FIDIC SEMINAR

CML Beograd & CML International

Beograd, 22 Decembar 2017
Agenda

10:00 Pocetak – Uvod

10:15 Struktrura i interpretacija
10:45 Vazne karakteristike Crvene i Zute knjige
11:15 Program
12:00 Pauza
12:30 Claim Procedure
13:15 Variation Procedure
14:00 Suspenzija i Raskid ugovora
14:45 DAB
15:15 Arbitraza
15:50 FIDIC 2017
16:00 Q&A za kraj
UVOD
CML

 CML is providing legal and contract management services to STRABAG affiliates

in all fields of law except labor and tax law.
CML
Michael Lück
General Counsel

AUSTRIA BENELUX CZECH REP. GERMANY HUNGARY INTER- CROATIA POLAND RUSSIA, ROMANIA SERBIA SLOVAKIA SWITZER- SWEDEN COMPLIANCE PPP
NATIONAL CIS & LAND ,
BALTIC CORPORATE
STATES

S. Müllner G. Koele I. Karfík R. Fuchs D. Kázmér M. Ðenadić M. Brundić A. I. Campbell C. Tampau M.Momcilovic R. Šály M. Cabalzar E. Dalén H. Soldierer R. Allitsch
(Real Estate) Rybicki
C. Genschow
(Civil engineering)

V. Springer
(Road construction)

 CML INT: Seven (7) lawyers, four (4) contract managers, and Stand: 15.07.15

three (3) assistants. Austrian, French, German, Italian, Russian,

Serbian and Turkish legal backgrounds.
FIDIC
 FIDIC = Fédération Internationale des Ingénieurs Conseils
 Private organisation with no governmental or international law
functions or powers but with great influence in international
construction
 Publikacije: Medjunarodne standardizovane forme ugovora
 1957: First publication of conditions of contract based on ICE Contract

 1999: Issuance of FIDIC Contract Suite

 2017 Release of updated FIDIC Suite of Contracts

FIDIC Organizacija

Generalna skupstina (General Assembly)

2 – 6 delegata po clanici

Izvrsni Komitet (Executive Committee)

10 izabranih clanova, ukljucujuci Predsednika (President)

Sekretarijat (Secretariat)

Komiteti (Committees)
Forumi
Odnos izmedju FIDIC Ugovora
Prelazak rizika: Glavne razlike po knjgama

 The most frequently used and best-known are the Red Book, Yellow
Book, Silver Book and Green Book

 They propose a different risk allocation:

Employer retains Contractor

the risk risk transfer assumes the risk

Red Book Yellow Book Silver Book

Green Book
Struktura i Interpretacija
Sadrzaj FIDIC Ugovora
1. Form of Contract Agreement
 Highest priority document, rather short document containing:
- the identity of the parties to the Contract,
- the formal conclusion of the Contract itself,
- the list of contract documents and their order of precedence.
2. Appendix to Tender
 Information complementing the General Conditions or the Particular Conditions:
- Time for Completion,
- Delay damages rates and cap if any;
- Duration of the defect notification periods,
- Choice of law,
- Dispute resolution mechanisms
3. Particular Conditions
- contain all additions, deletions and / or changes to the General Conditions.
4. General Conditions
- always remain unchanged
- contain all contractual provision
5. Other Appendices
Pravni status FIDIC Ugovora

 FIDIC contracts are standard forms of contract operating under a

specific legal system (GC 1.4 and Appendix to Tender)

 FIDIC contracts are neither a legal system, nor are they laws

 Legal issues not regulated in the contract are to be interpreted in

accordance with applicable laws

 Once signed FIDIC contracts bind the parties, however:

• mandatory provisions are applicable
• legal provisions may change the interpretation to be given
to the provisions of the contract.
Interpretacija FIDIC Ugovora
Two key issues:
1. What forms part of the Contract? 2. What is the priority order between the
[GC 1.1.1.1 in YB] Contract documents? [GC 1.5 in YB]

• The Contract Agreement • the Contract Agreement

• The Letter of Acceptance • the Letter of Acceptance

• The Letter of Tender • the Letter of Tender

• The Conditions of Contract • the Particular Conditions

• The Employer‘s Requirements • the General Conditions

• The Schedules • the Employer‘s Requirements

• Contractor‘s Proposal • the Schedules

• Further document (if any) listed in • the Contractor‘s Proposal and any
the Contract or in the Letter of other documents forming part of the
Acceptance Contract

-> this defines the documents which -> this defines the priority order in case
form part of the Contract of ambiguity or discrepancy
-> ugovorne strane mogu u Posebnim
Uslovima dogovoriti drugaciji prioritet
dokumenata
Sta se desava kada strane ne popune Appendix to Tender?

