FIDIC Contracts Training Course: Claim Management / Dispute Resolution

FIDIC Contracts training course
Based on the 1999 Edition

of the FIDIC Red & Yellow
Books, with highlights of the
main changes introduced by
the 2017 Edition
Module
Title
2
Claim Management /
Dispute Resolution @FIDIC
Module 2 - Programme
14.12.2021
14.12.2021 Session 2 05.01.2022
16.12.2021
Session 1 16.12.2021 Session 5
Claim procedures Session 4
Project risks & – Employer’s Session 3 – Claims Typical issues
Quantum Extension of Time
their allocation / Claims, encountered with
(EoT) claims
Claim causes Contractor’s claims
Claims
@FIDIC
Module 2 - Programme
05.01.2022
05.01.2022 07.01.2022
Session 7 07.01.2022
Session 6
Dispute Boards – Session 9
Dispute resolution Session 8
origin, purpose
methods - history, Final instance of
(prevention & Dispute Boards –
FIDIC’s position, current dispute resolution –
resolution), formation, operation in practice
trends Arbitration
current use
@FIDIC
Module 2
Claim Management /
Dispute Resolution
@FIDIC
Module 2 – Session 1
What is a risk?
In broad terms risk is
“the impact of uncertainty on objectives, but is also

often expressed in terms of a combination of the
consequences of an event and the associated
likelihood of occurrence of an event »
Definition from ISO 31000 (2009), page 1

@FIDIC
Risk in construction
@FIDIC
Applied to a construction project, risks can typically be classified
based upon:
• their possible timing of occurrence (pre, during or post

construction phase),
• and their effect if they eventuate:

 personal injury or loss of life,
 material damage to the works being constructed or to the
property of others, and/or
 pure economic and/or time loss for the construction team, for
example when unforeseen physical conditions are encountered
at site and make the construction operation more onerous than
anticipated
Nael Bunni, Risk and insurance in Construction (Second Edition, Spon Press, 2011), page 43
@FIDIC
FIDIC Contracts philosophy for risk allocation
FIDIC mainly applies risk management principles which emerged
in the 80’s
“A construction contract party should bear a construction risk if:
• It is in his control, i.e. if it comes about it will be due to willful
misconduct or lack of reasonable efficiency or care; or
• He can transfer the risk by insurance and allow for the
premium in settling his charges to the other party…and it is
most economically beneficial and practical for the risk to be
dealt with that way; or
• The preponderant economic benefit of running the risk
accrues to him;”
Max Abrahamson, Risk management [1983] ICLR 241
@FIDIC
FIDIC mainly applies risk management principles which emerged
in the 80’s
“A construction contract party should bear a construction risk if:
• To place the risk on him is in the interests of efficiency
(which includes planning, incentive, innovation) and the
long term health of the construction industry on which that
depends; or
• If the risk eventuates, the loss falls on him in the first
instance, and it is not practicable or there is no reason
under the above four principles to cause expense and
uncertainty and possibly make mistakes in trying to transfer
the loss to another
Max Abrahamson, Risk management [1983] ICLR 241 @FIDIC
FIDIC
Procurement
the most beneficial Procedures Guide
distribution of risks is
to allocate each risk to (2011)
the party that is best
able to deal with and
handle it
FIDIC
Sir Michael Latham Procurement
‘Constructing the Team, Final Report
of the Government/Industry Review Procedures Guide
of Procurement and Contractual (2011)
Arrangements in the UK Construction
Industry’ (1994), page 13
Risk inherently exists “a sensible, balanced

in construction and risk sharing between
cannot be ignored. the contractor and the
However it can be employer results in the
“managed, minimised, lowest overall total
shared, transferred or cost for completed
accepted” projects”
@FIDIC
Risk Responsibility Liability Indemnity Insurance
Nael G. Bunni, "The FIDIC Form of Contract” (Third Edition, Blackwell

Publishing, 2005).
@FIDIC
Example 1 of risk management sequence under
FIDIC Contracts
• Responsibility – a truck driver (Contractor’s Personnel) damages the
front of a local resident’s house when discharging sand to a water
supply pipeline construction site along the edge of a road. The truck
driver is responsible for the damage caused
• Liability – However the truck driver is employed by the Contractor. At

law, the Contractor is vicariously liable towards the resident for such
negligent act of his employee (the driver) who was acting in the course
of his employment
@FIDIC
FIDIC Contracts
• Indemnity – The resident does not know the Contractor and only
knows that those works are carried out by the local water utility
company (the Employer). He turns to the Employer and claims for
damages. However, the Employer would then in turn claim against the
Contractor (or ask the latter to directly settle the resident’s claim) since
under the FIDIC Red Book Contract used by the Parties, the
Contractor has given a contractual indemnity in such cases, under
Sub-Clause 17.1 [Indemnities] (2017 Edition – SC 17.4) as follows:
@FIDIC
FIDIC Contracts
• The Contractor shall indemnify and hold harmless the Employer,
the Employer's Personnel, and their respective agents, against and
from all claims, damages, losses and expenses (including legal fees
and expenses) in respect of:
(a) …..
(b) damage to or loss of any property, real or personal (other than the
Works), to the extent that such damage or loss:
» arises out of or in the course of or by reason of the Contractor's
design (if any), the execution and completion of the Works and the
remedying of any defects, and
» is attributable to any negligence, wilful act or breach of the
Contract by the Contractor, the Contractor's Personnel, their
respective agents, or anyone directly or indirectly employed by any of
them. @FIDIC
FIDIC Contracts
• Insurance The FIDIC Red Book Contract requires the Contractor, under
Sub-Clause 18.3 (2017 Ed. – SC 19.2.4), to take and maintain an
insurance against injury to persons and damage to Property.
This is usually called “public liability insurance”, or “insurance to
third parties”, depending on local insurance industry practices.
The Contractor will declare the damage to the insurance firm,

which may delegate an expert to come on Site and produce a
report detailing the damage and the event & circumstances
which gave rise to this situation
The insurer would then cover the cost of repair to be incurred

by the local resident (or directly pay a contractor for doing so,
depending on insurance terms). Remaining cost borne by the
Contractor is the amount of insurance deductible @FIDIC
Example 2 of risk management sequence under FIDIC
Contracts
• Responsibility – The Engineer, under the 1999 YB, delays his review of one of
the Contractor’s Documents. He spends 52 days in issuing a prior approval
under Sub-Clause 5.2, where only 21 days were allowed. The Engineer is held
responsible for this delay, which is then a non-excusable delay
• Liability – Under the Contract in between the Employer and the Contractor, this
is the Employer who is liable towards the Contractor for the acts or omissions of
the Engineer. The Engineer does not have any Contract with the Contractor,
hence is not contractually liable for this delay towards the Contractor (note
however that in certain jurisdictions the Contractor might have a cause of action
directly against the Engineer – those are called tortious or extra-contractual
claims under the general law applicable to the Contract)
@FIDIC
FIDIC Contracts
• Indemnity – The relief for the Contractor will be to claim towards the
Employer for an extension of the Time for Completion under Sub-
Clause 8.4(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” (the Engineer is part of the
Employer’s Personnel as per 1999 SC 1.1.2.6)
@FIDIC
FIDIC Contracts
• Insurance – In this particular case, there is no straightforward
insurance available with the Employer to cover him of time and cost
claims caused by the professional negligence of his Engineer.
Employer’s remedy would be to claim against the Engineer, under the
services contract (the FIDIC White Book for instance) in between the
Employer and the Engineer, for his professional negligence which has
caused the Employer to suffer from losses (the Contractor’s claim).
The Engineer however should normally hold a so-called « PI insurance »,

which correctly speaking is a Professional Liability Insurance, which covers
the Engineer for the consequences of any negligence from his side.
@FIDIC
Whenever a risk eventuates:
• which is not attributable to any of the Parties, and
• which is not insurable
FIDIC Contracts will generally allocate the risk of loss and damage to the Works to the Employer, as
being the Party having the higher long-term interest in the project
 This is typically the case for Force Majeure events, which explains why they are listed under
1999 Sub-Clause 17.3 of the FIDIC RB/YB
The risks referred to in Sub-Clause 17.4 below are:

(a) war, hostilities (whether war be declared or not), invasion, act of foreign enemies,
(b) rebellion, terrorism, revolution, insurrection, military or usurped power, or civil war, within the Country,
(c) riot, commotion or disorder within the Country by persons other than the Contractor's Personnel and other
employees of the Contractor and Subcontractors,
(d) munitions of war, explosive materials, ionising radiation or contamination by radio-activity, within the Country,
except as may be attributable to the Contractor's use of such munitions, explosives, radiation or radio-activity,
Etc.
@FIDIC
If the Contractor suffers delay and/or incurs Cost from rectifying this loss or damage,
the Contractor shall give a further notice to the Engineer and shall be entitled subject to Sub-
Clause 20.1 [Contractor's Claims] to:
(a) an extension of time for any such delay, if completion is or will be delayed, under Sub-
Clause 8.4 [Extension of Time for Completion], and
(b) payment of any such Cost, which shall be included in the Contract Price. In the case of
sub-paragraphs (f) and (g) of Sub-Clause 17.3 [Employer's Risks], reasonable profit on the
Cost shall also be included.
After receiving this further notice, the Engineer shall proceed in accordance with Sub-Clause
3.5 [Determinations] to agree or determine these matters.
=> The Contract provides for the Employer to pay for the Costs incurred
by the Contractor in repairing loss or damage caused to the Works, even
though there is generally no insurance available to cover for the loss and
damages caused by such Force Majeure events as war, rebellion, etc.
@FIDIC
This has been further refined in the FIDIC Gold Book (Conditions of Contract for
Design, Build and Operate projects, 2008), where the Contract has categorized two
main types of risks:
• Sub-Clause 1.1.7 - Commercial Risk “means a risk which results in financial loss
and/or time loss for either of the Parties, where insurance is not generally or
commercially available.”
• Sub-Clause 1.1.67 - Risk of Damage “means a risk which results in physical loss or
damage to the Works or other property belonging to either Party, other than a
Commercial Risk.”
 Risk of Damage may or may not be insurable.
• If insurable, the risk can be allocated to the Contractor
• If not insurable, risk should be allocated to the Employer (see SC
17.3(b)(iii) for operation of the forces of nature)
@FIDIC
Gold Book Sub-Clause 17.1 – The Employer’s Risks during the Design-Build Period
Subject to the provisions of Sub-Clause 17.8 [Limitation of Liability], the risks allocated to the
Employer and for which the Employer is liable during the Design-Build Period are divided into:
(a) The Employer's Commercial Risks, which are:

(i) the financial loss, delay or damage allocated to the Employer under the Contract or for
which the Employer is liable by law, unless otherwise modified under the Contract;
(ii) the right of the Employer to construct the Works or any part thereof on, over, under, in or
through the Site;
(iii) the use or occupation of the Site by the Works or any part thereof, or for the purpose of
design, construction or completion of the Works other than the abusive or wrongful use by the
Contractor; and
(iv) the use or occupation by the Employer of any part of the Permanent Works, except as may
be specified in the Contract;
@FIDIC
Gold Book Sub-Clause 17.1 – The Employer’s Risks during the Design-Build Period
(b) The Employer's Risk of Damage, which are:

