and Materials, UKBC-UFIDIC 500923135 (2021)
Section 7.7 - Ownership of Plant and Materials
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.7 - Ownership of Plant and Materials
7-020
Each item of Plant and Materials shall, to the extent consistent with the mandatory requirements of the Laws of the
Country, become the property of the Employer at whichever is the earlier of the following times, free from liens and other
encumbrances:
(a)when it is delivered to the Site;
(b)when the Contractor is paid the value of the Plant and Materials under Sub-Clause 8.11 [Payment for Plant and
Materials after Employer’s Suspension]; or
(c)when the Contractor is paid the amount determined for the Plant and Materials under Sub-Clause 14.5 [Plant and
Materials intended for the Works].
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923131 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.7 - Ownership of Plant and Materials
Overview of Key Features
7-021
•Provided the laws of the Country do not provide otherwise, items of Plant and Materials will become the property of
the Employer either:
(i)when they are delivered to the site; or
(ii)when the Contractor is entitled to payment for them, whichever takes place first.
End of Document
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1
Commentary, UKBC-UFIDIC 500923146 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.7 - Ownership of Plant and Materials
Commentary
7-022
The legal position as to the ownership of Plant and Materials on the occurrence of insolvency will vary from jurisdiction to
jurisdiction.
A property-vesting clause
7-023
The primary goal of this property-vesting sub-clause is to provide some form of security to the Employer for the sums it has
had to disburse in advance of completion. It also enables the immediate replacement of the Contractor by another to complete
the works, if this ever becomes necessary.
As it is a property-vesting clause, it can be distinguished from intermediate protective measures such as Cl.65.2 of the 7th edn
of the ICE Standard Form of Contract. Clause 65.2 does not grant any proprietary rights to the Employer but simply provides
it with the option to:
“… at any time sell any of the … Contractor’s Equipment temporary works goods and materials on any part of
the Site and apply the proceeds of the sale in or towards the satisfaction of any sums due or which may become
due to him from the Contractor under the Contract.”
In England and Wales, in the case of Smith v Bridgend County BC, 8 the House of Lords held that this arrangement amounted
to the placing of a floating charge over the Contractor’s assets. In the absence of registration in accordance with Pt XII of the
Companies Act 1985, such floating charge will be void against the Contractor’s administrator. In contrast, under Sub-Cl.7.7,
the Employer is granted full ownership of the items of plant and materials. No registration is therefore necessary.
Subject to the provisions of the law of the site
7-024
Sub-Clause 7.7 grants property-vesting rights to the Employer, “to the extent consistent with the Laws of the Country”. The
Contractor by virtue of Sub-Cl.2.1 can ask the Employer for copies of relevant laws which may affect the Contract and by SubCl.4.10 will be deemed to have taken into account the effect of any such laws when compiling his tender.
This means that, regardless of the law governing the Contract, if the legislation of the country where the site is located grants
security rights to the Contractor or its subcontractors over the items of Plant and material, these provisions will take precedence
over the rights granted to the Employer under this sub-clause. There is thus no potential for conflict between local legislation and
Sub-Cl.7.7 as the former will always prevail over the latter. This issue is highly relevant, as several jurisdictions possess a type of
contractor’s lien legislation, which provides statutory security in the form of a lien for payment of money owing to contractors. 9
© 2025 Thomson Reuters.
1
Commentary, UKBC-UFIDIC 500923146 (2021)
In the situation where a subcontractor relies on such statutory provisions to regain control of the materials he supplied to the
site, the Contractor will not be in breach of Sub-Cl.7.7 in respect of the Employer, as Sub-Cl.7.7 specifically grants priority
to “the Laws of the country”.
Footnotes
8
9
[2002] 1 A.C. 336 HL; [2002] 1 All E.R. 292.
See, for example, British Columbia Builders Lien Act 1997—Florida Statute 713.13.
End of Document
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2
Section 7.8 - Royalties, UKBC-UFIDIC 500923143 (2021)
Section 7.8 - Royalties
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.8 - Royalties
7-025
Unless otherwise stated in the Employer’s Requirements, the Contractor shall pay all royalties, rents and other payments
for:
(a)natural Materials obtained from outside the Site; and
(b)the disposal of material from demolitions and excavations and of other surplus material (whether natural or manmade), except to the extent that disposal areas within the Site are specified in the Employer’s Requirements.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500923147 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.8 - Royalties
Overview of Key Features
7-026
•The Contractor shall pay for natural Materials obtained from outside the Site.
•The Contractor shall pay for the removal of surplus material from the site, except where the Contract provides for disposal
areas within the site.
End of Document
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1
Commentary, UKBC-UFIDIC 500923152 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.8 - Royalties
Commentary
7-027
This straightforward clause confirms that the Contractor must allow for the payment of any Royalties for any natural materials
together with the disposal costs of debris and surplus materials in compiling his tender.
In addition, if the Contract provides for disposal areas, then the Contractor is also obliged to dispose of all surplus material, be
it demolition debris or unearthed soil, into the designated disposal area(s).
End of Document
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1
Section 7.9 - Origins of Goods, UKBC-UFIDIC 500923134 (2021)
Section 7.9 - Origins of Goods
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 7 - Clause 7—Plant, Materials and Workmanship
Section 7.9 - Origins of Goods
7-028
Like the 1999 Form, the Special Provisions here have a sub-clause which requires that the country of origin of good and materials
be defined. This type of sub-clause might be required where the institution funding the project, or part of it, has particular rules
(or is governed by particular rules) which impose a restriction on the use of its funds. 10
The suggested sub-clause is as follows:
“All Goods shall have their origin in eligible source countries as defined in [Insert name of published guidelines
for procurement].
Goods shall be transported by carriers from these eligible source countries, unless exempted by the Employer
in writing on the basis of potential excessive costs or delays. Surety, insurance and banking services shall be
provided by insurers and bankers from the eligible source countries.”
This type of sub-clause is often also inserted if the Country where the Works are being carried out operates sanctions. Contractors
should also take care when sourcing supplies and materials that the country of origin does not prohibit trade with the country
where the works are being carried out. If delays occur, because shipments are stopped, that will be to the Contractor’s account.
Footnotes
10
See also comments about Sub-Cl.4.1 above.
End of Document
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1
Chapter 8 - Clause 8—Commencement, Delays and Suspension, UKBC-UFIDIC...
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Differences between the Red and Yellow Books
8-001
There are minor differences between the two forms, which reflect the difference between construction-only and design-build
operations. Thus, the Contractor’s programming obligations in Sub-Cl.8.3(c) of the Yellow Book only, include showing details
of commissioning and trial operations.
The payment schemes of the Red and Yellow Book are different too, which is why Sub-Cl.8.5 of the Red Book includes an
additional potential ground for an extension of time, namely if the measured quantity of any item of work in accordance with
Cl.12 is 10 per cent greater than the estimated quantity of this item in the Bill of Quantities and such increase in quantities
causes a delay to completion.
End of Document
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1
Section 8.1 - Commencement of Works, UKBC-UFIDIC 500923180 (2021)
Section 8.1 - Commencement of Works
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.1 - Commencement of Works
8-002
The Engineer shall give a Notice to the Contractor stating the Commencement Date, not less than 14 days before the
Commencement Date. Unless otherwise stated in the Particular Conditions, the Commencement Date shall be within 42
days after the Contractor receives the Letter of Acceptance.
The Contractor shall commence the execution of the Works on, or as soon as is reasonably practicable after, the
Commencement Date and shall then proceed with the Works with due expedition and without delay.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500923173 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.1 - Commencement of Works
Overview of Key Features
8-003
•The Engineer shall give the Contractor not less than 14 days’ notice of the Commencement Date.
•That Commencement Date, unless otherwise stated, shall be within 42 days after the Contractor receives the Letter of
Acceptance.
•The Contractor shall commence the works as soon as reasonably practicable after the Commencement Date.
•The Contractor shall proceed with the works with due expedition and without delay.
End of Document
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Commentary, UKBC-UFIDIC 500923184 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.1 - Commencement of Works
Commentary
8-004
This sub-clause deals with the date for commencement of the Contractor’s work. The Time for Completion runs from the
Commencement Date.
The Contract does not actually set out a date as to when the Contractor may commence work. Instead a 14-day 1 notice period is
provided for. Although the notice period of the Commencement Date provided for by Sub-Cl.8.1 may seem tight, the Contractor
knows that the Commencement Date will be within a 42-day window from the date that the Letter of Acceptance is received.
The Contractor is required to start the Works (which include the design element) as soon as is “reasonably practical”.
The Letter of Acceptance is defined by Sub-Cl.1.1.51 as being a formal letter signed by the Employer signifying acceptance
of the Contractor’s Letter of Tender.
If the formalities required by Sub-Cl.1.1.51 are not observed, the parties are thrown back on the Contract Agreement itself. 2
The Contract procedure provided for by the FIDIC terms and conditions does not envisage there being a letter of intent and
both parties to the Contract should understand the potential pitfalls if a letter of tender is issued which could be interpreted as
a letter of intent. Those potential pitfalls arise because the Commencement Date is the precursor of a number of events.
The actual date of the Commencement Date is of some importance as it is the trigger for a number of dates and actions that the
Contractor and (to a lesser extent) the Employer must take:
(i)The Time for Completion, set out in more detail at Sub-Cl.8.2, is calculated from the Commencement Date. In accordance
with the Contract Data 3 this period should be calculated in days.
(ii)The time for access to the site, set out in more detail in Sub-Cl.2.1, 4 is also calculated in the number of days from
the Commencement Date.
(iii)By Sub-Cl.4.2 the Contractor must, if required by the Contract, provide the Performance Security within 28 days of
receiving the Letter of Acceptance.
(iv)The Contractor, as required by Sub-Cl.4.3, must, unless the Contractor’s Representative is named in the Contract, before
the Commencement Date, submit to the Engineer for consent, details of the proposed Contractor’s Representative.
(v)By Sub-Cl.4.7.2, if the Contractor finds an error in any item of reference, Notice of the error must be given to the
Engineer within the date set out in the Contract Data. This date is calculated from the Commencement Date.
(vi)Under Sub-Cl.4.8, within 21 days of the Commencement Date and before commencing any construction on the Site, the
Contractor must submit to the Engineer for information a health and safety manual which has been specifically prepared
for the Works, the Site and other places where the Contractor intends to execute the Works. 5
(vii)The Sub-Cl.4.9 QM System must be submitted to the Engineer within 28 days of the Commencement Date.
(viii)By Sub-Cl.8.3, the Contractor must submit the initial programme within 28 days of receiving the Commencement
Date Notice.
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Commentary, UKBC-UFIDIC 500923184 (2021)
(ix)The first Sub-Cl.20 Progress Report must cover the period up to the end of the first month following the Commencement
Date.
(x)By Sub-Cl.14.4, if the Contract does not include a Schedule of Payments, the Contractor shall submit non-binding
estimates of the payments which he expects to become due during each period of three months. The first estimate shall be
submitted within 42 days after the Commencement Date.
(xi)Under Sub-Cl.16.2(e), if the Contractor does not receive a Notice of the Commencement Date within 180 days after
receiving the Letter of Acceptance, then this is a ground for termination under Cl.16.
(xii)By Sub-Cl.17.3, the Contractor takes full responsibility for the care of the Works and Goods from the Commencement
Date until the Taking-Over Certificate is issued.
(xiii)By Sub-Cl.19.2.1, the Contractor shall insure and keep insured in the joint names of the Contractor and the Employer
from the Commencement Date until the date of issue of the Taking-Over Certificate for the Works.
One potential initial problem is that although the Time for Completion might have started to run on the Commencement Date,
the date the Contractor is due to obtain access might be a significant number of days after the Commencement Date. Whilst
lead-in times can be used profitably, the Contractor should check that there is no discrepancy with the intended programme, as
he might have difficulties in arguing that he is entitled to an extension of time in accordance with Sub-Cl.8.4(e).
By Sub-Cl.1.1.25, day means calendar and not working day. This therefore includes weekends. With both these dates, it is
suggested that the parties should try and agree the actual calendar date in order to avoid any potential disagreement over the
day on which these two key events are to take place. It is critical that the commencement and end dates are clearly identified
and established to avoid uncertainty.
The Contract does not say what will happen if the Engineer is not able to give at least 14 days’ notice of the Commencement Date
such that it falls within the 42-day period defined by Sub-Cl.8.1 or if the Employer is not able to give access to the Contractor
within the defined period. Obviously it would be open for the Contractor and Employer to agree the changed periods. However,
given the mandatory words of this sub-clause, it is submitted that the giving of a late notice would be a breach of contract such
that the Contractor might well be entitled to consider the Contract to be at an end.
Sub-Clause 16.2(f) provides that if the Contractor does not receive a Notice of the Commencement Date under Sub-Cl.8.1
within 84 days after receiving the Letter of Acceptance, then the Contractor shall be entitled to give a Notice giving intention
to terminate.
By Sub-Cl.1.1.86 (Yellow Book), the Time for Completion, is calculated from the Commencement Date. Therefore, a Contractor
need not seek an extension of time if the Notice of the Commencement Date is late.
However, as noted above, the final paragraph of Sub-Cl.8.1 requires the Contractor to commence execution of the Works “as
soon as reasonably practicable” and to carry out those works with “due expedition and without delay”. These phrases are not
defined in the Contract, however the over-riding obligation on the Contractor is to complete his Works within the Time for
Completion of the Works. Therefore, strictly it might be considered that these terms are not required. Where a Contract includes
an express obligation for a contractor to complete the works by a specified date then, in most common law jurisdictions a term
will not be implied that the Contractor is to proceed regularly and diligently or with due expedition with those works. Without
these words, all the Contractor has to do is plan the works as he sees fit, provided that he completes the Works as required by the
Contract. 6 In this there is a similarity with the civil code approach. Article 877 of the UAE Civil Code requires a Contractor to
complete the contracted works in accordance with the conditions of contract. This is similar to a requirement for the Contractor
to complete contractual works by the agreed time for completion.
However, the fact that these express terms have been included within Sub-Cl.8.1 means that in theory even if the Contractor
does complete in time, if it can be shown that there has been a breach of Contract because the Contractor has not proceeded
with due expedition, then the Employer will:
(i)potentially be able to terminate the Contract under Cl.15; and
(ii)provided he can establish a loss, have available a potential remedy of damages. 7
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Commentary, UKBC-UFIDIC 500923184 (2021)
To take one example, in the case of Hounslow v Twickenham Garden Developments 8 it was said that even where the Contractor
is well ahead with the Works, he was not to be allowed to slow down so that the work is completed on time. Instead the Contractor
remained under an obligation to continue to proceed regularly and diligently.
The more usual phrase to be found in construction contracts is the obligation on the Contractor to proceed “regularly and
diligently”. It is suggested that the obligation to proceed with “due expedition” is likely to have a similar meaning.
Some guidance on the obligation to proceed regularly and diligently was provided in the case of West Faulkner Associates v
London Borough of Newham 9 where Simon Brown LJ commented:
“Taken together the obligation upon the contractor is essentially to proceed continuously, industriously and
efficiently with appropriate physical resources so as to progress the works steadily towards completion
substantially in accordance with the contract requirements as to time, sequence and quality of work.”
The judge then conceded that:
“Beyond that I think it impossible to give useful guidance. These are after all plain English words and in reality,
the failure of which clause 25(1)(b) speaks is, like the elephant, far easier to recognise than to describe.”
If no time period for completion is contained within the Contract Data, then under English law a term will be implied by s.14
of the Supply of Goods and Services Act 1982 that the Contractor’s obligation is to complete the Works within a reasonable
time. However, a delay on its own is not a failure to proceed regularly and diligently.
The case of Vivergo Fuels v Redhall Engineering Solutions 10 provides a useful insight into how a court is likely to evaluate
whether there has been a failure to proceed regularly and diligently. In that case Ramsey J viewed a lack of productivity as
being “the best evidence” of a failure to proceed regularly and diligently. Nevertheless, he also noted that the failure to provide
a proper programme (and one in accordance with their contractual obligations) “undoubtedly” resulted, in that case, in an
inability to “proceed continuously, industriously and efficiently with appropriate physical resources so as to progress the works
towards completion”.
A similar provision can be found in art.687 of the Qatar Civil Code:
1 The Contractor must perform the work in accordance with the conditions recorded in the contracting
contract and within the period agreed upon, If there are no conditions, or a period has not been agreed upon,
the Contractor must perform the work in accordance with recognised principles and within a reasonable
period required by the nature of the work while observing the custom of the trade;
The UAE Civil Code does not contain such a specific provision. 11 That said, art.877 of the UAE Civil Code notes that where
there are defects, “if it is possible to make good the work it shall be permissible for the employer to require the contractor to
abide by the conditions of the contract and to repair the work within a reasonable period” which suggests that the concept is
recognised within the UAE.
Under Sub-Cl.18.3, there is a duty on the Contractor to use all reasonable endeavours to minimise delay caused by Exceptional
Risks. There is no other similar obligation contained in the FIDIC Form. Under typical civil law, the absence of an explicit
duty to mitigate in such jurisdictions suggests that there is no express obligation upon the Contractor to mitigate delay where
they are entitled to an extension of time. This is not the case under common law jurisdictions where there is a duty both to
minimise any loss suffered by taking reasonable steps to ensure that, where possible, the loss does not increase, and to not take
unreasonable steps which may increase the loss. If a party fails to take steps to mitigate its loss, the damages it recovers may be
adversely affected as a Tribunal may only award a sum which takes into account steps which could have been taken to mitigate
loss, but which have not been taken.
In addition if no time period for completion is contained then, under common law principles, time will be said to be at large and
the Employer will not be entitled to deduct Delay Damages as set out in Sub-Cl.8.8. Time at large is a common law concept,
which is not found under civil law. Under the common law, time will be at large if the Employer prevents the Contractor from
completing the Works by the time required under the Contract and that contract does not provide for an extension of time in
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Commentary, UKBC-UFIDIC 500923184 (2021)
respect of the employer acts of prevention. 12 In these circumstances, a contractor will be under an obligation to complete the
works within a reasonable time. The House of Lords decision in Percy Bilton v GLC, 13 noted as follows:
1.The general rule is that the main contractor is bound to complete the work by the date of completion stated in the contract.
If he fails to do so, he will be liable for liquidated damages to the employer.
2.That is subject to the exception that the employer is not entitled to liquidated damages if by his acts or omissions he has
prevented the main contractor from completing his work by the completion date.
3.The general rules may be amended by the express terms of the contract.
In the UAE, although the concept of time at large is not recognised, Lord Fraser’s second point is addressed by art.390 of the
Civil Code which enable the court to vary the amount of any delay damages and thereby take into account any act of default
or prevention by the employer. There is also caselaw which establishes that:
“It is established—in the jurisprudence of this court—that the contractor is not bound by the delay fine agreed
upon in the contractor contract, if it is proven that the breach of the contractor’s obligation to complete the works
within the time limit specified in the contract is due to reasons related to the employer or to a cause beyond the
control of the contractor.” 14
There then remains the question as to what constitutes a reasonable time. Where no time period is specified and a contractor
has been selected through the competitive tender process, then a court would be likely to take an objective view based on how
the reasonable contractor in the actual circumstances would have carried out the works. If time is at large (i.e. where there is
no identified date for completion) following an act of prevention or breach by the Employer, then the original completion date
provides good but not conclusive evidence. It is not conclusive because one needs to take account of not only the fact that a
contractor would be expected to have planned the works in order to achieve the original completion date but also of the delay
and/or disruption caused by the breach or act of prevention.
Thus, in British Steel Corp v Cleveland Bridge & Eng Co, 15 Goff J (as he then was) said:
“I have first to consider what would, in ordinary circumstances, be reasonable time for the performance of the
relevant services; and I have then to consider to what extent the time for performance by BSC [the Contractor]
was in fact extended by extraordinary circumstances outside their Control.”
Alternatively, the Court of Appeal 16 quoted with approval the following definition given by HHJ Seymour QC in a situation
where he said that the question as to whether a reasonable time has been exceeded is:
“a broad consideration, with the benefit of hindsight, and viewed from the time at which one party contends
that a reasonable time for performance has been exceeded, of what would, in all the circumstances which are by
then known to have happened, have been a reasonable time for performance. That broad consideration is likely
to include taking into account any estimate given by the performing party of how long it would take him to
perform; whether that estimate has been exceeded and, if so, in what circumstances; whether the party for whose
benefit the relevant obligation was to be performed needed to participate in the performance, actively, in the
sense of collaborating in what was needed to be done, or passively, in the sense of being in a position to receive
performance, or not at all; whether it was necessary for third parties to collaborate with the performing party in
order to enable it to perform; and what exactly was the cause, or were the causes of the delay to performance.
The list is not intended to be exhaustive.” 17
However, under the FIDIC conditions, the proper operation of the extension of time Sub-Cl.8.5, should ensure that time does
not become at large and that the Contractor’s obligation remains to complete within a specified time.
The MDB Harmonised edn 2010
8-005
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Commentary, UKBC-UFIDIC 500923184 (2021)
Whilst this edition deals primarily with the 2017 FIDIC Form, it is worth noting the different approach of the 2010 Pink Book
which includes the following:
“Except otherwise specified in the Particular Conditions of Contract, the Commencement Date shall be the date
at which the following precedent conditions have all been fulfilled and the Engineer’s instruction recording the
agreement of both Parties on such fulfilment and instructing to commence the Work is received by the Contractor:
(a)signature of the Contract Agreement by both Parties, and if required, the approval of the Contract by
relevant authorities of the Country;
(b)delivery to the Contractor of reasonable evidence of the Employer’s financial arrangements (under SubCl.2.4 [Employer’s Financial Arrangement]);
(c)except if otherwise specified in the Contract Data, possession of the Site given to the Contractor together
with such permission(s) under (a) of Sub-Cl.1.13 [Compliance with Laws] as required for the commencement
of the Works;
(d)receipt by the Contractor of the Advance Payment under Sub-Cl.14.2 [Advanced Payment] provided that
the corresponding bank guarantee has been delivered by the Contractor; and if
(e)the Engineer’s instruction is not received by the Contractor within 108 days from his receipt of the Letter
of Acceptance, the Contractor shall be entitled to terminate the Contract under Sub-Cl.16.2 [Termination
by Contractor].”
These amendments are, on the one-hand, of some benefit to the Contractor. The Project cannot commence unless: the Contract
Agreement has been signed by both parties, the Contractor has in its possession reasonable proof that the Employer can fund
the works, and the Contractor has received any advanced payments that it was entitled to.
All these conditions are stated to be conditions precedent. Significantly, the Contractor has the option of terminating the contract
in accordance with Sub-Cl.16 if no instruction is received.
On the other hand, the actual time of the commencement date is probably less clear under the MDB Form. Under the 1999
Form, there was a 42-day window. Now there appears to potentially be a 180-day window as there is no Commencement Date
until the Engineer’s Instruction has been received by the Contractor.
Footnotes
1
2
3
4
5
6
7
8
9
It is a seven-day period under the 1999 Contract.
Sub-Cl.1.1.1.50 also provides that if there is no such Letter of Acceptance, the expression Letter of Acceptance means
the Contract Agreement, and the date of issuing or receiving the Letter of Acceptance means the date of signing the
Contract Agreement.
Particular Conditions Part A.
See comments under Sub-Cl.2.1 about the importance of the date access to site is given and the typical problems an
Employer may face in providing access.
This manual is in addition to any other similar document required under applicable health and safety regulations and
laws.
GLC v Cleveland Bridge & Eng Co Ltd (1984) 34 B.L.R. 50.
If, for example, the Employer has made arrangements of which the Contractor is aware, which are dependent on the
regular progress of the Works, then the Employer might well suffer a loss if the Contractor’s poor performance means
that he has to re-organise those arrangements.
[1970] 7 B.L.R. 89.
[1992] 71 B.L.R. 6. The obligation must be expressly set out and is unlikely to be implied: Leander Construction Ltd
v Mulalley and Co Ltd [2011] EWHC 3449 (TCC).
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Commentary, UKBC-UFIDIC 500923184 (2021)
10
11
12
13
14
15
16
17
[2013] EWHC 4030 (TCC).
Although, art.246(2) states that: “(2) The contract shall not be restricted to an obligation upon the contracting party to
do that which is (expressly) contained in it, but shall also embrace that which is appurtenant to it by the law, custom,
and the nature of the transaction.” It may be possible to argue that principle of completing a project within a reasonable
time is appurtenant (or customary) within the construction industry.
Multiplex Constructions UK Ltd v Honeywell Control Systems Ltd [2007] EWHC 447 (TCC). As will be seen, SubCl.8.4(e) of the FIDIC Form does provide for an extension of time entitlement.
(1982) 20 B.L.R. 1. See also Peak Construction v McKinney (1970) 1 B.L.R. 114.
Dubai Court of Cassation, Petition No.310/2009. For a more thorough review of this topic see: S. Lord Hill, “The
Concept of ‘time at large’ in the United Arab Emirates” (2017) Vol.12(2) Construction Law International.
[1981] 24 B.L.R. 100.
Peregrine Systems Ltd v Steria Ltd [2005] EWCA Civ 239.
Astea (UK) Ltd v Time Group Ltd [2003] EWHC 725.
End of Document
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Section 8.2 - Time for Completion, UKBC-UFIDIC 500923168 (2021)
Section 8.2 - Time for Completion
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.2 - Time for Completion
8-006
The Contractor shall complete the whole of the Works, and each Section (if any), within the Time for Completion for the
Works or Section (as the case may be), including completion of all work which is stated in the Contract as being required
for the Works or Section to be considered to be completed for the purposes of taking over under Sub-Clause 10.1 [Taking
Over the Works and Sections].
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923160 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.2 - Time for Completion
Overview of Key Features
8-007
•The Contractor shall complete the whole of the contract works within the time for completion for the Works or Section.
•The obligation to complete includes the passing of any Tests on Completion and the completion of all works stated in the
Contract as being necessary for the purpose of taking over under Sub-Cl.10.1.
End of Document
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Commentary, UKBC-UFIDIC 500923194 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.2 - Time for Completion
Commentary
8-008
This is one of the few sub-clauses left unchanged between 1999 and 2017, Sub-Cl.8.2 sets out the time within which the
Contractor must complete the Works. If the Contractor fails to do this, they may become liable for the payment of delay damages
to the Employer.
The Time For Completion of the Works will be inserted in the Contract Data. It is calculated from the Commencement Date as
defined in Sub-Cl.8.1. The Contract Data provides for the Time for Completion to be expressed in days (and according to SubCl.1.1.25 that means calendar not working days). It is suggested that for certainty, the parties should agree a calendar date.
By Sub-Cl.1.1.86 (Yellow Book), the Time for Completion means the time for completing the Works or a Section of the Works
as stated in the Contract Data taking into account any extension under Sub-Cl.8.5, calculated from the Commencement Date.
The Works (or Section of the Works) will not be complete until all the necessary Tests on Completion (as defined within Cl.9)
have been successfully carried out and all the Work required for the issuing of a Taking Over certificate as provided for by
Cl.10 has been completed.
The reference to the completion of the Works means the completion of all the Permanent Works and the Temporary Works
as set out in the Contract. Provided these are adequately described, all the parties to the Contract will understand what work
needs to be carried out.
However, care is required when talking about sectional completion. Section is defined by Sub-Cl.1.1.76 (Yellow Book) as being
a part of the works specified in the Contract Data as a Section (if any). Therefore, it is important that an appropriate description
of any Section is set out in the Contract Data. This description should include a separate Time for Completion of that Section
together with details of the Delay Damages 18 which may be allowable for a failure to meet the stated Time for Completion. If
there is any doubt, then it is likely, under both common and civil law jurisdictions that that doubt would be resolved in favour
of the Contractor, the Employer being the party who put the words or description which is in doubt forward. 19
As discussed at Sub-Cl.4.24 above, many contracts provide for milestones. These are different to and not covered by the
reference to Sections in Sub-Cl.8.2. A milestone is a completed stage in a project defined in the contract as a marker point. For
example, triggering an entitlement to payment when the foundations are installed or the roof is complete. If formal milestones,
by which we mean, the Contractor is to be required to complete a part of the project by an agreed milestone date, are to be
part of the Contract, then additional or supplemental provisions will be required which must clearly define what makes up the
milestone in question.
Footnotes
18
19
This topic is described in more detail within Sub-Cl.8.8.
See the contra proferentum rule and art.266(1) of the UAE Civil Code.
End of Document
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Section 8.3 - Programme, UKBC-UFIDIC 500923169 (2021)
Section 8.3 - Programme
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.3 - Programme
8-009
The Contractor shall submit an initial programme for the execution of the Works to the Engineer within 28 days
after receiving the Notice under Sub-Clause 8.1 [Commencement of Works]. This programme shall be prepared using
programming software stated in the Employer’s Requirements (if not stated, the programming software acceptable to the
Engineer). The Contractor shall also submit a revised programme which accurately reflects the actual progress of the Works,
whenever any programme ceases to reflect actual progress or is otherwise inconsistent with the Contractor’s obligations.