Yellow Book / Red Book Green Book

Performance Bond NO NO

Retention money NO NO

Advance payment NO NO

Liquidated damages No amount No amount

Cap of LDs NO 10%

Price escalation NO (only if formula revision is NO
inserted)
Commencement date not later than 42 days 14 days after
after Letter of Acceptance contract signature

Cap of liability YES (100% of accepted contract NO

amount)
Exclusion of indirect damages YES NO

Defects notification period 365 days 365 days

Applicable laws NO Laws of the country

Dispute resolution clause ICC Arbitration UNCITRAL Arbitration

FIDIC i srpsko pravo

 Obavezno primenjive zakonske odredbe koje se ne mogu iskljuciti:

 Zakon o planiranju i izgradnji ("Sl. glasnik RS", br. 72/2009, 81/2009 - ispr., 64/2010 -
odluka US, 24/2011, 121/2012, 42/2013 - odluka US, 50/2013 - odluka US, 98/2013 -
odluka US, 132/2014 i 145/2014);
 Zakon o obligacionim odnosima ("Sl. list SFRJ", br. 29/78, 39/85, 45/89 - odluka USJ i
57/89, "Sl. list SRJ", br. 31/93 i "Sl. list SCG", br. 1/2003 - Ustavna povelja);

 (Boban Jelic)
Vazne karakteristike Crvene knjige i Zute knjige
Dizajn

Red Book Yellow Book

The Contractor shall carry out The Contractor bears, by default,

design to the extent referred to in the liability and responsibility for
the Contract. the Design [GC 4.1 and 5.1].

Should the Contractor be required The Employer is liable for its own
to design, the Engineer is design [GC 17.3 g], if any (e.g.
responsible for the coordination of Preliminary Design).
each Party’s design.
When achieved, the Works
The Contractor bears the risk that (especially the design) shall be “fit
Works are“fit for their intended for the purposes for which the
purposes”. Works are intended as defined
in the Contract”.

NB: Under certain jurisdictions, “fitness for purpose” is an implied term!

Design Liability: Fitness for Purpose (i)

 Fitness for purpose means that the Contractor is guaranteeing that, when
completed, the Works will satisfy the functionality and the purposes
defined in the Contract

 This is a very high standard as it may impose obligations going beyond

the mere Employer’s Requirements or applicable technical standards!

 Fitness for purpose is required irrespective of (i) the level of skill and care
and dilligence expected from the Contractor or (ii) whether or not an
independent professional designer may decline liability for being unable to
procure insurance or limit its liability to reasonable skill and care
Design Liability: Fitness for Purpose (ii)

The purpose shall be defined precisely!

Please note that by default there is no such definition with the FIDIC
Contract

 The degree of additional obligations and risk put on the Contractor by such “fit
for purpose” depends mainly on the way such purpose is defined in the Contract:

- wide/open/functionally defined “purpose” more freedom + more risk;

- narrowly defined / detailed “purpose” less freedom + less risk.

 To seek the liability of the Contractor or reject the Works, the Employer
does not need to prove any fault but (simply) that the Works are not fit for the
relevant purpose
Errors in the Employer‘s Requirements in Yellow Book

GC 5.1 GC 1.9
During the period stated in GC 5.1 After the period stated in GC 5.1
(starting on receipt of the
notice of Commencement Date)

Time for
Completion
1. Obligation to scrutinize the Employer's 1) Contractor shall send a notice when it
Requirements u roku predvidjenom u discovers any error, fault or defect in the
Appendix to Tender. Employer's Requirements.

2. Contractor shall sent a notice of any 2) Entitlement to a time extension and/or

error, fault or defect found in the cost compensation if and to the extent an
Employer's Requirements. experienced Contractor using due care would
have not discovered the error, fault or defect
3. Po prijemu obavestenja Inzenjer at tender stage or during the period stated in
odlucuje da li se primenjuje Clan 13 GC 5.1
(Variations & Adjustments)

4. No entitlement to time extension and/or

cost compensation if and to the extent
an experienced Contractor using due
care would have discovered the error,
fault or defect at tender stage.
Review of Contractor‘s Document in Yellow Book

 The Contractor's Documents comprise the technical documents

specified in the Employer's Requirements, documents required
to satisfy all regulatory approvals, As-Built Documents and
Operation and Maintenance Manuals

 Review and/or approval of Contractual documents are limited to those

specified in the Employer’s Requirements

 Unless otherwise provided in the Contract, time for review is 21 days

Approval of the Engineer does not relieve the Contractor from

its contractual obligations or responsibility
Design problems in Red Book

 Two (2) key issues:

1) Errors in the design of the Employer are Employer‘s Risk (GC 1.8 /
17.3.g);

2) Contractor is likely to be delayed due to a drawing or instruction

missing (GC 1.9):
• The Contractor shall send in advance (i) details of the necessary
drawings or instructions, (ii) details of why, and (iii) when it should
be necessary; and (iv) the nature and amount of delay should the
instruction be delayed;
(Above procedure is condition precedent for Contractor‘s claim.)
The Price [GC 14.1]

 Under Yellow Book the price is by default a lump sum. However, certain
items may be paid according to their actual quantities if so is expressly
stated in the PC.