(i) damage due to any interference, whether temporary or permanent, with any right of way,
light, air, water or other easement (other than that resulting from the Contractor's method
of construction) which is the unavoidable result of the construction of the Works in
accordance with the Contract;
(ii) fault, error, defect or omission in any element of the design of the Works by the
Employer or which may be contained in the Employer’s Requirements, other than design
carried out by the Contractor pursuant to his obligations under the Contract;
(iii) any operation of the forces of nature (other than those allocated to the Contractor in the
Contract Data) against which an experienced contractor could not reasonably have been
expected to have taken adequate preventative precautions; and
(iv) The Exceptional Risks under Clause 18 [Exceptional Risks].
@FIDIC
Further refinements under the FIDIC 2017 Edition
Subject to Sub-Clause 18.4 [Consequences of an Exceptional Event], if any of the events described in sub-
paragraphs (a) to (f) above occurs and results in damage to the Works, Goods or Contractor’s Documents
the Contractor shall promptly give a Notice to the Engineer. Thereafter, the Contractor shall rectify any such
loss and/or damage that may arise to the extent instructed by the Engineer. Such instruction shall be
deemed to have been given under Sub-Clause 13.3.1 [Variation by Instruction].
If the loss or damage to the Works or Goods or Contractor’s Documents results from a combination of:
i. any of the events described in sub-paragraphs (a) to (f) above, and
ii. a cause for which the Contractor is liable,
and the Contractor suffers a delay and/or incurs Cost from rectifying the loss and/or damage, the Contractor
shall subject to Sub-Clause 20.2 [Claims for Payment and/or EOT] be entitled to a proportion of EOT
and/or Cost Plus Profit to the extent that any of the above events have contributed to such delays
and/or Cost.
@FIDIC
Articulation of FIDIC 1999 Red & Yellow Book Clauses around Q,C,T
CLAUSE 3 The Engineer
CLAUSE 2 The Employer CLAUSE 4 The Contractor

CLAUSE 5 Nominated Subcontractor (RB)
CLAUSE 12 (RB) – Measurement & Evaluation

CLAUSE 1 General Provisions
CLAUSE 17 Risk and Responsability
COST € CLAUSE 13 Variation and Adjustments
CLAUSE 14 Contract Price and Payment
CLAUSE 18 Insurance CLAUSE 16 Suspension and Termination by
CLAUSE 19 Force Majeure Contractor
Sub-Clause 2.5 Employer’s Claim

Sub-Clause 20.1 Contractor’s Claim
Sub-Clauses 20.2 to 20.4 - DAB
Sub-Clause 20.6 - Arbitration
CLAUSE 5 Design (YB)
CLAUSE 6 Staff and Labour
CLAUSE 7 Plant, Materials and Work.
CLAUSE 9 Tests on Completion CLAUSE 8 Commencement,
CLAUSE 10 Employer’s Taking-Over Delays and Suspension
CLAUSE 11 Defect liability CLAUSE 15 Termination by
CLAUSE 12(YB/SB) Tests after Completion
CLAUSE 15 Termination by Employer CLAIMS & Employer
CLAUSE 19 Force Majeure
DISPUTES
QUALITY TIME
@FIDIC
Articulation of FIDIC 2017 Red & Yellow Book Clauses around Q,C,T
Clause 3 The Engineer – 8 Sub-Clauses
Sub-Clause 3.7 Agreement or Determination
Clause 4 The Contractor – 23 Sub-Clauses

Clause 2 The Employer – 6 Sub-Clauses Clause 5 – Subcontractors (RB)
Clause 1 General Provisions / Definitions / Law Clause 12 (RB) – Measurement & Evaluation
Sub-Clause 1.15 Limitation of Liability COST € Clause 13 Variation and Adjustments
Clause 17 Care of the Works and Indemnities Clause 14 Contract Price and Payment
Clause 18 Exceptionnal Events Clause 16 Susp. Termination by Contractor
Clause 19 Insurance
Clause 20 Employer’s and Contractor’s Claim

Sub-Clauses 20.1 => SC 3.7 Determination
+ COSTS €
Clause 5 Design (YB) Clause 21 Dispute and Arbitration
Clause 6 Staff and Labour Sub-Clauses 21.2 to 21.4 - DAAB
Clause 7 Plant, Materials and Workmanship Sub-Clause 21.6 - Arbitration
Clause 9 Tests on Completion
Clause 10 Employer’s Taking Over
Clause 11 Defect after Taking Over
Clause 12 (YB) Tests after Completion
Clause 15 Termination by Employer CLAUSE 8 Commencement, Delays, Suspension
Sub-Clause 8.3 Programme
CLAIMS & Sub-Clause 8.4 Advance Warning
DISPUTES
QUALITY TIME
@FIDIC
Risk allocation under FIDIC Red, Yellow & Silver Books
Contractor’s Project cost

risks
SILVER
YELLOW BOOK
RED BOOK
BOOK
Employer’s risks Employer design

ownership
@FIDIC
Risk allocation & claim causes
under FIDIC 2017 Red, Yellow & Silver Books
@FIDIC
@FIDIC
@FIDIC
@FIDIC
@FIDIC
Claim causes
The table above summarizes the main claim risk events under the
Contract.
Beware these are NOT the only claim events. They only provide
entitlements (for time and/or money) which are expressly laid down
under the Contract. For example, 1999 SC 4.12 – Unforeseeable
Physical Conditions provides for:
If and to the extent that the Contractor encounters physical conditions which are Unforeseeable, gives
such a notice, and suffers delay and/or incurs Cost due to these conditions, the Contractor shall be
entitled subject to Sub-Clause 20.1 [Contractor's Claims] to:
(a) an extension of time for any such delay, if completion is or will be delayed, under Sub-Clause
8.4 [Extension of Time for Completion], and
(b) payment of any such Cost, which shall be included in the Contract Price.
@FIDIC
Claim causes
A contract, such as FIDIC Contract, is under most jurisdictions, “an
agreement giving rise to obligations which are enforced or recognised
by law” (Treitel on the Law of Contract, 14th Edition,
Sweet & Maxwell, 2015)
When a contract obligation is not fulfilled by the Party which is obliged,

the innocent party can claim for damages if it can demonstrate that:
1. The Party in default actually breached a Contract obligation;
2. The innocent Party suffered from losses and/or damages; and
3. The losses and/or damages are caused by the breach (causation
link)
@FIDIC
Claim causes
As for any contract, claims under FIDIC Contracts can then be made:
1. Under the terms of the Contract : 1999 SC 1.9, SC 4.7, SC 4.12,
etc., or
2. For breach of Contract – for example 1999 SC 6.6 states that “the
Contractor shall…provide facilities to the Employer’s Personnel stated
in the Specification” => what if he does not ?
3. For any right given by the governing law, and the mandatory
provisions of the law of the Country, (i.e. where the Site and the Permanents
Works are located – see definition under 1999 SC 1.1.6.2) in case the former is
different from the latter => statutory claims, tortious claims, equity
claims
@FIDIC
Claim causes
See the wording of 1999 Sub-Clause 20.1 on Contractor’s
Claims
“If the Contractor considers himself to be entitled to any
extension of the Time for Completion and/or any additional
payment, under any Clause of these Conditions (claim
category 1 above) or otherwise in connection with the
Contract (claim category 2 & 3 above), the Contractor
shall give notice to the Engineer, describing the event or
circumstance giving rise to the claim”
@FIDIC
Claim causes
There are then :
- Claims UNDER the Contract – entitlements are expressly provided, and are
enforceable under the principles of freedom of contract, and of « pacta sunt
servanda » (agreements are to be kept => See France Civil Code Art. 1103 –
the contract is the law of the Parties)
- Claims IN CONNECTION with the Contract – claims under the general law,
arising out of the Contract
@FIDIC
Module 2
Claim Management /
Dispute Resolution
@FIDIC
1999
Contractor’s claim procedure
Edition A typical time/money claim entitlement under the Contract
Sub-Clause 2.1 – Access to the Site
“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 give notice to the Engineer and shall be entitled subject to
Sub-Clause 20.1 [Contractor's Claims] to:
• an extension of time for any such delay, if completion is or will be
delayed, under Sub-Clause 8.4 [Extension of Time for Completion], and
• payment of any such Cost plus reasonable profit, which shall be included
in the Contract Price.”
 Time and cost entitlements are subject to a procedure laid down
under Sub-Clause 20.1
(emphasis added)
@FIDIC
2017
Contractor’s claim procedure
Edition
A typical time/money claim entitlement under the Contract
Sub-Clause 2.1 – Access to the Site
“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. »
Red Book SC 1.1.38 - “Extension of Time” or “EOT” means an extension of the
Time for Completion under Sub-Clause 8.5 [Extension of Time for Completion]
Time and cost entitlements are subject to a procedure laid down under
Sub-Clause 20.2
(emphasis added)
@FIDIC
Contractor’s claim notices
1999
Edition
Sub-Clause 20.1 – RB/YB/SB
“If the Contractor considers himself to be entitled to any extension of
the Time for Completion and/or any additional payment, under any
Clause of these Conditions or otherwise in connection with the
Contract, the Contractor shall give notice to the Engineer, describing
the event or circumstance giving rise to the claim”
Notices are typically short: a few lines

• describing the event or circumstance giving rise to the claim,
• stating that the Contractor considers to be entitled to a time and/or
money remedy
• And that a fully detailed claim is upcoming
@FIDIC
1999
Edition Module 2 – Session 2
FIDIC Contracts Guide, 2000 Edition, page 299:
“The notice must describe "the event or circumstance giving rise to the claim" for an extension of time or additional
payment, to which "the Contractor considers himself to be entitled". Generally, there is no need for this notice to
indicate how much extension of time and/or payment may be claimed, or to state the Clause or other
contractual basis of the claim. Notices must comply with Sub-Clause 1.3.”
“The notice is to be sent to the Engineer under CONS or P&DB (with a copy to the Employer under CONS/P&DB 1.3), or
to the Employer under EPCT. They are not required to respond, other than to acknowledge receipt under Sub-Clause
1.3(a). They should not regard the notice as an aggressive act which must be rebutted, but merely as an
act which enables the Employer to be aware of the possibility of the Contractor's enhanced entitlement. Although the
recipient of a notice may respond if he is aware of factual errors in the notice, the absence of any rebuttal should not
be taken as any indication of agreement.»
2017
Edition
@FIDIC
1999
Edition
“The notice shall be given 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.
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”
A notice submitted within the prescribed time is a
condition precedent for a Contractor’s claim
@FIDIC
The cultural factor
Do you see a claim notice as an agression from one Party

to the other, which is likely to negatively impact the
relationship in between the Parties ?
Nael Bunni, « FIDIC Forms of Contract » (Blackwell, 3rd Edition, 2005)

• Page 447: “in international disputes, it is necessary to possess some
expertise in cross-cultural communication and a sensitivity towards the
customs and habits of various societies”
@FIDIC
2017 Module 2 – Session 2
Edition
“If either Party considers that he/she is entitled to any additional payment
by the other Party (or, in the case of the Employer, a reduction in the
Contract Price) and/or to EOT (in the case of the Contractor) or an extension
of the DNP (in the case of the Employer) under any Clause of these
Conditions or otherwise in connection with the Contract, the following Claim
procedure shall apply » (emphasis added)
@FIDIC
2017 Parties’ Notices of Claim
Edition
As per SC 1.3, a Notice is:

• A paper original or an electronic original
• Identified as a Notice
• Delivered by hand, sent by mail or courier or electronically, to the address set out
in Contract Data, with a copy to the other Party or the Engineer (as the case may
be)
• Effective when received @FIDIC
2017
Parties’ Claims – the time bar impact
Edition
Sub-Clause 20.2.1 – RB/YB/SB
A Notice submitted within the prescribed time is

a condition precedent for a Claim from whatever
Party @FIDIC
Why a time bar for Claims under FIDIC Contracts ?
Main purpose : promptly informing the other Party that
an event or circumstance will have adverse effects on the
Time for Completion and/or DNP and/or Contract Price. It
enables the other Party to timely take the right project
management actions/corrective measures
For a time bar to be effective, you need clear unequivocal wording / clear rebuttal
words to remove what is otherwise a legitimate right to claim
Gilbert Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] A.C. 689 (HL)
Lord Diplock, page 717, par H : "It is, of course, open to parties ….to exclude by express
agreement a remedy for its breach which would otherwise arise by operation of law …But
in construing such a contract one starts with the presumption that neither party
intends to abandon any remedies for its breach arising by operation of law, and clear
express words must be used in order to rebut this presumption" @FIDIC
Are there ways
around the time
bar ?
However is the
28-day time bar so
sharp ?
@FIDIC
Time bar – fatal to a claim ?
Importance of the wording
FIDIC Contracts Guide, 2000 Edition :