The initial programme and each revised programme shall be submitted to the Engineer in one paper copy, one electronic
copy and additional paper copies (if any) as stated in the Contract Data, and shall include:
(a)the Commencement Date and the Time for Completion, of the Works and of each Section (if any);
(b)the date right of access to and possession of (each part of) the Site is to be given to the Contractor in accordance
with the time (or times) stated in the Contract Data. If not so stated, the dates the Contractor requires the Employer
to give right of access to and possession of (each part of) the Site;
(c)the order in which the Contractor intends to carry out the Works, including the anticipated timing of each stage of
design, 20 preparation and submission of Contractor’s Documents, procurement, manufacture, inspection, delivery to
Site, construction, erection, installation, work to be undertaken by any nominated Subcontractor (as defined in Clause
4.5 [Nominated Subcontractors]), testing, commissioning and trial operation; 21
(d)the Review periods under Sub-Clause 5.2.2 [Review by Engineer], and periods for Review for any other
submissions specified in the Employer’s Requirements or required under these Conditions;
(e)the sequence and timing of inspections and tests specified in, or required by, the Contract;
(f)for a revised programme: the sequence and timing of the remedial work (if any) to which the Engineer has given
a Notice of No-objection under Sub-Clause 7.5 [Defects and Rejection] and/or the remedial work (if any) instructed
under Sub-Clause 7.6 [Remedial Work];
(g)all activities (to the level of detail specified in the Employer’s Requirements), logically linked and showing the
earliest and latest start and finish dates for each activity, the float (if any), and the critical path(s);
(h)the dates of all locally recognised days of rest and holiday periods (if any);
(i)all key delivery dates of Plant and Materials;
(j)for a revised programme and for each activity: the actual progress to date, any delay to such progress and the effects
of such delay on other activities (if any); and
(k)a supporting report which includes
(i)a description of all the major stages of the execution of the Works;
(ii)a general description of the methods which the Contractor intends to adopt in the execution of the Works;
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Section 8.3 - Programme, UKBC-UFIDIC 500923169 (2021)
(iii)details showing the Contractor’s reasonable estimate of the number of each class of Contractor’s Personnel,
and of each type of Contractor’s Equipment, required on the Site, for each major stage of the execution of the
Works;
(iv)if a revised programme, identification of any significant change(s) to the previous programme submitted by
the Contractor; and
(v)the Contractor’s proposals to overcome the effects of any delay(s) on progress of the Works.
The Engineer shall Review the initial programme and each revised programme submitted by the Contractor and may give a
Notice to the Contractor stating the extent to which it does not comply with the Contract or ceases to reflect actual progress
or is otherwise inconsistent with the Contractor’s obligations. If the Engineer gives no such Notice:
-within 21 days after receiving the initial programme; or
-within 14 days after receiving a revised programme,
the Engineer shall be deemed to have given a Notice of No-objection and the initial programme or revised programme
(as the case may be) shall be the Programme.
The Contractor shall proceed in accordance with the Programme, subject to the Contractor’s other obligations under the
Contract. The Employer’s Personnel shall be entitled to rely on the Programme when planning their activities.
Nothing in any programme, the Programme or any supporting report shall be taken as, or relieve the Contractor from any
obligation to give, a Notice under the Contract.
If, at any time, the Engineer gives a Notice to the Contractor that the Programme fails (to the extent stated) to comply
with the Contract or ceases to reflect actual progress or is otherwise inconsistent with the Contractor’s obligations, the
Contractor shall within 14 days after receiving this Notice submit a revised programme to the Engineer in accordance
with this Sub-Clause.
Footnotes
20
21
The Red Book has the additional words “(if any)”.
Commissioning and trial operation are features of the Yellow and not the Red Book.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923175 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.3 - Programme
Overview of Key Features
8-010
•The Contractor shall submit a detailed time programme to the Engineer no later than 28 days after receiving the Notice
of the commencement of Works under Sub-Cl.8.1.
•The Contractor must submit revised and updated programmes when the original programme becomes out-of-date and
inconsistent with actual progress.
•The programme software used should be as specified in the Employer’s Requirements.
•The minimum programme requirements are set out in sub-paras (a)–(k) but every programme shall include:
(i)the sequence in which the Contractor intends to carry out the work;
(ii)details of access dates, as well as key delivery dates, required by the Contractor;
(iii)details of any stage of work to be carried out by a nominated subcontractor;
(iv)details of the sequence and timing of any inspections and tests;
(v)supporting details of the methods the Contractor intends to use;
(vi)full logic links including a critical path; and
(vii)a supporting report including a description of the major elements of the proposed work and an estimate of the
number of personnel and equipment required.
•If the Engineer believes that the programme does not comply with the Contract, the Engineer should give Notice to the
Contractor within 21 days (for the initial programme) or 14 days (for any revised programme).
•If the Engineer fails to give such a notice, the programme shall be the Programme and the Contractor shall proceed in
accordance with that Programme.
•The Employer’s Personnel are entitled to rely upon the programme when planning their activities.
•If the Engineer considers that a programme fails to comply with the Contract or is inconsistent with actual progress, he
may give due Notice to the Contractor.
•If the Engineer gives such a Notice, the Contractor must submit a revised programme to the Engineer within 14 days.
•Nothing in the Programme shall constitute a Notice of Claim as required by Sub-Cl.20.2.
End of Document
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Commentary, UKBC-UFIDIC 500923188 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.3 - Programme
Commentary
8-011
Sub-Clause 1.1.66 (Red Book) defines the Programme as meaning the detailed time programme submitted by the Contractor to
which the Engineer has given, or is deemed to have given, a Notice of No-Objection. By using the new wording, no-objection,
FIDIC have avoided any suggestion that the Engineer has formally “approved” the programme. Under Cl.14 of the old Red
Book FIDIC, 4th edn, programmes were submitted for approval to the Engineer. This is not quite the case here. However,
the Engineer is able to give Notice to the Contractor if he considers that the programme does not comply with the Contract.
Therefore, the Engineer should be careful to remember that it will accordingly be open to the Contractor to argue that, by not
rejecting a programme, the Engineer has impliedly given his approval to it.
Sub-Clause 8.3 provides that the Contractor must submit an initial programme containing the details set out above, to the
Engineer within 28 days after receiving the Notice of the Commencement of the Works. This is a more exhaustive process, than
under the 1999 edns. Any initial or required programme has to comply with the extensive requirements set out in the second
paragraph of Sub-Cl.8.3.
The essential purpose of the programme is to set out how the Contractor proposes to carry out the Works. The programme must
be supported by a report setting out the methods the Contractor intends to adopt together with an estimate of the personnel and
equipment required on site for carrying out the major stages of the Works.
The Contractor is required to proceed as set out by his programme, unless he receives Notice from the Engineer stating that
the programme does not either reflect actual progress on site or the requirements of the Contract. Obviously this programme
will not only be used to demonstrate progress but also to demonstrate whether any delay may cause a delay to completion.
By Sub-Cl.4.20(h), the Contractor, must submit monthly progress reports. These must include a comparison of planned and
actual progress.
The Contractor should remember that the programme must be revised whenever it is inconsistent with actual progress. This
will include when the Contractor is ahead or behind schedule. The Contractor should also remember that others, such as the
Employer’s Personnel, are entitled to rely upon the programme. For example, more staff might be required when work or testing
was meant to be at a peak. Further, Sub-Cl.2.1 notes that the Contractor is not given exclusive access to the Site, the Employer
and Engineer may well rely on the Contractor’s programme information to plan the requirements of other parties who may
need access to the Site.
The 2017 Sub-Cl.8.3 programme requirements 22 are set out in far more detail than those previously found in the 1999 Form. 23
The programme must include the detail set out within Sub-Cl.8.3, and follow the software requirements set out in the Employer’s
Requirements (or Contract Data in the Red Book) or otherwise approved by the Employer. The Contract itself also provides
further assistance as to what is required. The testing, commissioning and trial operation required by Sub-Cl.8.3(c) in the Yellow
Book, 24 whilst not being defined terms, are further explained in Sub-Cl.9.1. Whilst there is no specific requirement as to the
form the programme should take, the Special Provisions strongly recommend that the programming software that the Engineer
prefers to use to monitor the Contractor’s progress be clearly identified in the Employer’s Requirements, and that the software
is drawn to the attention of tenderers in the Instructions to Tender. Given the importance of the contract programme as a
management tool to all parties, many contracts will no doubt specify exactly what form the programme is to take.
If the Engineer gives Notice to the Contractor that a programme does not comply with the Contract or is not consistent with
actual progress, then the Contractor is required to submit a revised programme to the Engineer. In addition, by Sub-Cl.8.7, the
Engineer can require the Contractor to submit a revised programme where there is delay caused by reasons other than those
set out in Sub-Cl.8.5.
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Commentary, UKBC-UFIDIC 500923188 (2021)
For certainty, it is suggested that in addition the Employer might want to consider requiring the Contractor to provide a revised
programme whenever an extension of time is granted.
Footnotes
22
23
24
They are clearly influenced by Annex F of the 2011 Red Book Sub-Contract which in fact listed 17 such requirements.
The Special Requirements suggest that for what are termed “less complex projects”, the Employer may consider
simplifying the programme requirements by replacing sub-paras (a)–(k) with sub-paras (a)–(d) from the 1999 Yellow
Book.
The reference to trial operation is not found in the Red Book.
End of Document
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2
Section 8.4 - Advance Warning, UKBC-UFIDIC 500923182 (2021)
Section 8.4 - Advance Warning
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.4 - Advance Warning
8-012
Each Party shall advise the other and the Engineer, and the Engineer shall advise the Parties, in advance of any known or
probable future events or circumstances which may:
(a)adversely affect the work of the Contractor’s Personnel;
(b)adversely affect the performance of the Works when completed;
(c)increase the Contract Price; and/or
(d)delay the execution of the Works or a Section (if any).
The Engineer may request the Contractor to submit a proposal under Sub-Clause 13.3.2 [Variation by Request for Proposal]
to avoid or minimise the effects of such event(s) or circumstance(s).
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500923166 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.4 - Advance Warning
Overview of Key Features
8-013
•If either the Contractor, Employer or Engineer become aware of any event that may have an impact upon the performance
of the Works, they should let the other parties know.
•In order to minimise the impact of the event, the Engineer may require the Contractor to submit a Sub-Cl.13.3.2 proposal.
End of Document
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Commentary, UKBC-UFIDIC 500923171 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.4 - Advance Warning
Commentary
8-014
This is a new clause to the Red and Yellow Books, although there is an advance warning clause at Sub-Cl.8.4 of the Gold Book.
It is consistent with both the increased emphasis on dispute avoidance that is a particular feature of the 2017 FIDIC Form and
the prevailing trend in construction contracts. 25 It is also consistent with the civil law requirements of good faith.
The basic idea behind the sub-clause is a simple one. The earlier a potential problem issue is identified and brought out into the
open, the greater the possibility that the issue can be resolved promptly without it developing into anything more serious, for
example a formal dispute. Co-operation between the parties following the initial discovery of an issue by way of early warning
provides an opportunity for the parties to discuss and resolve the matter in the most efficient manner. It could be said that this
is a partnering-based approach to the resolution of issues before they form into disputes.
This is also a departure from the usual FIDIC approach where the Contractor and Employer have to serve formal notices. Indeed,
there is no reference in this sub-clause to formal claims Notices under Sub-Cl.20.2 and nor could there be, as the underlying
purpose here is to flag up any potential issue, which may or may not turn out to be a claim, not to give notice of a claim
itself. It is therefore very unlikely that a Contractor could subsequently claim that an Advance Warning constituted a formal
Cl.20.1 Notice. It is perhaps more conceivable that a Contractor could argue that as a result of an Advance Warning Notice,
the Employer had prior knowledge, as required by Sub-Cl.20.2.5, of the event or circumstance giving rise to a claim. However,
this would be very fact specific.
One question that may arise is, if a party fails to act under this sub-clause, whether a timely early warning would have provided
an opportunity to identify a more efficient manner of resolving the issues. If so, should a Contractor, for example, only be granted
an extension of time and/or be paid for the consequences of the more economic method of dealing with the event in question had
a warning been given. For example, art.686(1) of the Qatari Civil Code provides that the Contractor must notify the Employer
immediately if there are defects in the materials provided by the Employer or other factors which may obstruct the performance
of the work. Further, art.686(2) provides that the Contractor is liable for the consequences if it neglects to notify the Employer.
Here, Sub-Cll.8.4 and 20.2.7 are silent in this regard. 26 This is in contrast to Sub-Cl.20.1 of the 1999 Form which provided that:
“If the Contractor fails to comply with this or another Sub-Clause in relation to any claim, any extension of time
and/or additional payment shall take account of the extent (if any) to which the failure has prevented or prejudiced
proper investigation of the claim, unless the claim is excluded under the second paragraph of this Sub-Clause.”
In the test edition for the 2017 Contract, the requirement on the parties was not an absolute “shall” but a slightly less strict “shall
endeavour.” By way of illustration, under common law, a distinction is drawn between best and reasonable endeavours. Flaux
J in the case of Rhodia International Holdings Ltd v Huntsman International LLC 27 noted that:
“there may be a number of reasonable courses which could be taken in a given situation to achieve a particular
aim. An obligation to use reasonable endeavours to achieve the aim probably only requires a party to take one
reasonable course, not all of them, whereas an obligation to use best endeavours probably requires a party to take
all the reasonable courses he can.”
The tightening up of the wording is a demonstration of the importance of the sub-clause within the contract as a whole, even if
for many, the idea of making a formal advance warning might seem new or even unusual.
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Commentary, UKBC-UFIDIC 500923171 (2021)
Although there is no specific cross-reference, it appears that Sub-Cl.4.20(h) requires the Contractor to include details of any
advance warnings that have been made as part of the Monthly Progress Report. If there is no specific contractual requirement,
it is suggested that this would constitute best practice.
Footnotes
25
26
27
See, for example, Cl.16 of the NEC Form.
Unlike the NEC Form, which makes it clear that there are consequences if the Contractor fails to give early warning of a
matter in respect of which it subsequently notifies as a compensation event. If a contractor fails to give an early warning
of an event which subsequently arises and that he was aware of, then the Contractor is assessed as if he had given an
early warning. Therefore, if a timely early warning would have provided an opportunity to identify a more efficient
manner of resolving the issues, then the Contractor will only be paid for that economic method of dealing with the event.
[2007] EWHC 292 (Comm).
End of Document
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2
Section 8.5 - Extension of Time for Completion, UKBC-UFIDIC 500923186 (2021)
Section 8.5 - Extension of Time for Completion
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.5 - Extension of Time for Completion
8-015
The Contractor shall be entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to Extension of Time if
and to the extent that completion for the purposes of Sub-Clause 10.1 [Taking Over the Works and Sections] is or will be
delayed by any of the following causes:
(a)a Variation (except that there shall be no requirement to comply with Sub-Clause 20.2 [Claims For Payment and/
or EOT]);
(b)a cause of delay giving an entitlement to EOT under a Sub-Clause of these Conditions;
(c)exceptionally adverse climatic conditions, which for the purpose of these Conditions shall mean adverse climatic
conditions at the Site which are Unforeseeable having regard to climatic data made available by the Employer under
Sub-Clause 2.5 [Site Data and Items of Reference] and/or climatic data published in the Country for the geographical
location of the Site;
(d)Unforeseeable shortages in the availability of personnel or Goods (or Employer-Supplied Materials, if any) caused
by epidemic or governmental actions; or
(e)any delay, impediment or prevention caused by or attributable to the Employer, the Employer’s Personnel, or the
Employer’s other contractors on the Site.
When determining each EOT under Sub-Clause 20.2 [Claims For Payment and/or EOT], the Engineer shall review previous
determinations under Sub-Clause 3.7 [Agreement or Determination] and may increase, but shall not decrease, the total
EOT.
If a delay caused by a matter which is the Employer’s responsibility is concurrent with a delay caused by a matter which
is the Contractor’s responsibility, the Contractor’s entitlement to EOT shall be assessed in accordance with the rules and
procedures stated in the Special Provisions (if not stated, as appropriate taking due regard of all relevant circumstances).
Red Book
8-016
The 2017 Red Book has an additional paragraph as follows:
“The Contractor shall be entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to EOT if the
measured quantity of any item of work in accordance with Clause 12 [Measurement and Valuation] is greater than
the estimated quantity of this item in the Bill of Quantities or other Schedule by more than ten per cent (10%) and
such increase in quantities causes a delay to completion for the purposes of Sub-Clause 10.1 [Taking Over the
Works and Sections]. The agreement or determination of any such Claim, under Sub-Clause 20.2.5 [Agreement
or determination of the Claim], may include a review by the Engineer of measured quantities of other items of
work which are significantly less (by more than 10%) than the corresponding estimated quantities in the Bill
of Quantities or other Schedule. To the extent that there are such lesser measured quantities, the Engineer may
take account of any favourable effect on the critical path of the Programme. However, the net effect of all such
consideration shall not result in a net reduction in the Time for Completion.”
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Section 8.5 - Extension of Time for Completion, UKBC-UFIDIC 500923186 (2021)
End of Document
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2
Overview of Key Features, UKBC-UFIDIC 500923178 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.5 - Extension of Time for Completion
Overview of Key Features
8-017
The following points provide an overview of the key features of Sub-Cl.8.5.
Conditions precedent to a claim for an extension of time
8-018
If (and only if) completion for the purposes of Sub-Cl.10.1 is or will be delayed by any one of the causes set out in SubCll.8.4(a)–(e), then the Contractor must give notice to the Engineer in accordance with Sub-Cl.20.2.
Assessment of an extension of time
8-019
In accordance with Sub-Cl.20.2, the Engineer shall review both the current claim and any previous determinations and may
increase, but shall not decrease, the total extension of time awarded to the Contractor.
Events giving rise to an entitlement to an extension of time
8-020
•A Variation 28 under Cl.13.
•A cause of delay giving an entitlement to extension of time under a sub-clause of these Conditions. In addition to SubCl.8.5, these are Sub-Cll.1.9 [Delayed Drawings or Instructions], 1.13 [Compliance with Laws], 2.1 [Right of Access to
the Site], 4.6 [Co-operation delay], 4.7 [Setting Out], 4.12 [Unforeseeable Physical Conditions], 4.15 [Access Route], 4.23
[Archaeological and Geological Findings], 7.4 [Testing], 7.6 [Remedial Work], 8.10 [Suspension initiated by the Engineer],
8.12 [Prolonged Suspension], 10.3 [Interference with Tests on Completion], 13.3 [Variation procedure], 13.6 [Adjustments
for Changes in Legislation], 16.1 [Suspension by Contractor], 16.2 [Termination by Contractor], 17.2 [Liability for the
Care of the Works], 17.4 [Consequences of Employer’s Risks of Damage], and 18.4 [Consequences of Exceptional Events].
•Exceptionally adverse climatic conditions.
•Unforeseeable shortages in the availability of personnel or Goods caused by epidemic or governmental actions.
•Any act of delay, impediment or prevention caused by or attributable to the Employer, the Employer’s Personnel, or the
Employer’s other contractors on the Site.
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Overview of Key Features, UKBC-UFIDIC 500923178 (2021)
•In the Red Book only, if the measured quantity of any item of work in accordance with Cl.12 is greater than the estimated
quantity of this item in the Bill of Quantities and such increase in quantities causes a delay to completion.
Concurrent delay
8-021
The Contract should provide details of how delay is to be assessed where a delay caused by something which is the Employer’s
responsibility is concurrent with a delay caused by the Contractor.
Footnotes
28
Unless an adjustment has been agreed under Sub-Cl.13.3.
End of Document
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Commentary, UKBC-UFIDIC 500923159 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.5 - Extension of Time for Completion
Commentary
Overview
8-022
This is obviously a key sub-clause of the Contract. If the Contractor fails to complete his Works within the agreed time for
completion then he will be in breach of contract. Sub-Clause 8.5 provides the mechanism by which the time for completion
can be extended, but only in certain clearly defined circumstances and only if the Contractor takes certain steps to give Notice
of his considered entitlement.
A number of changes were made to the general wording of the 1999 version of this sub-clause from those contained in the
extension of time provisions to be found at Cl.44 of the old Red Book, FIDIC, 4th edn. Those material changes included
modifications of the original paras (a), (b) and (e). Sub-paragraph (d) was a new event entitling the Contractor to an extension
of time. Otherwise, the intent of this sub-clause remains largely the same as that contained in the extension of time provisions
at Sub-Cl.44.1 of the old Red Book, FIDIC, 4th edn.
Sub-Clauses 44.2 and 44.3 of the old Red Book, FIDIC, 4th edn, set out how the Contractor was to notify and put forward any
claim and detailed how the Engineer should determine that claim. These have now been modified in Sub-Cl.20.2.
The purpose of extensions of time
8-023
It has often been thought that extension of time provisions are solely for the benefit of the Contractor. This is, in reality, the
opposite of the true intent. The primary purpose of an extension of time provision is to preserve a contractor’s obligation to
complete within a specified time. Extending the completion date therefore preserves the Employer’s right to liquidated damages
known as Delay Damages under the FIDIC contract, even when by prevention or breach of contract, the Employer has delayed
the Contractor and is responsible in part for late completion. 29 Jackson J, as he then was, in a case arising out of the construction
of the new Wembley Stadium concluded that:
(i)actions by the Employer which are perfectly legitimate under a construction contract may still be characterised as
prevention, if those actions cause delay beyond the contractual completion date;
(ii)acts of prevention by an employer do not set time at large, if the contract provides for extension of time in respect of
those events; and
(iii)in so far as the extension of time clause is ambiguous, it should be construed in favour of the Contractor.
If there is no completion date, there is no date from which “Delay Damages” can run. Sub-Clause 8.5 only entitles the Contractor
to an extension of time, not to additional payment. 30 Any extension of time granted will relieve the Contractor of the obligation
to pay Delay Damages to the Employer in respect of the extension period.
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Commentary, UKBC-UFIDIC 500923159 (2021)
Conditions precedent to a claim for an extension of time
8-024
There are two conditions precedent that the Contractor must comply with prior to making a submission to the Engineer for an
extension of time. In other words, if these conditions are not complied with, then any entitlement to an extension of time is lost.
First, it is mandatory that one of the events listed in Sub-Cl.8.5(a)–(e) must have resulted in an actual delay in completion within
the meaning of Taking Over as expressed in Sub-Cl.10.1. It is not good enough for the Contractor to say that there has been
a delay or disruption to the Contractor’s programme. Secondly, the Contractor must give notice to the Engineer in accordance
with the provisions and strict time limits required by Sub-Cl.20.2.
Quite often, the terms “delay” and “disruption” are used as if they are the same thing and it is not uncommon that disruption
is understood in the same way as “delay and disruption”. This is not correct. For example, the Society of Construction Law’s
“Delay and Disruption Protocol” 31 defines “disruption” as:
“… disturbance, hindrance or interruption of a Contractor’s normal working methods, resulting in lower
productivity or efficiency in the execution of particular work activities.” 32
A copy of the Protocol can be found at: https://www.scl.org.uk/resources/delay-disruption-protocol [Accessed 30 October
2018].
The SCL Protocol then addresses the concept of delay by using two separate terms to distinguish them—“Contractor Delay
to Completion” and “Contractor Delay to Progress”. The former is a term used to describe delay to the planned date that
the Contractor was to complete his works or a delay to the contract completion date. The latter term refers to a delay to the
Contractor’s progress, which does not affect the contract completion date. 33
The clear intent of FIDIC conditions is that only a “Delay to Completion” will afford the Contractor a right to an extension of
time (subject always to compliance with the provisions of Sub-Cl.20.2).
The steps that the Contractor is required to take when giving notice under Sub-Cl.20.2 are discussed in detail below. In short
there is in place a detailed and regimented procedure to ensure that the Contractor both gives early notice and provides formal
and detailed particulars of all necessary and relevant details to substantiate an extension of time claim. If the Contractor fails
to takes these steps within the prescribed time limits, he may well lose the right to an extension of time notwithstanding that he
may have suffered a delaying event under this sub-clause. Once the Contractor has carried out these steps, the Engineer will then
follow the procedures contained in Sub-Cl.3.7 in order to make a “fair determination” of any entitlement to an extension of time.
Amongst the many issues Akenhead J had to consider in the case of Obrascon Huarte Lain SA v Her Majesty’s Attorney General
for Gibraltar 34 was the approach to take to Sub-Cl.20.1, the sub-clause which said that in order to make a claim, the Contractor
must give notice in writing to the Engineer:
“as soon as practicable, and not later than 28 days after the Contractor became aware, or should have become
aware, of the event or circumstance.”
The judge decided that the Contractor, OHL, was entitled to no more than seven days extension of time (rock and weather).
However, this was subject to compliance with Sub-Cl.20. It was accepted by OHL that Sub-Cl.20.1 imposed a condition
precedent on the Contractor to give notice of any claim. The judge held that properly construed and in practice, the “event or
circumstance giving rise to the claim” for extension must occur first and there must have been either awareness by the Contractor
or the means of knowledge or awareness of that event or circumstance before the condition precedent bites. Importantly,
Akenhead J said that he could see:
“no reason why this clause should be construed strictly against the Contractor and can see reason why it should
be construed reasonably broadly, given its serious effect on what could otherwise be good claims for instance for
breach of contract by the Employer” .
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Commentary, UKBC-UFIDIC 500923159 (2021)
It is important that Contractors do not take the judge’s comments as meaning that the condition precedent in Sub-Cl.20.1, now
found in Sub-Cl.20.2.1 in the 2017 edns, does not bite. It does. The purpose of the FIDIC condition precedent is to encourage
notification of claims promptly in order to provide certainty to the Employer and to ensure that problems can be dealt with when
they arise and not months if not years later. Here, the judge was merely recognising that (in cases where the law of England and
Wales applies) there may be circumstances where some latitude may be given to the strictest interpretation of the 28–day rule.
Sub-Clause 20.1 did not call for the notice to be in any particular form. It should be construed as allowing any claim provided
that it is made by notice in writing to the Engineer, the notice describes the event or circumstance relied on, and the notice is
intended to notify a claim for extension (or for additional payment or both) under the contract or in connection with it. It must be
recognisable as a “claim”. The onus of proof was on the Employer if he should want to establish that the notice was given too late.
In terms of claims for an extension of time, the judge by reference to Cl.8, considered that the entitlement to an extension arises
if and to the extent that the completion “is or will be delayed by” the various events, such as variations or “unforeseeable”
conditions. In particular, he noted that the wording in Sub-Cl.8.4 did not impose any restriction such as “is or will be delayed
whichever is the earliest”. This therefore suggested that the extension of time could be claimed either when it was clear that
there will be delay (a prospective delay) or alternatively when the delay has at least started to be incurred (a retrospective delay).
To demonstrate the position, the judge provided his own hypothetical example:
“(a)A variation instruction is issued on 1 June to widen a part of the dual carriageway well away from the
tunnel area in this case.
(b)At the time of the instruction, that part of the carriageway is not on the critical path.
(c)Although it is foreseeable that the variation will extend the period reasonably programmed for constructing
the dual carriageway, it is not foreseeable that it will delay the work.
(d)By the time that the dual carriageway is started in October, it is only then clear that the Works overall will
be delayed by the variation. It is only however in November that it can be said that the Works are actually
delayed.
(e)Notice does not have to be given for the purposes of Clause 20.1 until there actually is delay (November)
although the Contractor can give notice with impunity when it reasonably believes that it will be delayed
(say, October).
(f)The ‘event or circumstance’ described in the first paragraph of Clause 20.1 in the appropriate context can
mean either the incident (variation, exceptional weather or one of the other specified grounds for extension)
or the delay which results or will inevitably result from the incident in question.”
Finally, the judge commented that he doubted that this interpretation should, in practice, necessarily involve “a difficult mental
exercise” on construction projects where, as was the case here, an electronic critical path programme was being used. Therefore,
it should be possible to determine fairly easily when delay was actually being suffered.
However, whilst these comments tend to reflect the general approach of most DABs (though less so Arbitral Tribunals) to the
FIDIC Sub-Cl.20.1 and appear to be “contractor-friendly”, they did not help OHL here. One of OHL’s two EOT claims was
rejected because of the wording of the documents relied upon. For example, “The adverse weather condition (rain) have [sic]
affected the works” was not recognisable as a notice of a claim about being delayed by the weather. The already small EOT
award of seven days was reduced to one.
There is no explicit requirement to ensure that the Contractor has made reasonable and proper efforts to mitigate any delay.
The prudent Employer might want to specifically insert such an obligation rather than try and suggest at a later date that such
a term can be implied.
In certain jurisdictions the Employer would not be able to rely on a breach of these condition precedents as some local laws
disallow any contractual right to restrict the ability to bring a claim before a judge or arbitral tribunal. 35
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Commentary, UKBC-UFIDIC 500923159 (2021)
Where that is the case, the Employer would not be able to rely on the fact that the Contractor may have failed to comply with
the notice requirements of Sub-Cl.8.4 or any other condition precedents that may be found within the Contract.
In addition, the Employer should take care to guard against waiving the right to rely upon any breach of a condition precedent
through its prior conduct during an earlier stage of the contract. In the Scottish case of E&J Glasgow v UCG Estates Ltd, 36 the
Contractor failed to follow the required contractual procedure for claiming an extension of time for a variation. However, the
Court of Session found that the Contractor could still claim additional time as the Employer had not insisted that the correct
contractual procedures be complied with at the relevant time and so had waived his right to insist upon compliance when the
matter came before the courts.
Events giving rise to an entitlement to an extension of time
8-025
The events listed in Sub-Cll.8.5(a)–(e) require careful consideration.