 Under Red Book, the price is by default a unit contract price.

The quantities provided are estimated quantities and the Contractor is
paid according to the quantities actually performed

 Both, Yellow Book and Red Book make the difference between:
 Accepted Contract Amount (GC 1.1.4.1); and
 Contract Price (GC 1.1.4.2).
Price Adjustment
 The Contract Price is adjusted in the following events:
 Claims (GC 20.1);
 Use or not to provisional Sums (GC 13.5);
 Variations (GC 13.1);
 Price escalation (or Ajdustments for changes in Cost) (GC 13.8); or
 For Red Book only, changes in the quantities of an item (GC 12.3) such
as:
(i) the measured quantity of the item is changed by more than 10%;
(ii) this change in quantity multiplied by such specified rate for this
item exceeds 0.01 % of the Accepted Contract Amount;
(iii) this change in quantity directly changes the Cost per unit quantity
of this item by more than 1%; and
(iv) this item is not specified in the Contract as a "fixed rate item“.
Payment procedure under Yellow Book and Red Book

Certification of the IPC Date of payment

Contractor´s submission by the Engineer by the Employer
of statement

56 days

28 days

 The Statement shall be accompanied by supporting documents,

otherwise the Engineer may validly refuse to certify it
 The Engineer is not bound to certify any payment if the statement does
not exceed the minimum amount of interim payment certificate [if
any is stated in the Appendix to Tender]
 In Red Book, statements are submitted at the end of every month for the
previous month while in Yellow Book, statements are submitted at the
end of the period of payment stated in the Contract
Programme [GC 8.3]

 To be issued within 28 days from receiving the notice of

Commencement Date in the Yellow Book or the Red Book

 The Engineer is not required to approve the programme but has up to

21 days to indicate whether the programme is not compliant – New
Yellow Book approval shall be needed

 The Contractor has to proceed as per its programme

 A revised programme is to be issued whenever inconsistent with

actual progress. It is very important to have a realistic programme to
avoid disputes regarding progress of the Works and to substantiate
claims
 The Contractor shall give promptly notice to the Engineer of specific
probable future events or circumstances which may adversely affect
the Works, the Contract amount or the Time for Completion
Programme [GC 8.3]

 It is therefore essential to…..

 regularly update the Programme to reflect the actual progress,
 notifly events that has / might change the initial plan during the course of
the Contract and
 demonstrate the effects of these changes in Claims.

 Accordingly, Sub-Clause 8.3 of the FIDIC require the Contractor to submit

revised Programme when the current Programme does not reflect any of
these matters.

 The Engineer also can instruct such revision, if considers that “actual
progress is too slow to complete within the Time for Completion” or
“progress has fallen (or will fall) behind the current programme”, in
accordance wit the SC 8.6 [Rate of Progress].
Programme [GC 8.3] and Claims [GC 20.1]
• When claiming Extension of Time, the same is always (in vast majority of the
cases), measured & quantified on the Programme which was valid at the
time of the delay.

• It is necessary to timely process claims, prior to submitting new Programmes

showing completion date later then current contractual completion date or
acceleration which was not agreed / instructed.

• When a (critical) activity uses more time than has been allocated to it in the
Programme, there are four possible scenarios:
1. Use time-contingency of delayed activity (shorten duration) to
eliminate any deviation from Baseline.
2. Re-sequence and/or shorten remaining activities to absorb the
impact/overrun of the potential delay.
3. Agree later date for completion (EOT).
4. Suffer Delay Damages.

 In first three aforementioned cases, the Contractor is required to submit

revised Programme with reference to SC 8.3.
What do we owe under the Programme? [GC 8.1 & 8.3]

Date(s)
Contractor’s intention on how the works will be executed, needs to reflect the
requirements and constraints of the Contract. Generally, in sense of the
POW, these constrains are:
 Time for Completion (general or for Sections);
 Any milestones defined in Contract (penalized deadlines).

PROGRESS
Contractor’s progress is expected to be in accordance with the POW and with
reference to Time for Completion (SC 8.6 Rate of Progress).
 Obligation to proceed “with due expedition and without delay” i.e. show
actual progress as to complete within the Time for Completion.