"… the Contractor shall give notice …": which is obligatory, but a failure to notify
may be due to him not having suffered delay and not having incurred Cost”
J. Akenhead‘s judgment in OHL SA v Her Majesty's Attorney General for Gibraltar - [2014] EWHC
1028 (TCC):
• [312] I 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
• [313] 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
@FIDIC
Time bar – fatal to a claim ?
1999
Edition
The « event or circumstance giving rise to the claim »,

starting point of the Contractor’s notification duty under
SC 20.1, can well be seen as being when the later of the 2
following conditions occurs
1 2
An incident (Unforeseeable
physical condition under SC 4.12 The incident makes the
(RB/YB), Unforeseeable forces of Contractor suffer delay and/or
nature under SC 17.3 (RB/YB), incur Cost
etc)
@FIDIC
1999 Time bar – fatal to a claim ?
Edition
• A Variation is instructed by the Engineer, but affects a task which is not on

the programme’s critical path
• No EOT entitlement since the completion for the purposes of Sub-Clause
Month M 10.1 (Sub-Clause 8.4), is or is not meant to be delayed
• Other incidents have occurred, and the above task in now on the critical path
• The past Variation now generates a delay to completion
• This is the starting point of the notification duty under SC 20.1. Not when the
Variation was instructed at Month M, but when it makes the Contractor suffers delays
Month M+6 in completion for the purposes of Sub-Clause 10.1 i.e. generates an EoT entitlement
@FIDIC
Time bar – fatal to a claim?
Road project
Is the Engineer correct ? « You have failed to notify

Additional equipment &
within 28 days from D20.
1. Yes specialized manpower
Your claim is time
2. No mobilisation required
barred. »
@FIDIC
Road project
Has the Contractor lost his

entitlements ?
« You have failed to notify
Additional equipment &
1. Yes for the whole rocky within 28 days from D20.
specialized manpower
ground claim Your claim is time
mobilisation required 2. Not at all barred. »
3. Only for what he suffered
from before D42
4. Only for what he suffered
from before D70 @FIDIC
Time bar – civil law perspective
Time bars tend to also apply in many Civil Law jurisdictions
• Based on freedom of contract , and the « contract is the law of the Parties »
principle (‘pacta sunt servanda’) enshrined in several civil codes (France Art
1103, Morocco Art. 230 of the 1913 Dahir on obligations & contracts, Vietnam –
Art. 389 onwards)
However
• they need to be « reasonable » under the circumstances, and must not de facto
prevent all remedies (France : see Civil Tribunal of Périgueux 6 July 1954,
rejecting a contractual time bar considered too short)
• Would also be re-considered when the « event » relates to a direct action of the
Employer or the Engineer (instructing a Variation, preventing the Contractor
from performing his obligations, etc.) under good faith principles (France Art
1104 Civil Code) and unjust enrichment doctrine (« enrichissement sans cause@FIDIC
»)
All these are possible
ways to defeat
a time bar provision
From an Employer/Engineer’s perspective,

applying a time bar on Contractor’s claims
should not be handled lightly, owing to the
severe consequences this has on what could
otherwise be a legitimate right to claim@FIDIC
1999 Fully detailed claim
Edition
Sub-Clause 20.1:
“Within 42 days after the Contractor became aware (or should have become
aware) of the event or circumstance giving rise to the claim… the Contractor
shall send to the Engineer a fully detailed claim which includes full supporting
particulars of the basis of the claim and of the extension of time and/or
additional payment claimed. »
Fully detailed claim within 42 days from claim event/circumstance
will all required particulars/substantiation of :
• Contractual and/or legal merits
• Quantum – Cost, and possible profit, substantiation based inter alia
on contemporary records
• Extension of time – use of delay analysis techniques (see SCL Delay
& Disruption protocol and other guidance documents)
@FIDIC
Fully detailed claim
2017
Edition
@FIDIC
Fully detailed claim
2017
Edition
A time bar only

for this, but not
for the other
parts of the fully
detailed Claim
@FIDIC
2017
Edition
Claim process
Days
28 84
1 max Same possible Max*
challenge and
Time bar 1 remedies as in Time bar 2 Only if
SC 20.2.2 SC 20.2.4
Fully detailed Claim with:
SC 20.2.1 SC 20.2.1
a) Description of the Claim SC 3.7
Event giving Notice of Claim event Agreement
rise to by the claiming b) Contractual and/or legal / Determin.
Party SC 20.2.2
the Claim basis of the Claim process
Challenge by c) Contemporary records
14 days max the Engineer for d) Quantum / EOT-ext DNP
late Notice ? sought
Interim fully
No Yes detailed Claim in
SC 20.2.3 SC 20.2.2 case of continuing
SC 20.2.2 effect
Claiming Party keeps Deemed valid
Claim time-barred but
Notice of Claim but
contemporary records claiming Party can *: unless otherwise
can be challenged
to substantiate the object in fully detailed proposed by the
by the other Party
Claim Claim claiming Party and
agreed by the Engineer
@FIDIC
1999
Edition What about other timing imposed in relation
with a claim ? Directory rather than mandatory?
Indeed not the same fatal consequences in other instances, such as when the
Contractor is required to submit:
• Under SC 20.1 of a fully detailed claim within 42 days from an event or
circumstance giving rise to a claim
• Under SC 19.2 a Force Majeure notice
• Under SC 4.12 (RB/YB) of a notice when Unforeseeable physical conditions
are encountered
• Under SC 1.9 (RB) of a notice when Works are likely to be delayed/disrupted
if drawing or instruction from the Engineer is not issued within a particular
reasonable time
• Etc.
@FIDIC
1999 What if I submit a fully detailed claim
Edition
beyond the prescribed 42 days ? No time bar
Beware the last paragraph of SC 20.1 in RB/YB/SB 99:
If the Contractor fails to comply with this or another Sub-Clause in relation to
as such but…
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
Claim then not time barred, but could be reduced !
FIDIC Contracts Guide, 2000 Edition:
“Under this final paragraph, if the Contractor fails to comply with any such
requirement, he runs the risk that any extension of time or additional payment
may be reduced by reason of the failure having prevented or prejudiced proper
investigation of the claim. »
Indeed the Employer could argue that had he been aware of the claim
magnitude within the prescribed 42 days, he could have taken earlier
mitigation measures hence avoiding a situation where he is « taken by
surprise » by a late Contractor’s claim @FIDIC
1999 Additional procedural requirements for some
Edition
specific claim events…
SC 4.12 – Unforeseeable Physical Conditions – various tests
Physical condition encountered by
the Contractor
No Contractor’s
Unforeseeable as No entitlement to Costs
per SC 1.1.6.8?
and/or EoT
Yes
Contractor shall give notice to the
Engineer
Contractor’s entitlement
Engineer gives
instruction(s) on
Yes Instruction(s)
Yes for Cost, profit and/or
how to deal with = Variation ? EoT through SC 13.1 &
the condition ? No SC 13.3
Contractor’s entitlement
Contractor suffers Yes for Cost and/or EoT
delay and/or incurs
through a SC 20.1 claim
Costs ?
No @FIDIC
1999 Additional procedural requirements for some
Edition
specific claim events…
SC 1.9 / SC 5.1 (Yellow Book) – Errors in Employer’s Requirements
Errors to be
Tender stage raised to the
Employer
Scrutiny period Error could have Variation

been spotted
under SC 5.1 earlier by an No
experienced
+ Time
Later in contractor ? Claim
Lower opportunity to contract
claim execution Yes
SC 1.9 No entitlements
@FIDIC
1999
Edition Contemporary records
Sub-Clause 20.1:
“The Contractor shall keep such contemporary records as may be necessary
to substantiate any claim, either on the Site or at another location acceptable
to the Engineer. Without admitting the Employer’s liability, the Engineer may,
after receiving any notice under this Sub-Clause, monitor the record-keeping
and/or instruct the Contractor to keep further contemporary records. »
What can those be ?
• Specific forms prepared by the Contractor and signed off by the
Engineer/Employer
• Extracts of on-site log book/site diaries
• Bailiff/ “huissier” reports, or other third-party statements of facts which
are locally seen as reliable/non-disputable
• Extracts of Contractor’s internal production data (timesheets, etc)
• Etc.
However beware the limited credit given to documents produced by one
Party alone, without the confirmation of the other or of a reliable third-party
@FIDIC
Contemporary records – the view of the judiciary
Attorney General of the Falkland Islands v Gordon Forbes Construction (Falklands) Ltd
[2003] B.L.R. 280
(6) ‘Contemporary records‘…means original or primary documents, or copies

thereof, produced or prepared at or about the time giving rise to the claim, whether
by or for the Contractor or Employer.
(7) ‘Contemporary records' does not mean witness statements produced after the
time giving rise to the claim where such statements cannot be considered to be
original or primary documents prepared at or about the time giving rise to the claim.
(8) Where there is no contemporary record to support a claim, that claim fails.
@FIDIC
Contemporary records – the view of the judiciary
Attorney General of the Falkland Islands v Gordon Forbes Construction (Falklands) Ltd
[2003] B.L.R. 280
(9) Where there are contemporary records to support part of a claim although not its entirety,
the claim may succeed on that part of the claim which is supported by contemporary records but
not the balance unless
(i) inferences can be properly drawn from the extant contemporary records to show that
the otherwise unsupported part of the claim is made out and
(ii) those inferences allow the Engineer or arbitrator to be satisfied to the civil standard of
proof that the extant contemporary records substantiate the otherwise unsupported part
of the claim.
(10) In drawing such inferences the Engineer or arbitrator may rely on witness statements only
to identify or to clarify extant contemporary records. A witness statement cannot supplement,
or be a substitute for, incomplete contemporary records
@FIDIC
Claim – proving the Employer’s liability
Reminder
Legally, arguing for an Employer’s liability requires demonstrating:
1. A breach of Employer’s obligation occurred, or the occurrence
of an event/circumstance for which the Employer is
contractually liable
2. That the breach/event caused damages to the Contractor

(causation link: breach – damages)
3. Proof of damages => contemporary records
@FIDIC
Claims of continuing effect
For Claim event/circumstance with continuing effect