The Contractor should note that the grant of an extension of time does not always lead to an award of Cost 37 and/or reasonable
profit and as set out above, there is no automatic right to such an award. This is dependent on the event that gives rise to a claim
for an extension of time and the relevant sub-clause concerned. If the Contractor also seeks a claim for additional payment, it
has to be made under that particular sub-clause for that additional payment in addition to the claim being made for an extension
of time.
Sub-Clause 8.5(a) refers to Cl.13, which provides that the Engineer is empowered to issue either an instruction or request for the
Contractor to submit a proposal at any time prior to issuing the Taking-Over certificate for the Works. However, the Contractor
should not make any alteration and/or modification of the Permanent Works unless and until the Engineer instructs or approves
a Variation. In the 1999 Red Book, Sub-Cl.8.4(a) also referred to delays caused by “other substantial change in the quantity of
an item of work”. This has been omitted from the 2017 Red Book. In its place, there is a clause which states that if there has
been an increase of more than 10 per cent in the measured quantity of an item which causes delay, then, subject to compliance
with Sub-Cl.20.2, the Contractor shall be entitled to an extension of time. This change, brings certainty by defining what is
a substantial change.
By virtue of Sub-Cl.8.5(b), the following sub-clauses 38 give rise to a claim for an extension of time:
1.9
1.13
2.1
4.6
4.7
4.12.4
4.15
4.23
7.4
7.6
8.5
8.10
8.12
10.3
13.3
13.6
16.1
16.2
17.2
Delayed Drawings or Instructions
Compliance with Laws
Right of Access to the Site
Co-operation
Setting Out
Unforeseeable Physical Conditions
Access Route
Archaeological and Geological Findings
Testing by the Contractor
Remedial Work
Extension of Time for Completion—variation, climate disruptions, personnel or goods shortages
caused by epidemic or governmental actions, or delay, impediment or prevention caused by the
Employer
Suspension initiated by the Engineer
Prolonged suspension
Interference with Tests on Completion
Variation Procedure
Adjustments for Changes in Laws
Suspension by Contractor
Termination by Contractor
Liability for the care of the Works
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18.4
Consequences of an Exceptional Event
As noted above, the granting of an extension of time does not necessarily entitle the Contractor to cost or cost plus the applicable
percentage for profit.
The following sub-clause carries an entitlement to an extension of time only:
8.5
Extension of Time for Completion
The following sub-clauses carry an entitlement to an extension of time and cost only:
4.12.4
4.1
4.23
13.6
18.4
Unforeseeable Physical Conditions
Access Route
Archaeological and Geological Findings
Adjustments for Changes in Laws
Consequences of an Exceptional Event
The following sub-clauses carry an entitlement to an extension of time and cost plus the applicable percentage for profit:
1.9
1.13
2.1
4.6
4.7
7.4
7.6
8.10
8.12
10.3
13.3
16.1
16.2
17.2
17.4
Delayed Drawings or Instructions
Compliance with Laws
Right of Access to the Site
Co-operation
Setting Out
Testing by the Contractor
Remedial Work
Suspension initiated by the Engineer
Prolonged suspension
Interference with Tests on Completion
Variation Procedure
Suspension by Contractor
Termination by Contractor
Liability for the care of the Works
Consequences of Employer’s Risks of Damage
The entitlement to an extension of time is assessed, reviewed and determined in accordance with the Sub-Cl.8.5.
The Contractor must provide contemporaneous documentation 39 to substantiate a claim such as under Sub-Cl.8.5(c) for
exceptionally adverse climatic conditions. The Contractor is usually required to have records for normal weather and will have
made use of these at the tender stage. The Contractor might want to consider putting mechanisms in place at the commencement
of works so that changes in conditions are recorded as they occur.
The 1999 FIDIC Guide suggested that to establish whether such exceptionally adverse climatic conditions occurred, it would be
sensible to compare the frequency with which events of a similar adversity have taken place. This sounds sensible. The Guide
then suggests that an exceptional degree of adversity might be one which has a probability of occurrence of four or five times
the Time for Completion of the Works. 40 This sensible provision is repeated in the Special Provisions.
This suggestion is not contractually binding but it might stand as a useful starting point for consideration. It is also something
the Contractor might want to think about when assessing the risks in establishing a tender figure. The Special Provisions suggest
that it may be preferable to set out in the Employer’s Requirements what constitutes an “exceptionally adverse” event. For
example, by reference to available weather statistics and return periods.
Sub-Clause 8.4(d) was new to the 1999 Form. Under this sub-clause, any shortage of personnel or goods would have to be
unforseeable by the experienced Contractor. 41 This could cause some difficulties for the Contractor. Would the experienced
Contractor make provision for the possibility of epidemic or government interference causing delay? This will, of course, largely
depend on the particular circumstances of each project.
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No definition is provided of epidemic. It will be a question of fact. The World Health Organisation Website 42 defines epidemic
in this way:
“The occurrence in a community or region of cases of an illness, specific health-related behaviour, or other healthrelated events clearly in excess of normal expectancy. The community or region and the period in which the cases
occur are specified precisely. The number of cases indicating the presence of an epidemic varies according to
the agent, size, and type of population exposed, previous experience or lack of exposure to the disease, and time
and place of occurrence.”
In 2003, SARS caused mayhem in Asia and had a serious impact on a number of countries. Was it an epidemic? Probably. The
Ebola outbreak in West Africa in 2014–6 would also qualify. However, a Contactor would only be entitled to seek an extension
of time if it was already working on the project when the epidemic broke out. 43 A Contractor must also be able to demonstrate
both shortages in availability of personnel or Goods and how this caused delay. Most governments have extensive powers to
deal with health emergencies which may lead to the shutdown of a project or factory supplying materials.
The question of unforeseeable delay caused by government action would again be a question of fact and depend on the specific
circumstances of each project. Regardless, the Contractor should bear in mind the provisions of Sub-Cl.8.6 which provide that
the Contractor is entitled to an extension of time for delays caused by Authorities. The provisions of this sub-clause might
make a claim easier to make, although as set out above, a claim for an extension of time under Sub-Cl.8.5 does not carry an
entitlement to Cost.
Sub-Clause 8.5(e) provides an overall right to an extension of time for the Contractor because of delay caused by the Employer
or the Employer’s Personnel if such act or omission occurs on the Site. However, some of these events are covered by other
sub-clauses such as Sub-Cll.17.3 and 17.4. The reference to the Employer’s other contractors must be read in conjunction with
Sub-Cl.4.6, which makes mention of the reimbursement of Unforeseeable Cost, but not delays. Under the 2010 Pink Book, the
words “on the Site” have been deleted therefore expanding the grounds for which a Contractor might be entitled to an extension
of time as a delay caused by the Employer need no longer be confined to an act or omission which takes place on the Site.
By Sub-Cl.1.1.33 (Red Book), the definition of Employer’s Personnel includes the Engineer. Of course, by Sub-Cl.8.5 it is the
Engineer who is responsible for determining the entitlement, if any, of the Contractor to an extension of time. There is therefore
the potential for conflict, as the Engineer might be called upon to consider a claim for an extension based on his own default.
Sub-Clause 8.5 does not, unlike Cl.44 of the old Red Book, FIDIC, 4th edn provide a general clause referring to “other special
circumstances”. The Contractor’s entitlement to an extension of time is that set out in Cl.8.5 and that is that.
Assessment of an extension of time
8-026
The Engineer must make an assessment of the application for an extension of time in accordance with Cll.3.7 and 20. This
means that the Engineer must respond and must provide detailed comments. Before making a determination, the Engineer
should consult with both parties to see if an agreement can be reached. When making a determination under Sub-Cl.3.7, the
Engineer is deemed to be acting neutrally. 44 Further, that determination must be carried out fairly, taking due regard of all
relevant circumstances.
HHJ LLoyd QC in Balfour Beatty Construction Ltd v The Mayor and Burgess of the London Borough of Lambeth 45 said this
in terms of a party establishing a right to an extension of time:
“… By now one would have thought that it was well understood that, … the foundation must be the [1] original
programme (if capable of justification and substantiation to show its validity and reliability as a contractual starting
point) [2] and its success will similarly depend on the soundness of its revisions on the occurrence of every event,
so as to be able to provide a satisfactory and convincing demonstration of cause and effect. [3] A valid critical
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path (or paths) has to be established both initially and at every later material point since it (or they) will almost
certainly change. …”
A good example of what might be an appropriate approach for the Engineer was set out by Mr Recorder Toulson QC, who in the
case of John Barker Construction Ltd v London Portman Hotel Ltd 46 set out the following criteria which should be considered
in order to calculate a “fair and reasonable” extension of time:
(i)apply the rules of the contract;
(ii)recognise the effects of constructive change;
(iii)make a logical analysis, in a methodical way, of the effect of relevant events on the contractor’s programme; and
(iv)calculate objectively, rather than make an impressionist assessment of the time taken up by the relevant events.
In carrying out his assessment, the Engineer is required to review any previous assessments. However, he is not allowed to
decrease the total extension period. This means that the Engineer must not consider applications for an extension in isolation.
Concurrency
8-027
Claims revolving around concurrent delay are a frequently encountered problem in construction contracts. The problem of
concurrency typically arises when the Contractor is in delay, but the Employer also appears to be delaying the Contract. The
question then arises as to whether the Contractor is entitled to receive an extension of time in any event?
Unlike the 1999 Form, the 2017 FIDIC Form does address concurrency but it does not attempt to provide a definition, merely
stating that concurrency shall be assessed in accordance with the rules and procedures stated in the Special Provisions (or if
nothing is stated, as appropriate taking due regard of all relevant circumstances). This really only serves to remind the parties
that it is something that should be addressed.
Core Principle 10 of the Second Edition of the SCL Delay and Disruption Protocol defines concurrency in this way:
“True concurrent delay is the occurrence of two or more delay events at the same time, one an Employer Risk
Event, the other a Contractor Risk Event, and the effects of which are felt at the same time. For concurrent delay
to exist, each of the Employer Risk Event and the Contractor Risk Event must be an effective cause of Delay to
Completion (i.e. the delays must both affect the critical path). Where Contractor Delay to Completion occurs
or has an effect concurrently with Employer Delay to Completion, the Contractor’s concurrent delay should not
reduce any EOT due.”
To be a concurrent delay, the event for which the Employer is responsible and an event for which the Contractor is responsible
should commence at precisely the same time. Therefore, it is likely that true concurrency will only rarely arise. For example,
the Employer might be late in giving possession of the Site, but at the same time the Contractor might not have been ready to
start in any event due to a lack of labour or materials.
However, the term concurrency, in construction disputes, is also used to refer to situations where the two events occur at different
times and have differing effects but continue such that some of the effects are felt during an overlapping period. These delays
are perhaps more properly referred to as having “concurrent effects”. In practical terms the question that arises is whether the
Contractor is entitled to an extension of time and loss and/or expense or is the Employer entitled to Delay Damages? That
question is not dealt with by Sub-Cl.8.5.
Concurrency in the UK
8-028
The law relating to concurrency, in the UK at least, is unclear. There are different approaches in England, Wales and Scotland.
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The definition of concurrency which tends to find most favour is the one put forward by John Marrin QC:
“A period of project overrun which is caused by two or more effective causes of delay which are of approximately
equal causative potency.” 47
There are a number of competing approaches to the legal question of how concurrency is resolved. These include:
(i)The “but for” test, where a claimant contractor argues that “but for” the action of the employer, a delay would not have
occurred.
(ii)The dominant cause approach, namely the decision-maker must determine which event was the “dominant cause” of
the delay.
(iii)The Malmaison approach. 48
(iv)Apportionment.
This has led to the adoption of two different approaches in England and Wales, and Scotland. In England, the traditional approach
is the one followed in the Malmaison case. In that case Dyson J (as he then was) stated that:
“It is agreed that if there are two concurrent causes of delay, one of which is relevant event, and the other is
not, then the contractor is entitled to an extension of time for the period of delay caused by the relevant event,
notwithstanding the concurrent effect of the other event. If no work is possible on site for a week not only because
of exceptionally inclement weather (a relevant event) but also because the contractor has a shortage of labour (not
a relevant event) and if the failure to work during that week is likely to delay the works beyond the completion
date by one week, then if he considers it fair and reasonable to do so, the architect is required to grant an extension
of time of one week. He cannot refuse to do so on the grounds that the delay would have occurred in any event
by reason of the shortage of labour.”
Indeed, in respect of claims for an extension of time, there is precious little by way of assistance from the courts. In Balfour
Beatty v Chestermount ((1993) 62 B.L.R. 12) a case under the JCT form of contract, the court had to decide whether the architect
could grant an extension of time during a period when the Contractor was in culpable delay. The court held that the architect
can consider and award an extension of time if in his opinion he considers it fair and reasonable to do so. Judge Coleman said
that the architect when approaching this task should:
“… assess whether any of the relevant events has caused delay to the progress of the works and if so, how much
… . Fundamental to this exercise is an assessment of whether the relevant event occurring during a period of
culpable delay has caused delay to the completion of the works and, if so, how much delay.”
In other words, the architect is looking for the dominant cause. This theory can perhaps be better demonstrated by reference to
claims for loss and/or expense. In the Scottish case of John Doyle Construction v Laing Management (Scotland) Ltd ([2004]
B.L.R. 295), the Scottish Inner House had to consider the question of concurrency. Lord Drummond Young said this:
“… it is frequently possible to say that an item of loss has been caused by a particular event notwithstanding
that other events played a part in its occurrence. In such cases, if an event or events for which the employer is
responsible can be described as the dominant cause of an item of loss, that will be sufficient to establish liability,
notwithstanding the existence of other causes that are to some degree at least concurrent … . If an item of loss
results from concurrent causes, and one of those causes can be identified as the proximate or dominant cause of
the loss, it will be treated as the operative cause, and the person responsible for it will be responsible for the loss.”
Simply put, if loss (or delay) resulted from concurrent causes then it might be possible to identify one of those causes as being
dominant in respect of the loss (or delay). If that were the case, then it would be treated as the operative cause and the person
responsible for it would be responsible for the entirety of that loss (or delay).
In Scotland, the preferred approach is known as the “apportionment” approach. This followed the case of City Inn Ltd v Shepherd
Construction Ltd. At first instance, Lord Drummond Young 49 said that:
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“Where there is true concurrency between a relevant event and a contractor default, in the sense that both existed
simultaneously, regardless of which started first, it may be appropriate to apportion responsibility for the delay
between the two causes; obviously, however, the basis for such apportionment must be fair and reasonable.”
Namely, this would require consideration of the period of delay and the causative significance of each event on the works as a
whole. On appeal, 50 Lord Osbourne took a slightly different approach concluding that:
(i)It must be established that a relevant event has occurred and is a cause of delay, and that completion of the works is
likely to be delayed or has been delayed by that relevant event.
(ii)Whether the relevant event has had or will have any causative effect is an issue of fact to be determined not by the
application of philosophical principles of causation but by common sense.
(iii)In deciding whether the relevant event has caused delay, the decision-maker can consider any factual evidence he
considers acceptable. A critical path analysis is not essential.
(iv)If a dominant cause can be identified as the cause of a particular delay in completion of the works, effect will be given
to that by leaving out of account any causes which are not material. Therefore, in those circumstances, the success of an
extension of time claim will depend on whether the dominant cause is a relevant event.
(v)Where a situation exists in which two causes are operative, one being a relevant event and the other some event for
which the Contractor is to be taken to be responsible, and neither of which could be described as the dominant cause, the
claim for extension of time will not necessarily fail. In such a situation, it will be open to the decision-maker, approaching
the issue in a fair and reasonable way, to apportion the delay in the completion of the works occasioned thereby as between
the relevant event and the other event.
This Scottish approach to apportionment has been comprehensively rejected by Akenhead J who said in the case of Walter Lily
& Co Ltd v MacKay 51 :
“In any event, I am clearly of the view that, where there is an extension of time clause such as that agreed upon
in this case and where delay is caused by two or more effective causes, one of which entitles the Contractor to
an extension of time as being a Relevant Event, the Contractor is entitled to a full extension of time. Part of
the logic of this is that many of the Relevant Events would otherwise amount to acts of prevention and that it
would be wrong in principle to construe cl.25 on the basis that the Contractor should be denied a full extension
of time in those circumstances. More importantly however, there is a straight contractual interpretation of cl.25
which points very strongly in favour of the view that, provided that the Relevant Events can be shown to have
delayed the Works, the Contractor is entitled to an extension of time for the whole period of delay caused by
the Relevant Events in question. There is nothing in the wording of cl.25 which expressly suggests that there is
any sort of proviso to the effect that an extension should be reduced if the causation criterion is established. The
fact that the Architect has to award a ‘fair and reasonable’ extension does not imply that there should be some
apportionment in the case of concurrent delays. The test is primarily a causation one. It therefore follows that,
although of persuasive weight, the City Inn case is inapplicable within this jurisdiction.”
One justification for the English approach is that as the contract in question in the MacKay case expressly provided for an
extension of time for certain relevant events, it must have been contemplated that there could be more than one effective cause
of delay, and also expressly agreed that a contractor is entitled to an extension of time for an effective cause of delay. This is
similar to the approach in the FIDIC form and where the law of England and Wales is the law of the contract, this is likely to
be the approach adopted by any Tribunal or DAB.
The Scottish City Inn case centred around a JCT 1980 contract which required, by Cl.25.3.1.2 that the decision-maker determine
a delay claim “by fixing such later date as the Completion Date as he then estimates to be fair and reasonable”. This may make
apportionment an attractive approach for the Engineer who is required by Sub-Cl.3.7 to act “fairly” when determining a claim
by the Contractor, in non-English jurisdictions.
Of course, the Engineer must as a starting point consider what the contract, as amended says. Some standard forms do endorse
apportionment, for example Cl.34.4 of the Australian Standard construction contract AS4000 which states:
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“34.4 Assessment
When both non qualifying and qualifying causes of delay overlap, the Superintendent shall apportion
the resulting delay to WUC according to the respective causes’ contribution.In assessing each EOT the
Superintendent shall disregard questions of whether:
a)WUC can nevertheless reach practical completion without an EOT; or
b)the Contractor can accelerate, but shall have regard to what prevention and mitigation of the delay
has not been affected by the Contractor.” 52
It would be possible for the Employer to seek to amend the contract to make it clear that where there are two causes of delay
during a single period (one of which is the liability of the Contractor and the other of the Employer) then the Contractor will
not receive an extension of time. Indeed, Employers often seek to do this. Such an amendment could be achieved as follows:
“Where more than one event causes concurrent delays and the cause of at least one of those events, but not all of
them, is a cause of delay which would not entitle the Contractor to an extension of time under sub-clause … then
to the extent that the delays are concurrent, the Contractor will not be entitled to an extension of time.”
Alternatively, UK contracts such as the 2016 JCT Major Projects 53 (Cl.18.7.3) favour the Contractor and provide that the
Contractor is entitled to an extension of time, notwithstanding that completion of the project may have been delayed due to the
concurrent effects of a cause that is not listed as a relevant event.
Certainly, the courts will uphold the express agreement of the parties. 54 In the case of North Midland Building Ltd v Cyden
Homes Ltd 55 the parties had amended a standard JCT Design and Building Contract 2016 to read as follows:
“3.and provided that
(a)the Contractor has made reasonable and proper efforts to mitigate such delay; and
(b)any delay caused by a Relevant Event which is concurrent with another delay for which the Contractor
is responsible shall not be taken into account
then, save where these Conditions expressly provide otherwise, the Employer shall give an extension
of time by fixing such later date as the Completion Date for the Works or Section as he then estimates
to be fair and reasonable.”
LJ Coulson, said that:
“In my view, clause 2.25.1.3(b) is unambiguous. It plainly seeks to allocate the risk of concurrent delay to the
appellant. The consequence of the clear provision was that the parties have agreed that, where a delay is due to
the contractor, even if there is an equally effective cause of that delay which is the responsibility of the employer,
liability for the concurrent delay rests with the contractor, so that it will not be taken into account in the calculation
of any extension of time.”
Concurrency under the civil law codes
8-029
Civil law codes tend not to make express provision for concepts such as concurrency. If the contract does not provide the answer,
then it is quite possible that bearing in mind the general requirements of good faith and fairness that the civil law approach
might tend to favour apportionment. To take the UAE civil code:
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•as a starting point, art.246(1) requires that a contract must be performed in accordance with its contents, and in a manner
consistent with the requirements of good faith;
•art.290 allows a judge to reduce the level by which an act has to be made good or to order that it need not be made good
if the person suffering harm participated by his own act in bringing about or aggravating the damage; and
•art.291 states that if a number of persons are responsible for a harmful act, each of them shall be liable in proportion to
his share in it. The judge may make an order against them in equal shares or by way of joint or several liability.
The UAE Civil Code therefore does expressly recognise the concept of apportionment. Taken together, these three provisions
do seem to suggest that a Tribunal under UAE law might be able to adopt an apportionment approach when there is concurrent
employer and contractor delay.
Other codes are more straightforward. This is the position in the Republic of Georgia:
“The acting law recognizes situation when the loss suffered by one party was caused by both parties’ reasons and
so called “composed fault” exists. In such case, the court is obliged to determine which party is liable for the loss
to what extent and to determine its amount proportionally to such extent.” 56
However, whichever approach is preferred, when preparing or determining a claim for an extension of time it is important to
bear the following in mind:
(i)The precise express terms of the contract.
(ii)What records are available to substantiate the claim?
(iii)What the Applicable Law says and requires.
(iv)What is the factual and chronological sequence of events? By this we mean, not just what happened at the point of
delay and beyond but in the lead up to the delay.
(v)What is the status of the project programmes? Have they been properly and regularly updated?
(vi)Has a delay to the Completion Date been established?
An example from the courts
8-030
There is very little by way of assistance from the courts in the interpretation of the FIDIC clauses. In one such case the parties
to a contract found themselves bound by the FIDIC extension of time procedures and rules without them necessarily having
signed up to them. The case of Motherwell Bridge Construction v Micafil Vakuumtechnik 57 demonstrates both the difficulty in
working out what the parties have contracted, if no contract is agreed and signed and the extent to which the English courts will
often go in order to establish that a contract has been agreed. In August 1997 Micafil wrote to Motherwell Bridge saying that
it had been awarded the subcontract “conditional upon … both parties signing the formal contract consolidating all necessary
commercial technical and operational requirements … “. Nevertheless, no formal contract was executed.
The court concluded, on the basis of the conduct of the parties, that the contract was formed by correspondence and discussions
culminating in that August 1997 letter. As a consequence of their conduct, Judge Toulmin CMG QC held that the parties had
agreed to conduct their relations within the spirit of FIDIC terms but not to be bound by the strict terms. Despite the fact that there
was no FIDIC subcontract available at the time, this meant that whilst Motherwell Bridge were entitled to claim an extension
of time on grounds available under the FIDIC conditions. They did not have to comply with the FIDIC procedural time limits.
Motherwell Bridge had accelerated and re-sequenced its Work to overcome the effects of delay by Micafil. The court approached
the problem in this way. Was the delay on the critical path and if so, was it caused by Motherwell Bridge?
The judge noted that the approach of the decision-maker determining the extension of time claim:
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“… must always be tested against an overall requirement that the result accords with common sense and fairness.”
He continued:
“Micafil undertake a detailed analysis of what they say is the 35-week delay caused by MBST. The correct
approach for me is to have this in mind but to focus on MBST’s claims for extensions of time and to consider
Micafil’s submissions in the context that unless MBST can show their entitlement to it they are not entitled to the
extensions of time which they claim. For example clearly if MBST needed to carry out remedial works because
they had not fulfilled the standard required under their contract with Micafil (as opposed to work as a result of
more stringent requirements from BICC) they cannot claim an extension of time under the contract to enable
them to do so.”
On the evidence, the delays were on the critical path, but were not the fault of Motherwell Bridge. Accordingly, Motherwell
Bridge was entitled to an extension of time to the date it would have been likely to have completed the Work had it not accelerated
and attempted to mitigate the Employer delay. 58 It was also entitled to claim for prolongation costs.
A coda
8-031
Finally, all parties should ensure that wherever an extension of time has been granted, the new completion date (which supersedes
the original or previous contract completion date) is clearly set out. There is no contractual requirement under Sub-Cl.8.3 for
the Contractor to prepare a new programme whenever an extension of time is granted. Instead, the Contractor must submit a
revised programme whenever the previous programme is inconsistent with actual progress or his obligations under the Contract.
Whilst you could argue that this does amount to a requirement to issue a new programme upon the award of an extension of
time, it is suggested that this is not sufficiently clear to amount to a contractual requirement.
Footnotes
29
30
31
32
33
34
See Multiplex Constructions UK Ltd v Honeywell Control Systems Ltd [2007] EWHC 447 (TCC), where Jackson J, as
he then was, summarised the key authorities on the prevention issue including Holme v Guppy (1838) 3 M & W 387;
Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd (1970) 1 B.L.R. 114; and Gaymark Investments Pty Ltd
v Walter Construction Group Ltd [1999] NTSC 143, (2005) 21 Construction Law Journal 71.
The grant of an extension of time does lead to an automatic entitlement of loss and/or expense. See, for example, H.
Fairweather & Co v London Borough of Wandsworth (1987) 39 B.L.R. 106.
The Protocol launched in October 2002 (with a second edition being issued in February 2017) is not intended to be a
contract document. It is not binding upon parties or a tribunal unless the parties have expressly agreed that this is the
case. That said, although expressed as a guidance note, it aspired to become the standard for best practice in dealing with
delay and disruption issues. Whilst it has rarely if ever been taken up in contracts, it remains a useful summary of many
of the key principles relating to extension of time and disruption claims and is often referred to in expert reports. In
Adyard Abu Dhabi v Sd Marine Services [2011] EWHC 848 (Comm), Hamblen J, as he then was, noted that: “However,
as Mr Swan agreed in evidence, the SCL Protocol is not in general use in contracts in the construction industry and nor
has it been approved in any reported case. There was no evidence that the parties were aware of it or that they contracted
with it in mind …. In such circumstances the SCL Protocol can be of little assistance in relation to the legal causation
issues which arise in this case.” Contrast this with the approach in the Australian case of Santos Ltd v Fluor Australia
Pty Ltd [2017] QSC 153 where Flanagan J followed the guidance of the 2nd edn of the Protocol in considering the use
of the measured mile.
Part A, para.5, 2017 edn.
Appendix A, Definitions and glossary, meaning of “Contractor Delay”, 2017 edn.
[2014] EWHC 1028 (TCC).
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35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
For example, in Taiwan, pursuant to art.58 of the Civil Procedural Code.
[2005] CSOH 63.
See definition of “Cost” at Sub-Cl.1.1.19—it does not include any profit element.
See the separate commentary to each of these sub-clauses.
For further detail of what this means, see the discussion of the cases of Attorney General for the Falklands Island v
Gordon Forbes Construction (Falklands) Ltd (2003) 6 B.L.R. 280 and National Insurance Property Development Co
Ltd v NH International (Caribbean) Ltd Claim No.CV2008-04881/CV2008-04998 in Sub-Cl.6.10 above.
i.e. once every eight years in a two-year project. In the NEC Form of Contract, adverse weather will only constitute a
compensation event if a weather measurement which is shown to occur on average less frequently than once in 10 years
is recorded within a calendar month. In the NEC Form, details of the types of weather to be measured and the place
where measurements are to be taken should be set out in the Contract Data.
For further discussion about “foreseeable” and the “experienced contractor” see Sub-Cll.1.1.87 (Yellow Book), 1.1.85
(Red Book) and 4.12.
http://www.who.int/hac/about/definitions/en/ [Accessed 30 October 2018].
Otherwise, clearly it would not be unforeseeable.
See Sub-Cl.3.7 for discussion as to meaning of this term.
[2002] B.L.R. 288 at [30].
(1996) 83 B.L.R. 31.
For an authoritative discussion on concurrent delay, see J. Marrin QC, “Concurrent Delay Revisited”, SCL Paper 179,
February 2013, available at http://www.scl.org.uk [Accessed 10 September 2018].
Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd [1999] 70 Con L.R. 32. The decision was
followed in Steria Ltd v Sigma Wireless Communications Ltd [2007] EWHC 3454 (TCC), [2008] B.L.R. 79.
[2007] CSOH 190.
[2010] CSIH 68.
[2012] EWHC 1173 (TCC). The contract was the standard English JCT form. See also De Beers v ATOS Origin IT
Services UK Ltd [2011] B.L.R. 274 and Adyard Abu Dhabi v SD Marine Services [2011] EWHC 848.
The clause is usually marked up to give the Superintendent a unilateral power to extend time, to account for the
prevention principle. Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd [2002] NSWCA 211.
A solution preferred by the SCL Protocol.
This is the starting point of most civil codes.
[2018] EWCA Civ 1744.
sb-278-263-2017, 21 April 2017, Supreme Court of Georgia.
(2002) C.I.L.L. 1913. Probably a unique and certainly a slightly surprising case, but one which demonstrates the dangers
of not signing up to an agreed contract.
It was not entitled to an extension to the date that it actually did complete.
End of Document
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13
Section 8.6 - Delays Caused by Authorities, UKBC-UFIDIC 500923179 (2021)
Section 8.6 - Delays Caused by Authorities
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.6 - Delays Caused by Authorities
8-032
If:
(a)the Contractor has diligently followed the procedures laid down by the relevant legally constituted public authorities
or private utility entities in the Country;
(b)these authorities or entities delay or disrupt the Contractor’s work; and
(c)the delay or disruption was Unforeseeable,
then this delay or disruption will be considered as a cause of delay under sub-paragraph (b) of Sub-Clause 8.5 [Extension
of Time for Completion].