Keep in mind:
 Engineer has no power to reject the POW, simply because he has a different view
as to how the work should be carried out or the work could be carried out in another
way that is more convenient to the Employer.
What Employer owes to us under the Programme? [GC 2.1 &
8.3]
Right of ACCESS to the SITE
Duty to provide access to and possession of the Site by the Employer is in some cases
dependent on the Contractor’s POW. In accordance with the Sub-clause 2.1 [Right of
Access to the Site]:
 if no time(s) is stated in the Appendix to Tender, the Employer must give the
Contractor such right of access and possession “within such times as may be
required to enable the Contractor to proceed in accordance with the Programme”

ATTENTION:
 Dates of Site Access are an essential part of the POW
 But – under FIDIC – Time for Completion starts with Commencement Date.
Claim Procedure
Claim procedure

 There are mainly two types of claims:

 Contractor’s claim [GC 20.1]; and

 Employer’s claim [GC 2.5].

 FIDIC Contracts establish strict rules in respect of claim which shall be

followed

 Failure to do so, the Contractor may have its entitlement reduced or be time-
barred (28-days rule) even if the Contractor has a good entitlement

Do not be afraid to
send notice!
Claim Procedure: General [GC 20.1]
GC 20.1 is the key clause in respect of Contractor’s claims and provides for
the main requirements:

- Notice of claim within 28 days after being aware of the event or on the
date on which it should have been aware of;
and
- Fully detailed claim with supporting particulars within 42 days after
being aware of the event or on the date on which it should have been
aware of (i.e. not the date of the first notice).

However, the Contractor should follow the other requirements provided in the
Contract:
i.e.: Notice of change in standards [GC 5.4];
i.e.: Notice of Unforeseeable Physical Conditions [GC 4.12];
i.e.: Notice of Force Majeure event within 14 days [GC 19.2]; or
i.e.: Notice of any event which may adversely affect the Works or Contract
[GC 8.3].
Claim Procedure: Overview

Notice of intention to Sending Details of Claim Engineer‘s Consultation

Claim to Engineer To Engineer within 42 with Parties in accordance
Occurence of a
within 28 days from days from becoming With Sub-Clause 3.5 (within
claimable event
Becoming aware of aware of the event 42 days from receipt of
the event the detailed Claim)

Settlement YES
of Claim Fair Determination by
Agreement to Successful
Engineer In accordance NO
the Determination Consultation
With Sub-Clause 3.5

Occurence of NO
a dispute
YES

… Settlement
of Claim
Time bar: Notice to be sent within 28 days

 Many provisions require the Contractor to send a notice „as soon as

practicable“ [GC 4.12 Unforeseeable Site Conditions], „promptly“ [GC 4.24
Fossils] or within a certain time period [GC 19.2 Force majeure]

 In any case, it is key to send a notice of claim within 28 days at the latest to
reserve Contractor’s rights !

 If the Contractor fails to give notice of a claim within such period of 28 days, the
Time for Completion shall not be extended, the Contractor shall not be
entitled to additional payment, and the Employer shall be discharged
from all liability in connection with the claim.

The Contractor will be time-barred

Time bar: notice& other obligations

 A notice is a document in writing

 This is a document sent by one Party to the other Party with the Engineer in
copy or to the Engineer with the Employer in copy
 There is no secret or magical wording to draft a notice, but:
- the content of the notice must be clear,
- the event or circumstance referred to in the notice must be clear,
- it is recommended to insert the wording “…the Contractor gives hereby
notice…“

 In addition to send the notices referred to in GC 20.1, the Contractor has

other obligations:
 keep contemporary records [GC 20.1];
 revise the programme [GC 8.3];
 list in the monthly progress reports [GC 4.21] the notices sent;
Extension of Time Claim
Sub-Clause 8.4 sets out criteria under which Contractor shall be entitled to an
extension of time for Completion - 5 causes that will result in entitlement to
EOT:
a) a Variation,
b) any relevant Sub-Clause of the Contract which refers to EoT being granted,
c) exceptionally adverse climatic conditions,
d) unforeseeable shortages in personnel or Goods caused by epidemic or
governmental actions,
e) delay, impediment or prevention caused by the Employer, Employer’s
Personnel or Employer’s other Contractor.