(e.g: Unforeseeable rocky ground conditions) => claim
to be updated on a monthly basis, then finalized within
28 days from the time the event/circumstance ceases
to have effect
@FIDIC
Engineer’s role
1999
Edition Within 42 days after receiving a fully detailed claim, respond
with approval or disapproval, with detailed comments (reasons)
at least on principles / Possibility to ask for more time
Quantum and EoT – obligation to proceed under SC 3.5
Engineer’s
obligations SC 3.5 – 1st step – consultation with each Party « in an
endeavour to reach agreement » - Record and give notice to
Parties if agreement is reached
SC 3.5 – 2nd step – if no agreement, make a « fair

determination ». Give notice to the Parties of the
determination, with supporting particulars. @FIDIC
Engineer’s role
1999
Edition
Acknowledge receipt of notice of claim
Remind Contractor of contemporary records keeping and time

requirements for fully detailed claim
At Engineer’s
discretion
Agree with Contractor a methodology (on-site/off-site) for record
keeping – possibly an instruction to do so
Inspections of records-keeping – possible joint signature process for

agreement on facts (time & cost saving for future decisions –
determination, DAB decision or arbitral award– on quantum liabilities)
@FIDIC
1999
Engineer’s role
Edition Consider Contractor’s request for extension of time for
submission of fully detailed claim – spurious or legitimate
claim ? Complex or simple claim ?
At Engineer’s Require further claim particulars

discretion
Way to organize SC 3.5 Consultation – joint meetings,

separate meetings, regular claim meetings (following
monthly progress meetings?)
« Pouvoir d’appréciation / using his own discretion » on

matters which are not fully substantiated (especially
quantum/EoT) @FIDIC
Engineer’s determination – typical structure
1999
Introduction / Jurisdiction and procedural matters
Edition (possibly in a separate part if issues were encountered))
Engineer’s
Background & context – the agreed facts
determinations can in
practice follow a
similar structure as an
Summary of claim issues to be decided and of the corresponding Parties positions
adjudication or
arbitration decision
Issues to be decided by the Engineer – for each issue in turn:
Though contents can Summary of The facts (with The law/contract Quantum/EoT Conclusion and
Parties’ common ground if (ditto) decision
be lighter (not acting contentions any, and findings)
terms (ditto)
in quasi judicial
Conclusion on liability and quantum/EoT
capacity), reasons
need to be given
Decision – the operative part of the determination
@FIDIC
Engineer’s determination
1999
Edition
• An Engineer’s determination is immediately binding on the

Parties : « Each Party shall give effect to each agreement or
determination unless and until revised under Clause 20”
• An Engineer’s determination can then be reflected in a

Contractor’s Statement for payment under SC 14.3:
“The Statement shall include…
• (f) “any other additions or deductions which may have
become due under the Contract or otherwise, including those
under Clause 20 [Claims, Disputes and Arbitration]; »
@FIDIC
1999
Engineer’s determination
Edition
Should any or both of the Parties be dissatisfied with

the Engineer’s determination, a dispute can be
declared and referred to the Dispute Adjudication
Board
• Under SC 20.4 in the FIDIC Red Book (standing DAB)
• Under SC 20.2 (for DAB nomination) then SC 20.4 in

the FIDIC Yellow Book (ad’hoc DAB)
@FIDIC
2017
Engineer to act
neutrally Edition Engineer’s determination
SC 21.4
SC 3.7.3 SC 3.7.3 Either Party may refer
AGREEMENT PHASE DETERMINATION PHASE the Dispute to the DAAB
« Time limit for agreement » « Time limit for determination » Any matter SC 1.1.29
42 days max unless otherwise 42 days max unless otherwise other than Claim Dispute formed
agreed agreed
Claim – deemed Yes
No No determination
SC 3.7.1 SC 3.7.1 SC 3.7.2 SC 3.7.4 SC 3.7.5
Engineer consult Notice of the Yes Notice of the Agreement or max Any notice of
Agreement 28 Dissatisfaction
with both Parties No Engineer Engineer’s determination binding
reached? days received on
in an endeavour Determination on both Parties
to reach determination?
Fair SC 14.3(vi)
agreement Yes Any amount to
Record of Yes be included in No
consultation No Statement
to be SC 3.7.1 SC 3.7.4 SC 3.7.4(a)
SC 3.7.4 SC 3.7.5
provided by Notice of the Engineer to
Typo/clerical or
Engineer Parties’ advise Notice of corrected Determination is
arithmethical
agreement or final and binding
Agreement error found Yes SC 3.7.4(b) 7 days determination
(with copy of within 14 d? on both Parties
agreement) Notice of either
Party
@FIDIC
1999
Edition Employer’s claim procedure
Sub-Clause 2.5
• If the Employer considers himself to be entitled to any payment under any
Clause of these Conditions or otherwise in connection with the Contract,
and/or to any extension of the Defects Notification Period, the
Employer or the Engineer shall give notice and particulars to the
Contractor.
• “The notice shall be given as soon as practicable after the Employer
became aware of the event or circumstances giving rise to the claim”
• The Engineer shall then proceed in accordance with Sub-Clause 3.5
[Determinations] to agree or determine (i) the amount (if any) which the
Employer is entitled to be paid by the Contractor, and/or (ii) the extension
(if any) of the Defects Notification Period in accordance with Sub-Clause
11.3 [Extension of Defects Notification Period]
Contrast the « as soon as practicable » requirement SC 2.5 and the
28 days notification period under SC 20.1 @FIDIC
1999 No time bar on Employer’s claims?
Edition
Yes, but only to some extent…
NH International (Caribbean) Limited v National Insurance Property
Development Company Limited (No 2) (Trinidad and Tobago) [2015]
UKPC 37
• UK PC decided that late Employer's cross-claims, or attempts to set-off would be
barred under SC 2.5 and that only abatement claims would be allowed (deducting
amounts for unsatisfactory works, falling below the requisite standards, etc)
• [38] Its (NB: Sub-Clause 2.5) purpose is to ensure that claims which an employer wishes
to raise, whether or not they are intended to be relied on as set-offs or cross-claims,
should not be allowed unless they have been the subject of a notice, which must have
been given “as soon as practicable”. If the Employer could rely on claims which were
first notified well after that, it is hard to see what the point of the first two parts of
clause 2.5 was meant to be.
@FIDIC
1999
Edition
Employer’s claim procedure
• This process applies each and every time the Employer
seeks payment from the Contractor and/or extension of
the DNP
• Accordingly, applying delay damages under SC 8.7

straight away would be a breach of contract by the
Employer. Indeed an Employer’s claim under SC 2.5
ends in SC 3.5 – Determinations which allows for a
period of consultation in between the Parties where the
Contractor can raise objections/comments etc.
@FIDIC
1999
Edition Employer’s claim procedure
J Murphy & Sons Ltd v Beckton Energy Ltd [2016] EWHC 607 (TCC)
Inter alia, Murphy seeks a declaration that, until there has been an agreement or
determination by the Engineer appointed under the Contract in accordance with Sub-
Clause 3.5 of the amount (if any) which Beckton is entitled to be paid by Murphy in
respect of liquidated damages, Murphy is not obliged to pay any liquidated damages to
Beckton.
Held that the application of delay damages under SC 8.7 under the FIDIC Yellow Book
was subject to a SC 2.5 and SC 3.5 process – but in that particular case the wording of SC
8.7 was amended to remove any reference to SC 2.5
@FIDIC
1999
Edition Typical Employer’s claim causes under the Contract
Sub-Clause Topic
4.19 Electricy, Water and Gas put at the disposal of the Contractor by the
Employer
7.5 Rejection (of design, Plant, Materials or workmanship) and retesting
7.6 / 11.4 Mobilizing another contractor to proceed with remedial work
8.6 Costs incurred by the Employer following an instruction to the Contractor
to accelerate the rate of progress to catch up with his own culpable delays
8.7 Delay damages
9.4 Reduction of the Contract Price for Works failing to pass Tests on
Completion
11.3 Againofthese
Extension are potential
the Defects claimsPeriod
Notification based on express entitlements given
under the Contract. There are also all other possible claims for
15.4 Payment on termination
Contractor’s breaches(forofContractor’s cause)
Contract (ex: SC 8.3 and failure to « proceed
18.1 / 18.2 Insurances in accordance with the programme») @FIDIC
Module 2
Claim Management /
Dispute Resolution
@FIDIC
Quantum
• This is a latin word meaning “how much”
• Those with scientific background may be familiar with quantum
physics….
• ..but in the legal environment, this is used to represent the
amount of money owed to a Party, as decided by means of an
Engineer’s determination, a DAB decision, an arbitration award
or a court judgment.
• Our session will focus on the quantum of damages, and the way
to determine those, based on the FIDIC Contracts (focus on
Red & Yellow Books, 1999 Edition) express terms, hence for
claims under the Contract, but also based on the governing law,
hence for claims made in connection with the Contract
@FIDIC
Legal basis of a quantum
• FIDIC Contracts terms are governed by principles of commercial law,
where the law provides for compensation of loss or damage suffered
by one Party caused by reasons attributable to the other Party
(“réparation d’un préjudice”)
• Accordingly, we are not here dealing with penalties under criminal law,
or punitive damages which can apply in certain jurisdictions
• Essence of those principles is enshrined in Civil codes and in common
law :
French Civil Code, Article 1231-1 (2016 reform)
“The debtor is, if relevant, to pay damages in case of non-performance of an obligation,
or in case of delay in performing, if he cannot justify that the said performance was
prevented by force majeure.“
England & Wales - Robinson v Harman (1848) 1 Ex. 850
“Where a party sustains a loss by reason of a breach of contract, he is, so far as money
can do it, to be placed in the same situation as if the contract had been performed" @FIDIC
Legal basis for determining the quantum
of damages
• What should be the basis for determining this amount/quantum of
damages ? What is the measure of damages owed by one Party to the
other in contract ? Should it cover any loss suffered by the other Party
no matter how unpredictable this might have been by the other Party?
• Position in contracts at common law such as England & Wales:
Hadley v Baxendale (1854) 9 Ex. 341
“Where two parties have made a contract which one of them has broken, the damages
which the other party ought to receive in respect of such breach of contract should be
such as may fairly and reasonably be considered either
[1] arising naturally, i.e. according to the usual course of things from such breach of contract itself,
or
[2] such as may reasonably be supposed to have been in the contemplation of both parties at the
time they made the contract, as the probable result of the breach of it.”
These are the 2 limbs on the so-called Hadley v Baxendale rule for
the measure of damages in England and Wales
@FIDIC
of damages
• Hadley v Baxendale rule for the measure of damages in contract tends
to cover direct losses or damages (limb 1) but also indirect losses or
damages which were reasonably foreseeable by the Parties at the time
of contract formation
• This matter of foreseeability of losses explains the sometimes

extensive use of “Recitals” as preamble of Contract agreements, which
are not there “to tell a story” to the Contractor, but to explain to him in
which context and framework his contracted works are to be delivered,
and what are the likely consequences if he breaches his obligations.
Those consequences are then not unforeseeable…
• The default position at law can then be rather severe for a Contractor
@FIDIC
of damages
• Assume the case of an electrical works Contractor, contracted to
replace the existing transformers of a car factory
• His personnel proceeds negligently, in breach of the recognized good
practice, and cause the factory to be without any power for 3 days
• Depending on the way his contract is drafted, he could find himself
liable to pay for:
 The cost of repairs of electrical devices
 The loss of production suffered from the Employer – 3 days without producing any car
=> personnel mobilized & paid who cannot work, profit loss on cars unproduced
hence unsold, equipment depreciation not covered by any revenue, etc.
 Claims which the Employer may suffer from customers who do not get their cars on
time
 Loss of reputation of the Employer in the car industry
 Etc.
This can potentially be far and wide….
@FIDIC
Contractual basis for determining the
quantum of damages
• The default position at law can be so severe for a contract party that
businesses have, over the years, developed floodgates to prevent liability
from flowing into too wide areas
• This was developed for practical commercial reasons, as otherwise many

businesses would be reluctant to enter into contracts with others, owing to a
too wide liability exposure which could threaten the existence of the business
itself. A single claim for damages on a single contract may just bring a
business to insolvency!
• Also in the frame of a large Employer – small Contractor relation, even if

supported by the position at law and by contract terms favorable to the
Employer, the latter’s maximum recourse is anyhow capped by the assets of
the small Contractor, plus possibly his insurance coverage, which might be far
insufficient to cover damages suffered.
@FIDIC
Contractual basis for determining the
quantum of damages
• Modern contract terms then reflect the practical/common sense
approach to do business, and provide for exclusions and
limitations of liability from one Party to another
• Accordingly, Parties to a Contract will often expressly stipulate
that they are not liable to each other for:
 Indirect or consequential loss or damage, such as business
interruption, loss of chance (to get another contract, to get a
specific benefit, etc.), etc. => Exclusion of liability
 Any damages going beyond a cap set in Contract – for example
and from a Contractor’s perspective, the Contract will often
stipulate that his liability is limited to the Contract Price and shall
not exceed the latter => Limitation of liability
FIDIC Contracts reflect those commercial practices
@FIDIC
1999 Limitation of liability in FIDIC Contracts
Edition
SC 17.6 in RB/YB 99 – 1st paragraph - Exclusion of liability
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 Sub-Clause 16.4 [Payment on Termination] and Sub-Clause 17.1
[Indemnities].
SC 17.6 in RB/YB 99 – Limitation of liability