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500923193 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.6 - Delays Caused by Authorities
Overview of Key Features
8-033
The Contractor is required to follow any applicable procedures required by the public authorities in the Country where the
project is taking place.
If the Contractor has been delayed by the local authorities, they may be entitled to an extension of time (not Cost) pursuant
to Sub-Cl.8.5(b), provided:
(a)the Contractor has “diligently” followed the procedures of the local authorities; and
(b)the delay or disruption was unforeseeable.
End of Document
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1
Commentary, UKBC-UFIDIC 500923195 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.6 - Delays Caused by Authorities
Commentary
8-034
Sub-Clause 8.5(b) refers to causes of delay giving an entitlement to an extension of time under a sub-clause of the contract. SubClause 8.6 is one such example. By this subclause, the Contractor may claim an extension of time if a delay has been caused
by a public authority in the country in which the Site (or most of it) is located. The 2017 Form has added the words “private
utility entities” in recognition of the trend towards the privatisation of public utilities.
The Contractor should note sub-ss.(a)–(c) carefully. Unless all three conditions apply, the Contractor will not be entitled to an
extension of time.
Unlike the other sub-clauses of the Contract which carry the right to both an extension of time and cost (with or without
reasonable profit), this sub-clause is silent as to whether there is any such entitlement to cost or profit if additional time is
granted. Therefore, it is submitted that there cannot be any entitlement here. The Contractor is entitled to additional time but
nothing further (financially).
The 1999 FIDIC Guide says that no mention of financial consequences of delay was made because they would depend on
the particular circumstances. That is, it is suggested, something which is true of any event which causes delay. In any event,
whatever the reason why, the fact that no mention is made of any entitlement to cost or profit, can only lead to the result that
there is no such entitlement.
This sub-clause is another example of the importance to the Contractor of making proper use of the right conferred to SubCl.2.2 to request relevant copies of Laws of the Country.
The delay or disruption must be unforeseeable, which by Sub-Cl.1.1.87 (Yellow Book) means not “reasonably foreseeable by
an experienced contractor” at the Base Date for the submission of tender. For a discussion of the difficulties caused by this
definition see Sub-Cl.4.12.
End of Document
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1
Section 8.7 - Rate of Progress, UKBC-UFIDIC 500923167 (2021)
Section 8.7 - Rate of Progress
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.7 - Rate of Progress
8-035
If, at any time:
(a)actual progress is too slow to complete the Works or a Section (if any) within the relevant Time for Completion;
and/or
(b)progress has fallen (or will fall) behind the Programme (or the initial programme if it has not yet become the
Programme) under Sub-Clause 8.3 [Programme],
(c)when the Contractor is paid the amount determined for the Plant and Materials under Sub-Clause 14.5 [Plant and
Materials intended for the Works].
other than as a result of a cause listed in Sub-Clause 8.5 [Extension of Time for Completion], then the Engineer may instruct
the Contractor to submit, under Sub-Clause 8.3 [Programme], a revised programme describing the revised methods which
the Contractor proposes to adopt in order to expedite progress and complete the Works or a Section (if any) within the
relevant Time for Completion.
Unless the Engineer gives a Notice to the Contractor stating otherwise, the Contractor shall adopt these revised methods,
which may require increases in the working hours and/or in the numbers of Contractor’s Personnel and/or the Goods, at
the Contractor’s risk and cost. If these revised methods cause the Employer to incur additional costs, the Employer shall
be entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to payment of these costs by the Contractor, in
addition to Delay Damages (if any).
Sub-Clause 13.3.1 [Variation by Instruction] shall apply to revised methods, including acceleration measures, instructed
by the Engineer to reduce delays resulting from causes listed under Sub-Clause 8.5 [Extension of Time for Completion].
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500923161 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.7 - Rate of Progress
Overview of Key Features
8-036
•Where actual progress is too slow to enable the Contractor to complete the project within the Time for Completion or
where progress has fallen behind the programme, the Engineer may instruct the Contractor to submit a revised programme.
•The Engineer can only do this where the reason for the delay is a reason other than those listed in Sub-Cl.8.5.
•The revised programme must set out the method by which the Contractor intends to deal with the situation and complete
within the Time for Completion.
•If the Engineer does not object, the Contractor shall adopt these proposals at risk and cost.
•If the Employer incurs increased costs as a result of the revised proposals, the Employer may be entitled to claim these
costs from the Contractor pursuant to Sub-Cl.2.5.
•Any costs the Employer receives as a consequence of this Sub-Clause shall be in addition to any entitlement for delay
damages described in Sub-Cl.8.8.
End of Document
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1
Commentary, UKBC-UFIDIC 500923191 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.7 - Rate of Progress
Commentary
8-037
The purpose of this sub-clause is to enable the Engineer to instruct the Contractor to accelerate his work to ensure that the
project is completed on time.
Sub-Clause 8.1 provides that the Contractor must proceed “with due expedition and without delay”, whilst Sub-Cl.8.3 already
provides that whenever the project falls into delay, the Contractor must, if required by the Engineer, submit a revised programme
setting out proposals to rectify the delay. Sub-Clause 8.7 specifically deals with what happens if the cause of delay is not a
reason which pursuant to Sub-Cl.8.5 would entitle the Contractor to an extension of time. Under the 2017 Form, progress will
be judged against the Programme and judged in relation to the Time for Completion of either the Works or a relevant Section.
The difference between Sub-Cll.8.3 and 8.7 is that as the Contractor is not entitled to an extension of time and cost, the Contractor
is responsible for any increased costs and risk caused by the acceleration or other measures which it is necessary to take.
In addition to this, the Contractor is responsible for any additional costs which the Employer might incur as a result of the
accelerative measures. Costs here, refer to actual costs incurred and not any entitlement the Employer might have to Delay
Damages. This is dealt with in Sub-Cl.8.8. If the Employer considers that they are entitled to costs, they must follow the claims
process outlined at Sub-Cl.20.2.
If incentives are proposed for early completion, the Special Provisions propose the following additional paragraph:
“Sections are required to be completed by the dates given in the Contract Data in order that these sections may
be occupied and used by the Employer in advance of the completion of the whole of the Works. Details of the
work required to be executed to entitle the Contractor to bonus payments and the amount of the bonuses are stated
in the Specification.
For the purpose of calculating bonus payments, the dates given in the Contract Data for completion of Sections
are fixed. No adjustments of the dates by reason of granting an extension of time for Completion will be allowed.”
End of Document
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1
Section 8.8 - Delay Damages, UKBC-UFIDIC 500923192 (2021)
Section 8.8 - Delay Damages
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.8 - Delay Damages
8-038
If the Contractor fails to comply with Sub-Clause 8.2 [Time for Completion], the Employer shall be entitled subject to SubClause 20.2 [Claims For Payment and/or EOT] to payment of Delay Damages by the Contractor for this default. Delay
Damages shall be the amount stated in the Contract Data, which shall be paid for every day which shall elapse between the
relevant Time for Completion and the relevant Date of Completion of the Works or Section. The total amount due under
this Sub-Clause shall not exceed the maximum amount of Delay Damages (if any) stated in the Contract Data.
These Delay Damages shall be the only damages due from the Contractor for the Contractor’s failure to comply with
Sub-Clause 8.2 [Time for Completion], other than in the event of termination under Sub-Clause 15.2 [Termination for
Contractor’s Default] before completion of the Works. These Delay Damages shall not relieve the Contractor from the
obligation to complete the Works, or from any other duties, obligations or responsibilities which the Contractor may have
under or in connection with the Contract.
This Sub-Clause shall not limit the Contractor’s liability for Delay Damages in any case of fraud, gross negligence,
deliberate default or reckless misconduct by the Contractor.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500923174 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.8 - Delay Damages
Overview of Key Features
8-039
•If the Contractor fails to complete his Works within the Time for Completion, the Employer is entitled to levy Delay
Damages.
•The Delay Damages shall be deducted at the rate provided for in the Contract Data.
•The Contract Data provides for the maximum amount of Delay Damages to be capped.
•Unless the Contract is terminated, Delay Damages are the only remedy available to the Employer prior to Completion.
•The Delay Damages do not relieve the Contractor of his other contractual obligations.
•To recover the Delay Damages, the Employer must make an application in accordance with Sub-Cl.20.2.
End of Document
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Commentary, UKBC-UFIDIC 500923157 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.8 - Delay Damages
Commentary
8-040
This sub-clause entitles the Employer to levy Delay Damages (sometimes known as Liquidated and Ascertained Damages) if
the Contractor fails to complete the Works by the Time for Completion (as extended in accordance with Sub-Cl.8.4). Delay
Damages are defined at Sub-Cl.1.1.28 as being: “the damages for which the Contractor shall be liable under Sub-Clause 8.8
[Delay Damages] for failure to comply with Sub-Clause 8.2 [Time for Completion].”
The 1999 FIDIC Guide notes that the purpose of Delay Damages is to compensate the Employers for losses they suffer as a
consequence of delayed completion. Where the amount of Delay Damages is pre-agreed, the intention is that the Employer does
not have to prove actual loss and damage. Whether that is entirely correct may, as we discuss below, depend on the Applicable
Law.
To be able to levy such damages, the Employer must make an application in accordance with Sub-Cl.2.5. The appropriate rates
must be set out in the Contract Data. The Contract Data provides for the levying of Delay Damages on a daily basis until the
date set out in the Taking-Over Certificate. The Delay Damages are expressed in the Contract Data as a percentage of the final
Contract Price which is calculated according to Sub-Cl.14.15(b). These damages can also be capped at a maximum percentage
of the final Contract Price.
As a consequence, it is submitted that no delay damages can actually be deducted until the Final Contract price has been
ascertained. Until that has been done, the actual amount of the Delay Damages cannot be known.
The law under which the Contract operates will have particular significance here. Under English law, a liquidated damages
clause will not be enforceable where it constitutes a “penalty”. 59 However, under many other jurisdictions penalty clauses are
not only valid but common.
In England and other common law jurisdictions, the approach the courts will take was set out by Lord Woolf who was sitting
as part of the Privy Council in Philips Hong Kong Ltd v The Attorney General of Hong Kong (1993) 60 :
“Except possibly in the case of situations where one of the parties to the contract is able to dominate the other as to
the choice of the terms of a contract, it will normally be insufficient to establish that a provision is objectionably
penal to identify situations where the application of the provision could result in a larger sum being recovered
by the injured party than his actual loss. Even in such situations so long as the sum payable in the event of noncompliance with the contract is not extravagant, having regard to the range of losses that it could reasonably
be anticipated it would have to cover at the time the contract was made, it can still be a genuine pre-estimate
of the loss that would be suffered and so a perfectly valid liquidated damage provision. The use in argument of
unlikely illustrations should therefore not assist a party to defeat a provision as to liquidated damages. As the Law
Commission stated in Working Paper No.61 (page 30):
‘The fact that in certain circumstances a party to a contract might derive a benefit in excess of his
loss does not … outweigh the very definite practical advantages of the present rule upholding a
genuine estimate, formed at the time the contract was made of the probable loss.”’
When, Jackson J, as he then was, reviewed the position in Alfred McAlpine Capital Projects Ltd v Tilebox, 61 he made four
general observations:
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Commentary, UKBC-UFIDIC 500923157 (2021)
1.There seem to be two strands in the authorities. In some cases judges consider whether there is an unconscionable or
extravagant disproportion between the damages stipulated in the contract and the true amount of damages likely to be
suffered. In other cases, the courts consider whether the level of damages stipulated was reasonable. Mr Darling submits,
and I accept, that these two strands can be reconciled. In my view, a pre-estimate of damages does not have to be right in
order to be reasonable. There must be a substantial discrepancy between the level of damages stipulated in the contract and
the level of damages which is likely to be suffered before it can be said that the agreed pre-estimate is unreasonable.
2.Although many authorities use or echo the phrase “genuine pre-estimate”, the test does not turn upon the genuineness
or honesty of the party or parties who made the pre-estimate. The test is primarily an objective one, even though the court
has some regard to the thought processes of the parties at the time of contracting.
3.Because the rule about penalties is an anomaly within the law of contract, the courts are predisposed, where possible,
to uphold contractual terms which fix the level of damages for breach. This predisposition is even stronger in the case of
commercial contracts freely entered into between parties of comparable bargaining power.
4.Looking at the bundle of authorities provided in this case, I note only four cases where the relevant clause has been struck
down as a penalty. These are Commissioner of Public Works v Hills, 62 Bridge v Campbell Discount Co Ltd, 63 Workers
Trust and Merchant Bank Ltd v Dojap Investments Ltd, 64 and Ariston SRL v Charly Records. 65 In each of these four cases
there was, in fact, a very wide gulf between (a) the level of damages likely to be suffered, and (b) the level of damages
stipulated in the contract.
Jackson J’s judgment provides a reminder that in addressing this question, the test is the reasonableness of the estimate when
considered objectively at the time of entering into the contract. However, in 2015, in the case of Cavendish Square Holdings
BV (Appellant) v Tatal El Makdessi (Respondent), 66 the Supreme Court rejected the traditional test set down in the Dunlop
case that a clause will be a penalty if it is not a genuine pre-estimate of loss and is extravagant or unconscionable, or if its
purpose is to deter a breach of contract. The majority of the Supreme Court set out a new test and held that the correct approach
in commercial cases was to have regard to the nature and extent of the innocent party’s (e.g. the Employer’s) interest in the
performance of the obligation that was breached as a matter of construction of the contract.
The new test, as formulated by the majority, is whether the clause in question is:
“… a secondary obligation which imposes a detriment on the contract-breaker out of all proportion to any
legitimate interest of the innocent party in the enforcement of the primary obligation. The innocent party can
have no proper interest in simply punishing the defaulter. His interest is in performance or in some appropriate
alternative to performance. In the case of a straightforward damages clause, that interest will rarely extend beyond
compensation for the breach, and we therefore expect that Lord Dunedin’s four tests would usually be perfectly
adequate to determine its validity. But compensation is not necessarily the only legitimate interest that the innocent
party may have in the performance of the defaulter’s primary obligations.”
The basic principle that a penalty is unenforceable remains unchanged. The real question when a contractual provision is
challenged as a penalty is whether it is penal and not any longer whether it is a genuine pre-estimate of loss. The fact that a
clause is not a genuine pre-estimate of loss does not necessarily mean that it is penal. What this means is that a penalty clause
whose purpose is to punish the contract-breaker is likely to be an unenforceable penalty clause, whereas a clause that is intended
to deter a breach of contract is less likely to be a penalty clause, even if it does not represent a genuine pre-estimate of loss.
It is important to remember both that the principle behind the new rule is intended to deter a breach of contract and also that
this means that the rate of liquidated damages does not necessarily have to be representative of any actual financial loss the
Employer may have suffered.
Can the liquidated damages clause be commercially justified? For example, this might mean that commercial interests such as
reputational issues, goodwill, the interests of third parties, and other losses that cannot be easily quantified can now be taken
into account in determining the level of liquidated damages. Further, if a liquidated damages clause has been negotiated in a
commercial contract made between two parties of comparable bargaining power, then there will be a strong initial presumption
that the clause is not out of all proportion to the employer’s legitimate interests in timely completion. In other words, this new test
requires a consideration of the commercial justification for the liquidated damages clause at the time the contract was entered
into, and whether it is out of all proportion to the employer’s legitimate commercial interest in the works completing on time.
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Commentary, UKBC-UFIDIC 500923157 (2021)
Parties are reminded that it is always sensible to keep a record and explanation of the reasons (perhaps including details of
any negotiations) why the amount of the liquidated damages was set at the level it was, and why it represents a reasonable and
proportionate protection of a legitimate commercial interest.
Therefore, under most common law jurisdictions, the Employer would be advised to take steps to ensure that he can demonstrate
that the percentage of the Contract Price (or any alternative formulation which may be agreed between the parties) can be proved
to be a genuine pre-estimate of the likely losses where completion is delayed. To be a genuine pre-estimate, the sum must bear
a reasonable relationship to the likely level of damages that would result from a breach of contract and be a pre-estimate of
damages that would otherwise be recoverable as damages for breach of contract. The fact that the Delay Damages here are
expressed as a proportion of the Contract Price suggest a lump sum rather than a carefully calculated approach. This may well
mean that the Delay Damages will be considered by the English courts to be a penalty. 67
If the Delay Damages clause was found to be a penalty, then the Employer may still be entitled to damages to compensate for
any actual loss which may have been suffered.
It is often said that where the Employer is a government body then Delay Damages are a penalty because there is no loss as the
projects are effectively underwritten by the state. In the Australian case of State of Tasmania v Leighton Contractors Pty Ltd, 68
Leighton was to design, construct and maintain 13.65km of new highway. Completion was delayed and AUS$1,832,000 was
deducted as liquidated damages by the state of Tasmania at the agreed rate of $8,000 per day. It was generally understood that
the state of Tasmania would be entitled to receive reimbursement for all project costs from the Commonwealth Government.
Leighton argued that as the state had suffered no loss on account of such reimbursement, the liquidated damages amounted
to a penalty.
The Full Court held that the state was accountable for its public expenditure and was, therefore, entitled to require reasonable
compensation for the delay and public inconvenience caused. The court noted that:
“Public utility does not of itself disentitle the State or public authority from seeking, by way of damages,
compensation for loss, the components of which are incalculable. Delay or breach of a particular term of agreement
might result in loss or harm to public convenience such as transportation costs, provision of temporary or substitute
infrastructure, continued maintenance of alternate services or increased administrative costs. The provision of
public money does not change the character of a compensatory provision into one of penalty simply because the
expenditure is to be paid by another public authority.”
Different jurisdictions of course deal with delay damages differently. For example, in South Africa under the Conventional
Penalties Act 15 of 1962, the court can reduce the amount of Delay Damages that might be applicable if the Contractor can
prove that the Employer will be unjustly enriched if he receives the Delay Damages as specified in the Contract. Namely, if the
Employer is not suffering any loss due to the Contractor’s delay. The onus, of course, is on the Contractor to highlight that the
penalty is out of proportion to the loss suffered by the Employer.
A similar approach is adopted by many Arab civil codes. The Arabic term used, mostly by state courts, for liquidated or delay
damages can be translated as “delay fines” or “penalty clause” or even “consensual compensation.” In Qatar, art.265 of the Civil
Code allows the parties to a contract to calculate the amount of damages payable in the event of delay. However, by art.266
the court can reduce the delay damages if the Contractor can show that the Employer has not suffered any loss or the amount
claimed is exaggerated. By art.267, the amount of delay damages agreed in the Contract Data will be a cap on the damages
payable, except in circumstances of fraud or gross mistake.
In contrast, in the UAE, art.390 of the Civil Transactions law (Civil Code) 69 states:
“1-The contracting parties may fix the amount of compensation in advance by making a provision therefor
in the contract or in a subsequent agreement, subject to the provisions of the law.
2-The court may, on the application of either party, vary such agreement so as to make the compensation
equal to the loss and any agreement to the contrary shall be void.”
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Commentary, UKBC-UFIDIC 500923157 (2021)
Therefore, in the UAE, both the Contractor and the Employer may challenge the element of “loss”. Article 390(2) entitles the
judge to vary the parties’ agreement to reflect the actual loss. For example, the UAE High Federal Court in Abu Dhabi 70
stated that:
“delay fines clauses contained in construction contracts are, in substance, no more than an agreed estimate of
compensation that would become due in case of the contractor’s failure or delay to perform its contractual
obligations. According to Article 390 of the Civil Code, it is not sufficient—for the agreed compensation to
become due—to establish the element of fault alone. In addition, the element of loss which is suffered by the other
party should be established’. If the contractor succeeds in establishing the absence of loss, the agreed compensation
should be repudiated.”
In other words, a court may set aside entirely the liquidated damage, in the unlikely event of the Employer suffering no loss
from the delay. Further, the court may also award less damages reflecting the actual loss. In both scenarios, the burden of proof
is placed squarely on the Contractor. Similar standards will be applied to the Employer who is trying to argue that his actual
loss exceeds the liquidated damages. However, parties should be aware that as a starting point, the court will attempt to respect
the parties’ agreement. So in practice, it will be reluctant to vary the liquidated damages clause unless it is evident that the
liquidated damages considerably exceed the actual loss.
There is a further potential difficulty here caused by the fact that the Contract Price will not be known with any certainty until
the Works are, at least, nearly complete. How can the Employer make a reasonable pre-estimate based in percentage terms
of a figure which is unclear? There are two answers to this. First, amend the Contract Data and use a different basis for the
calculation of the Delay Damages. Alternatively, ensure that the percentage figure entered into the Contract Data is based on a
genuine pre-estimate of the Contract Price as anticipated at the time the Contract is entered into.
It is always a sensible precaution for an Employer to consider keeping records to show the reasonableness of final figure agreed
for Delay Damages. In the English case of Tullett Prebon Group Ltd v Ghaleb El-Hajjali 71 Nelson J noted that an express
contractual statement that there is a pre-estimate or that the sum stipulated is not a penalty is persuasive but not conclusive.
In Azimut-Benetti SpA v Healey, 72 the trial judge concluded that both parties had the benefit of expert representation in the
conclusion of the contract. The terms, including the liquidated damages clause, were freely entered into:
“As the authorities referred to … show, in a commercial contract of this kind, what the parties have agreed should
normally be upheld.”
Care must be taken when filling in the Contract Data. In Temloc v Ermill Properties, 73 the liquidated damages were expressed
to be “£nil”. This, it turned out, did not mean that there was no liquidated damages clause, therefore damages became “at large”.
Instead it meant that the Employer lost all rights to damages for delay.
Sub-Clauses 1.1.86 (Yellow Book) and 8.2 refer to the possibly of sectional completion. Where sectional completion is required
by the Contract, the Delay Damages provision should make clear how the damages payable in the event of late completion
are apportioned between the different stages of work. Where there is provision in a contract for partial possession or sectional
completion prior to takeover, but no equivalent provision for the reduction of Delay Damages in such circumstances, the right
to deduct Delay Damages will be lost.
The most straightforward way to do this is to reduce the sum by reference to the section of the Works which is complete. The
Contract must identify the value to be ascribed to each section. A failure to do so can be fatal to the Employer’s claim for
liquidated damages. The Employer should, in particular, be aware that the English courts will almost certainly construe such
clauses by operating the contra proferentum rule, in other words, against the Employer who will be the party seeking to rely
on the particular clause. 74
If the appropriate part of the Contract Data is not filled out, then the Employer will not be entitled to levy Delay Damages.
However, under English law, a term will normally be implied into any building contract which provides that the Contractor
shall complete the works within a reasonable time. If, without sufficient excuse, the Contractor fails to achieve this, then he
is liable to pay damages at common law assessed under the common law principles that derive from Hadley v Baxendale and
Victoria Laundry (Windsor) Ltd v Newman Industries Ltd. 75
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Commentary, UKBC-UFIDIC 500923157 (2021)
What if the Contract is terminated? The wording of the FIDIC Form is not clear and certainly does not rule out the continuation
of liquidated damages. In the UAE, if a construction contract is terminated, the LDs clause automatically becomes valueless.
The Employer may then claim general unliquidated damages. In this respect the Dubai Court of Cassation 76 stated that:
“delay fines contained in contracts are deemed to be a penalty clause which is a secondary obligation correlated to
the primary obligation, and it is a forfeit to the breach of the latter. The ineffectiveness of the primary obligation
—as a result of the contract termination—leads to the ineffectiveness of the penalty clause. It follows that the
court should not take account of the agreed damages stated in the delay fines clause; the judge may award general
damages subject to proof of fault and loss according to the general rules.”
It was thought that the right to liquidated damages came to an end upon termination in England and Wales too. That was until
the case of Hall & Shivers v Van der Heiden (No.2), 77 where Coulson J, as he then was, dismissed the suggestion that the
defendant’s liability to pay liquidated damages would come to an end in these circumstances. In particular, he noted that there
was no such provision in the contract, 78 and that in addition, any such term would reward the defendant for his own default.
Sub-Clause 8.8 does not deal with what happens if delay damages are paid out but the Contractor is subsequently awarded an
extension of time. 79 The proper course is that the Contractor is entitled to a refund based on the extension awarded. In the
interests of clarity the parties should consider inserting the following sub-clause:
“If the Employer extends the Time for Completion under Sub-Clause 8.5 after delay damages have been paid or
otherwise accounted for under this Sub-Clause, the extension of the Time for Completion shall not invalidate the
Employer’s claim for the delay damages. In such circumstances the Contractor’s liability to pay delay damages
shall be limited to the sum due on the basis of the new Time for Completion, and the Employer shall repay or
otherwise account for the difference between that sum and the sum which has been paid or otherwise accounted
for on the basis of the Employer’s claim before the extension of the Time for Completion. Interest shall [or shall
not] be payable by the Employer on any amounts payable or repayable under this Sub-Clause.”
Sub-Clause 8.7 deals with the deduction of damages if completion is late. The contract conditions do not make provision for
a bonus for early completion. Employers are sometimes prepared to incentivise the Contractor to complete by a certain time
through the payment of a further bonus. If this is something which the Parties agree upon, then it is important that the appropriate
clause is drafted with sufficient clarity.
Bonus payments and incentives for early completion
8-041
The converse of delay damages is the provision of an incentive for the Contractor to complete the project early. The Special
Provisions provide the following suggested wording:
“The Contractor shall be entitled to a bonus payment if the Works and/or each Section is completed earlier than
the Time for Completion for the Works or Section (as the case may be). The amount of bonus for early completion
of the Works and/or each Section is stated in the Employer’s Requirements.
For the purposes of calculating any bonus payment, the applicable Time for Completion stated in the Contract
Data is fixed and no adjustments of this time by reason of granting an EOT will be allowed.”
Footnotes
59
60
Dunlop Ltd v New Garage Co Ltd (1915) A.C. 79.
61 B.L.R. 41.
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Commentary, UKBC-UFIDIC 500923157 (2021)
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
[2005] EWHC 281 (TCC).
[1906] A.C. 368.
[1962] A.C. 600.
[1993] A.C. 573.
CA, 13 March 1990.
The Cavendish Square Holding BV v El Makdessi case was conjoined with a separate appeal, ParkingEye Ltd v Beavis
[2015] UKSC 67. In a further demonstration of the importance of the case, the bench consisted of seven rather than
the usual five judges.
Note however the case of Decoma UK Ltd v Haden Drysys International Ltd [2005] EWHC 2429 (TCC) where the
parties agreed by art.12 of the contract that if Haden failed to achieve the final completion date, then liquidated and
ascertain damages could be levied up to a maximum amount of 5% of the contract price. According to the judgment,
both parties agreed that these rates were a genuine pre-estimate of loss.
[2005] TASSC 133. A case heard by the Supreme Court of Tasmania.
See also, art.224(1) of the Egyptian Civil Code which states that: “Damages fixed by agreement are not due if the debtor
proves that the creditor has suffered no harm”. The Code further states at art.224(2) that “the judge may reduce the
amount of these damages, if the debtor establishes that the amount fixed was grossly exaggerated or that the principal
obligation has been partially performed.”
High Federal Court, case 25/24—1 June 2004 (Civil).
[2008] EWHC 1924 (QB).
[2010] EWHC 2234 (Comm).
(1988) 39 B.L.R. 30.
Bramall & Ogden Ltd v Sheffield CC (1983) 29 B.L.R. 73 (OR), Bruno Zornow v Beechcroft Development (1989) 51
B.L.R. 16, and Stanor Electric v Mansell (1988) C.I.L.L. 399.
(1854) 9 Ex. 341; [1949] 2 KB 528.
Dubai Court of Cassation, 17 June 2001, case 302/21.
[2010] EWHC 586 (TCC).
And there is no such clear and unambiguous provision in many of the standard contracts.
This problem was highlighted by the case of DOE v Farrans (Construction) Ltd (1982) 19 B.L.R. 1.
End of Document
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6
Section 8.9 - Employer’s Suspension, UKBC-UFIDIC 500923177 (2021)
Section 8.9 - Employer’s Suspension
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.9 - Employer’s Suspension
8-042
The Engineer may at any time instruct the Contractor to suspend progress of part or all of the Works, which instruction
shall state the date and cause of the suspension.
During such suspension, the Contractor shall protect, store and secure such part or all of the Works (as the case may be)
against any deterioration, loss or damage.
To the extent that the cause of such suspension is the responsibility of the Contractor, Sub-Clauses 8.10 [Consequences
of Employer’s Suspension], 8.11 [Payment for Plant and Materials after Employer’s Suspension] and 8.12 [Prolonged
Suspension] shall not apply.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923170 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.9 - Employer’s Suspension
Overview of Key Features
8-043
•The Engineer may at any time instruct the Contractor to suspend progress of his Works or any part of them.
•The Engineer may, but does not have to, notify the Contractor for the reason for the suspension.
•During the period of the suspension it is the responsibility of the Contractor to protect the Works.
•If the cause of the suspension is something for which the Contractor is responsible, Sub-Cll.8.10–8.12 shall not apply.
End of Document
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1
Commentary, UKBC-UFIDIC 500923196 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.9 - Employer’s Suspension
Commentary
8-044
Sub-Clauses 8.9 to 8.13 deal with suspension and need to be read together. The sub-clause here details what is to happen should
the Engineer instruct the Contractor to suspend progress of his Works.