Additionally, other SCs entitling the Contractor to claim Extension of Time:

• 1.9 [Delayed Drawings or Instructions] •10.3 [Interference with Tests on Completion]
• 2.1 [Right of Access to the Site] •13.7 [Adjustments for Changes in Legislation]
• 4.7 [Setting Out] •16.1 [Contractor’s Suspension of Work]
• 4.12 [Unforeseeable Physical Conditions] •17.4 [Consequences of Employer’s Risks]
• 4.24 [Fossils] •19.4 [Consequences of Force Majeure]
• 7.4 [Testing]
• 8.5 [Delays Caused by Authorities]
•8.9 [Consequences of Suspension]
Specific conditions for Extension of Time claim (example)

Sub-Clause 8.5 – Delays Caused by Authorities

IF…

1. Contractor has followed procedures of the public authorities in the Country,

and IF …

2. these authorities delay or disrupt the Contractor’s work,

and IF …

3. the delay and disruption was Unforeseeable*,

THEN …

4. this delay or disruption will be a cause under paragraph (b) of Sub-Clause 8.4
[Extension of Time for Completion]

AND

5. the Contractor shall be entitled to an EOT subject to Sub-Clause 20.1.

* Defined term under Sub-Clause 1.1.6.8

Specific conditions for additional cost claim (example)

Sub-Clausse 17.3 & 17.4 – Employer’s Risks & Consequences of Employer’s Risks

IF…

1. to the extent that any of the risks listed in Sub-Clause 17.3 above
results in loss or damage to the Works, Goods or Contractor’s Documents,

and IF …

2. the Contractor suffers delay and/or incurs Cost from rectifying this loss or
damage,

THEN …

3. the Contractor shall be entitled to payment of any such Cost*, which shall be
included in the Contract Price.

and IF …

4. In the case of sub-paragraphs (f) and (g) of Sub-Clause 17.3 [Employer’s Risks],

THAN …

5. reasonable profit on the Cost shall also be included.

Specific conditions for additional cost claim (i)

• 1.1.4.3 “Cost” means all expenditure reasonably incurred (or to be incurred)

by the Contractor, whether on or off the Site, including overhead and similar
charges, but does not include profit.

• Personnel Costs
• Salary
• Insurance
• Medical Care & Check
• Housing
• Transportation
• Professional Licenses
• Work Permits
• Food
• etc.

ALL HAVE TO SUBSTANTIATED WITH RECORDS / EVIDENCE

Specific conditions for additional cost claim (ii)

• Principle of costs calculation presented in this claim is as following:

• Each month is take as a separate „window“, for which all incurred costs are
calculated in total.

• Than from such total costs, certain amount of costs is taken as compensable by
proportional number of critical delay days incurred in same month.

• Nevertheless, not all delay are giving the entitlement for the Contractor to claim
costs therefore, appropriate adjustment FROM “total critical delays” TO “critical
delays on reasons giving the Contractor entitlement for reimbursement for
costs” needs to be differentiated.
Procedure: Response from Engineer

 The Engineer shall respond within 42 days after receiving a claim or

any further particulars.

 The Engineer shall respond:

- with approval;

- with disapproval and detailed comment; or

- may request further particulars but shall give his response on

the principles of the claim within the 42 day period.

 The Contractor may insert in its statement any sums claimed

reasonable substantiated and the Engineer shall certify them in
the Interim Payment Certificates
Engineer‘s determination [GC 3.5]

Contractor’s claim Employer’s claim

[GC 20.1] [GC 2.5]

28 days time bar !! no time bar !!

The Engineer shall consult with each Party in an endeavour to reach
agreement.

An agreement is reached, the NO agreement is reached,

Engineer shall “record” the the Engineer shall make a
agreement in writing. fair determination

The Parties shall give effect BUT … the Contractor may

to the agreement or to the submit the matter for
determination dispute resolution
Variation Procedure
Right to Variation [GC 13.1]
 The Engineer may initiate Variation at any time prior to issuing the
Taking-Over Certificate – it can be:
 an instruction (unilateral request from the Engineer); or
 a Variation agreed between the Parties following a proposal from
the Contractor in reponse to Engineer‘s request.

 The Contractor shall carry out the Variation, even if there is no

agreement on the impact of the Variation, unless it gives notice
that:
(i) Goods required are not obtainable (for RB and YB);
(ii) it will reduce the safety or suitability of the Works (only for
YB); or
(iii) it will have an impact on the schedules of Guarantees (only
for YB); (if any).

 Then the Engineer will then cancel, confirm or vary the Instruction.
Procedure for Variation [GC 13.3]

A Variation may include:

1. changes to quality and other characteristics of any item of work,
2. omission of any work, unless it is to be carried out by others,
3. any additional work,
4. changes to the sequence or timing of the execution of the
Works (including an acceleration)

 No changes can or shall be made by the Contractor until instructed

or until a proposal is approved by Engineer

 Variations shall be in writing

 Whenever the Contractor considers any request of the Engineer amount

to a variation (e.g. increase of Works), it shall ask for the confirmation of
the issuance of an Instruction.
Evaluation of Variation (only Red Book) (i)