The total liability of the Contractor to the Employer, under or in connection with
the Contract other than under Sub-Clause 4.19 [Electricity, Water and Gas], Sub-
Clause 4.20 [Employer's Equipment and Free-Issue Material], Sub-Clause 17.1
[Indemnities] and Sub-Clause 17.5 [Intellectual and Industrial Property Rights],
shall not exceed the sum stated in the Particular Conditions or (if a sum is not so
stated) the Accepted Contract Amount.
@FIDIC
Edition
Liability Cap
As stated in Particular Conditions
No Indirect /
Otherwise = Accepted Contract Amount
Consequential
liability except under
SC 16.4 & 17.1 loss or damage
Direct loss or
damage
In the
scope of
liability
Pure Physical Injury to

economic damage to others
loss property
@FIDIC
Edition
SC 17.6 in RB/YB 99 – 3rd paragraph - Exception
This Sub-Clause shall not limit liability in any case of fraud, deliberate
default or reckless misconduct by the defaulting Party.
• Fraud / deceit cases lead to severe consequences for the tortfeasor =>
this reflects the core underlying assumption of Parties entering into a
Contract, which is that the other Party will act honestly and in good
faith (HIH Casualty & General Insurance Ltd & Ors v Chase Manhattan Bank &
Ors [2003] UKHL 6 @ [15])
Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158

The Court of Appeal held that the Claimant is entitled to damages for any such loss which flows
from the Defendant’s deceit, even if it was not reasonably foreseeable.
However, it is worth remembering that even in a fraud case, the Claimant must mitigate its loss
though the court is more favourable to the Claimant once fraud is established, the normal rules as
to the quantum are not discarded entirely
@FIDIC
Measure of damages and limitation of
1999
Edition
liability – Civil Law perspective
• Exemple with the French Civil Code (as recently reformed and
effective from 1st October 2016)
Article 1231-2
The damages owed to the innocent Party amount to the loss or damage that Party suffered, and
the profit from which it was deprived (principle of protection of the expectations of Parties to a
contract – loss of profit is also claimable)
Article 1231-3
The Party liable to pay for losses or damages is only liable to pay those which were foreseeable at
the time of contract formation, unless the breach was caused by reckless misconduct or fraud
Article 1231-4
Even if the breach was caused by reckless misconduct or fraud, damages to be paid by the
defaulting Party are only those which are immediately and directly flowing from the breach
Normal regime: direct and foreseeable losses

@FIDIC
Measure of damages and limitation of
1999
Edition
liability – Civil Law perspective
• Exemple with the French Civil Code (as recently reformed and
effective from 1st October 2016)
Normal regime: direct losses which were foreseeable at the time of contract
formation
Fraud, reckcless misconduct : direct losses, whether foreseeable or not
Indirect or consequential losses – excluded from the scope of liability
Liability for damages is limited to direct losses / losses flowing directly from the
breach
But all still depends on how “direct” or “indirect”

a damage can be defined !
@FIDIC
FIDIC Contracts definition of the
1999
Edition
Contractor’s quantum of damages
• Entitlements for additional payment are expressly provided.
This, in conjunction with SC 17.6, will then define what is owed
to the Contractor hence is the contractually binding reflection of
the measure of damages principles at law
• Two different but typical cases:
Sub-Clause 4.12 – Unforeseeable physical conditions
If and to the extent that the Contractor encounters physical conditions which are
Unforeseeable, gives such a notice, and suffers delay and/or incurs Cost due to
these conditions, the Contractor shall be entitled subject to Sub-Clause 20.1
[Contractor's Claims] to:
(a)….
(b) payment of any such Cost, which shall be included in the Contract Price.
@FIDIC
FIDIC Contracts definition of the
1999
Edition
Contractor’s quantum of damages
• Contrast with…
Sub-Clause 2.1 – Right of access to the Site
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 give notice to the
Engineer and shall be entitled subject to Sub-Clause 20.1 [Contractor's Claims] to:
(a) …..
(b) payment of any such Cost plus reasonable profit, which shall be included in the Contract
Price.
Entitlement to Cost only in case of “neutral” event (physical

conditions at Site, Force Majeure)
Entitlement to Cost and reasonable profit in case of event directly
attributable to the Employer
@FIDIC
Contractor’s additional payment
1999
Edition
entitlements under FIDIC Contracts
Sub- Heading Cost Reasonable
Clause profit
1.9 Delayed Drawings or Instructions (RB) Yes Yes
1.9 Errors in Employer’s Requirements (YB) Yes Yes
2.1 Right of access to the Site Yes Yes
4.6 Interfaces (dealt with as Variation) Yes Yes
4.7 Setting Out Yes Yes
4.12 Unforeseeable Physical Conditions Yes No
4.24 Fossils Yes No
7.4 Testing Yes Yes
8.9 Suspension Yes No????
10.2 Taking Over of Parts of the Works Yes Yes@FIDIC
Contractor’s additional payment
1999
Edition
entitlements under FIDIC Contracts
Sub- Heading Cost Reasonable
Clause profit
10.3 Interference with Tests on Completion Yes Yes
11.8 Contractor to Search Yes Yes
12.3 Evaluation (measurement, Variations) Yes Yes
13.7 Adjustments for Changes in Legislation Yes No
16.1 Contractor’s Entitlement to Suspend Yes Yes
17.4 Consequences of Employer’s Risks Yes Yes (f) and
g))
No (others)
19.4 Consequences of Force Majeure Yes No
@FIDIC
FIDIC Contracts definition of
the Contractor’s quantum of damages
• But what is Cost as repeatedly used across the Conditions ?
1999
Sub-Clause 1.1.4.3 – definition of Cost Edition
"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.
2017
Sub-Clause 1.1.19 – definition of Cost Edition
"Cost” 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 @FIDIC
Typical breakdown of Cost
• From SCL Delay & Disruption Protocol (2nd edition – Feb 2017)
Costs are classified into the following broad headings:
(a) direct costs (labour, equipment, materials, and sub-contracted work);
And
(b) indirect costs (on-site overheads and head office overheads),
Warning : Not to be confused with liability for direct or indirect loss or damage !
An indirect cost such as overheads is typically considered as direct loss/damage @FIDIC
Substantiation is key…
1999
Edition Sub-Clause 20.1
"Unless and until the particulars supplied are sufficient to substantiate the
whole of the claim, the Contractor shall only be entitled to payment for
such part of the claim as he has been able to substantiate.”
•Key role of contemporary records (see Session 2)
•No proof/evidence => no entitlement (burden to prove loss or damage)
•The ideal situation is to benefit from records agreed by both Parties, or
otherwise witnessed by a reliable third party (bailiff) – Ok for quantities
of resources, but cost of those would typically be demonstrated by
invoices, vouchers, receipts, payroll extracts, etc.
3 rules for a successful claim: 1) Records 2) Records 3) Records
Parties should put themselves in the shoes of an arbitrator or judge looking at the
case several years down the line…their only reliable supporting reference are the
records / A claim should always be prepared with that perspective in mind @FIDIC
If no records, what weight giving
to witnesses of facts ?
Gestmin SGPS S.A v. Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm),
Evidence based on recollection, by Leggatt J.:
15. An obvious difficulty which affects allegations and oral evidence based on recollection of events
which occurred several years ago is the unreliability of human memory …
18. Memory is especially unreliable when it comes to recalling past beliefs. Our memories of past beliefs
are revised to make them more consistent with our present beliefs...
19. The process of civil litigation itself subjects the memories of witnesses to powerful biases. The
nature of litigation is such that witnesses often have a stake in a particular version of events. This is
obvious where the witness is a party or has a tie of loyalty (such as an employment relationship) to a
party to the proceedings. Other, more subtle influences include allegiances created by the process of
preparing a witness statement and of coming to court to give evidence for one side in the dispute. A
desire to assist, or at least not to prejudice, the party who has called the witness or that party's lawyers,
as well as a natural desire to give a good impression in a public forum, can be significant motivating
forces @FIDIC
If no records, what weight giving
to witnesses of facts ?
Gestmin SGPS S.A v. Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm),
Evidence based on recollection, by Leggatt J.:
20. Considerable interference with memory is also introduced in civil litigation by the procedure of
preparing for trial….The effect of this process is to establish in the mind of the witness the matters
recorded in his or her own statement and other written material, whether they be true or false, and
to cause the witness's memory of events to be based increasingly on this material and later
interpretations of it rather than on the original experience of the events.
22. In the light of these considerations, the best approach for a judge to adopt in the trial of a
commercial case is, in my view, to place little if any reliance at all on witnesses'
recollections of what was said in meetings and conversations, and to base factual findings on
inferences drawn from the documentary evidence and known or probable facts. ….. Above all, it
is important to avoid the fallacy of supposing that, because a witness has confidence in his or her
recollection and is honest, evidence based on that recollection provides any reliable guide to the
truth.
@FIDIC
Time-related Costs: Prolongation Costs
• SCL Delay & Disruption Protocol (2nd Edition, February 2017)
“Delay causes prolongation. Prolongation causes increased cost. The

recoverability of compensation for prolongation depends on the terms of the
contract and the cause of the prolongation. Obviously, any prolongation costs
resulting from Contractor Risk Events must be borne by the Contractor.
Compensation for prolongation resulting from Employer Risk Events will
primarily comprise the Contractor's extended use of time-related resources,
notably its site overheads.»
Prolongation definition in SCL Protocol: «The extended duration of the works during
which time-related costs are incurred as a result of a delay. »
@FIDIC
Disruption Costs
“In referring to “disruption”, the Protocol is concerned with disturbance,

hindrance or interruption to a Contractor’s normal working methods, resulting
in lower productivity or efficiency in the execution of particular work
activities.
If the Contractor is prevented from following its reasonable plan for

carrying out the works or a part of them (i.e. it is disrupted), the likelihood is
that its resources will accomplish a lower productivity rate than planned on the impacted
work activities such that, overall, those work activities will cost more to complete and
the Contractor’s profitability will be lower than anticipated.
@FIDIC
Disruption Costs
“Work that is carried out with a lower than reasonably anticipated productivity
rate (i.e. which is disrupted) will lead to: (a) activity delay; or (b) the need for
acceleration such as increasing resources, work faces or working hours, to
avoid activity delay; or (c) a combination of both – and therefore, in each case,
loss and expense. Hence, “disruption” is concerned with an analysis of the
productivity of work activities, irrespective of whether those activities are on
the critical path to completion of the works
@FIDIC
Disruption Costs
Disruption is demonstrated by applying analytical methods and techniques to

establish the loss of productivity arising out of the disruption events and the
resulting financial loss. Disruption is not merely the difference between what
actually happened and what the Contractor planned. From the Contractor’s
perspective, the objective of a disruption analysis is to demonstrate the lost
productivity and hence additional loss and expense over and above that which
would have been incurred were it not for the disruption events for which the
Employer is responsible.
@FIDIC
Disruption Costs
Many of the causes of lower than anticipated productivity (such as poor