Only the Engineer (and not the Employer), can issue such an instruction at any time. There is no obligation on the Engineer to
inform the Contractor of the reason for the suspension, however it is suggested that practically the Engineer would be wise to
do so. The Contractor needs to know if the fault is his. Indeed, under Sub-Cl.9.7 of the FIDIC Gold Book 2008, the Employer’s
Representative is required to tell the Contractor the cause of the suspension.
There is also no restriction on when the Engineer can issue such a notice. The words “at any time” 80 mean exactly that. There
is also no obligation on the Engineer to give any advance notice of the suspension. Presumably therefore, a notice can be served
with immediate effect.
During the period of the suspension, it is the responsibility of the Contractor to “protect, store and secure” the Works, including
Plant and Materials (or part of the Works if the suspension only relates to a part) against any “deterioration, loss or damage.”
Thus the suspension does not relieve the Contractor of the responsibility to take care of the Works set out at Sub-Cl.17.1.
The clause does not state who is responsible for the costs of undertaking this protection work. However, from the following
Sub-Cll.8.10–8.12, it seems clear that if the reason for the suspension is related to a reason for which the Contractor is entitled
to an extension of time under Sub-Cl.8.5, then the Contractor will be entitled to make a claim for these costs. Nevertheless,
if the reason for the suspension is the responsibility of the Contractor, then he will equally be responsible for these protection
costs and indeed the sub-clause here makes it clear that if the reason for the suspension is the fault of the Contractor then SubCll.8.10–8.12 shall not apply.
If the Contractor fails to provide adequate protection which leads to a delay on resumption of the works, then in accordance
with Sub-Cl.8.10 he will not be entitled to an extension of time. In addition to this, once work resumes, the Contractor might,
again if the reason for the suspension is related to a reason for which the Contractor is entitled to an extension of time under
Sub-Cl.8.5, be entitled to make a claim for the costs of resumption. These can often be quite considerable.
One thing which Sub-Cll.8.9–8.13 do not do, is require the Contractor to maintain its staff and labour resources ready to
commence work when the period of suspension is lifted. The Contractor has to take steps to protect the Works. Yet, an Employer
might want to consider how he can ensure that key personnel in addition to the Contractor’s Representative (who will presumably
be required by Sub-Cl.4.3 to remain available) are not moved from the project. Obviously, at the very least the Contractor would
look to recover its costs in these circumstances.
As you would expect, under Sub-Cl.8.6 of the FIDIC Subcontract 2011, the Contractor is entitled to instruct the Subcontractor
to suspend progress of his Works, a right which is back-to-back with the Employer’s right here.
Footnotes
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Commentary, UKBC-UFIDIC 500923196 (2021)
80
Something that was confirmed by Dyson J, as he then was, in Herschel v Breen (2002) B.L.R. 272, in a case involving
the enforcement of an adjudicator’s decision under the UK Housing Grants, Construction and Regeneration Act 1996.
End of Document
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2
Section 8.10 - Consequences of Employer’s Suspension, UKBC-UFIDIC 500923185...
Section 8.10 - Consequences of Employer’s Suspension
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.10 - Consequences of Employer’s Suspension
8-045
If the Contractor suffers delay and/or incurs Cost from complying with an Engineer’s instruction under Sub-Clause 8.9
[Employer’s Suspension] and/ or from resuming the work under Sub-Clause 8.13 [Resumption of Work], the Contractor
shall be entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to EOT and/or payment of such Cost Plus
Profit.
The Contractor shall not be entitled to EOT, or to payment of the Cost incurred, in making good:
(a)the consequences of the Contractor’s faulty or defective design, workmanship, Plant or Materials; and/or
(b)any deterioration, loss or damage caused by the Contractor’s failure to protect, store or secure in accordance with
Sub-Clause 8.9 [Employer’s Suspension].
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923181 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.10 - Consequences of Employer’s Suspension
Overview of Key Features
8-046
•If the Contractor suffers delay or increased costs as a result of a suspension notified by the Engineer, he is entitled to make
a claim and must give an appropriate notice to the Engineer as required by Cl.20.
•The Contractor will not be entitled to an extension of time and/or additional cost, if the reason for the suspension is not
covered by Sub-Cl.8.5 and/or was a result of the Contractor’s poor design, workmanship or materials.
•The Contractor will not be entitled to an extension of time and/or payment for cost incurred as a consequence of any
failure on the part of the Contractor to protect the Works during the period of suspension in accordance with Sub-Cl.8.9.
End of Document
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1
Commentary, UKBC-UFIDIC 500923162 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.10 - Consequences of Employer’s Suspension
Commentary
8-047
This clause confirms that the Contractor is entitled to submit a claim for an extension of time and additional cost as a consequence
of any suspension notice issued by the Engineer in accordance with Sub-Cl.8.9.
However, a Contractor will not be entitled to an extension of time and/or additional cost if the reason for the suspension was
the responsibility of the Contractor and not an item covered by the Sub-Cl.8.5.
In addition, the Contractor will not be entitled to an extension of time and/or additional cost, if he fails to take adequate steps
to protect the Works, Plants and Materials during the period of the suspension.
End of Document
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1
Section 8.11 - Payment for Plant and Materials After..., UKBC-UFIDIC...
Section 8.11 - Payment for Plant and Materials After Employer’s
Suspension
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.11 - Payment for Plant and Materials After Employer’s Suspension
8-048
The Contractor shall be entitled to payment of the value (as at the date of suspension instructed under Sub-Clause 8.9
[Employer’s Suspension]) of Plant and/or Materials which have not been delivered to Site, if:
(a)the work on Plant, or delivery of Plant and/or Materials, has been suspended for more than 28 days and
(i)the Plant and/or Materials were scheduled, in accordance with the Programme, to have been completed and
ready for delivery to the Site during the suspension period; and
(ii)the Contractor provides the Engineer with reasonable evidence that the Plant and/or Materials comply with
the Contract; and
(b)the Contractor has marked the Plant and/or Materials as the Employer’s property in accordance with the Engineer’s
instructions.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500923172 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.11 - Payment for Plant and Materials After Employer’s Suspension
Overview of Key Features
8-049
•If Work or the delivery of Plant and Materials has been suspended for more than 28 days and if the Contractor has marked
the Plant and Materials as the Employer’s property, then the Contractor shall be entitled to payment for Plant and Materials
which have not been delivered to site if those goods were programmed to be ready (and were actually ready) for delivery
during the suspension period.
•The value of the payment will be the value of the Plant and Materials as at the date of the suspension.
End of Document
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1
Commentary, UKBC-UFIDIC 500923164 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.11 - Payment for Plant and Materials After Employer’s Suspension
Commentary
8-050
This sub-clause recognises that some items required on site can have long lead-in times. The sub-clause is intended to ensure
that the Contractor has an entitlement to payment when suspension impacts on any such times. The Contractor must provide
evidence that the relevant Plant and Materials were due for delivery during the period of suspension and were actually ready (in
accordance with the contract requirements) for delivery during the relevant period. A Contractor must therefore take proactive
steps to manage their delivery programme and requirements during the period of suspension and continue to maintain relevant
records.
End of Document
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1
Section 8.12 - Prolonged Suspension, UKBC-UFIDIC 500923189 (2021)
Section 8.12 - Prolonged Suspension
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.12 - Prolonged Suspension
8-051
If the suspension under Sub-Clause 8.9 [Employer’s Suspension] has continued for more than 84 days, the Contractor may
give a Notice to the Engineer requesting permission to proceed.
If the Engineer does not give a Notice under Sub-Clause 8.13 [Resumption of Work] within 28 days after receiving the
Contractor’s Notice under this Sub-Clause, the Contractor may either:
(a)agree to a further suspension, in which case the Parties may agree the EOT and/or Cost Plus Profit (if the Contractor
incurs Cost), and/or payment for suspended Plant and/or Materials, arising from the total period of suspension;
or (and if the Parties fail to reach agreement under this sub-paragraph (a))
(b)after giving a (second) Notice to the Engineer, treat the suspension as an omission of the affected part of the Works
(as if it had been instructed under Sub-Clause 13.3.1 [Variation by Instruction]) with immediate effect including
release from any further obligation to protect, store and secure under Sub-Clause 8.9 [Employer’s Suspension]. If the
suspension affects the whole of the Works, the Contractor may give a Notice of termination under Sub-Clause 16.2
[Termination by Contractor].
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500923187 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.12 - Prolonged Suspension
Overview of Key Features
8-052
•If the period of suspension runs for more than 84 days, then the Contractor may seek permission to proceed with the
Works from the Engineer.
•If the Engineer does not give permission within 28 days of being requested to do so, in respect of a suspension of the entire
Works, the Contractor will be entitled to try and agree a further suspension or give notice of termination under Sub-Cl.16.2.
•If the Engineer fails to respond within 28 days of any such request, in respect of a suspension of a part of the Works, the
Contractor may treat the suspension as an omission under Sub-Cl.13.
End of Document
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1
Commentary, UKBC-UFIDIC 500923165 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Section 8.12 - Prolonged Suspension
Commentary
8-053
Obviously, it cannot be in the Contractor’s interest for the periods of suspension to continue indefinitely. During the period of
suspension the Contractor will incur potentially significant costs in protecting the site and also disruption to the resourcing of
other projects. The Contractor will have also had to maintain his insurance during the period of insurance to the extent required
by Cl.18.
Sub-Clause 8.12 provides the Contractor with the contractual mechanisms needed to bring the period of suspension to an end
through the provision of a Notice the Engineer. The Contractor should note that the Notice should specifically request permission
from the Engineer to proceed with the suspended Works.
Sub-Clause 8.12(a) of the 2017 Form includes a new provision noting that the Parties may agree a further period of suspension,
extension of time and payment of Cost. This has always been an option open to the Parties, although the insertion of this subclause as an option to be found in the Contract itself is a further acknowledgement of the increased importance of dispute
avoidance within the 2017 FIDIC Form.
However, the notice period is a long one. The Contractor must wait 84 days from the date of the suspension notice before being
able to take action. The Contractor must then wait for a further period of up to 28 days (i.e. a total of 112 days) before being
able to take any action to bring the suspension period to an end.
If the area affected by the suspension is a part of the Works, then the Contractor can treat the suspension as an omission under
Sub-Cl.13.1(d).
If the whole of the Works were suspended, then the Contractor is entitled to give immediate notice of termination in accordance
with Sub-Cl.16.2(f).
End of Document
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1
Clause 8.13 Resumption of Work, UKBC-UFIDIC 500923176 (2021)
Clause 8.13 Resumption of Work
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Clause 8.13 Resumption of Work
8-054
The Contractor shall resume work as soon as practicable after receiving a Notice from the Engineer to proceed with the
suspended work.
At the time stated in this Notice (if not stated, immediately after the Contractor receives this Notice), the Contractor and the
Engineer shall jointly examine the Works and the Plant and Materials affected by the suspension. The Engineer shall record
any deterioration, loss, damage or defect in the Works or Plant or Materials which has occurred during the suspension and
shall provide this record to the Contractor. The Contractor shall promptly make good all such deterioration, loss, damage
or defect so that the Works, when completed, shall comply with the Contract.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500923158 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Clause 8.13 Resumption of Work
Overview of Key Features
8-055
•The Contractor must re-start work as soon as practicable once permission to proceed has been given.
•Once permission to proceed has been given, the Contractor and the Engineer shall carry out a joint inspection of the Works
affected by the suspension.
•It is the responsibility of the Contractor to make good any damage in the Works which has occurred during the period
of suspension.
End of Document
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Commentary, UKBC-UFIDIC 500923163 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 8 - Clause 8—Commencement, Delays and Suspension
Clause 8.13 Resumption of Work
Commentary
8-056
This sub-clause sets out the procedure for the resumption of work after suspension. Following a joint inspection, the Contractor
must rectify any defects that may have occurred to the Works during the period of the suspension. In line with Sub-Cl.9.11
of the FIDIC Gold Book 2008, the Engineer is expected to make a written record of all making good required to be carried
out by the Contractor. This is a sensible, practical approach and an agreed joint inspection will again minimise the possibility
of future dispute.
In accordance with Sub-Cll.8.9–8.11, the Contractor will not be able to recover the costs of so doing if he was responsible
for the suspension in the first place or if the defects occurred as a result of any failure by the Contractor during the period of
suspension to protect the Works properly.
End of Document
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1
Chapter 9 - Clause 9—Tests on Completion, UKBC-UFIDIC 500923206 (2021)
Chapter 9 - Clause 9—Tests on Completion
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 9 - Clause 9—Tests on Completion
Differences between the Red and Yellow Books
9-001
The Tests on Completion required by Sub-Cl.9.1 of the Yellow Book, culminating in the trial operation are far more detailed
than those set out in the equivalent Red Book sub-clause.
End of Document
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Section 9.1 - Contractor’s Obligations, UKBC-UFIDIC 500923201 (2021)
Section 9.1 - Contractor’s Obligations
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 9 - Clause 9—Tests on Completion
Section 9.1 - Contractor’s Obligations
9-002
The Contractor shall carry out the Tests on Completion in accordance with this Clause and Sub-Clause 7.4 [Testing by
the Contractor], after submitting the documents under Sub-Clause 5.6 [As-Built Records] and Sub-Clause 5.7 [Operation
and Maintenance Manuals].
The Contractor shall submit to the Engineer, not less than 42 days before the date the Contractor intends to commence the
Tests on Completion, a detailed test programme showing the intended timing and resources required for these tests.
The Engineer may Review the proposed test programme and may give a Notice to the Contractor stating the extent to
which it does not comply with the Contract. Within 14 days after receiving this Notice, the Contractor shall revise the
test programme to rectify such non-compliance. If the Engineer gives no such Notice within 14 days after receiving the
test programme (or revised test programme), the Engineer shall be deemed to have given a Notice of No-objection. The
Contractor shall not commence the Tests on Completion until a Notice of No-objection is given (or is deemed to have
been given) by the Engineer.
In addition to any date(s) shown in the test programme, the Contractor shall give a Notice to the Engineer, of not less than
21 days, of the date after which the Contractor will be ready to carry out each of the Tests on Completion. The Contractor
shall commence the Tests on Completion within 14 days after this date, or on such day or days as the Engineer shall instruct,
and shall proceed in accordance with the Contractor’s test programme to which the Engineer has given (or is deemed to
have given) a Notice of No-objection.
Unless otherwise stated in the Employer’s Requirements, the Tests on Completion shall be carried out in stages in the
following sequence:
(a)pre-commissioning tests (on or off the Site, as appropriate), which shall include the appropriate inspections and
(‘dry’ or ‘cold’) functional tests to demonstrate that each item of the Works or Section can safely undertake the next
stage under sub-paragraph (b) below;
(b)commissioning tests, which shall include the operational tests specified in the Employer’s Requirements to
demonstrate that the Works or Section can be operated safely and as specified in the Employer’s Requirements, under
all available operating conditions; and
(c)trial operation (to the extent possible under available operating conditions), which shall demonstrate that the Works
or Section perform reliably and in accordance with the Contract.
The tests of each stage described in sub-paragraphs (b) and (c) above shall not be commenced until the Works or Section
have passed the previous stage.
During trial operation, when the Works or Section (as the case may be) are operating under stable conditions, the Contractor
shall give a Notice to the Engineer that they are ready for any other Tests on Completion, including performance tests.
Performance tests shall be carried out to demonstrate whether the Works or Section comply with the performance criteria
specified in the Employer’s Requirements and with the Schedule of Performance Guarantees.
Trial operation, including performance testing, shall not constitute a taking over under Clause 10 [Employer’s Taking
Over].
Any product produced by, and any revenue or other benefit resulting from, trial operation under this Sub-Clause shall be
the property of the Employer.
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Section 9.1 - Contractor’s Obligations, UKBC-UFIDIC 500923201 (2021)
As soon as the Works or Section have, in the Contractor’s opinion, passed each stage of the Tests on Completion described
in sub-paragraphs (a) to (c) above, the Contractor shall submit a certified report of the results of these tests to the Engineer.
The Engineer shall Review each such report and may give a Notice to the Contractor stating the extent to which the results
of the tests do not comply with the Contract. If the Engineer does not give such a Notice within 14 days after receiving the
results of the tests, the Engineer shall be deemed to have given a Notice of No-objection.
In considering the results of the Tests on Completion, the Engineer shall make allowances for the effect of any use of (any
part of) the Works by the Employer on the performance or other characteristics of the Works.
Differences between the Yellow and Red Books
9-003
The paragraphs setting out the stages in which the Tests on Completion are to be carried out, culminating in the trial operation
do not appear in the Red Book.
Under the Red Book, in accordance with Sub-Cl.4.1(g), the Contractor need only provide as-built drawings and operations and
maintenance manuals in respect of those parts of the Works designed by the Contractor.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923199 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 9 - Clause 9—Tests on Completion
Section 9.1 - Contractor’s Obligations
Overview of Key Features
9-004
•It is the responsibility of the Contractor to carry out the Tests on Completion.
•These are Tests which must be carried out prior to Taking Over.
•In the Yellow Book, the tests must be carried out in the following sequence, pre-commissioning, commissioning and trial
operation.
•Before the Tests are carried out, the Contractor must provide the as-built drawings and Operations and Maintenance
manuals.
•The Contractor must give at least 42 days’ notice to the Engineer of the date on which they will be ready to carry out
the Tests.
•Unless otherwise agreed, the Tests will be carried out within 14 days after this date.
•The Engineer must consider the Tests and decide whether the works tested have passed.
•Trial operation is not the same as Taking-Over.
End of Document
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Commentary, UKBC-UFIDIC 500923203 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 9 - Clause 9—Tests on Completion
Section 9.1 - Contractor’s Obligations
Commentary
9-005
The requirement for “Tests on Completion” is nothing new. The old Red Book, FIDIC, 4th edn provided for “Tests on
Completion” noting that they were the tests specified in the Contract or otherwise agreed by the Engineer and the Contractor
which were to be made by the Contractor before the Works or any Section or part thereof could be taken over by the Employer.
Clause 9 here sets out the specific way in which the tests are now required to be carried out.
By Sub-Cl.1.1.85 (Yellow Book), “Tests on Completion” are defined simply as the tests which are specified in the Contract or
agreed by both Parties or instructed as a Variation, and which are carried out under Cl.9 to determine whether the Works or a
Section (as the case may be) are ready to be taken over by the Employer. Sub-Clause 8.2 specifically notes that the passing of
the Tests on Completion is one of the pre-conditions of completing the Works within the Time for Completion.
The Special Provisions follow the 1999 FIDIC Guide and sensibly suggest that the Employer’s Requirements 1 or Specification
should describe the tests which the Contractor has to carry out before being entitled to a Taking-Over Certificate. Typically
these tests are described in some considerable detail and should give consideration to the possibility of tests being carried out
when other parts of the Works or overall project are incomplete.
The 2017 Yellow Book 2 provides for a three-stage testing or commissioning process before Taking-Over (Tests on Completion):
•pre-commissioning tests, including “dry” or “cold” functional tests;
•commissioning tests, including operational tests to demonstrate that the Works or relevant section operate safely, as
specified in the Employer’s Requirements under all available operating conditions; and
•trial operation to demonstrate that the Works or Section perform reliably and in accordance with the Contract requirements.
The purpose of the Tests is to demonstrate that the Works comply with Employer’s Requirements and that the Works met the
specified standards and any Performance Guarantees that may have been entered into. The standard FIDIC Form does not set
limits for the length of time within which the testing is to take place. Every project is unique and the testing regime will always
be subject to different requirements. It is therefore important that all Tests are organised to reflect the requirements of the plant
being built. As this is a testing regime, trial operation should not be confused with Taking-Over.
In establishing a testing regime, thought should be given to establishing pass or fail criteria which are easily and objectively
understood. This should minimise disputes about whether or not a Test has been passed.
Given the Contractor’s design obligations, the Contractor must first provide the documents set out in Sub-Cll.5.6 and 5.7, namely
the as-built records and O&M Manuals before carrying out the Tests on Completion. These documents must be “in accordance
with the Specification and in sufficient detail for the Employer to operate, maintain, dismantle, reassemble, adjust and repair this
part of the Works.” Until these documents have been provided, the Works cannot be taken over in accordance with Cl.10. Under
Sub-Cl.5.2.2, there is a specific obligation on the Engineer to check these documents, in default of which they will be deemed
approved. Given their importance, it is to be assumed that the Employer will want to ensure that they fulfil their purpose.
The Tests must be carried out in accordance with both this sub-clause and the detailed provisions of Sub-Cl.7.4. 3 For example,
the Contractor must supply all the apparatus and staff that may be necessary to carry the tests out efficiently.
The sub-clause requires the Contractor to submit the results, in the form of a certified report, of the Tests on Completion to the
Engineer, who may give a Notice to the Contractor indicating the extent to which the tests do not comply with the Contract. If
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1
Commentary, UKBC-UFIDIC 500923203 (2021)
no such Notice is given within 14 days, the Engineer shall be deemed to have given a Notice of No-Objection. By Sub-Cl.7.4,
when tests are passed the Engineer must endorse the test certificate accordingly. Equally by Sub-Cl.7.5, the Engineer can reject
any item which fails a test and order a retest in accordance with Sub-Cl.9.3. The 1999 FIDIC Guide notes that if the Works are
being tested and taken over in stages, then allowance may need to be made to take account of the fact that part of the Works
will be incomplete at the time of testing.
It is important that the Contractor factors in the time that might be taken to organise the Tests For Completion into his programme.
By Sub-Cl.8.2, the Contractor must complete the Works in accordance with the Time for Completion. This includes passing
the Tests on Completion. This might be important as whilst by virtue of the Contractor’s programme prepared in accordance
with Sub-Cl.8.3 and the Progress Reports required by Sub-Cl.4.21, the Engineer will already have been provided with the
Contractor’s estimate of when the particular tests were going to be carried out, the Contractor must now give 42 days’ notice
of the proposed tests in the form of a detailed test programme, to enable the Engineer to make his preparations for the test.
Previously, under the 1999 Form, the Contractor had to give 21 days’ notice. The Engineer then has 14 days to review the
programme and may give a Notice indicating the extent to which the proposed progamme does not comply with the Contract.
The Contractor must also remember to provide a further Notice to the Engineer giving not less than 21-days warning of the
date when they will be ready to carry out the Tests on Completion.
Footnotes
1
2
3
This is another example, see also Sub-Cl.4.1, of FIDIC replacing a reference from the 1999 Form to something being
“set out in the Contract” with the more focussed and specific reference to the Employer’s Requirements. As FIDIC say
in the Guidance Notes, if any matters are not referred to or covered by the Employer’s Requirements, the Contractor
may well be relieved of any responsibility in respect of such matters.
These requirements do not appear in the 2017 Red Book.
See discussion above regarding Sub-Cl.7.4.
End of Document
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2
Section 9.2 - Delayed Tests, UKBC-UFIDIC 500923198 (2021)
Section 9.2 - Delayed Tests
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 9 - Clause 9—Tests on Completion
Section 9.2 - Delayed Tests
9-006
If the Contractor has given a Notice under Sub-Clause 9.1 [Contractor’s Obligations] that the Works or Section (as the
case may be) are ready for Tests on Completion, and these tests are unduly delayed by the Employer’s Personnel or by a
cause for which the Employer is responsible, Sub-Clause 10.3 [Interference with Tests on Completion] shall apply.
If the Tests on Completion are unduly delayed by the Contractor, the Engineer may by giving a Notice to the Contractor
require the Contractor to carry out the tests within 21 days after receiving the Notice. The Contractor shall carry out the
tests on such day or days within this period of 21 days as the Contractor may fix, for which the Contractor shall give a
prior Notice to the Engineer of not less than 7 days.
If the Contractor fails to carry out the Tests on Completion within this period of 21 days:
(a)after a second Notice is given by the Engineer to the Contractor, the Employer’s Personnel may proceed with the
tests;
(b)the Contractor may attend and witness these tests;
(c)within 28 days of these tests being completed, the Engineer shall send a copy of the test results to the Contractor; and
(d)if the Employer incurs additional costs as a result of such testing, the Employer shall be entitled subject to SubClause 20.2 [Claims For Payment and/or EOT] to payment by the Contractor of the costs reasonably incurred.
Whether or not the Contractor attends, these Tests on Completion shall be deemed to have been carried out in the presence
of the Contractor and the results of these tests shall be accepted as accurate.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500923202 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 9 - Clause 9—Tests on Completion
Section 9.2 - Delayed Tests
Overview of Key Features
9-007
•If the Employer unduly delays the Tests on Completion then Sub-Cll.7.4 or 10.3 apply and the Contractor may be entitled
to additional time and costs.
•If the Tests on Completion are unduly delayed by the Contractor, the Engineer may give notice requiring the Contractor
to carry out the Tests within 21 days.
•If the Contractor fails to carry out the tests within the 21 days specified, then provided a second Notice is served by the
Engineer, the Employer’s Personnel can complete the Tests.
•If the Employer’s Personnel carry out the tests in these circumstances, they do so at the Contractor’s risk and cost.
End of Document
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Commentary, UKBC-UFIDIC 500923197 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 9 - Clause 9—Tests on Completion
Section 9.2 - Delayed Tests
Commentary
9-008
If Tests on Completion are unduly delayed by the Employer, the Contractor may give notice under Sub-Cl.10.3 and if the
Contractor suffers delay and/or incurs cost (including reasonable profit), it can make a claim in accordance with the provisions
of Cl.20.2. Under Sub-Cl.10.3, if the Contractor is prevented from carrying out the Tests on Completion, then provided the
appropriate Notice is given, the Employer shall be deemed to have taken over the Works.
No definition is provided of “undue delay”. Sub-Clause 7.4 only refers to “delay”. Sub-Clause 10.3 refers to the Contractor
being prevented for more than 14 days (either a continuous or multiple periods) from carrying out the Test. This will provide
some guidance. However, the most likely definition will be project specific being based on the factual circumstances of the
delay in particular in relation to the impact on the Contractor’s programme.
The advantage to the Contractor of proceeding in accordance with Sub-Cl.10.3 is that it provides a certain time frame. SubClause 10.3 specifically comes into effect if the Contractor is prevented from carrying out the tests for more than 14 days. SubClause 7.4 refers to “delay” whilst Sub-Cl.9.2 refers to more pressing “undue delay”. A prudent Contractor would be able to
use his Programme to demonstrate that the Tests were being delayed. However, it is suggested that the maximum period of
delay before the Contractor could take advantage of Sub-Cll.7.4 and 9.2 should correlate with the 14-day time frame set out
in Sub-Cl.10.3.
This must mean that the Employer too would have to wait for 14 days before being able to submit a notice requiring the
Contractor to carry out the Tests. The time reference is the same, the Tests being “unduly delayed”.
If the Employer submits a notice, the Contractor must still give notice to the Engineer. This potentially gives the Contractor
some difficulty, as the Contractor is supposed by Sub-Cl.9.1 to give the Engineer 21 days’ notice. It is suggested that the time
provisions set out within Sub-Cl.9.1 cannot apply when the Tests are in delay.
It is important for the Contractor to respond to any notice from the Employer requiring him to carry out the Tests. If he does
not, the Employer is entitled to allow his personnel to carry out the tests, at the Contractor’s risk and cost. In addition, the Tests
will be deemed to be both accurate and to have taken place in the presence of the Contractor.
End of Document
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1
Section 9.3 - Retesting, UKBC-UFIDIC 500923204 (2021)
Section 9.3 - Retesting
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 9 - Clause 9—Tests on Completion
Section 9.3 - Retesting
9-009
If the Works, or a Section, fail to pass the Tests on Completion, Sub-Clause 7.5 [Defects and Rejection] shall apply. The
Engineer or the Contractor may require these failed tests, and the Tests on Completion on any related work, to be repeated
under the same terms and conditions. Such repeated tests shall be treated as Tests on Completion for the purposes of this
Clause.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500923205 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 9 - Clause 9—Tests on Completion
Section 9.3 - Retesting
Overview of Key Features
9-010
If the Works do not pass the Tests on Completion, the Engineer can reject the Works and require the Tests to be repeated.
End of Document
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Commentary, UKBC-UFIDIC 500923200 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 9 - Clause 9—Tests on Completion
Section 9.3 - Retesting
Commentary
9-011
The sub-clause here simply provides that if the Works fail the Tests on Completion, the Engineer or the Contractor can require
the tests to be re-taken. The new tests must be carried out under the same conditions as the original tests.
This sub-clause should be read in conjunction with Sub-Cl.7.5 which provides that the Contractor shall make good any defect
and ensure that the rejected item complies with the Contract. The tests can then be repeated.
There is no limit set on how many times the works can be carried out. However Sub-Cl.15.2(d) provides that the Employer is
entitled to terminate the Contract, if the Contractor fails to comply within 28 days with a notice issued under Sub-Cl.7.5. This
is the same ultimate sanction as set out in Sub-Cl.9.4.
End of Document
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1
Section 9.4 - Failure to Pass Tests on Completion, UKBC-UFIDIC 500923207 (2021)
Section 9.4 - Failure to Pass Tests on Completion
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 9 - Clause 9—Tests on Completion
Section 9.4 - Failure to Pass Tests on Completion
9-012
If the Works, or a Section, fail to pass the Tests on Completion repeated under Sub-Clause 9.3 [Retesting], the Engineer
shall be entitled to:
(a)order further repetition of Tests on Completion under Sub-Clause 9.3 [Retesting];
(b)reject the Works if the effect of the failure is to deprive the Employer of substantially the whole benefit of the
Works, in which event the Employer shall have the same remedies as are provided in sub-paragraph (d) of Sub-Clause
11.4 [Failure to Remedy Defects];
(c)reject the Section if the effect of the failure is that the Section cannot be used for its intended purpose(s) under
the Contract, in which event the Employer shall have the same remedy as is provided in sub-paragraph (c) of SubClause 11.4 [Failure to Remedy Defects]; or
(d)issue a Taking-Over Certificate, if the Employer so requests.