Variations shall be evaluated as follows:

 for each item of work, the appropriate rate or price for that item
specified in the Contract (usually in the BoQ)
 where no such item exists, then item for similar work specified in
the Contract
 a new rate or price shall be used if:
 no rate or price is specified in the Contract for this item, and
 no similar rate applicable as item is not similar or executed
under different conditions
Evaluation of Variation (only Red Book) (ii)

 New rates derived from relevant rates in Contract, with reasonable

adjustments
 If no rate is relevant, the price shall be derived from reasonable cost of
executing work, including reasonable profit

 Rather vague instructions on how to valuate such variations

 Until a rate is agreed or determined, Engineer shall use a provisional
rate for Interim Payments
THE MOST IMPORTANT ASPECT FOR VARIATIONS AND CLAIMS

IS………:

RECORDS!
Suspension & Termination
Right of suspension under FIDIC Yellow and Red Books (i)

 The Contractor may suspend or reduce the rate of the Works in three (3)
circumstances under GC 16.1:
- the Engineer fails to certify within 28 days from the submission
of the statement;
- the Employer fails to pay within 56 days from the submission
of the statement; or
- the Employer fails to provide reasonable evidence that it has
sufficient financial arrangements to pay the Contract price in a
timely manner

after a 21 day prior notice.

 The Contractor is entitled (without the need of a further notice) to

suspend if the Employer does not remedy the breach within this 21 day
period
Right of suspension under FIDIC Yellow and Red Books (ii)

Procedure in case of non payment [Sub-Clause 16.1 ]

Contractor´s
submission Certification of the IPC Contractor´s notice of
of statement by the Engineer suspension Beginning of
under Sub-Clause 16.1 suspension

56 days 21 days
Beginning of
suspension

28 days 21 days

Contractor´s notice of
suspension

2 cases to issue a notice under Sub- i) Non issuance of the IPC within 28 days from the submission of the Statement
Clause 16.1 ii) Non payment by the Employer within 56 days from the submission of the Statement
Right of suspension under FIDIC Yellow and Red Books (iii)

Procedure in case of failure to submit reasonable evidence of financial

arrangements [Sub-Clause 2.4]

Contractor´s request to Contractor´s

submit reasonable notice of
evidence under Sub- suspension under Beginning of
Clause 2.4 Sub-Clause 16.1 suspension

28 days 21 days
Contractor‘s obligations after end of suspension

 Upon receipt of payment, issuance of the IPC or the proof of financial

arrangements, the Contractor “shall resume normal working as soon as is
reasonably practicable” [GC 16.1]

 The Contractor shall restart the Works even if no express notice was sent by the
Engineer or the Employer

 The Contractor is not immediately obliged to recommence the Works. A reasonable

time period is provided, for example, to adjust itself should some people has
left, some subcontracts having to be resumed or the equipment needs some
reparations or maintenance before starting

 In respect of what Works the Contractor has to do, the Contractor has to
continue to “proceed in accordance with the programme” [GC 8.3].
Contract termination at Contractor‘s risk and fault

 Contract provides for, at least, seven (7) grounds for the Employer to terminate
the Contract at Contractor‘s risk and fault [GC 15.2]

 The most significant events are that the Contractor:

(a) fails to issue the Performance Security or comply with a notice to correct a
default,
(b) abandons the Works or otherwise plainly demonstrates the intention not to
continue performance of his obligations,
(c) without reasonable excuse fails to:
(i) proceed with the Works in accordance with Clause 8
[Commencement, Delays and Suspension], or
(ii) comply with a notice issued under Sub-Clause 7.5 [Rejection] or
Sub-Clause 7.6 [Remedial Work] within 28 days
Procedure for termination

 Upon termination, the Contractor shall leave the site, deliver all Goods,
Contractor's documents [including design] required by the Engineer

 The Engineer shall consult the Parties or, as the case may be, make a
determination on the value of the Works done

 The Employer may withhold payment until the cost of completing the
Works is known

 The Employer may recover from the Contractor all costs incurred

Keeping records is extremely important

Termination for Convenience [GC 15.5]

 The Employer may terminate the Contract at any time for convenience
but not for giving Works to other Contractors [GC 15.5] under Yellow
Book and Red Book

 Termination takes effect 28 days after (i) the receipt of the notice
and (ii) the return of the Performance Security

 Upon termination, the Engineer shall determine the amount due in

respect of:
- Works done up to termination,
- breakage of subcontract and undertaking prior to termination,
- any cost incurred in the expectation of completing the Works,
and
- repayment of the advance payment.