supervision or planning, re-work due to defects, inadequate coordination of
subcontractors, or over-optimistic tendering or tendering errors) will not justify
compensation for disruption. It is only the consequences of disruption events
that are the responsibility of the Employer for which compensation might be
payable to the Contractor. The productivity loss caused by all other events must
be excluded from the claim.
@FIDIC
Disruption Costs
The Protocol does not recommend the use of percentage additions to tender
productivity assumptions, where these are unsupported by analysis. Where the
Contractor has demonstrated disruption events for which the Employer is
contractually responsible, even on very simple contracts the Contractor should
be capable of carrying out some analysis (albeit a limited analysis in the case
of simple contracts) in estimating the lost productivity and hence loss and
expense caused by those disruption events. The onus of proof of the fact that
disruption has led to financial loss remains with the Contractor.
@FIDIC
Disruption Costs
The Contractor seeking to be compensated for disruption must demonstrate

the quantum of its claim to the level of certainty reasonably required by the
CA, adjudicator, judge or arbitrator pursuant to the applicable law. That
quantum is the cost of the productivity loss, which will be the difference
between realistic and achievable productivity and that which was actually
achieved in carrying out the impacted work activities as a result of the
disruption events for which the Employer is responsible. Original tender
assumptions should not automatically be considered as a “realistic and
achievable” baseline.
@FIDIC
Disruption analysis methods
Productivity based methods, which are based on actual or theoretical
measurements of comparative productivity. Those are typically as follows (by
order of decreasing reliability and general acceptance):
• Project specific studies
• Measured Mile analysis
– This compares the level of productivity achieved in areas or periods of
the works impacted by identified disruption events with productivity
achieved on identical or like activities in areas or periods of the works not
impacted by those identified disruption events
– Allows to eliminate disputes over the validity / reality of tender
assumptions
– Very efficient and most common and relied-upon technique used /
However can be complex and document-intensive, and identifiying the
« measured mile », i.e. a period of ideally no disruption or few disruption,
can prove challenging
@FIDIC
Productivity based methods, which are based on actual or theroretical
mesurements of comparative productivity. Those are typically as follows (by
order of decreasing liability and general acceptance):
• Project specific studies
• Earned value analysis
– This identifies the amount of man-hours included in the tender allowance
for completing certain work activities and compares this with the actual
man-hours for completing those work
• Programme analysis based on resource-loaded programmes
• Project-comparison studies – these are relied upon when there are
insufficient records available to carry out a project-specific study. With this
approach, productivity on the disrupted project is compared to similar or
analogous projects (or similar or analogous work activities on other projects)
within the same industry where the disruption events (and hence the productivity
losses) did not occur.
• Industry studies @FIDIC
• Cost-based methods, which rely on the analysis of planned and actual
expenditure of resource or costs. They provide the least robust support for a
disruption claim and are often applied when lost productivity cannot be
reliably calculated utilizing a productivity-based approach. These
methods focus on project cost records and seek to provide a comparison
between either incurred and estimated cost, or labour used and estimated
labour, for those activities impacted by disruption events for which the
Employer is responsible.
• Formulae can be used to determine total labour cost (by the Contractor) less
total labour cost paid (by the Employer), with adjustments to take into
account Contractor’s tender errors, disruption events attributable to the
Contractor, etc.
@FIDIC
Claiming for overheads - Principles
Head office overheads
Where there is an Employer’s delay to Completion, a Contractor will often include a
claim for the lost contribution to head office overheads, and the lost opportunity to earn
profit…This is on the basis that its time-related resources have been prolonged on the
project, rather than earning revenue (including, importantly, contribution to head office
overheads and profit) on other projects from the contract completion date… a lost
contribution to head office overheads is generally recoverable as a foreseeable loss
resulting from prolongation.
Site overheads
Would typically be claimed based on the demonstrated prolonged resources on-site –
management staff, support functions (finance & accountancy, HR, secretariat) staff,
offices, warehouses, storeyards, car pool, etc.
@FIDIC
Claiming for HO overheads - Substantiation
 Company account statements documenting annual head office

general and administrative costs and revenue;
 business plans for generating profit;
 records regarding tendering history;
 records regarding tendering opportunities; and
 internal meeting minutes to review future tendering
opportunities and staff availability.
 Etc.
@FIDIC
The Contractor should make all reasonable efforts to demonstrate through

records the head office overheads that it has failed to recover …. If it is not
otherwise feasible to quantify the unabsorbed overheads, formulae may be
used (with caution) to quantify unabsorbed overheads once it has been
successfully demonstrated that overheads have remained unabsorbed.... The
burden of proving that is has unabsorbed overheads and lost profit always rests
with the Contractor. A formula just serves as a tool for the quantification of the
loss.
@FIDIC
Hudson formula
HO Overheads x Accepted Contract Amount x period of delay
contract period
HO Overheads: head office overheads percentage in tender.
Emden formula
HO Overheads x Accepted Contract Amount x period of delay
contract period
Overheads: head office overheads percentage (actual).
Eichleay formula
(1) = Head Office overhead costs allocable to the contract =
Final Contract Price x HO overhead costs over actual contract period
Total revenue of the company for the actual contract period
(2) = Daily contract overhead rate = (1)
days of contract performance
(3) Amount recoverable = (2) x Nb of days of EoT @FIDIC
Reasonable profit?
• Not a defined term under RB/YB/SB 1999 Edition
• Contrast with the FIDIC Pink Book (MDB Harmonised 2010 Edition)
Sub-Clause 1.2 – Interpretation

"In these Conditions, provisions including the expression "Cost plus profit"
require this profit to be onetwentieth
(5%) of this Cost unless otherwise indicated in the Contract Data.”
• And with the FIDIC Gold Book (2008 Edition)

Sub-Clause 1.1.24 – Cost Plus Profit
"Cost Plus Profit" means Cost plus the applicable percentage agreed and
stated in the Contract Data. Such percentage shall only be added where
the Sub-Clause states that the Contractor is entitled to Cost Plus Profit.
@FIDIC
• Similar principle found in FIDIC 2017 Suite (Red, Yellow, Silver)
Not to be forgotten…
duty to mitigate loss at law
British Westinghouse v Underground Electric Railways [1912] A.C. 673 (HL)
“The fundamental basis [of assessing damages] is thus compensation for pecuniary loss
naturally flowing from the breach; but this first principle is qualified by a second, which
imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss
consequent on the breach, and debars him from claiming any part of the damage which
is due to his neglect to take such steps”
• Beware this position under English common law is not necessarily the same
in other jurisdictions!
• There is no such implied duty to mitigate loss or damage under French law
for example (whether in contract or in tort) hence in the absence of contract
terms to that effect a FIDIC Contractor would not be under such duty => the
only express terms for mitigation of duty are found in Force Majeure/EE
clauses (SC 19.3 1999 Ed. / SC 18.3 2017 Ed.)….and only for delay (not for
@FIDIC
Cost).
Module 2
Claim Management /
Dispute Resolution
@FIDIC
Why seeking an Extension of the
Time (EoT) for Completion?
• From SCL Delay & Disruption Protocol (2nd Edition, February
2017)
The benefit to the Contractor of an EOT is to relieve the Contractor of liability

for damages for delay (usually liquidated damages or LDs) for any period prior
to the extended contract completion date and allows for reprogramming of the
works to completion.
The benefit of an EOT for the Employer is that it establishes a new contract
completion date, and prevents time for completion of the works becoming 'at
large' and allows for coordination/planning of its own activities.
@FIDIC
1999
Delay Damages in FIDIC Contracts
Edition
• SC 8.7 – Delay damages
• can be applied if Time for Completion for Works/Section has expired. Daily
rate and cap are defined in Appendix to Tender
• Applying delay damages require the Employer to follow an Employer’s
claim process under SC 2.5
Sub-Clause 8.7 – 1st paragraph
If the Contractor fails to comply with Sub-Clause 8.2 [Time for Completion], the Contractor shall
subject to Sub-Clause 2.5 [Employer's Claims] pay delay damages to the Employer for this
default. These delay damages shall be the sum stated in the Particular Conditions, which shall be paid
for every day which shall elapse between the relevant Time for Completion and the date stated in the
Taking- Over Certificate. However, the total amount due under this Sub-Clause shall not exceed the
maximum amount of delay damages (if any) stated in the Appendix to Tender.
• When reference to SC 2.5 is removed from an amended FIDIC Contract,

it may lead one to construe that a SC 2.5 formal claim is no longer
required => see J Murphy & Sons Ltd v Beckton Energy Ltd [2016] EWHC
607 (TCC) @FIDIC
1999 Delay Damages in FIDIC Contracts
Edition
• SC 8.7 – Delay damages
• Delay damages are the only damages due from the Contractor for failure to
complete the Works (Section) within the Time for Completion except in
Employer’s termination for Contractor’s cause under SC 15.2
Sub-Clause 8.7 – 2nd paragraph
These delay damages shall be the only damages due from the Contractor for
such default, other than in the event of termination under Sub-Clause 15.2
[Termination by Employer] prior to completion of the Works. These damages shall not
relieve the Contractor from his obligation to complete the Works, or from any other
duties, obligations or responsibilities which he may have under the Contract.
• Beware that the default is here a failure to comply with SC 8.2 => delay
damages are then NOT the only damages in case of Contractor’s culpable
delays. See SC 8.6 for instance. A general damages claim can also be raised in
case of failure to comply with SC 8.1 obligation to proceed with the Works with due
expedition and without delay….or with obligation to comply with the programme
under SC 8.3 @FIDIC
Delay Damages at common law
• Liquidated damages or penalties ?
• Position at law – Common law jurisdictions – England & Wales
– Penalties are unenforceable
• 4-stage test in Dunlop Pneumatic Tyre Co Ltd v New Garage &
Motor Co Ltd [1915] A.C. 79 (House of Lords)
1. It is held to be penalty if the sum stipulated for is extravagant and

unconscionable in amount in comparison with the greatest loss that
could conceivably be proved to have followed from the breach.
2. It will be held to be a penalty if the breach consists only in not paying a sum of
money, and the sum stipulated is a sum greater than the sum which ought to
have been paid
@FIDIC
• 4-stage test in Dunlop Pneumatic Tyre Co Ltd v New Garage &
Motor Co Ltd [1915] A.C. 79 (House of Lords)
3. There is a presumption (but no more) that it is penalty when a single lump sum is made
payable by way of compensation, on the occurrence of one or more or all of several
events, some of which may occasion serious and others but trifling damage
• 1 to 3 would tend to require the Employer to make a genuine

pre-estimate of losses likely to be incurred in case of
Contractor’s culpable delay BUT
4. It is no obstacle to the sum stipulated being a genuine pre-estimate of damage, that
the consequences of the breach are such as to make precise pre-estimation
almost an impossibility. On the contrary, that is just the situation when it is probable
that pre-estimated damage was the true bargain between the parties
@FIDIC
• Modern test by the Supreme Court under Makdessi v
Cavendish Square Holdings BV [2015] UKSC 67:
“whether or not the clause which provides for liquidated damages 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 (the Dunlop case 1915) 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.”
@FIDIC
• 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.
• 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
@FIDIC
• 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.
Setting the Delay Damages based on a pre-estimate of losses likely to be incurred by the
Employer in case of Contractor’s culpable delays remains a safe way forward, but by all
means is NOT the only way forward from an Employer’s perspective
@FIDIC
Delay Damages at civil law
• Exemple with French Civil Code (as reformed on 1st October 2016)
Article 1231-5
Whenever a contract stipulates that a certain sum for damages shall be paid by a Party
when breaching an obligation, no higher or lower sum can be allocated to the innoncent
Party
However a judge may, even on his/her own initiative, decide to increase or decrease such
agreed penalty if it is obviously excessive or low
• Two main functions for a penalty:
• Pre-set damages, which can be applied without having the burden t
prove an actual loss or damage
• Act as deterrent against breaches of contract
Increasing convergence in between

common law and civil law jurisdictions
@FIDIC
1999 EoT entitlements under FIDIC Contracts
Edition
Given under SC 8.4 (SC 8.5 in 2017 Edition)
• 5 causes for Extension of Time for Completion
• SC 8.4 opens an EoT entitlement but remains silent on payment =>
other SC are to be used to claim for payment
(a) a Variation (unless an adjustment to the Time for Completion has been agreed
under Sub-Clause 13.3 [Variation Procedure]) or other substantial change in the
quantity of an item of work included in the Contract (RB),
(b) a cause of delay giving an entitlement to extension of time under a Sub-Clause
of these Conditions,
(c) exceptionally adverse climatic conditions,
(d) Unforeseeable shortages in the availability of personnel or Goods 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. @FIDIC
Edition
Sub-Clause No Claim event
1.9 Errors in Employer’s Requirements (YB)
Delayed Drawings or Instructions (RB)
2.1 Access to the Site
4.7 Setting-out
4.12 Unforeseeable physical conditions
4.24 Fossils
7.4 Testing
8.4 Variation, exceptionally adverse climatic
conditions, Unforeseeable shortages caused
by epidemic or governmental actions,
delay/prevention attributable to the
Employer @FIDIC
Edition
Sub-Clause No Claim event

