EBRD Seminar on 2017 FIDIC Forms of Contract
On 27 September 2018, EBRD held an Industry Conference titled “Changes to the FIDIC Forms of Contract – Red, Yellow and Silver Books” in London.
EIC Participation
EIC participated in the event with a delegation led by EIC President Philippe Dessoy. He was joined by several Members of the EIC Working Group “Contract Conditions”, including the group’s Chairman, Mathias Fabich from Porr, Nabeel Khokhar from Strabag, François Doré from Bouygues and Stefan Ciufu-Hayward from Colas.
The two EIC presentations by Mathias Fabich and Nabeel Khokhar comprised the contractors’ views on the changes to the FIDIC forms of contract. Their conclusion was that in the light of the complex and burdensome drafting, structure and language of the FIDIC 2017 edition, regressions regrettably outweighed progressions.
Key Topics
A panel session at which EIC was represented by François Doré from Bouygues and Stefan Ciufu-Hayward from Colas brought forth five key topics based on the feedback they generated:
Notice requirements, prescriptive processes and deemed consequences
The 2017 Editions include a range of prescriptive processes that might lead to deemed consequences such as: revocation of the relevant instruction, deemed rejection or deemed acceptance or 'non-objection'. Both Contractors and Employers acknowledge that such provisions keep processes moving. However, concerns may arise with respect to additional bureaucratic and administrational efforts such provisions might create.
Golden Principles
To address concerns that certain modifications to the General Conditions are so extensive that modified contracts no longer reflect the FIDIC principles, FIDIC has developed a set of Golden Principles (GPs) to which all drafters are to pay 'all due regard'. While these GPs are not part of the Contract itself they are included in the new Editions as Guidance (to the Particular Conditions).
The principles are expected to be well-received, however, there might be concerns about their enforceability. Therefore, EIC suggested a mandatory compliance with the principles and conditions in the lending agreements of the development banks.
Division between 'time and money' and 'other' claims, and reciprocal notice requirements
The new Editions separate claims into 'time and money' and 'other' claims. The FIDIC rationale is to allow matters which do not relate to time or money to be resolved through less 'heavy' procedures. Another significant change in the new Editions is reciprocity in the notice provisions that apply to Employers and Contractors, both of whose claims are now managed by the same clause.
Treatment of Variations
In the new Editions, the Contractor's right to object to implementing a variation has expanded. As an example, Contractors may object to variations that involve 'Unforeseeable' work with regard to the scope of work as described in the Employer's Requirements. What FIDIC wanted to capture with this change are variations entirely outside the scope of what could be contemplated for the contract (i.e. more akin to the English law principle 'when is a change not a variation but a new contract'). The changes made to limit the scope of variations that can be instructed have been broadly welcomed, and are considered to make the procedure far more clear and practicable.
Dispute avoidance
The new Editions provide for a focus on dispute avoidance by the strengthening the role of dispute adjudication boards – now renamed Dispute Avoidance and Adjudication Boards or DAABs. Standing DAABs (as opposed to ad-hoc) are actively encouraged, and the Engineer plays a bigger role in the dispute processes. Whilst standing DAABs may cause higher administration costs, their familiarity with a project (relative to that of an ad-hoc DAAB) might further help avoiding disputes, thus reducing the risk of costly arbitration proceedings.