 No payment for any loss of profit is due

Contract termination at Employer‘s risk and fault

 FIDIC provides for seven (7) grounds for the Contractor to terminate the
Contract at Employer´s risk and fault [GC 16.2] following a 14 day prior
notice
 The most significant events are that a:
(a) Failure of the Employer to pay an amount due within 42 days,
(b) Failure of the Engineer not certify a Statement with 56 days after receiving
payment Statement,
(c) Substantial failure of the Employer to perform its obligations under the
Contract,
(d) Failure of the Employer to provide reasonable evidence of financial
arrangement within 42 days from the notice of suspension under Sub-Clause
16.1.

 Same consequences as for a termination by convenience apply, but in addition,

the Contractor is entitled to be paid for its loss of profit and other loss suffered as
result of the termination
DAB
Overview
Settlement
of Dispute
Occurence of
a dispute
YES

Reference of DAB‘s Decision Acceptance of Notice of Dissatisfaction and

Dispute to DAB (within 84 days) the Decison Intension to Commence
NO
Arbitration (within 28 days
After receiving the decision)

Attempt at Amicable Settlement

Commencement of (within 56 days after
Final Settlement NO receiving the decision)
Arbitration (After 56 Amicable Settlement
of Dispute
Days from the notice)

YES

Settlement
of Dispute
What is a dispute?

 If a dispute (of any kind whatsoever) arises between the Parties

in connection with, or arising out of, the Contract or the execution of the
Works, including (but not limited to):
 certificate of the Engineer,
 determination of the Engineer,
 instruction of the Engineer,
 opinion of the Engineer or,
 valuation of the Engineer.

either Party may refer the dispute in writing to the DAB for its decision.
Appointment of the DAB

 FIDIC Yellow and Red Books proposes to solve any dispute which arose
between the Parties by a Dispute Adjudication Board (“DAB”)

 The Parties shall appoint the DAB panel (comprised of 1 or 3 members

depending on the Appendix) within 28 days from the receipt of a notice of
a Party to refer a matter to the DAB

 Adjudicators (DAB members) are most often chosen from:

 FIDIC President‘s list of DAB members
 List of potential DAB members specified in the Appendix to the Tender

 In case of disagreement on the composition of the DAB, the institution

named in the appendix (by default the President of FIDIC) shall
appoint the DAB panel
Role of the DAB

 In Yellow Book, the DAB is an “ad hoc” procedure (i.e. no

permanent) while in Red Book, the DAB is a “standing” procedure
(i.e. periodic visits of the DAB members on site)

 DAB shall give decision within 84 days. Its decision is binding on

the Parties unless and until revised amicably or by arbitration

 The decision becomes final if no notice of dissatisfaction is issued

within 28 days from the decision

 In Red Book, the Parties may jointly request a formal opinion to the
DAB (not provided in the Yellow Book)
DAB Procedure (i)

Procedural Rules Agreed Annex PROCEDURAL RULES

Party submits the Referral & Statement of

Clause 20.4
Case to DAB

DAB and Parties agree timeline

for further submissions / DAB decides if hearing is needed

Employer submits
Statement of Defence

Contractor submits
84 days Statement of Reply

optional Employer submits optional

Statement of Rejoinder

Hearing Additional info. / submissions

(if DAB requests) (if DAB requests)

DAB decision
DAB Procedure (ii)

DAB Decision No DAB Decision

Clause 20.4
within 84 days of reference within 84 days of reference

No Notice of Dissatisfation Notice of Dissatisfaction Notice of Dissatisfaction

within 28 days of Decision within 28 days of Decision within 28 days after 84 days of reference

DAB Decision
final and binding
Clause 20.5 „Amicable Settlement“ stage

Arbitration
Clause 20.6 within 56 days Notice of Dissatisfaction
Saveti (ii)

Kontaktirajte CML za:

- Pipremu podnesaka
-Analizu primljenih podnesaka
-Pripremu svedoka za saslušanje
-Koordinaciju svih pravnih i tehničkih
pitanja sa konsultantima i
• Spor nastaje na osnovu advokatima
postupka / neaktivnosti
Nadzornog organa • Odluka da se podnese spor • DAB izdaje odluku
• Interna odluka o DAB je doneta • Investitor ne izršava odluku
razmatranju daljeg • Spor je u toku
rešavanja spora na DAB je
doneta
Kontaktirajte CML za:
-Pripremu sporazuma o poravnanju
Kontaktirajte CML za:
-Pribavljanje privremene mere suda
- Inicijalnu analiza spora
-Savet u izboru DAB članova
-Reviziju podnesaka ka DAB-u
Ili
VOĐENJE DAB postupka
Saveti (ii)

• Pošto su DAB članovi najčešće po obrazovanju građ.inž., isti lakše razumeju i

procesuiraju sporove koji su po prirodi tehničke & građevinsko-komercijalne
prirode. Neki od DAB članova sa liste FIDIC-a su pravnici ili komercijalisti.
Potrebno je izabrati članove DAB prema sadržaju spora.