In the event of sub-paragraph (d) above, the Contractor shall then proceed in accordance with all other obligations under
the Contract, and the Employer shall be entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to payment
by the Contractor or a reduction in the Contract Price as described under sub-paragraphs (b)(i) or (b)(ii) of Sub-Clause 11.4
[Failure to Remedy Defects], respectively. This entitlement shall be without prejudice to any other rights the Employer
may have, under the Contract or otherwise.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500923209 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 9 - Clause 9—Tests on Completion
Section 9.4 - Failure to Pass Tests on Completion
Overview of Key Features
9-013
•If the Works do not pass the Tests on Completion, the Engineer can either:
(i)order the Tests on Completion to be repeated;
(ii)reject the Works; or
(iii)issue a Taking-Over Certificate.
•There is no limit on the number of repetitions.
•If the Works are rejected, the Contractor’s contract could be terminated.
•If a Taking-Over Certificate is issued in these circumstances, the Contractor may have to make a payment to the Employer
or the Contract Price may be reduced to take account of the consequential reduced value to the Employer.
End of Document
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1
Commentary, UKBC-UFIDIC 500923208 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 9 - Clause 9—Tests on Completion
Section 9.4 - Failure to Pass Tests on Completion
Commentary
9-014
If the Works being tested fail the test then the Engineer can either order a re-test or reject the Works. There is no limit to the
number of times a retest can be ordered.
The Engineer can only choose to reject the Works if “the failure” deprives the Employer of substantially the “whole benefit” of
the Works being tested. If the Engineer takes this option, then the Employer shall have the same remedies as are available for
a Failure to Remedy Defects as provided for at Sub-Cl.11.4. In other words, the Employer may:
(i)make other arrangements to carry out the Works and require the Contractor to pay for these Works;
(ii)accept the defective work and seek a reduction in price; or
(iii)terminate the contract and seek to recover all sums paid to date plus financing costs and the costs of clearing the site.
The third option is quite obviously a very serious one for the Contractor and also the Employer. An Employer should consider
quite carefully the risks before taking the final option. There might be a considerable delay and increase in costs in appointing
a new Contractor at a late stage in the Contract.
The Engineer cannot issue a Taking-Over Certificate. This can only be done at the request of the Employer. If the Employer
chooses to take over the Works even though they have failed the Tests, the Employer is entitled to seek a payment from the
Contractor or a reduction in the Contract Price in order to cover the reduced value. If the amount of the reduction cannot be
agreed and paid before the Taking-Over Certificate is issued, then the amount to be deducted will be worked out accordance
with Sub-Cl.20.2.
End of Document
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1
Chapter 10 - Clause 10—employer’s Taking Over, UKBC-UFIDIC 500923220 (2021)
Chapter 10 - Clause 10—employer’s Taking Over
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 10 - Clause 10—employer’s Taking Over
Differences between the Red and Yellow Books
10-001 There are no differences between the two Contract Forms.
End of Document
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1
Section 10.1 - Taking Over the Works and Sections, UKBC-UFIDIC 500923216 (2021)
Section 10.1 - Taking Over the Works and Sections
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 10 - Clause 10—employer’s Taking Over
Section 10.1 - Taking Over the Works and Sections
10-002
Except as stated in Sub-Clause 9.4 [Failure to Pass Tests on Completion], Sub-Clause 10.2 [Taking Over Parts] and SubClause 10.3 [Interference with Tests on Completion], the Works shall be taken over by the Employer when:
(a)the Works have been completed in accordance with the Contract, including the passing of the Tests on Completion
and except as allowed in sub-paragraph (i) below;
(b)the Engineer has given (or is deemed to have given) a Notice of No-objection to the as-built records submitted
under sub-paragraph (a) of Sub-Clause 5.6 [As-Built Records];
(c)the Engineer has given (or is deemed to have given) a Notice of No-objection to the provisional O&M Manuals
for the Works submitted under Sub-Clause 5.7 [Operation and Maintenance Manuals];
(d)the Contractor has carried out the training (if any) as described under Sub-Clause 5.5 [Training]; and
(e)a Taking-Over Certificate for the Works has been issued, or is deemed to have been issued in accordance with
this Sub-Clause.
The Contractor may apply for a Taking-Over Certificate by giving a Notice to the Engineer not more than 14 days before
the Works will, in the Contractor’s opinion, be complete and ready for taking over. If the Works are divided into Sections,
the Contractor may similarly apply for a Taking-Over Certificate for each Section.
If any Part of the Works is taken over under Sub-Clause 10.2 [Taking Over Parts], the remaining Works or Section shall
not be taken over until the conditions described in sub-paragraphs (a) to (e) above have been fulfilled.
The Engineer shall, within 28 days after receiving the Contractor’s Notice either:
(i)issue the Taking-Over Certificate to the Contractor, stating the date on which the Works or Section were completed
in accordance with the Contract, except for any minor outstanding work and defects (as listed in the Taking-Over
Certificate) which will not substantially affect the safe use of the Works or Section for their intended purpose (either
until or whilst this work is completed and these defects are remedied); or
(ii)reject the application by giving a Notice to the Contractor, with reasons. This Notice shall specify the work required
to be done, the defects required to be remedied and/or the documents required to be submitted by the Contractor to
enable the Taking-Over Certificate to be issued. The Contractor shall then complete this work, remedy such defects
and/or submit such documents before giving a further Notice under this Sub-Clause.
If the Engineer does not issue the Taking-Over Certificate or reject the Contractor’s application within this period of 28
days, and if the conditions described in sub-paragraphs (a) to (d) above have been fulfilled, the Works or Section shall
be deemed to have been completed in accordance with the Contract on the fourteenth day after the Engineer receives the
Contractor’s Notice of application and the Taking-Over Certificate shall be deemed to have been issued.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923217 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 10 - Clause 10—employer’s Taking Over
Section 10.1 - Taking Over the Works and Sections
Overview of Key Features
10-003
•The Works will be taken over by the Employer when:
(i)the Works and the conditions described in sub-paras (b)–(d) have been completed; and
(ii)a Taking-Over Certificate has been issued or deemed to have been issued.
•The Contractor may apply to the Engineer for a Taking-Over Certificate not more than 14 days before he anticipates
completing the Works.
•Within 28 days of receiving the Contractor’s application, the Engineer may either:
(i)issue the Taking-Over Certificate; or
(ii)reject (with reasons) the application.
•If the Engineer fails to accept or reject the application within 28 days and the works are substantially in accordance with
the Contract, then the Taking-Over Certificate will be deemed to have been issued on the last day of the 28-day period.
End of Document
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1
Commentary, UKBC-UFIDIC 500923213 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 10 - Clause 10—employer’s Taking Over
Section 10.1 - Taking Over the Works and Sections
Commentary
10-004 Taking-Over is a key part of any building contract. Under the FIDIC Form:
•The Employer is able to take full possession of the Works, start operating them and earning an income.
•The Contractor ceases to be responsible for the care of the Works and responsibility passes to the Employer. 1
•Whilst the primary insurance obligation under Sub-Cl.19.2 ends upon issue of the Taking-Over Certificate, the Contractor,
unlike under many contracts, must maintain some insurance for the Works until the issue of the Performance Certificate.
•The Contractor’s rights of access to the Site are restricted as set out in Sub-Cl.11.7.
•The Employer no longer has the right to instruct variations under Sub-Cl.13.1 save for the purpose of remedying defects
under Sub-Cl.11.2.
•An Employer’s right to Delay Damages under Sub-Cl.8.8 will cease to accrue.
•The first part of the retention for the Contractor will become due under Sub-Cl.14.9.
•The Defects Notification Period begins.
•The legal limitation period for claims may start to run.
The Date of Completion is not necessarily the date of the Taking-Over Certificate. It is defined in Sub-Cl.1.24 as being “the
date stated in the Taking-Over Certificate issued by the Engineer; or, if the last paragraph of Sub-Clause 10.1 [Taking Over the
Works and Sections] applies, the date on which the Works or Section are deemed to have been completed in accordance with
the Contract; or, if Sub-Clause 10.2 [Taking Over Parts] or Sub-Clause 10.3. [Interference with Tests on Completion] applies,
the date on which the Works or Section or Part are deemed to have been taken over by the Employer.”
Sub-Clause 10.1 sets out the pre-conditions to taking-over and the procedure whereby the Works can be taken over by the
Employer. Prior to Taking-Over, the Contractor must have completed any work that is necessary to fulfil the Employer’s
Requirements. In common with the scheme of the new Form, if the Engineer does not consider that taking-over should be
granted, the Engineer must follow the prescribed process and time limits. If the Engineer does not do this, then the Taking-Over
Certificate 2 shall be deemed to have been issued.
The Special Provisions recommend that if the Works are to be completed and taken over in stages, it is important that each stage
is defined as a Section in the Contract Data. The Contract Data should include a table to also define for each Section:
•the relevant percentage for release of Retention Money, and
•the applicable Delay Damages.
Sometimes the Contract Data will show the Time for Completion for each Section, but equally often the Parties agree one
overall Time for Completion for the Works as a whole.
This sub-clause refers to either the Works in their entirety or Sections of the Works (provided they are defined in the Contract
Data 3 ). This sub-clause does not refer to parts of the Works. These are dealt with in Sub-Cl.10.2.
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Commentary, UKBC-UFIDIC 500923213 (2021)
For the Works to be taken over, the Works must be complete and a Taking-Over Certificate must have been issued. The Contractor
commences the taking over process by applying for a Taking-Over Certificate.
If the Works have failed the Tests on Completion, then in accordance with Sub-Cl.9.4, they will not be taken over unless the
Employer specifically requests a Taking-Over Certificate.
Sub-Clause 10.1 cross-refers to Sub-Cl.8.2 and mirrors its requirements. Completion of the Works (or a Section of the Works)
requires that:
(i)the Works have passed the Tests of Completion; and
(ii)all the work stated under the Contract as being required before taking over has been completed.
In addition to the Works having been completed, sub-paras (b)–(d) set out three pre-conditions to taking-over:
•In accordance with Sub-Cl.5.5, the Contractor must carry out training of the Employer’s Personnel as described in the
Employer’s Requirements. The timing of the training should be set out in the Employer’s Requirements, and any training
specified to be carried out before taking-over must be completed prior to taking-over.
•During the currency of the project, in accordance with Sub-Cl.5.6, the Contractor is expected to keep an up-to-date set of
as-built records. 4 A complete set must be submitted to the Engineer, before, during and after the Tests on Completion. The
Engineer must, in accordance with Sub-Cl.5.2.2, provide a Notice of Objection within 21 days. If no Notice is received
then the O&M Manuals will be deemed to be acceptable.
•Prior to commencement of the Tests on Completion, as required by Sub-Cll.5.7 and 9.1, the Contractor must submit to the
Engineer, provisional O&M manuals in sufficient detail to enable the Engineer to operate the relevant part of the works.
The Works or part thereof will not be considered complete, and no Taking-Over Certificate shall be issued for the purposes
of Taking-Over of the Works, until these manuals have been submitted in a final and acceptable form. The Engineer must,
in accordance with Sub-Cl.5.2.2, provide a Notice of objection within 21 days. If no Notice is received, the O&M Manuals
will be deemed to be acceptable.
The Taking-Over of the Works, which is not linked to or dependent on the Time for Completion, follows a three-stage process:
(i)the Contractor gives up to 14-days’ advance notice 5 that the Works are suitably complete;
(ii)the Engineer has 28 days to accept or reject the Works; and
(iii)if the Engineer neither rejects nor accepts, then the Works will be deemed to have been taken over on the 14th day
after the Engineer received the Contractor’s application, provided the conditions set out at Sub-Cl.10.1(a)–(e) have been
fulfilled. The 1999 Form required the Works to be substantially in accordance with the Contract.
By Sub-Cl.10.1(i), the Engineer cannot refuse to issue the Taking-Over Certificate because of “any minor outstanding work”
provided the minor defect does not “substantially affect the safe use of the Works … for their intended purpose”. However,
there is no guidance given as to the meaning of “substantially” or “substantially affect” and it will be left to the judgment of the
Engineer. This could potentially lead to disputes. One practical way to reduce these may be for there to be a joint inspection of
the Works (or Section) when they appear to be almost complete. That way, outstanding work can be identified on draft punch
or snagging lists. Indeed, if there is any minor outstanding Work, this must be completed by the Contractor during the Defects
Notification Period as set out in Sub-Cl.11.1(a).
If the Engineer decides to reject the Works, he must give reasons in a Notice. The Engineer must also specify the work required
to be done (e.g. the defects that need remedying, the training to be provided or the outstanding documents) by the Contractor to
enable the Taking-Over Certificate to be issued. It is the responsibility of the Contractor to complete this work before applying
for a further certificate.
If the Engineer fails to approve or reject the Works within the 28-day period, they will be deemed to be complete provided
the conditions set out at Sub-Cl.10.1(a)–(e) have been fulfilled. This may be significant, as Sub-Cl.8.8 says that a Contractor’s
liability for Delay Damages ends on the date stated in the Taking-Over Certificate.
As noted above, there is no definition within the Contract of “substantially”. However, Sub-Cl.10.1(i) notes that the TakingOver Certificate can be issued where there remain minor outstanding works and/or defects which will not substantially affect
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Commentary, UKBC-UFIDIC 500923213 (2021)
the use of the Works or Section for their intended purpose. In this regard the FIDIC approach is entirely in keeping with general
international practice. The Works will be substantially in accordance with the Contract if they are free from known defects
which would prevent the Employer from taking over and making use of the Project.
Under the Society of Construction Law’s Delay and Disruption Protocol, 6 “Substantial Completion” is bracketed with Practical
Completion and both are defined as the completion of all the construction work that has to be done, subject only to very minor
items of work left incomplete. The Protocol further notes that it is generally the date when the obligation to insure passes from
the Contractor to the Employer and the date from which the defects liability period runs.
This definition is close to general scheme under common law. 7 Salmon LJ in J. Jarvis Son Ltd v Westminster Corp 8 held that
practical completion was completion:
“for all practical purposes, that is to say for purpose of allowing the employer to take possession of the works and
use them as intended, but not ‘completion’ down to the last detail, however trivial and unimportant.” 9
Under the 2011 FIDIC Subcontract, the default position is that the Subcontract Works shall be deemed to have been taken over
when a Taking-Over Certificate in respect of the Main Works, or a Section of the Main Works of which the Subcontract Works
are a part has been issued or deemed to have been issued. In other words, the Subcontractor remains obliged to the Contractor
until the Contractor has been relieved of his own obligations under the main contract. If the Contractor requires an early taking
over, this must be made clear in the Subcontract.
Under art.884 of the UAE Civil Code:
“the Employer shall be bound to take delivery of the work done when the Contractor has completed it and placed
it at his disposal.”
This is broadly in line with the requirements of Cl.10. An Employer must accept delivery of completed contract works, unless
there is a valid reason not to. At the same time, by placing the Works at the disposal of the Employer, the responsibility for
the Works will also be transferred to the Employer. Whilst the UAE Code is silent on conditions or procedures, the Parties to
a contract will be subject to the processes they have agreed in the Contract and so the FIDIC procedures outlined above in
Cl.10 would be taken to apply.
The same is not true of every jurisdiction and there are a number of mandatory laws which deal with Taking-Over. Whatever
jurisdiction you are operating under, careful attention must be paid to local legislation. Indeed, the prudent Contractor will have
already checked out the local requirements at an early stage of the contract. This will avoid problems arising over whether the
Works can be said to be taken-over when the Contractor has complied with the contract (in terms of substantially completing the
works), or whether the Works need to have received the necessary permit or registration from the local authority. A Contractor
might consider that the requirements of Sub-Cl.10.1 have been met but the Engineer will refuse to take over on the basis that a
Building Permit has not yet been obtained, and without this the relevant local authority will refuse take-over.
A potential difficulty with the FIDIC Form is that whilst the building contract between the Employer and Contractor is governed
by its terms (terms which state that the Works are either ready to be taken-over in accordance with the terms of their contract—
because as a fact they are substantially complete—or they are not), the FIDIC Form does not anticipate or make provision for
circumstances where an Employer, and in particular the Contractor, will have to wait until a third party local authority decides
(using some different standard) that the Works are complete in accordance with local legislation.
Take the example of Romania; here there are very clear provisions regarding the take-over and/or rejection of construction
work. Building Permit approval must be provided by a take-over committee. The mandatory provisions of Government Decision
no.273/1994 state that the rejection of takeover is only permitted if two cumulative conditions are met:
(i)the defects cannot be remedied; and
(ii)the defects that cannot be remedied interfere with one or more essential operational parameters of the works.
The essential parameters of the works are those defined in art.5 of Law no.10/1995 regarding the quality of construction, namely:
1.mechanical resistance and stability;
2.security in case of fire;
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Commentary, UKBC-UFIDIC 500923213 (2021)
3.hygiene, health and environment;
4.safety during the exploitation;
5.noise protection; and
6.energy sustainable and heat insulation.
These conditions of Romania’s governing law are mandatory and must be respected by the Employer, Contractor and Engineer,
when they decide to accept, delay or reject the taking-over of the works. These conditions cover the design and construction
of buildings. The important point here is that they are concerned with the health and safety of the building users, energy and
water efficiency, access issues, and facilities for people with disability. The focus then is on safety, durability, building methods,
materials, sustainability of the design and the building process. It is not concerned with a particular employer’s requirement
under the Contract.
One specific problem for the Contractor under the FIDIC Form is that whilst the requirements of the Romanian legislation are
very close to the requirements of FIDIC Sub-Cl.10.1, 10 it is the owner or Employer who has to apply, for approval, not the
Contractor. A Contractor must understand how long the Building Permit Approval process might take and consider carefully
when to request that the Engineer or Employer start the process. Further, the Contractor will have little or no control over any
delays that might be caused by the third party local authority.
Where does this leave a Contractor who may have achieved Taking-Over under Sub-Cl.10.1 but where the Employer says that
the project is not complete because there is no Building Permit and seeks to deduct Delay Damages? If the FIDIC Form has
not been amended, once the provisions of the FIDIC contract are objectively met, then Taking-Over has occurred or will be
deemed to have occurred. If the Employer takes possession, then it is difficult to see how they can be incurring any losses that
would have been covered by the delay penalties. If the Employer chooses not to take possession when the works are suitable for
Taking-Over, then it is the Employer’s failure that causes the loss rather than a Contractor breach. An application of civil law
or common law principles to these situations varies, although in general terms they all amount to the same thing. An Employer
cannot rely upon its own default in order to claim damages for delay during a period when the building was suitable for TakingOver regardless of whether local authority approval or a Building Permit had been issued by a third party applying the same
or a different standard than that required under the building contract.
However, the situation might be different if the Contract has been amended, as is typically the case, to say that Taking-Over
under Sub-Cl.10.1 must comply with the local legislation. In that case, the risk may well shift to the Contractor.
The FIDIC Guide for the 1999 Form provides “Sample Forms” for a Taking-Over Certificate for the Works and Sections. The
Form for taking over of the Works, which works just as well for the 2017 Form, provides as follows:
“Having received your notice under Sub-Clause 10.1 of the Conditions of Contract, we hereby certify that the
Works were completed in accordance with the Contract on … [date], except for minor outstanding work and
defects [which include those listed in the attached Snagging List and] which should not substantially affect the
use of the Works for their intended purpose.”
Taking-Over and BIM
10-005 As noted below, 11 the 2017 FIDIC Form does not deal specifically with BIM (or Building Information Modelling), although
a discussion of the use of BIM can been found in the Advisory Notes. In time, on BIM enabled projects it is quite possible that
completion or taking over principles will start to change.
In the UK, the Government has adopted a policy known as Government Soft Landings (“GSL”). The GSL is the government’s
management approach to the specification and measurement of building performance and is based on the government’s
philosophy that the ongoing maintenance and operational cost of a building during its life cycle far outweighs the original
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Commentary, UKBC-UFIDIC 500923213 (2021)
capital construction cost: if this can be recognised during the design process, there will be greater scope to achieve cost savings
and improved functionality.
The GSL’s primary focus therefore is on functionality and effectiveness (buildings should be designed to meet the needs of
their occupiers with effective, productive working environments); environmental factors (buildings should meet government
performance targets in energy efficiency, water usage and waste production); facilities management (there should be a clear,
cost-efficient strategy for managing the operations of buildings); and finally, commissioning, training and handover (projects
should be delivered, handed over and supported such that they meet the needs of end-users).
From a legal perspective, the GSL is likely to create contractual issues since it raises a brand-new concept of responsibility
for the whole life cycle of buildings which involves the setting of targets and measuring performance against those targets in a
new post-occupancy period. Under GSL, the post-occupancy period is intended to last for three years post-completion. In other
words, the post-occupancy period is two years in excess of the traditional defects liability period and therefore amendments to
the standard forms will be necessary to provide for the associated extended monitoring on site (which may or may not overlap
with the defects liability period). Amendments will also be necessary to provide for the precise maintenance and operational
requirements and standards that needs to be met during the life cycle of a building. This may lead to a shift towards routine fitness
for purpose obligations and absolute warranties—which are currently construed very narrowly by the courts in the absence of
very clear words to the contrary.
Footnotes
1
2
3
4
5
6
7
8
9
10
11
This is not spelt out in Sub-Cl.10.1 but is clearly the intention as can be seen from the express wording used in SubCl.10.2 which deals with the taking over of a part of the Works.
Sub-Cl.1.1.81 (Yellow Book) simply defines the Taking-Over Certificate as the certificate issued or deemed to have
been issued in accordance with Cl.10.
And for clarity, if there are any, they should be so defined.
Contractors should remember that often much of this documentation might be held by the sub-contractors. In the case
of Alstom Power Ltd v Somi Impianti SRL [2011] EWHC 3941, Somi tried to hold on to documentation including
erection completion certificates, piping and instrumentation diagrams, as-built and pipes support drawings, welding
records, radiographic and ultrasonic testing films and reports, and hardness and magnetic and penetrant testing results.
The documents were a critical part of the handover arrangements and without them it was unlikely that the equipment
or units to which they related could be accepted. In other words, Alstom would not have been able to complete its main
contract works without them.
The Contract says “may”, the 1999 FIDIC Guide says “should.” Whilst the FIDIC Guide rightly says that giving notice
is in the Contractor’s own interests, it also makes the practical point that this will give the Employer an opportunity to
consider items such as insurance and other issues which may arise upon Taking-Over.
2nd edn, p.70.
In the Hong Kong case, Mariner International Hotels Ltd v Atlas Ltd (FACV No. 3 of 2006) the Court of Final Appeal
stated that practical completion was a state of affairs in which the hotel in question was completed free from any patent
defects other than ones ignored as trifling.
[1981] 1 W.L.R. 448 CA.
In Laing O’Rourke Construction Ltd v Healthcare Support (Newcastle) Ltd [2014] EWHC 2595 (TCC), Edwards-Stuart
J considered that the independent tester must issue the completion certificate when he was satisfied that completion had
occurred in accordance with the completion criteria. If the independent tester reasonably considered that a departure
from the specification had not had and would not have any material adverse impact on the ability of the trust to use
the buildings for the purposes anticipated by the contract, then it was open to the tester to conclude that the completion
criteria had been met. As a matter of business efficacy and commercial common sense, the judge could not see any
justification for importing into the contract a requirement that any breach of the specification, however technical or
minor, must prevent the certificate from being issued.
Indeed, the Romanian legislation contains a two-step process—Receptie la terminarea lucrarilor (taking-over) and
Receptie finala (“acceptance” or the “performance certificate”).
See Ch.23.
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Commentary, UKBC-UFIDIC 500923213 (2021)
End of Document
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Section 10.2 - Taking Over Parts, UKBC-UFIDIC 500923212 (2021)
Section 10.2 - Taking Over Parts
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 10 - Clause 10—employer’s Taking Over
Section 10.2 - Taking Over Parts
10-006
The Engineer may, at the sole discretion of the Employer, issue a Taking-Over Certificate for any part of the Permanent
Works.
The Employer shall not use any part of the Works (other than as a temporary measure, which is either specified in the
Employer’s Requirements or with the prior agreement of the Contractor) unless and until the Engineer has issued a TakingOver Certificate for this part. However, if the Employer does use any part of the Works before the Taking-Over Certificate
is issued the Contractor shall give a Notice to the Engineer identifying such part and describing such use, and:
(a)that Part shall be deemed to have been taken over by the Employer as from the date on which it is used;
(b)the Contractor shall cease to be liable for the care of such Part as from this date, when responsibility shall pass
to the Employer; and
(c)the Engineer shall immediately issue a Taking-Over Certificate for this Part, and any outstanding work to be
completed (including Tests on Completion) and/or defects to be remedied shall be listed in this certificate.
After the Engineer has issued a Taking-Over Certificate for a Part, the Contractor shall be given the earliest opportunity
to take such steps as may be necessary to carry out the outstanding work (including Tests on Completion) and/or remedial
work for any defects listed in the certificate. The Contractor shall carry out these works as soon as practicable and, in any
case, before the expiry date of the relevant DNP.
If the Contractor incurs Cost as a result of the Employer taking over and/or using a Part, the Contractor shall be entitled
subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to payment of such Cost Plus Profit.
If the Engineer issues a Taking-Over Certificate for any part of the Works, or if the Employer is deemed to have taken
over a Part under sub-paragraph (a) above, for any period of delay after the date under sub-paragraph (a) above, the Delay
Damages for completion of the remainder of the Works shall be reduced. Similarly, the Delay Damages for the remainder of
the Section (if any) in which this Part is included shall also be reduced. This reduction shall be calculated as the proportion
which the value of the Part (except the value of any outstanding works and/or defects to be remedied) bears to the value
of the Works or Section (as the case may be) as a whole. The Engineer shall proceed under Sub-Clause 3.7 [Agreement or
Determination] to agree or determine this reduction (and, for the purpose of Sub-Clause 3.7.3 [Time limits], the date the
Engineer receives the Contractor’s Notice under this Sub-Clause shall be the date of commencement of the time limit for
agreement under Sub-Clause 3.7.3). The provisions of this paragraph shall only apply to the daily rate of Delay Damages,
and shall not affect the maximum amount of these damages.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923218 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 10 - Clause 10—employer’s Taking Over
Section 10.2 - Taking Over Parts
Overview of Key Features
10-007
•The Engineer may, at the request of the Employer, issue a Taking-Over Certificate for any part of the Permanent Works.
•The Employer may not use any part of the Works until the Engineer has issued a Taking-Over Certificate.
•If the Employer does use any part of the Works prior to the issue of a Taking-Over Certificate, then provided the Contractor
has issued a Notice identifying the part and describing how it is being used:
(i)that part shall be deemed to have been taken over;
(ii)the Employer and not the Contractor will be responsible for that part of the Works which has been taken over;
(iii)the Engineer shall immediately issue a Taking-Over Certificate in respect of that part; and
(iv)if the Contractor incurs any costs as a result, the Contractor shall give Notice to the Engineer and may be entitled,
subject to Sub-Cl.20.2, to payment of these costs to include reasonable profit.
•If a Taking-Over Certificate has been issued for part of the Works, the rate of Delay Damages for the remainder of the
Works will be proportionately reduced.
End of Document
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Commentary, UKBC-UFIDIC 500923219 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 10 - Clause 10—employer’s Taking Over
Section 10.2 - Taking Over Parts
Commentary
10-008 Sub-Clause 10.2 refers to taking over of parts of the Works rather than the whole of the Works (or Sections of the Works, if
any, as defined in the Contract Data).
The Contractor does not have a right to request that the Employer take over part of the Works under this sub-clause. However,
the Employer has the discretionary right to request that the Engineer issue a Taking-Over Certificate for any part of the Works.
The Employer is not entitled to use any part of the Works (unless agreed as a temporary measure), unless the Engineer has
issued a Taking-Over Certificate.
The consequences of the Employer using any part of the Works before a Taking-Over certificate is issued, as set out in SubCll.10.2(a)–(c), are that:
(i)that part shall be deemed to have been taken over;
(ii)the Employer will be responsible for that part of the Works which have been taken over;
(iii)the Contractor may request that the Engineer issue a Taking-Over Certificate; and
(iv)if the Contractor incurs any costs as a result, the Contractor shall give notice to the Engineer and may be entitled to
payment of these costs to include reasonable profit.
This is all subject to the Contractor issuing a Notice detailing the nature and extent of the partial possession.
Whether or not an Employer has taken over a part of the Works will be a question of fact. It should be remembered that SubCl.9.1 makes it clear that trial operations shall not constitute a taking-over under Cl.10. In the case of Doosan Babcock Ltd v
Comercializadora de Equipos y Materiales Mabe Limitada, 12 where Doosan had contracted to supply two boilers to Mabe for
a power plant in Brazil, a dispute arose over whether or not the Employer had taken over part of the Works. Mabe relying on the
words “other than as a temporary measure” argued that they had not taken over the plant. Edwards-Stuart J disagreed holding
that there was a “strong case” that the boilers had actually been put into commercial operation as the contract contemplated.