8.5 Authorities
8.9 Suspension of work
10.3 Interference with Tests on Completion
13.7 Changes in Legislation
16.1 Contractor’s suspension of work
17.4 Employer’s risks of damage to the Works
19.4 Force Majeure
@FIDIC
Float ownership
• SCL definition of total float
The amount of time that an activity may be delayed beyond its early start/early
finish dates without delaying the contract completion date.
• SCL approach – float belongs to the project
Unless there is express provision to the contrary in the contract, where there
is remaining float in the programme at the time of an Employer Risk Event, an
EOT should only be granted to the extent that the Employer Delay is predicted
to reduce to below zero the total float on the critical path affected by the
Employer Delay to Completion
@FIDIC
1999 Float ownership - FIDIC
Edition
• Who owns the float in FIDIC Contracts ?
• Arguably float belongs to the Contractor owing to SC 8.4 wording:
The Contractor shall be entitled subject to Sub-Clause 20.1 [Contractor’s Claims]
to an extension of the Time for Completion if and to the extent that completion
for the purposes of Sub-Clause 10.1 [Taking Over of the Works and Sections] is or
will be delayed by any of the following causes
• Key reference term is « completion for the purposes of SC 10.1 » -

this can be ahead or behind the Time for Completion, depending
on Contractor’s progress
• Float ownership would have been different if the SC had stated « if
and to the extent the Contractor’s ability to meet the Time for
Completion is or will be affected by any of the following causes…» @FIDIC
Float ownership – FIDIC vs SCL
@FIDIC
FIDIC principles
would allow 9
days of EoT
SCL = none
@FIDIC
FIDIC principles
would allow 24
days of EoT
SCL = 1
@FIDIC
FIDIC principles
would allow 24
days of EoT
SCL = 1
@FIDIC
FIDIC principles
would allow 9
days of EoT
SCL = 9
@FIDIC
FIDIC principles
would allow 4
days of EoT
SCL = 4
@FIDIC
EoT entitlements under FIDIC Contracts
The view of the judiciary on SC 8.4 and 20.1
• Obrascon Huarte Lain SA v Her Majesty's Attorney General for
Gibraltar [2014] EWHC 1028 (TCC). Quotes from J. Akenhead:
• [312] I 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
• [313] 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
@FIDIC
EoT entitlements under FIDIC Contracts
The view of the judiciary on SC 8.4 and 20.1
• Obrascon Huarte Lain SA v Her Majesty's Attorney General for Gibraltar [2014]
EWHC 1028 (TCC). Example based on the judge approach to SC 8.4 and 20.1
• A Variation is instructed by the Engineer, but affects a task which is not on the
programme’s critical path
• No EoT entitlement since the completion for the purposes of Sub-Clause 10.1 is not,
Month M or is not meant in future, to be delayed
• Other incidents have occurred, and the above task in now on the critical path
• The past Variation now generates a delay to completion
• This is the starting point of the notification duty under SC 20.1. Not when the Variation was
instructed at Month M, but when it makes the Contractor suffers delays in completing the Works
for the purposes of Sub-Clause 10.1 i.e. when it generates an actual EoT entitlement (otherwise no
Month M+6 delay to completion = no entitlement)
@FIDIC
Justifying an EoT claim
Legal test for proving a right to claim/cause of action

The Contractor needs to prove the following:
1. Existence of a right – it can typically be founded in contract (breach of
contract by the Employer – e.g. late access to Site; or a contractual
entitlement such as for inclement weather), in statute, in equity or in tort –
existence is proved by the facts (of the case) and the law (contract, statute
or common law, civil code, etc)
2. Prejudice/loss suffered by the claimant – for an EoT claim, the
Contractor must demonstrate that it has suffered from an actual delay
3. Causation link in between 1 and 2– the liability of the Employer to the
Contractor in 1 above has caused the Contractor to suffer from a delay as
demonstrated in 2
@FIDIC
– Example:
1. The Employer informs the Contractor that no work can be carried out
on the foundations of the windfarm for 3 weeks as the Employer
wishes to perform additional surveys (bathymetric + geotechnical) for
the future extension of the farm and requires a clear Site during that
period
2. The Contractor has a right to claim for hindered access to the Site. Its
cause of action is founded in contract (proof of this is SC 2.1 in
YB/SB – breach of the Employer’s obligation to give the Contractor
full access to and possession of the Site) and substantiated by the
instruction received in 1 (the facts)
@FIDIC
– Example:
3. The Contractor will have to prove that he suffered delays. The Delay
Event (DE) here is the Employer’s instruction in 1. But it could well be
that the Contractor had not planned to do any work on Site during that
period…no delay = no claim!
4. Contractor needs to prove that the delay calculated in 3 is attributable

to the Employer’s breach under SC 2.1 => the causation link….it
could well be that the Contractor would have been, « but for » the
Employer’s breach, not able anyhow to work continuously during the
3 full weeks on site but only 1.5 => his rights would then be for a max
of 1.5 week EoT.
Delay analysis techniques are used to prove
actual delay in 3 and causation in 4 @FIDIC
Delay analysis techniques
Time extensions after completion of project
(retrospective):
1) Impacted As-Planned
2) Time Impact Analysis
3) Collapsed As-built
4) As-planned Vs. As-built
+ Windows Analysis
Time extensions during currency of
project (prospective)
1) Impacted As-Planned
2) Time Impact Analysis
@FIDIC
Impacted As-Planned Method
Activity A
Activity B
Activity C
Activity D
Activity E
@FIDIC
Activity A
Activity B
Activity C Delay
Activity D
Activity E
@FIDIC
Add delays to programme and reschedule

Activity A
Activity B
Activity C Delay
Activity D
Activity E
Impacted completion date
@FIDIC
Advantages
• Quick
• Simple to carry out and understand
• Transparent
• As-built programme not required
• Can demonstrate acceleration and mitigation
Disadvantages
• Theoretical conclusions
• Requires a reasonable and robust as-
planned programme
• Ignores actual progress
• Can hide concurrent delay @FIDIC
Time-Impact Analysis
Activity A
Activity B
Activity C
Activity D
Activity E
@FIDIC
Activity A
Add progress up to start of Delay Event
Activity B
Activity C
Activity D
Activity E
@FIDIC
Activity A
Reschedule
Activity B
Activity C
Activity D
Activity E Add Employer Risk Delay

Event and reschedule Impacted completion date
caused by Employer Risk
Delay Event
EOT due
@FIDIC
Advantages
• Simple to carry out and understand
• Takes some account of actual
progress
• Can demonstrate acceleration and
mitigation
Disadvantages
• Requires a reasonable and robust as-
planned programme
• Time consuming
• ‘Black-box’ syndrome on large
complex projects
@FIDIC
As-Built-But-For
Activity A Develop as-built programme and

determine actual logic links between
Activity B activities
Activity C
Activity D
Activity E
Actual completion date
@FIDIC
As-Built-But-For
Activity A Develop as-built programme and

determine actual logic links between
Activity B activities
Activity C
Activity D
Activity E Identify Employer Risk

Delay Events
Actual completion date
@FIDIC
As-Built-But-For
Activity A Remove Employer Risk Delay Events

and schedule as-built programme
Activity B
Activity C
Activity D
Activity E
Completion date ‘but-for’ Actual completion date

Employer Risk Delay Events
EOT due
@FIDIC
As-Built-But-For
Advantages
• Simple to understand
• Relies upon actual progress
• Does not require an as-planned
programme
Disadvantages
• Subjective assessment of as-built logic

• Detailed as-built records required
• Time consuming
• ‘Black-box’ syndrome on large complex
projects
@FIDIC
Which technique should be used?
Consider:
• Contract conditions
• Records available
• Time available
• Case law
• Value of dispute
• Most practical and common sense

approach in circumstances
@FIDIC
Why do experts opinions differ? Various EoT interpretations…
Contract Period
Allows 1 house per week
Contractor’s Programme
Plans 2 houses per week
Actual Performance
3 houses in 4 weeks
Variation
2 houses added
Extension of Time Options: EoT determination –
•2 week EOT based on contract period Science or Art ?
•0 week EOT based on early completion programme (SCL)
•1 week EOT based on actual productivity and preservation of float earned (FIDIC)
•3 week EOT based on actual performance @FIDIC
Why Critical Path Method –
Beware also the network level of details…
CPM problems – network too simple:
A 2 week delay to any M&E first-fix activity will impact the programme by 2 weeks
@FIDIC
@FIDIC
A 2 week delay to mechanical first-fix has no impact on the completion date
@FIDIC
Module 2
Claim Management /
Dispute Resolution
@FIDIC
Recommended claim contents
1) Introduction - what is it about
2) Background - Presentation of the Contract with summarized scope of Works, presentation of

the Parties and the Engineer. Overall chronological history of main events and main Contract
Data (the date the Contract came into force, Commencement Date, Time for Completion, any
Addendum to the Contract issued etc.) to date
3) Issues encountered which are the subject of the claim - Description of claim event(s) with
particulars ("the facts")
4) Contractual and/or legal basis of the claim ("the law")
5) Quantum / EoT, with substantiation/proof (and reference to Exhibits as need be) of loss or
damage suffered hence amounts claimed, plus causation demonstration (that the costs incurred
and/or delay suffered have been caused by the claim event described in 3) and justified in 4))
6) Conclusion - Summary of relief sought / capture in few lines what is it that you want from the
other Party / prompting for a decision
@FIDIC
Recommended claim contents
Repeat 3) to 6) for each claim issue, in case you submit a claim file consolidating several claim
events (beware though that by doing so you run the risk of having some of your claims time barred
under 2nd par. of SC 20.1...)
In Appendix - Exhibits supporting your contentions under 1 to 6 above (correspondence, MoM,