• Troškovi DAB i dužina procesa su značajno niži & kraći od sudskih / arbitražnih.

• Praksa Dispute Adjudication ima korene u UK gde je ista obavezan korak u

rešavanju sporova u građevinskim ugovorima. Ne postoji jasno razumevanje
pravnog statusa DAB odluke u R. Srbiji, te DAB odluka ne dovodi do
zaustavljanja zastarevanja novčanih potraživanja.

• Odluka DAB ima obavezujući karakter za stranke, te u slučaju nesprovođenja

može biti prosleđena na dalje procesuiranje (privremenu odluku) suda, bez
nužnog ponovnog otvaranja predmeta.
ARBITRAZA
Arbitraza (i)

Da li postoji obaveza da se spor prethodno uputi na DAB?

Crvena Knjiga ≠ Zuta knjiga

(Clan 20.8)
Arbitraza (ii)

 Strana nezadovoljna odlukom DAB mora u roku od 28 dana od

prijema odluke DAB da uputi drugoj strani obavestenje o neslaganju
(notice of dissatisfaction), u suprotnom odluka se smatra konacnom i
obavezujucom za obe strane

! Obavestenje o neslaganju obavezno mora da sadrzi

referencu na Clan 20.4
 U roku od 56 dana od davanja obavestanja zainteresovana strana
moze da zapocne arbitrazni postupak

 Tokom 56 dana od davanja obavestenja o neslaganju strane mogu

pokusati da rese spor mirnim putem
! Dokaz o pozivu na mirno resenje spora
Arbitraza (iii)

 By default, FIDIC books provide for an arbitration governed by the ICC

Rules of Arbitration (except Green Book)

 Arbitration panel shall be comprised by three (3) members. Procedure

shall be followed in the language of the Contract

 No seat (and venue) of the arbitration are provided by default. This

shall be stated in the Particular Conditions. It is an important issue to:
i) determine applicable procedural laws; and
ii) ensure the enforceability of the award

! U konsultaciji sa CML pazljivo odredite mesto

arbitraze (Seat) i merodavno pravo (Applicable Law)

! Pogledajte Appendix to Tender i Posebne Uslove

Arbitraza (iv)
Arbitrazni postupak u kratkim crtama (ICC)

- Request for arbitration

(CML priprema i preuzima pravne radnje/Operativa dostavlja
informacije i dokumentaciju, placa depozit odredjen od srane
arbitrazne ustanove)

- Odgovor suprotne strane

Kontaktirajte - Konstituisanje arbitraznog suda

CML (1 ili 3 arbitra imenovanih u skladu sa arbitraznim pravilima) Arbitrazna
(CML vrsi pripremne radnje i odluka
imenuje eksterne advokate) - Odgovor tuzitelja
(Saradnja izmedju CML i pravnog tima je cesto odlucujuca)

- Saslusanje strana
(Zakazuje arbitrazni sud)

- Vreme do arbitrazne odluke

(6 meseci do 2 godine)
Arbitraza (v)

Izvrsenje arbitrazne odluke

1958. u Njujorku je potpisana Konvencija o priznanju i

izvrsenju inostranih arbitraznih odluka
Konvencija predstavlja osnov za izvrsenje stranih
arbitraznih odluka
157 zemalja je ratifikovalo Konvenciju

! Republika Srbija:
• Domaća arbitražna odluka ima snagu domaće pravnosnažne sudske odluke
• Strana arbitražna podleze postupku priznanja od strane nadležnog suda
FIDIC 2017
 5 Decembra 2017 u Londonu je objavljen set novih FIDIC
Ugovora: Crvena Knjiga, Zuta Knjiga i Srebrna Knjiga
 Tokom jednogodisnjeg „probnog“ perioda, brojne kritike su
upucnene na racun novih izdanja
 Praksa ?
 Neke od izmena:
a) Znatno je povecan sadrzaj, unete su mnoge nove definicije;
b) Clan 3.7 [Determinations] zamenjuje dosadasnji Clan 3.5, definise detaljno
vremenska ogranicenja i ulogu Inzenjera u vezi sa Claims;
c) Clan 8.3 [Programme] predvidja da Program mora da bude odobren od
strane Inzenjera;
d) Predvidja se standing DAB i dodatna vremenska ogranicenja
e) Clan 20 [Claims, Disputes and Arbitration] je podeljen na Clan 20
[Employer's and Contractor's Claims] and Clan 21 [Disputes and Arbitration]
sa ciljem razgranicenja izmedju uobicajenih Claims i ozbiljnih sporova;

! NASTAVICE SE …
Pitanja?