Not only had more than 7,500 hours of power been released at various loads to the local grid, the court was referred to a press
releases containing a formal announcement by Mabe that the National Energy Agency had authorised the commencement of
commercial operations. For Mabe to have made good their argument, they would have needed to provide an explanation as to
how the alleged “temporary measure” had been specified in the contract (or agreed by both parties) as required by Sub-Cl.10.2.
No mention is made of time in Sub-Cl.10.2. This is because the subject is covered by Sub-Cl.8.5(e), which lists Employer delays
as a ground for an extension of time. One potential difficulty of the Employer taking over a part of the Works early might be
that an area will have been taken over before all the necessary Tests on Completion have been carried out. Sub-Clause 10.2
makes no provision for this.
It may be that it is no longer necessary to carry out those tests in these circumstances. The reason for this is that the Contractor
has the option under this sub-clause of requesting that the Engineer issue a Taking-Over Certificate. The obligation on the
Engineer is a positive one and he must issue the certificate. In accordance with Sub-Cll.8.2 and 10.1, it can be argued that the
issuing of the certificate represents an acknowledgment that the Tests on Completion have been carried out.
If it is still necessary to carry out the tests, the parties (and particularly the Employer) should recognise that this is likely to cause
some difficulties for the Contractor as it is likely that he will have prepared his programme for the Works on the understanding
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Commentary, UKBC-UFIDIC 500923219 (2021)
that parts of the Works would not be taken over early by the Employer. Therefore, the Contractor may need to re-organise his
programme and resources which could lead to delay and increased costs.
This will be one of the reasons why Sub-Cl.10.2 provides that the Contractor, if he incurs additional cost in these circumstances,
may make a claim in accordance with Cl.20 for payment of such cost to include reasonable profit.
The other potential problem caused by the Employer taking over parts of the Works at an early (and unanticipated stage)
relates to Delay Damages. We discussed the difficulties caused by sectional completion in Sub-Cl.8.8 above. Sub-Clause 10.2
recognises that where a Taking-Over Certificate is issued in respect of a part of the Works, then the Employer’s entitlement to
Delay Damages is reduced proportionally. The Engineer is required to agree or determine the amount of the reduction under
Sub-Cl.3.7.3.
Footnotes
12
[2013] EWHC 3010 (TCC), [2013] EWHC 3201 (TCC). There were a number of amendments to the standard FIDIC
Form. These included that the Engineer was stated to be the Employer, namely MABE and that Sub-Cl.4.2, which
provides that an Employer can only make a claim under the performance guarantees in certain specified situations,
had been deleted and replaced by wording which gave the Employer an unfettered right to make a demand under the
performance guarantees subject only to the terms of the security.
End of Document
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2
Section 10.3 - Interference with Tests on Completion, UKBC-UFIDIC 500923215 (2021)
Section 10.3 - Interference with Tests on Completion
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 10 - Clause 10—employer’s Taking Over
Section 10.3 - Interference with Tests on Completion
10-009
If the Contractor is prevented, for more than 14 days (either a continuous period, or multiple periods which total more than
14 days), from carrying out the Tests on Completion by the Employer’s Personnel or by a cause for which the Employer is
responsible (including any performance test that is not possible due to available operating conditions during trial operation):
(a)the Contractor shall give a Notice to the Engineer describing such prevention;
(b)the Employer shall be deemed to have taken over the Works or Section (as the case may be) on the date when the
Tests on Completion would otherwise have been completed; and
(c)the Engineer shall immediately issue a Taking-Over Certificate for the Works or Section (as the case may be).
After the Engineer has issued this Taking-Over Certificate, the Contractor shall carry out the Tests on Completion as soon
as practicable and, in any case, before the expiry date of the DNP. The Engineer shall give a Notice to the Contractor, of
not less than 14 days, of the date after which the Contractor may carry out each of the Tests on Completion. Thereafter,
Sub-Clause 9.1 [Contractor’s Obligations] shall apply.
If the Contractor suffers delay and/or incurs Cost as a result of being prevented from carrying out the Tests on Completion,
he shall be entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to EOT and/or payment of such Cost
Plus Profit.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500923222 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 10 - Clause 10—employer’s Taking Over
Section 10.3 - Interference with Tests on Completion
Overview of Key Features
10-010
•If the Employer prevents the Contractor from carrying out Tests on Completion for a cumulative period of more than 14
days, subject to the provision of a Notice by the Contractor, the Employer is deemed to have taken over the Works.
•In these circumstances, the Engineer shall issue a Taking-Over Certificate.
•However, the Engineer shall still require the Contractor to carry out the Tests on Completion.
•If the Contractor suffers delay or increased costs, he is entitled to submit a claim in accordance with the provisions of Cl.20.
End of Document
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Commentary, UKBC-UFIDIC 500923211 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 10 - Clause 10—employer’s Taking Over
Section 10.3 - Interference with Tests on Completion
Commentary
10-011
This sub-clause deals with the situation where the Employer prevents the Contractor from carrying out Tests on Completion.
Provided the cause of the delay is a cause for which the Employer is responsible, and provided the Contractor has given proper
Notice, then if the Contractor is prevented from carrying out the tests for a period of more than 14 days (and this can be either
a straight period of 14 days or a cumulative total), the Works will be deemed to have been taken over on the date on which the
Tests would have been completed but for the interference of the Employer.
However, even if the Contractor is prevented from carrying out the Tests by the Employer, this does not release the Contractor
from the requirement of carrying out the Taking-Over Tests and ensuring that the Works pass those tests. Arrangements for the
Tests must be made with the Engineer. The Tests must be carried out as soon as practicable and in any event no later than the
expiry of the Defects Notification Period.
If the Contractor suffers delay and/or increased costs, he may be entitled to submit a claim in accordance with Cl.20. Equally, it
is possible that a dispute might arise over whether the Employer is responsible for the interference. That dispute will presumably
be determined under the provisions of Cl.20.
End of Document
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1
Section 10.4 - Surfaces Requiring Reinstatement, UKBC-UFIDIC 500923221 (2021)
Section 10.4 - Surfaces Requiring Reinstatement
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 10 - Clause 10—employer’s Taking Over
Section 10.4 - Surfaces Requiring Reinstatement
10-012
Except as otherwise stated in the Taking-Over Certificate, a certificate for a Section or Part of the Works shall not be
deemed to certify completion of any ground or other surfaces requiring reinstatement.
End of Document
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1
Overview of Key Features, UKBC-UFIDIC 500923210 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 10 - Clause 10—employer’s Taking Over
Section 10.4 - Surfaces Requiring Reinstatement
Overview of Key Features
10-013 A Taking-Over Certificate must expressly state if it certifies the completion of any ground or other surfaces requiring
reinstatement.
End of Document
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1
Commentary, UKBC-UFIDIC 500923214 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 10 - Clause 10—employer’s Taking Over
Section 10.4 - Surfaces Requiring Reinstatement
Commentary
10-014 This sub-clause acknowledges that ground and other surfaces typically cannot be reinstated until right at the end of a project.
Often, this is not until the end of the Defects Notification Period, which, of course, takes place after the Taking-Over Certificates
have been issued.
End of Document
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1
Chapter 11 - Clause 11—Defects after Taking Over, UKBC-UFIDIC 500923246 (2021)
Chapter 11 - Clause 11—Defects after Taking Over
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Differences between the Red and Yellow Books
11-001
There are no differences between the two Contract Forms.
End of Document
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1
Section 11.1 - Completion of Outstanding Work and..., UKBC-UFIDIC...
Section 11.1 - Completion of Outstanding Work and Remedying
Defects
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.1 - Completion of Outstanding Work and Remedying Defects
11-002
In order that the Works and Contractor’s Documents, and each Section and/or Part, shall be in the condition required by
the Contract (fair wear and tear excepted) by the expiry date of the relevant Defects Notification Period or as soon as
practicable thereafter, the Contractor shall:
(a)complete any work which is outstanding on the relevant Date of Completion, within the time(s) stated in the TakingOver Certificate or such other reasonable time as is instructed by the Engineer; and
(b)execute all work required to remedy defects or damage, of which a Notice is given to the Contractor by (or on
behalf of) the Employer on or before the expiry date of the DNP for the Works or Section or Part (as the case may be).
If a defect appears or damage occurs during the relevant DNP, a Notice shall be given to the Contractor accordingly, by
(or on behalf of) the Employer. Promptly thereafter:
(i)the Contractor and the Employer’s Personnel shall jointly inspect the defect or damage;
(ii)the Contractor shall then prepare and submit a proposal for necessary remedial work; and
(iii)the second, third and fourth paragraphs of Sub-Clause 7.5 [Defects and Rejection] shall apply.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923226 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.1 - Completion of Outstanding Work and Remedying Defects
Overview of Key Features
11-003
•The aim is that all outstanding work should have been completed by the end of the Defects Notification Period (or as
soon as is practicable thereafter).
•The Contractor is obliged to complete the work identified in the Taking-Over Certificate within the reasonable time set
by the Engineer.
•The Contractor is also obliged to carry out all work required to remedy defects or damage identified by (or on behalf of)
the Employer, on or before the end of the Defects Notification Period.
End of Document
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1
Commentary, UKBC-UFIDIC 500923237 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.1 - Completion of Outstanding Work and Remedying Defects
Commentary
11-004
Under Sub-Cl.1.1.27 the “Defects Notification Period” or “DNP” is defined as:
“the period for notifying defects and/or damage in the Works or a Section or a Part (as the case may be) under
Sub-Clause 11.1 [Completion of Outstanding Work and Remedying Defects], as stated in the Contract Data (if
not stated, one year), and as may be extended under Sub-Clause 11.3 [Extension of Defects Notification Period].
This period is calculated from the Date of Completion of the Works or Section or Part.”
This is a more helpful concept than “Defect Liability Period”, the term used in the old Red Book, FIDIC, 4th edn. 1 Such clauses
are also sometimes known as defects rectification periods.
Sub-Clause 1.1.27 states that the term of the Defects Notification Period should be agreed and noted in the Contract Data. If it is
not set out there, the default period is one year. 2 This is a good example of some of the differences between the various FIDIC
contract forms. The Gold Book 2008 does not have a Defects Notification Period and the Contractor will be liable for repairing
defects during the whole Operation Service Period, regardless of whether the defect was identified and notified by the Employer.
There are two obligations imposed upon the Contractor during the DNP:
(i)to complete any work which is stated 3 to be outstanding at the time of the Taking-Over Certificate; and
(ii)to remedy defects when Notice is given of those defects by or on behalf of the Employer.
Defects must be notified to the Contractor within the DNP period, although the Contractor may require longer than the period
itself for their execution and completion. The right of the Employer to require the Contractor to return and remedy any defect
only lasts for the period of the DNP. Sub-Clause 11.4 deals with the consequences of the Contractor failing to remedy the defects.
The provisions of Cl.11 impose obligations relating to the making good of defects only, after the Works have been taken over, as
opposed to a wider duty to maintain the Works. This is made clear by the specific exception of the need to repair damage due to
“fair wear and tear”. 4 This is in line with Sub-Cl.17.1 which provides that the Contractor shall only assume full responsibility
for the care of the Works until the Date of Completion, which may not be the date the Taking-Over Certificate is actually issued.
It is believed that the reference to the expression “fair wear and tear” is taken directly from the English law of landlord and
tenant. 5 It refers to the effects of the normal use or ageing of the project. This term may lead to different interpretations
depending on the law governing the contract and/or the location of the Site of the project.
Importantly, the obligations upon the Contractor under Cl.11 depend upon proper Notice being given, either in the Taking-Over
Certificate or during the “Defects Notification Period.” That notice can be given by the Employer or alternatively by a request
from the Engineer under Sub-Cl.11.1(a). The Employer cannot simply rectify any defect itself and then seek to recover the costs
from the Contractor. If the Employer were to proceed to rectify the defects himself without giving notice to the Contractor, then
it seems that the Employer will not be entitled to rely on the defects clause against the Contractor.
In the UK case of Pearce and High v Baxter, 6 the Employer’s failure to comply with the notice requirements of defects liability
provisions, whether by refusing to allow the Contractor to carry out the repairs or by failing to give notice of the defects, was
held to limit the amount of damages which it was entitled to recover. Instead of being able to recover the full costs of employing
a third party, the Employer was only entitled to recover the amount which it would have cost the Contractor himself to remedy
the defects.
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Commentary, UKBC-UFIDIC 500923237 (2021)
Under typical civil law jurisdictions, a DNP or similar will only arise if it is included within the contract. Under English common
law, there does not necessarily need to be such a clause for this principle to take effect. In Woodlands Oak Ltd v Conwell, 7 the
Court of Appeal held that even if the contract did not have a defects liability clause an Employer still had a duty to mitigate any
losses and this might include inviting the Contractor back to remedy the defects before instructing others to rectify them.
It is to be noted that the decided cases in this area proceed on the basis that the Employer, not the Contractor, has knowledge of
the defects. 8 The liability of a Contractor with actual knowledge depends upon the words of the contract, however it is doubted
whether the words in Sub-Cl.11.1 are strong enough to create notice as a condition precedent to liability of the Contractor for
defects. See Sub-Cl.11.4 for further discussion on this point.
In accordance with the stated intention of FIDIC that the FIDIC 2011 Subcontract be back-to-back with the FIDIC Red Book
1999, Sub-Cll.11.1 and 11.2 of the new FIDIC Subcontract impose the same obligation on the Subcontractor to remedy defects
as those set out here. The Subcontract Defects Notification Period is intended to run from the date of the taking over of the
whole of the Subcontract works to the date of the expiry of the relevant Defects Notification Period under the Main Contract, the
obvious intention being to ensure that the Subcontractor remains under an obligation to the Contractor as long as any obligation
remains to complete or remedy defects and outstanding works.
Although, a Contractor can only remedy those defects about which it is given Notice, that does not mean that if the Employer
fails to give Notice, there is no liability on the Contractor. Defects are a breach of contract. Clause 11 is all about a Contractor’s
rights and obligations after Take-Over. The underlying purpose of the DNP is one of mitigation as in most if not all situations it
will be more practical and economic for a Contractor to return and correct any defects. It also gives the Contractor the chance
to remedy those breaches of contract which it is made aware of.
What is a defect?
11-005
In common with most standard forms, “defect” is not defined in the FIDIC contract. One exception is the NEC form which
identifies a defect as part of the works which is not in accordance with the works information or a part of the works designed
by the Contractor which is not in accordance with the applicable law or the Contractor’s design which the project manager
has accepted.
This is in accordance with the scheme of Sub-Cl.7.5 [Defects and Rejection] 9 which says that the Engineer must give Notice
to the Contractor of any Materials, design or workmanship that has been found to be “defective or otherwise not in accordance
with the Contract”. This sub-clause confirms that the Contractor’s obligation to remedy defects is not confined to the DNP.
This therefore deals with the question regarding whether or not defects that occur before practical completion can actually be
characterised as defects. In his dissenting speech in the English case of P & M Kaye Ltd v Hosier & Dickinson Ltd, 10 Lord
Diplock coined the phrase “temporary disconformity” (at 165) when he suggested that the argument that the disconformity of
any part of the works with the requirements of the contract, even though remedied before the end of the agreed construction
period, constituted a breach of contract for which nominal damages would be recoverable did not make business sense. Lord
Diplock was of the view that provided that the Contractor put it right promptly, he did not think that the parties intended that
any temporary disconformity should of itself amount to a breach of contract by the Contractor. The FIDIC Form deals with this
point by empowering the Engineer to give Notice to the Contractor to remedy defective work.
This is broadly in line with the Qatari Civil Code where art.688 of the Civil Code provides that where, during the Works a
Contractor is performing the work in a defective and/or incorrect way, the Employer may notify the Contractor to correct the
defective work within a reasonable time. 11 Where this period expires without remedy, the Employer may demand termination
of the contract.
Under English common law, reference is often made to the case of Yarmouth v France, 12 where a defect is described as:
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Commentary, UKBC-UFIDIC 500923237 (2021)
“anything which renders the plant unfit for the use for which it is intended, when used in a reasonable way and
with reasonable care.”
There are two types of defect, latent and patent. A latent defect is a defect that is not obvious or easily discovered, as opposed
to a patent defect, which is. In Baxall v Sheard, 13 a latent defect was defined as meaning:
“… a concealed flaw … a defect that would not be discovered following the nature of inspection that the defendant
might reasonably anticipate the article would be subjected to.”
Under the FIDIC scheme, one would expect patent defects to either be corrected prior to take-over or be the subject of a punch
list which must be remedied during the DNP.
Decennial liability
11-006
It is important that Contractors appreciate that Cl.11 does not mention decennial liability, which applies under many civil
law jurisdictions and which, if it applies, may serve to increase a Contractor’s potential liability. In contrast to the one-year
FIDIC defects notification period, decennial liability runs for 10 years irrespective of what the contract says. Decennial liability,
a mandatory local law provision, 14 provides that the Contractor will be liable absolutely (i.e. there is no defence of using
reasonable skill and care as there would be under common law jurisdictions) for any hidden defects for a period of 10 years
from completion or from the date of the Taking-Over Certificate. This liability cannot be excluded or limited by contract and
is generally not covered by standard Professional Indemnity insurance policies.
In the UAE, art.880 15 reads:
“If the subject of the construction contract is the erection of buildings or other fixed structures the plans for which
have been made by an architect with the intention that the contractor shall carry them out under his supervision;
they shall be jointly liable to pay compensation to the employer for any total or partial destruction occurring within
10 years to the buildings they have constructed or the installations they have erected, unless the contract provides
for a longer period of time, or unless it was the intention of the parties that such installations should remain for
a period shorter than ten years.
The liability to pay compensation as aforesaid shall endure notwithstanding that the defect or collapse arises out
of a fault in the land itself or that the employer consented to the erection of defective buildings or installations.”
This means that the designer and the Contractor will be jointly liable, for a period of 10 years for any total or partial destruction or
threat affecting the stability of the building from the time of delivery of the work, 16 and will need to compensate the Employer
for a total or partial collapse of the building constructed and for any defect which threatens the stability or safety of the building.
By art.881 of the UAE Civil Code, if the party responsible for the design did not have any supervision obligations, then their
liability is strictly limited to only defects within that design liability. This is an absolute obligation with no need to prove fault
and it is one that cannot be contracted out of. 17 There are similar provisions in other Middle East Codes, although in Iraq,
claims must be brought within one year of collapse or discovery of a defect but in Qatar and the UAE the period is three years.
Under French law, deriving originally from arts 17902 and 2270 of the Napoleonic Code, there is now a three-step process in
respect of potential contractor and designer liability:
•Garantie de parfait achèvement—a one-year defects or making-good liability.
•Garantie biennale—a two-year liability period in respect of equipment.
•Garantie décennale—10-year decennial liability.
Here, time runs from the hand-over or “reception” of the project, which may not be the same time as taking-over under FIDIC.
In France, under the 1987 Loi Spinetta (1978), there is an obligation to take out decennial insurance. Again, this is a mandatory
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public law requirement 18 and parties may find it impossible to pass on buildings which do not have this cover in place. There are
three types of insurance, Assurance Domage-Ouvrage (taken out by Employers), Assurance Décennale (taken out by designers
and Contractors), and a project policy, La Police Unique par Chantier.
For others, there is a need to find appropriate insurance if the project is located in a country where decennial legality is in place.
In England and Wales for example, this may be difficult, because professional indemnity insurance typically covers reasonable
skill and care obligations not where the design must be fit for its purpose. Certainly, insurance policies should be checked to see
if any form of strict liability is excluded. In regions where decennial legality is a common well-established feature, insurance
should, in theory, be easier to find, albeit it is likely to be a specific policy in its own right and not a part of any CAR policy.
Footnotes
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
The 3rd edn, even less helpfully referred to the “Period of Maintenance.”
Under Sub-Cl.1.1.3.7 of the Gold Book, the Defects Notification Period is stated to be 365 days unless stated otherwise
in the Contract Data.
These are likely to be the “minor outstanding work and defects” listed in the Take-Over Certificate or any other punch
or snagging list compiled at the time of completion.
This is in line with the Victorian English case of Sevenoaks Railways v London and Chatham Railway (1879) 11 Ch D.
625, where the Contractor was required to carry out reasonable improvements as the maintenance (or DNP) provisions
were to keep the works in the “same state”.
Under English law, for guidance on the legal meaning of “fair wear and tear”, see cases such as Haskell v Marlow
[1928] 2 KB 45, 97 LJKB 311 or Warren v Keen [1954] 1 QB 15, 19, 20. In the UAE, under art.21, Law No. 26 of 2007,
a tenant must return the property to the landlord in the same condition that it was in at the beginning of the tenancy,
subject to natural wear and tear.
(1999) B.L.R. 101 CA.
[2011] EWCA Civ 254.
London and South Western Railways v Flower (1875) 1 CPD 77 at 85.
The inclusion of the word “Defects” in the sub-clause heading is new to the 2017 Form. See also the discussion headed
“Defect of design error?” about Sub-Cl.4.1.
[1972] 1 W.L.R. 146. To be fair, it is not a theory that has found much favour and was criticised in Lintest Builders Ltd v
Roberts (1978) 10 B.L.R. 120 CA, although there is some overseas authority approving it: Adkin v Brown [2002] NZCA.
This is also similar to the Employer’s rights under Sub-Cl.15.1. See further, below.
(1887) 19 QBD 647. An alternative definition can be found in Tate v Latham [1897] 1 QB 502 where a “defect” meant
the “absence of something essential to completeness”—even if the works could be operated without the absent item.
Under the FIDIC approach, Works can be taken over if any defects do not substantially affect the safe use of the Works.
[2002] EWCA Civ 09.
What matters is the location of the site, not the applicable law of the contract.
Qatar has a similar provision, with art.711 holding that: “The contractor and architect/engineer will jointly guarantee
against total or partial collapse or flaw that occurs within ten years in buildings they have constructed, or fixed
installations they have erected, even if that collapse or flaw arises from a defect in the land itself, or the employer for
the work has allowed the defective buildings or structures. This guarantee includes defects that appear in the buildings
or structures that pose a threat to their strength and safety”.
Under FIDIC that would be the Cl.10 Taking-Over Certificate.
UAE Civil Code art.882.
Although it does not apply to government and similar bodies on projects being constructed for their own use.
End of Document
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Section 11.2 - Cost of Remedying Defects, UKBC-UFIDIC 500923257 (2021)
Section 11.2 - Cost of Remedying Defects
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.2 - Cost of Remedying Defects
11-007
All work under sub-paragraph (b) of Sub-Clause 11.1 [Completion of Outstanding Work and Remedying Defects] shall be
executed at the risk and cost of the Contractor, if and to the extent that the work is attributable to:
(a)the design of the Works, other than a part of the design for which the Employer is responsible (if any);
(b)Plant, Materials or workmanship not being in accordance with the Contract;
(c)improper operation or maintenance which was attributable to matters for which the Contractor is responsible (under
Sub-Clause 5.5 [Training], Sub-Clause 5.6 [As-Built Records] and/or Sub-Clause 5.7 [Operation and Maintenance
Manuals] or otherwise); or
(d)failure by the Contractor to comply with any other obligation under the Contract.
If the Contractor considers that the work is attributable to any other cause, the Contractor shall promptly give a Notice to
the Engineer and the Engineer shall proceed under Sub-Clause 3.7 [Agreement or Determination] to agree or determine the
cause (and, for the purpose of Sub-Clause 3.7.3 [Time limits], the date of this Notice shall be the date of commencement
of the time limit for agreement under Sub-Clause 3.7.3). If it is agreed or determined that the work is attributable to a
cause other than those listed above, Sub-Clause 13.3.1 [Variation by Instruction] shall apply as if such work had been
instructed by the Engineer.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923244 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.2 - Cost of Remedying Defects
Overview of Key Features
11-008
•The risk and cost of remedying defects is placed upon the Contractor in the case of:
(i)design work for which the Contractor is responsible;
(ii)Plant, Materials and workmanship not in accordance with the Contract;
(iii)improper maintenance or operation which arise out of improper training or problems with the O&M Manuals; and
(iv)any other failure of the Contractor to comply with any obligation.
•Remedial work attributable to any other cause is dealt with under the Variation Procedure (Sub-Cl.13.1.1).
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Commentary, UKBC-UFIDIC 500923250 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.2 - Cost of Remedying Defects
Commentary
11-009
Sub-Clause 11.1 makes the Contractor responsible for remedying defects regardless of responsibility. Sub-Clause 11.2 makes
it clear that the remedying of defects and other breaches of contract falls upon the Contractor at its cost. The Contractor is not
responsible for costs arising out of general maintenance or faulty operation by the Employer, unless that is due to errors in the
O&M Manuals or poor training by the Contractor.
The scheme used here achieves the clear and sensible result that, save in the case of design, 19 workmanship or other default
by the Contractor, any work carried out by the Contractor during the DNP is treated, and valued, as a Variation.
A Contractor’s liability in damages is not removed by the existence of a defects clause unless in the clearest words, 20 and the
words of Cl.11 do not have such an effect. Again, it is to be noted that the Contractor’s liability for not completing the works
in accordance with the provisions of the contract continues until it expires under the relevant legal provisions, be it 10-year
decennial liability or under English law, until it becomes barred by the Limitation Act 1980. A cause of action at common law
for failure to comply with the defects liability obligations will arise at the time when the contract terms provides that the defects
liability obligations are to be carried out.
Footnotes
19
20
Under, Sub-Cl.4.1 of the Yellow Book the Works must be fit for their stated purpose.
Hancock v Brazier [1966] 1 W.L.R. 1317 CA.
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Section 11.3 - Extension of Defects Notification Period, UKBC-UFIDIC 500923234 (2021)
Section 11.3 - Extension of Defects Notification Period
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.3 - Extension of Defects Notification Period
11-010
The Employer shall be entitled to an extension of the DNP for the Works, or a Section or a Part:
(a)if and to the extent that the Works, Section, Part or a major item of Plant (as the case may be, and after taking over)
cannot be used for the intended purpose(s) by reason of a defect or damage which is attributable to any of the matters
under sub-paragraphs (a) to (d) of Sub-Clause 11.2 [Cost of Remedying Defects]; and
(b)subject to Sub-Clause 20.2 [Claims For Payment and/or EOT].
However, a DNP shall not be extended by more than a period of two years after the expiry of the DNP stated in the
Contract Data.
If delivery and/or erection of Plant and/or Materials was suspended under Sub-Clause 8.9 [Employer’s Suspension] (other
than where the cause of such suspension is the responsibility of the Contractor) or Sub-Clause 16.1 [Suspension by
Contractor], the Contractor’s obligations under this Clause shall not apply to any defects or damage occurring more than
two years after the DNP for the Works, of which the Plant and/or Materials form part, would otherwise have expired.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923243 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.3 - Extension of Defects Notification Period
Overview of Key Features
11-011
•The Defects Notification Period for the Works can be extended if the Works, a Section of the Works or a major item of
Plant cannot be used for the reason for which they are intended as a result of defect or damage.
•The Defects Notification Period can only be extended if the Employer makes a claim for an extension in accordance with
Sub-Cl.2.5.
•The Defects Notification Period may not be extended for more than two years.
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Commentary, UKBC-UFIDIC 500923225 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.3 - Extension of Defects Notification Period
Commentary
11-012
In the case of a complex project, the ability to extend the Defects Notification Period is of considerable importance to the
Employer. This provision was new to the 1999 Form and in accordance with the general FIDIC approach to Employer claims,
this is not a unilateral right and the Employer must adopt the claims procedure set out in Sub-Cl.20.2. It is to be noted that the
test to be applied here does not just refer to whether or not the Works or a Section cannot be used for the purpose intended but
extends to a “major” item of Plant. It is suggested that when considering the meaning to be given to the word “major” it will
be necessary to look at the role played by the item of Plant in the project or process as a whole, rather than focussing upon
the piece of Plant in isolation.
The two-year limit of extension should be noted as providing a long-stop which cannot be further extended.
Sub-Clause 11.3 allows the Employer to extend the Defects Notification Period in the event of a “default or defect”. The 1999
version of this sub-clause did not say whether it is to be implied that it must be a “default or defect” on the part of the Contractor
for the Employer to be able to rely on this clause. This has been clarified by the 2017 edn which makes it clear that the right to
extend the DNP only applies where there are defects or damages which are the responsibility of the Contractor.
Under the 1999 Form, it was not clear whether the Contractor should only be allowed to take account of suspensions if those
suspensions were not of the Contractor’s own making. That said, the FIDIC Guide suggested that if the Contractor was not
responsible then the remedial work would constitute a variation entitling the Contractor to compensation. Again, this has been
clarified under the 2017 Form. Where this is not the case, then there may be difficulties with applying this sub-clause in civil law
countries where the Contractor would be able to rely on the principle of nemo auditur propriam turpitudinem allegans whereby
“no one is heard when alleging one’s own wrong.”
In other words, if the Contractor is not responsible for the defects, then the Defects Notification Period cannot be extended.
End of Document
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Section 11.4 - Failure to Remedy Defects, UKBC-UFIDIC 500923230 (2021)
Section 11.4 - Failure to Remedy Defects
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.4 - Failure to Remedy Defects
11-013
If the remedying of any defect or damage under Sub-Clause 11.1 [Completion of Outstanding Works and Remedying
Defects] is unduly delayed by the Contractor, a date may be fixed by (or on behalf of) the Employer, on or by which the
defect or damage is to be remedied. A Notice of this fixed date shall be given to the Contractor by (or on behalf of) the
Employer, which Notice shall allow the Contractor reasonable time (taking due regard of all relevant circumstances) to
remedy the defect or damage.
If the Contractor fails to remedy the defect or damage by the date stated in this Notice and this remedial work was to
be executed at the cost of the Contractor under Sub-Clause 11.2 [Cost of Remedying Defects], the Employer may (at the
Employer’s sole discretion):
(a)carry out the work or have the work carried out by others (including any retesting), in the manner required under
the Contract and at the Contractor’s cost, but the Contractor shall have no responsibility for this work. The Employer
shall be entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to payment by the Contractor of the
costs reasonably incurred by the Employer in remedying the defect or damage;
(b)accept the damaged or defective work, in which case the Employer shall be entitled subject to Sub-Clause 20.2
[Claims For Payment and/or EOT] to:
(i)payment of Performance Damages by the Contractor in full satisfaction of this failure; or
(ii)if there is no Schedule of Performance Guarantees under the Contract, or no applicable Performance Damages,
a reduction in the Contract Price. The reduction shall be in full satisfaction of this failure only and shall be in the
amount as shall be appropriate to cover the reduced value to the Employer as a result of this failure;
(c)require the Engineer to treat any part of the Works which cannot be used for its intended purpose(s) under the
Contract by reason of this failure as an omission, as if such omission had been instructed under Sub-Clause 13.3.1
[Variation by Instruction]; or
(d)terminate the Contract as a whole with immediate effect (and Sub-Clause 15.2 [Termination for Contractor’s
Default] shall not apply) if the defect or damage deprives the Employer of substantially the whole benefit of the
Works. The Employer shall then be entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to recover
from the Contractor all sums paid for the Works, plus financing charges and any costs incurred in dismantling the
same, clearing the Site and returning Plant and Materials to the Contractor.
The exercise of discretion by the Employer under sub-paragraph (c) or (d) above shall be without prejudice to any other
rights the Employer may have, under the Contract or otherwise.
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Overview of Key Features, UKBC-UFIDIC 500923247 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.4 - Failure to Remedy Defects
Overview of Key Features
11-014
•Where the Contractor fails to make good defects or damage within a reasonable time, then, provided reasonable notice is
given, the Engineer may fix the time within which the defects are to be remedied.
•If the Contractor fails to carry out required work within the time notified (or at all), then the Employer has a series of
options available as identified in sub-clauses (a)–(d) including, if referred to in the Contract Data, the right to deduct
Performance Damages.
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Commentary, UKBC-UFIDIC 500923232 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.4 - Failure to Remedy Defects
Commentary
11-015
The range of remedies provided for in the case of the Contractor’s poor performance in rectifying defects during the DNP, is
extensive, although it may be rare for sub-clause (d), termination, to be used, particularly on the partial basis which is permitted.
The need to notify the Contractor plays a critical role in Sub-Cl.11.4 and a failure to allow the Contractor the chance to remedy
its alleged foundering to remedy the defects in question would be a breach of contract on the part of the Employer. It is suggested
that, if the Employer purported to exercise the options in Sub-Cl.11.4 without giving the Contractor reasonable notice, then the
Employer may not later be able to rely upon the provisions of Sub-Cl.11.4. Certainly, the Employer would risk arguments in
relation to alleged failure to “instigate” (or reduce) his loss by following the procedure as to notification of the Contractor.
The Employer will also be required to follow the procedures set out in Sub-Cl.11.4 with care before exercising the options
at (a)–(d). The Employer should note that these options are only available where the defect or damage in question was the
responsibility of the Contactor in accordance with Sub-Cl.11.2. They do not apply to work carried out during the DNP which
is “attributable to any other cause”, as referred to in Sub-Cl.11.2. Conversely the Contractor should remember that under SubCl.14.9 if any work remains to be executed in respect of defects liability under Cl.11, then the Engineer is entitled to withhold
certification of the estimated cost of this work until has been executed.
A Notice can only be given if the performance of remedying any defect or damage is unduly delayed. Equally, the Notice given
to the Contractor must allow them a reasonable time to remedy the default. What is undue delay or a reasonable time will depend
on the circumstances of the project. But, as a starting point it is likely to be judged against the overall period of the DNP, the
nature of the defect and the attempts made by the Contractor to remedy the default.
Under Sub-Cl.11.4(b), if there is a failure to remedy defects, the Employer has the right, subject to complying with Sub-Cl.20.2
to deduct Performance Damages. Under Sub-Cl.1.1.63, Performance Damages are defined as being the damages to be paid by
the Contractor to the Employer, for the failure to achieve the guaranteed performance of the Plant and/or the Works or any part
of the Works (as the case may be), as set out in the Schedule of Performance Guarantees. If there is no Schedule of Performance
Guarantees or Performance Damages, the Employer is still entitled to a reduction in the Contract Price. The difference is, if
there is a set figure in the Contract, then the Employer does not have to prove its potential claim, i.e. establish what the reduced
value to the Employer might be as a result of the failure.
The option under Sub-Cl.11.4(c) for the Engineer to treat any part of the Works which cannot be used for its intended purpose(s)
under the Contract by reason of this failure as an omission, is new to the 2017 Form.
Termination pursuant to Sub-Cl.11.4(d) is not linked to the termination notice procedure that can be found at Cl.15 [Termination
by Employer]. Note that under Sub-Cl.11.4(d), the Employer does not (as in the old Red Book, FIDIC, 4th edition) even need
to refer the issue of the purported defect to the Engineer. Sub-Clause 11.4 refers to a failure by the Contractor to comply with
a Notice served by the Employer to remedy defects. If the Employer is wrong (e.g. if the defect has been remedied or does
not deprive the Employer of substantially the whole benefit of the Works), then the Contractor may then be left with no other
alternative than to start proceedings against the Employer for wrongful termination.
In the meantime, however, the Employer, subject to Sub-Cl.20.2, will be able to claim “all sums paid for the Works or for such
part (as the case may be), plus financing costs and the cost of dismantling the same, clearing the Site and returning Plant and
Materials to the Contractor”. Before taking advantage of this potentially significant benefit or draconian remedy (depending
on your point of view), Employers should bear in mind that it can only be used when the defect in question deprives them
“of substantially the whole benefit of the Works”. A similar wording is used in Sub-Cl.9.4(b). This is a significant hurdle to
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1
Commentary, UKBC-UFIDIC 500923232 (2021)
overcome. For example, under English law, this is the wording used to determine whether or not there has been a repudiatory
breach of contract. 21 There is no similar concept under most Civil Law Codes, although rejection of work or materials is
recognised as a remedy in the UAE under arts 237 and 877 of the Civil Code.
In the English case of Urban I (Blonk Street) Ltd v Ayres, 22 the Court of Appeal held that the delay of approximately one
month, at most, between the earliest possible date for contractual completion and the respondents’ purported termination of the
Contract on 20 March 2009 could not possibly be said to have deprived the respondents of a substantial part of the benefit of
the Contract, let alone substantially the whole of the benefit. In a case heard in the same year, Telford Homes (Creekside) Ltd v
Ampurius Nu Homes Holdings Ltd. 23 Lewison LJ gave the following helpful guidance:
“51. Whatever test one adopts, it seems to me that the starting point must be to consider what benefit the injured
party was intended to obtain from performance of the contract. In our case, the benefit that Ampurius was intended
to obtain from performance of the contract was, first and foremost, a leasehold interest of 999 years duration
in four blocks. In other words, what Ampurius bargained for was the right to possession of those units for 999
years, and the right for a like period to exploitation of the rents and profits to be derived from them. It was to take
the blocks in pairs, with a gap of seven months between each handover (although acknowledging that the sevenmonth gap was dependent on meeting dates described as ‘Target Dates’). The first pair of blocks was to be handed
over just over twenty-one months after the contract was signed. I do not think that the judge gave adequate weight
to the ultimate objective of the contract, viz. the grant to Ampurius of 999-year leases. He concentrated on the
expected effects on the marketing period. This, in my judgment, permeates his consideration of what practical
effect the breaches of contract had.
52. The next thing to consider is the effect of the breach on the injured party. What financial loss has it caused?
How much of the intended benefit under the contract has the injured party already received? Can the injured party
be adequately compensated by an award of damages? Is the breach likely to be repeated? Will the guilty party
resume compliance with his obligations? Has the breach fundamentally changed the value of future performance
of the guilty party’s outstanding obligations?”
Footnotes
21
22
23
Per Lord Diplock, Hong Kong Fir Shipping Co v Kawasaki Kisen Kaisha [1962] 2 QB 26, 1 All E.R. 474. See also
Sub-Cl.15.1, below.
[2013] EWCA Civ 816.
[2013] EWCA Civ 577.
End of Document
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2
Section 11.5 - Remedying of Defective Work Off Site, UKBC-UFIDIC 500923224 (2021)
Section 11.5 - Remedying of Defective Work Off Site
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.5 - Remedying of Defective Work Off Site
11-016
If, during the DNP, the Contractor considers that any defect or damage in any Plant cannot be remedied expeditiously on
the Site the Contractor shall give a Notice, with reasons, to the Employer requesting consent to remove the defective or
damaged Plant off the Site for the purposes of repair. This Notice shall clearly identify each item of defective or damaged
Plant, and shall give details of:
(a)the defect or damage to be repaired;
(b)the place to which defective or damaged Plant is to be taken for repair;
(c)the transportation to be used (and insurance cover for such transportation);
(d)the proposed inspections and testing off the Site;
(e)the planned duration required before the repaired Plant shall be returned to the Site; and
(f)the planned duration for reinstallation and retesting of the repaired Plant (under Sub-Clause 7.4 [Testing by the
Contractor] and/or Clause 9 [Tests on Completion] if applicable).
The Contractor shall also provide any further details that the Employer may reasonably require.
When the Employer gives consent (which consent shall not relieve the Contractor from any obligation or responsibility
under this Clause), the Contractor may remove from the Site such items of Plant as are defective or damaged. As a condition
of this consent, the Employer may require the Contractor to increase the amount of the Performance Security by the full
replacement cost of the defective or damaged Plant.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923228 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.5 - Remedying of Defective Work Off Site
Overview of Key Features
11-017
•If defects or damage cannot be made good expeditiously on site, then the Contractor may remove such items of Plant
as need to be repaired.
•The Contractor must provide a detailed Notice setting out the nature of the defect and reasons for and the scheme of the
proposed repair.
•The Employer’s consent is required.
•The Employer’s consent might require additional Performance Security.
End of Document
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Commentary, UKBC-UFIDIC 500923227 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.5 - Remedying of Defective Work Off Site
Commentary
11-018
This provision makes practical sense since it may often be far easier to address problems with Plant and equipment remote from
the site. A Contractor must provide a Notice clearly identifying the defect and where and how the remedial work is going to be
carried out. This requires the Employer to give its consent. A question which may arise in practice is whether the Employer can
at his absolute discretion insist that plant and machinery remain at site during repairs, or whether consent cannot unreasonably
be withheld. The latter approach appears more consistent with the rest of the Contract, and with the additional safeguard offered
in respect of security.
If without good reason the consent of the Employer for removal is withheld, then such additional trouble and expense as may
arise from the execution of repair work on site is likely to be the object of debate between the parties. The correct approach will
be a question of fact to be resolved in each case, although in a case where consent for removal is withheld by the Employer on
an unreasonable basis, it is hard to see how the associated cost should be attributed to any default of the Contractor.
If the Contractor is required by the Employer to increase the amount of the Performance Security, then it should do so in
accordance with the provisions of Sub-Cl.4.2. If the Contractor wishes to provide alternative security then the FIDIC Guide
suggests that the Employer can call for any such security to be provided under conditions as onerous as those described in the
Performance Security required under Sub-Cl.4.2.
End of Document
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Section 11.6 - Further Tests After Remedying Defects, UKBC-UFIDIC 500923241 (2021)
Section 11.6 - Further Tests After Remedying Defects
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.6 - Further Tests After Remedying Defects
11-019
Within 7 days of completion of the work of remedying of any defect or damage, the Contractor shall give a Notice to the
Engineer describing the remedied Works, Section, Part and/or Plant and the proposed repeated tests (under Clause 9 [Tests
on Completion] or Clause 12 [Tests after Completion], as applicable).
Within 7 days after receiving this Contractor’s Notice, the Engineer shall give a Notice to the Contractor either:
(a)agreeing with such proposed testing; or
(b)instructing the repeated tests that are necessary to demonstrate that the remedied Works, Section, Part and/or Plant
comply with the Contract.
If the Contractor fails to give such a Notice within the 7 days, the Engineer may give a Notice to the Contractor, within
14 days after the defect or damage is remedied, instructing the repeated tests that are necessary to demonstrate that the
remedied Works, Section, Part and/or Plant comply with the Contract.
All repeated tests under this Sub-Clause shall be carried out in accordance with the terms applicable to the previous tests,
except that they shall be carried out at the risk and cost of the Party liable, under Sub-Clause 11.2 [Cost of Remedying
Defects], for the cost of the remedial work.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923254 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.6 - Further Tests After Remedying Defects
Overview of Key Features
11-020
•If the remedying of any defect or damage could affect performance, then the Engineer can require the repetition of any
tests required under the Contract.
•The further testing shall be carried out in accordance with the Contract. However, this is at the risk and cost of the Party
responsible for the defect or damage.
End of Document
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1
Commentary, UKBC-UFIDIC 500923238 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.6 - Further Tests After Remedying Defects
Commentary
11-021
Testing on completion is dealt with in Cll.9 and 10.
This clause envisages re-testing after the completion of remedial work in circumstances where the remedial works could affect
the performance overall. It is thought that re-testing in circumstances described by the clause will be quite an unusual occurrence.
There are two important points to note here:
(i)The testing regime or specification used for the re-testing should be that set out in the Contract, and not a different or
more onerous regime.
(ii)The re-testing costs are to be borne by the party responsible for the remedial work itself under Sub-Cl.11.2.
End of Document
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Section 11.7 - Right of Access After Taking Over, UKBC-UFIDIC 500923235 (2021)
Section 11.7 - Right of Access After Taking Over
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.7 - Right of Access After Taking Over
11-022
Until the date 28 days after issue of the Performance Certificate, the Contractor shall have the right of access to all parts
of the Works and to records of the operation, maintenance and performance of the Works, except as may be inconsistent
with the Employer’s reasonable security restrictions.
Whenever the Contractor intends to access any part of the Works or such records during the relevant DNP:
(a)the Contractor shall request access by giving a Notice to the Employer, describing the parts of the Works and/or
records to be accessed, the reasons for such access, and the Contractor’s preferred date for access. This Notice shall
be given in reasonable time in advance of the preferred date for access, taking due regard of all relevant circumstances
including the Employer’s security restrictions; and
(b)within 7 days after receiving the Contractor’s Notice, the Employer shall give a Notice to the Contractor either:
(i)stating the Employer’s consent to the Contractor’s request; or
(ii)proposing reasonable alternative date(s), with reasons. If the Employer fails to give this Notice within the 7
days, the Employer shall be deemed to have given consent to the Contractor’s access on the preferred date stated
in the Contractor’s Notice.
If the Contractor incurs additional Cost as a result of any unreasonable delay by the Employer in permitting access to the
Works or such records by the Contractor, the Contractor shall be entitled subject to Sub-Clause 20.2 [Claims For Payment
and/or EOT] to payment of any such Cost Plus Profit.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923248 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.7 - Right of Access After Taking Over
Overview of Key Features
11-023
•Subject to the giving of a proper Notice, the Contractor has a right of reasonable access in order to comply with his
obligations under Cl.11.
•The right to access is subject to the Employer’s reasonable security restrictions.
•If the Employer unreasonably delays access, the Contractor can, subject to Sub-Cl.20.2, make a claim for Cost plus Profit.
End of Document
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Commentary, UKBC-UFIDIC 500923256 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.7 - Right of Access After Taking Over
Commentary
11-024
The Contractor’s right of access is often dealt with in contracts by the operation of necessary implied terms relating to nonprevention. The express provision in Sub-Cl.11.7 relating to Contractor’s access for defects liability obligations is a useful
clarification of what, in practice, could be an area of difficulty, since under Sub-Cl.2.1, a Contractor’s rights of access come
to an end upon issue of the Taking-Over Certificate and from a practical point of view, the Works (or Plant) are potentially in
operation at this stage. In other words, the Employer is under an obligation to grant the Contractor access to remedy defects.
As the FIDIC Guide says, if the Employer does not do this, Cl.11 might be unworkable.
The Contractor is given a right of “reasonable access” in order to comply with his Cl.11 obligations, save as is inconsistent with
the Employer’s “reasonable security restrictions”. In both cases, what is reasonable will depend on the actual circumstances
on site at the time. If the Employer unreasonably delays the Contractor, subject to the Notice provisions of Sub-Cl.20.2, the
Contractor is entitled to make a claim in respect of the Cost plus Profit of that delay.
End of Document
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Section 11.8 - Contractor to Search, UKBC-UFIDIC 500923255 (2021)
Section 11.8 - Contractor to Search
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.8 - Contractor to Search
11-025
The Contractor shall, if instructed by the Engineer, search for the cause of any defect, under the direction of the Engineer.
The Contractor shall carry out the search on the date(s) stated in the Engineer’s instruction or other date(s) agreed with
the Engineer.
Unless the defect is to be remedied at the cost of the Contractor under Sub-Clause 11.2 [Cost of Remedying Defects], the
Contractor shall be entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to payment of the Cost Plus
Profit of the search.
If the Contractor fails to carry out the search in accordance with this Sub-Clause, the search may be carried out by the
Employer’s Personnel. The Contractor shall be given a Notice of the date when such a search will be carried out and the
Contractor may attend at the Contractor’s own cost. If the defect is to be remedied at the cost of the Contractor under SubClause 11.2 [Cost of Remedying Defects], the Employer shall be entitled subject to Sub-Clause 20.2 [Claims For Payment
and/or EOT] to payment by the Contractor of the costs of the search reasonably incurred by the Employer.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923239 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.8 - Contractor to Search
Overview of Key Features
11-026
•The Engineer can require the Contractor to search for the cause of any defect, under the direction of the Engineer.
•The costs of search may be required to be paid by the Contractor under Sub-Cl.11.2.
•Alternatively, the Contractor is paid his costs and reasonable profit, to be determined by the Engineer under Sub-Cl.3.7.
•If the Contractor declines to carry out such a search, the Employer can do so. The Employer can then claim its costs
subject to Sub-Cl.20.2.
End of Document
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1
Commentary, UKBC-UFIDIC 500923229 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.8 - Contractor to Search
Commentary
11-027
It can often occur in practice that problems of operation of the Works (or Plant) do not indicate the immediate cause of difficulty,
so their investigation is required. In these circumstances, difficulties can arise as to: which party is to direct the investigations;
which is to undertake the investigations; and what is to happen in relation to the costs of these operations. Here, the Contractor
is required to look for defects, if so-directed by the Engineer. If the Contractor refuses to do this, the Employer, upon giving
Notice to the Contractor of the date, can arrange for the search to be carried out by its own personnel. The Contractor will be
responsible for the Employer’s costs. However, even in these circumstances, it would be advisable for the Contractor to attend
the search in order to satisfy itself that there is proper (if not a joint) record of the search.
Where the defect is to be remedied at the Contractor’s cost (as per Sub-Cl.11.2) then he bears the expense. Otherwise, the
Contractor receives his costs plus profit, either as agreed (if not) as determined by the Engineer.
End of Document
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Section 11.9 - Performance Certificate, UKBC-UFIDIC 500923251 (2021)
Section 11.9 - Performance Certificate
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.9 - Performance Certificate
11-028
Performance of the Contractor’s obligations under the Contract shall not be considered to have been completed until the
Engineer has issued the Performance Certificate to the Contractor, stating the date on which the Contractor fulfilled the
Contractor’s obligations under the Contract.
The Engineer shall issue the Performance Certificate to the Contractor (with a copy to the Employer and to the DAAB)
within 28 days after the latest of the expiry dates of the Defects Notification Periods, or as soon thereafter as the Contractor
has:
(a)supplied all the Contractor’s Documents, and the Engineer has given (or is deemed to have given) a Notice of Noobjection to the as-built records under sub-paragraph (b) of Sub-Clause 5.6 [As-Built Records]; and
(b)completed and tested all the Works (including remedying any defects) in accordance with the Contract.
If the Engineer fails to issue the Performance Certificate within this period of 28 days, the Performance Certificate shall
be deemed to have been issued on the date 28 days after the date on which it should have been issued, as required by
this Sub-Clause.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923233 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.9 - Performance Certificate
Overview of Key Features
11-029
•The issue of the Performance Certificate must occur before the obligations of the Contractor are regarded as having been
completed.
•The Performance Certificate is to be issued by the Engineer within 28 days of the expiry of the latest of any Defects
Notification Periods.
•A copy of the Performance Certificate is to be issued to the Employer and DAAB.
•Only the Performance Certificate will constitute deemed acceptance of the Works.
End of Document
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Commentary, UKBC-UFIDIC 500923236 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.9 - Performance Certificate
Commentary
11-030
The issue of the Performance Certificate is for practical purposes the conclusion of the defects liability machinery set out in
Cl.11 and is thus of considerable importance. The Performance Certificate is to be issued by the Engineer within 28 days of
the latest of the expiry dates of the Defects Notification Periods “… or as soon after as the Contractor has supplied all the
Contractor’s Documents and completed and tested all the Works …”. Once the certificate is issued, the Works shall be deemed
to have been accepted and so the Contractor will be considered to have completed its obligations under the Contract.
The Contractor will note that the issue of the Performance Certificate is linked to the provision of the Contractor’s Documents.
The provision of documents can often be overlooked in practice and it is important for the Contractor to prepare for this
obligation.
This sub-clause makes no mention as to whether the issuing of the Performance Certificate is final and conclusive regarding
the Contractor’s satisfactory performance of the contract—in other words does it prevent the Employer from being able to sue
the Contractor for defective work? There have been a number of English authorities on this point and the JCT was forced to redraft one of its standard clauses following the 1994 decision of the Court of Appeal 24 that the issuing of a final certificate was
conclusive evidence as to the quality of materials and standard of workmanship.
In Mathew Hall Ortech v Tarmac Roadstone, 25 the IChemE Red Book stated that the Final Certificate was “conclusive evidence
… that the Contractor had completed the Works and made good all defects.” The FIDIC Form does not use these words.
On the other hand, in the case of Attorney-General of Hong Kong v Wang Chong Construction, 26 the Hong Kong Court of
Appeal, noted that nowhere within the contract was the certificate of maintenance said to be “conclusive” or “final and binding”,
and so, held that this meant that the issuance of the maintenance certificate did not bar a claim arising from unperformed
contractual obligations.
Given that the wording of Sub-Cl.11.9 does not include terms such as “final and binding”, it is submitted that the issuing of
the Performance Certificate will not serve as final and conclusive proof as to the Contractor’s satisfactory performance under
the Contract.
As discussed below, any argument as to the potential conclusive effect of this sub-clause is also tempered by Sub-Cl.11.10
which deals with “Unfulfilled Obligations”.
Footnotes
24
25
26
Crown Estates Commissioners v John Mowlem & Co Ltd (1994) 70 B.L.R. 1. See also, by way of example, AttorneyGeneral of Hong Kong v Wang Chong Construction (1992) 8 Const LJ 137 or Matthew Hall Ortech v Tarmac Roadstone
(1997) 87 B.L.R. 96.
(1997) 87 B.L.R. 96.
(1992) 8 Const. L.J 137.
End of Document
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Section 11.10 - Unfulfilled Obligations, UKBC-UFIDIC 500923231 (2021)
Section 11.10 - Unfulfilled Obligations
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.10 - Unfulfilled Obligations
11-031
After the issue of the Performance Certificate, each Party shall remain liable for the fulfilment of any obligation which
remains unperformed at that time. For the purposes of determining the nature and extent of unperformed obligations, the
Contract shall be deemed to remain in force.
However in relation to Plant, the Contractor shall not be liable for any defects or damage occurring more than two years
after expiry of the DNP for the Plant except if prohibited by law or in any case of fraud, gross negligence, deliberate default
or reckless misconduct.
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923240 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.10 - Unfulfilled Obligations
Overview of Key Features
11-032
•Each Party remains liable for the performance of Unfulfilled Obligations after the issue of the Performance Certificate.
•For the purposes of the performance of any Unfulfilled Obligations, the Contract is deemed to remain in force.
End of Document
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Commentary, UKBC-UFIDIC 500923253 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.10 - Unfulfilled Obligations
Commentary
11-033
In a complex project, there will often be further outstanding obligations in spite of which the Performance Certificate may be
issued. In such a case, the Contractor will not be able to rely upon the Performance Certificate as an answer to outstanding
obligations, since they remain to be performed by virtue of Sub-Cl.11.10. The Engineer will wish, in deciding the time of issue
of the Performance Certificate, to be cautious about leaving too much outstanding or “unperformed” within the meaning of SubCl.11.10 since, in contrast to the rest of Cl.11, Sub-Cl.11.10 does not provide a mechanism for dealing with these “Unperformed
Obligations” in a particular manner or time frame.
The reason for this sub-clause ties to liability for latent defects under common law and civil law decennial liability as discussed
above under Sub-Cl.11.1. However, as the insertion of the second paragraph to Sub-Cl.11.2 makes clear, any such liability is
not intended to cover liability for Plant which is limited to two years after the DNP period comes to an end.
End of Document
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Section 11.11 - Clearance of Site, UKBC-UFIDIC 500923252 (2021)
Section 11.11 - Clearance of Site
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.11 - Clearance of Site
11-034
Promptly after the issue of the Performance Certificate, the Contractor shall:
(a)remove any remaining Contractor’s Equipment, surplus material, wreckage, rubbish and Temporary Works from
the Site;
(b)reinstate all parts of the Site which were affected by the Contractor’s activities during the execution of the Works
and are not occupied by the Permanent Works; and
(c)leave the Site and the Works in the condition stated in the Employer’s Requirements (if not stated, in a clean and
safe condition).
If the Contractor fails to comply with sub-paragraphs (a), (b) and/or (c) above within 28 days after the issue of the
Performance Certificate, the Employer may sell (to the extent permitted by applicable Laws) or otherwise dispose of any
remaining items and/or may reinstate and clean the Site (as may be necessary) at the Contractor’s cost.
The Employer shall be entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to payment by the Contractor
of the costs reasonably incurred in connection with, or attributable to, such sale or disposal and reinstating and/or cleaning
the Site, less an amount equal to the moneys from the sale (if any).
End of Document
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Overview of Key Features, UKBC-UFIDIC 500923249 (2021)
Overview of Key Features
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.11 - Clearance of Site
Overview of Key Features
11-035
•Upon receiving the Performance Certificate, the Contractor is obliged to clear the Site or equipment and reinstate any part
of the Work not occupied by the Permanent Works.
•If any Plant materials, wreckage or rubbish remains after 28 days of the Employer’s receipt of its copy of the Performance
Certificate, these can be sold or disposed of by the Employer.
•The Employer is entitled to recover from the Contractor the costs of any such disposal, with any surplus being paid to
the Contractor.
End of Document
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1
Commentary, UKBC-UFIDIC 500923242 (2021)
Commentary
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 11 - Clause 11—Defects after Taking Over
Section 11.11 - Clearance of Site
Commentary
11-036
It is unlikely in practice that the Contractor will leave any significant items of Plant and materials on site for a period such
as would fall within the operation of this sub-clause. The more likely scenario is that where the Contractor leaves debris and
rubbish on Site, or fails to reinstate parts of the Site which ultimately do not form part of the Permanent Works, and this then
has to be dealt with by the Employer. In such circumstances, the Employer is entitled to recover from the Contractor the costs
of restoring the site—and that is the actual costs and not the “costs” as defined by Sub-Cl.1.1.19.
Innovative technology
11-037
The FIDIC Special Provisions note that if the Works include the Plant that comprises (in whole or in part) new or innovative
technology, 27 then consideration may be given to including in the Employer’s Requirements a condition that the Contractor
provide supervisory assistance to the Employer’s permanent operating personnel in the operation and maintenance of the Plant
during the DNP of the Works.
The suggested sub-clause is as follows:
“The Contractor shall provide supervisory assistance to the Employer during the DNP for the Works. Such
supervisory assistance shall be as described in the Employer’s Requirements for the purpose of supporting the
Employer’s operation and maintenance of the Plant for the period of [insert number of months] after the Date
of Completion.”
Footnotes
27
Either in the Country or at the Employer’s location.
End of Document
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© 2025 SWEET & MAXWELL
1
Chapter 12R - Clause 12—Measurement and Evaluation..., UKBC-UFIDIC...
Chapter 12R - Clause 12—Measurement and Evaluation (Red
Book)
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 12R - Clause 12—Measurement and Evaluation (Red Book)
Differences between the Red and Yellow Books
12-001R Here, there are two completely different Clauses, which are treated individually. The Red Book deals with measurement and
the Yellow Book with the testing regime after completion.
End of Document
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© 2025 SWEET & MAXWELL
1
Section 12.1 - Works to be Measured, UKBC-UFIDIC 500923265 (2021)
Section 12.1 - Works to be Measured
Understanding the FIDIC Red and Yellow Books 3rd Ed.
Mainwork
Chapter 12R - Clause 12—Measurement and Evaluation (Red Book)
Section 12.1 - Works to be Measured