reports, any other contemporary record)
Note that there is no claim format/structure imposed under FIDIC Suite of Contracts, and the
above only reflects what I like to see so as to prove that there is a liability from one Party to the other
to pay monies and/or grant other reliefs (time in particular) => other practitioners may have different
views on a claim structure, based on their own views and preferences, but at the end of the day
what you need to demonstrate is your entitlement at law for a remedy. For that you need to be
demonstrate :
1) That there is a claim event, by contract or at law
2) That you have suffered from a loss or damage
3) That the loss/damage suffered is caused by the claim event
@FIDIC
Wrap-up on main case law
related to claims under FIDIC Contracts
Obrascon Huarte Lain SA v Her Majesty's Attorney General for Gibraltar
[2014] EWHC 1028 (TCC)
Main aspects covered by J. Akenhead’s decision:
• SC 15.1 + SC 15.2 a) can only operate for material breaches of
Contract, not minor
• termination cannot legally occur if the Contractor has been prevented
or hindered from remedying the failure within the specified reasonable
time (under SC 15.1 – act of prevention from Employer, who cannot
rely on its own wrong / breach to benefit by terminating (note : ditto
with delay damages))
• Termination under SC 15.2 c) i), and application of delay damages,
are two separate remedies. Application of one does not preclude
application of the other
Contractor’s claims
Termination@FIDIC
Obrascon Huarte Lain SA v Her Majesty's Attorney General for Gibraltar
[2014] EWHC 1028 (TCC)
Main aspects covered by J. Akenhead’s decision:
• For EoT claims : event or circumstance giving rise to a claim under
SC 20.1 can either be the incident, or the delay (the effect) resulting
from the incident
• SC 8.4 - “if completion is or will be delayed” : this suggests that the
extension of time can be claimed either when it is clear that there will
be delay (a prospective delay) or when the delay has at least started
to be incurred (a retrospective delay).
• Onus is on the Employer to prove that a notice is issued too late vs.
the 28-day time bar under SC 20.1
• There is no form required for a SC 20.1 notice Contractor’s claims
Termination@FIDIC
NH International (Caribbean) Limited v National Insurance Property
Development Company Limited (No 2) (Trinidad and Tobago) [2015] UKPC 37
• UK PC decided that late Employer's cross-claims, or attempts to

set-off would be barred under SC 2.5 and that only abatement
claims would be allowed (deducting amounts for unsatisfactory
works, falling below the requisite standards, etc) Employer’s claims
• [38] Its (NB: Sub-Clause 2.5) purpose is to ensure that claims which an
employer wishes to raise, whether or not they are intended to be relied on
as set-offs or cross-claims, should not be allowed unless they have been
the subject of a notice, which must have been given “as soon as
practicable”. If the Employer could rely on claims which were first notified
well after that, it is hard to see what the point of the first two parts of clause
2.5 was meant to be.
Beware the merits/ratio of this decision have been
criticized by the legal community! @FIDIC
Other sources of authority – Guidance documents
FIDIC Contracts Guide, Edition

2000
SCL Delay & Disruption Protocol
@FIDIC
Other sources of authority
Textbooks on FIDIC Contracts
@FIDIC
Other sources of authority
Textbooks on preparing claims
“Construction Contract Claims”
R. Thomas & M. Wright, Red Globe
Press
“Building Contract Claims”

D. Chappell, Wiley-Blackwell
@FIDIC
Module 2
Claim Management /
Dispute Resolution
@FIDIC
What is a dispute?
• “a disagreement between management (the Employer) and employees (the
Contractor) that leads to industrial action” (Oxford)
• “a discussion, often heated, in which a difference of opinion is expressed”
(Oxford)
• “a regulated discussion of a proposition between two matched sides” (Webster)
FIDIC Red Book, 2017 Edition, SC 1.1.29
“Dispute” 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. @FIDIC
What are the Alternative Dispute Resolution
(ADR) methods?
• Mediation
• Conciliation
• Expert determination
• Dispute Review Board
• Dispute Adjudication Board
• Arbitration
@FIDIC
Why having Alternative Dispute Resolution
(ADR) methods?
• Dispute settlement in state courts can take a very
long time.
• State courts may not have the technical expertise
necessary.
• Foreign parties to the contract will suspect that they
will not be treated fairly by the local courts.
• It is difficult to execute a court decision outside the
country of the court.
• Litigation is conflictual.
@FIDIC
Mediation
• In mediation, a neutral person facilitates negotiation between the disputing
parties.
• He/she does so by having ex parte meetings with each part (caucuses) during
which he seeks to explore grounds for an agreement and to reduce the
expectations of the parties.
• The objective is to broker “a deal that the parties can live with” rather than
deciding who is right and who is wrong.
• If an agreement is reached, it is recorded in writing and once signed, the

agreement can be enforced as a contract.
• It is a quick procedure but it depends upon each party being represented by

decision makers. It can also be of difficult application in the public sector in some
countries.
@FIDIC
Conciliation
• Similar to mediation, but if no agreement is reached by the end of the meetings,

the Conciliator prepares a report recommending a solution.
• Depending upon the terms of the agreement to conciliate, these

recommendations may become binding on the Parties unless they indicate that
they contest the recommendations within a fixed time period.
@FIDIC
Expert determination
Expert determination is a very useful and cost-effective way of determining disputes of a
highly technical nature. It can be used in a wide range of commercial cases such as rent
reviews, company, asset or share valuations, construction disputes, real property
disputes and land valuations, and energy disputes. Relevant factors governing selection
will include the extent to which the parties want a cost-effective, speedy, conclusive
determination of the matters in dispute, within a relatively informal process, with
control over the selection of an appropriate expert.
“Jackson ADR Handbook” Oxford University Press, First Edition, 2013

Where the parties use expert determination to resolve the dispute, they usually agree
that the determination is final and binding on them, and typically this is recorded in the
contract. ‘Final’ means that the decision cannot be reviewed or appealed. ‘Binding’
means that the parties must comply with the determination… The parties may also
agree that the determination is only binding on them for a temporary or interim period
(although this is less common).
@FIDIC
Dispute Review Boards (DRB)
• A board composed of one or three neutrals examines the cases presented by the Parties, hears
oral evidence and visits the Site if necessary, in order to arrive at a recommendation for settling
the dispute.
• The recommendations are not binding on the Parties.
• Success of the process is dependent upon both Parties acting in good faith and accepting to
implement the recommendations.
• The Employer and the Contractor are encouraged to resolve potential disputes without resorting to
the use of the DRB
• Attorneys are not required to attend DRB meetings and hearings / In fact the process works
particularly well when the DRB has direct access to and dealings with project managers on both
sides
• DRB recommendation is often a pre-requisite to proceeding to juridical procedures.
@FIDIC
Dispute Review Boards (DRB)
Movie on Dispute Review Boards in Australia
With permission from Paula Gerber and Brennan Ong, Monash University, Melbourne, Australia
@FIDIC
Dispute Adjudication Boards (DAB)
• A board composed of one or three neutrals examines the cases presented by the
Parties, hears oral evidence and visits the Site if necessary, in order to arrive at a
decision.
• The decision is binding on the Parties.
• The decision becomes final after a given period, unless one Party indicates that it
is dissatisfied with the decision.
• The process can be completed relatively quickly (3 – 4 months) for an “ad-hoc”

board.
• A “standing” board which follows the project from commencement until the end of
the DNP has the advantage of helping the Parties avoid disputes.
• The validity of the process is based on the contract.

@FIDIC
Arbitration
• A tribunal of one or three neutrals examines the cases presented by the
Parties, hears oral evidence and visits the Site if necessary, in order to
arrive at an award.
• The award is final & binding.
• The validity of the process is based on the law.
• Because the award is final & binding, Parties tend to “fight to the death”
– spending large amounts of money and using tactics to gain an
advantage, which can delay the process.
• International arbitration is favored when one party is foreign.
• If the Parties are from countries that have signed the New York
Convention (1958), the award can be enforced internationally.
• It is common for international arbitration to take 2 – 3 years.
Model retained by FIDIC as final tier of
dispute resolution
@FIDIC
Arbitration
Source: https://www.herbertsmithfreehills.com/lang-ja/latest-thinking/60-years-of-the- @FIDIC

new-york-convention-a-triumph-of-trans-national-legal-co-operation
Background to Dispute resolution under
FIDIC forms of Contract
FIDIC 1st Edition 1957 (The Decision of the Engineer)
• it shall in the first place be referred to and settled by the Engineer
• the decision in respect of every matter so referred shall be final and

binding upon the Employer and the Contractor
• If no claim to arbitration has been communicated … within … 90 days …

the .. decision shall remain final and binding upon the Employer and the
Contractor
• No arbitration until after the completion or alleged completion of the

Works
@FIDIC
FIDIC 1996 Supplement to 4th Edition 1987 (The DRB)
• Allow parties to refer disputes to the decision of either one or three
impartial individual(s)
• Parties should not disregard the possibility to seek an opinion from the
DRB on any matter to avoid a potential dispute
• No formal notice of dispute is required to make a formal referral
• Board may consider that it needs advice from an outside expert
• The Board is then required to give notice of its decision, including

reasons within 84 days.
@FIDIC
FIDIC 1st Edition 1999 (the DAB)
•The 1999 Edition incorporate same principles used in the 1996

Supplement
•The terminology changed from ‘DRB’ to ‘DAB’.
•The DAB is to be named by the date stated in the Appendix to Tender
•The DAB shall render its decision within 84 days.
@FIDIC
FIDIC 2nd Edition 2017 (the DAAB)
•The terminology changed from ‘DAB’ to ‘DAAB’
•Increased Dispute avoidance role given to the DAAB
•DAAB mobilized from the outset of the Contract under all Books
(Red, Yellow and Silver)
• Increased clarity on management of the DAAB process, to deal with

objection and challenges to a DAAB member, or reluctance of a Party
to enter into a DAA Agreement despite the obligations set out under
the Contract
@FIDIC
1999 FIDIC Dispute Adjudication Boards (DAB)
Main assets
• Prompt decisions on disputes – 84 days from a dispute referral,
unless otherwise agreed with the Parties
• Decisions are binding and to be forthwith complied with /
« Temporary finality »
• Decisions taken by construction professionals for construction
professonials
• Much quicker and cheaper dispute resolution method than
arbitration or litigation
• Dispute prevention capabilities under the Red Book where the
DAB makes routine site visits and can give opinions to the Parties
at their request
@FIDIC
Roots & history
• In construction, mechanism which initiated in the 70’s in USA.
Extensively used to date, under the form of Dispute Review
Boards making non-binding recommendations
• Pioneer experience in 1975 on the Eisenhower Memorial
Tunnel project (see Dispute Review Board Foundation, DRBF
Practices and Procedures Manual, ch 1.1., www.drb.org)
• recourse to Dispute Boards appears highly popular in the USA,
with several thousand projects recorded using those1
• International expansion as of the 80’s. 90’s: use by the World
Bank, and in FIDIC forms of Contract.
1Mastin Bovarnick D., ‘Dispute Review Boards to the rescue’ (2013) 15 (4) Underconstruction newsletter, American Bar Association
<http://www.americanbar.org/publications/under_construction/2013/november_2013/dispute_boards_to_the_rescue.html> @FIDIC
Roots & history
• A growing trend in using DAB, or also Conflict/Dispute Avoidance
Panels, on large projects…and not only under FIDIC Contracts
• Examples:
• Channel Tunnel project – France – England – 1987-1999 (15 bn€)1
• ITER project – thermonuclear fusion experimentation – France – 2010 onwards (20
bn€)1
• Olympic Games 2012
• Olympic Games 2016
• Transport for London
• High speed railway (HSR) project Tours – Bordeaux – France – 2010-20161
• CERN Nuclear project – France – Switzerland
• Etc.
1 Leloup V., ‘French National List of FIDIC Adjudicators: the background to a fresh new initiative’ (2013) 8 (2) Construction Law
International, International Bar Association, 28 @FIDIC
International Financing Institutions – JICA / MCC / World Bank
• A DAB is generally composed of:
• 1 Member for projects of capital value < 50 MUSD
• 3 Members for projects of capital value > 50 MUSD
• 5 Members for projects of capital value > 1 bn USD
(see recommendations made by JICA in their Dispute Board manual at

http://www.jica.go.jp/activities/schemes/finance_co/procedure/guideline/pdf/DisputeBoardManual_201203_e.pdf )
MCC (USA) also tend to largely impose the use of DAB’s on projects they finance and which
are run under FIDIC Conditions of Contract
World Bank, with their 2019 SPD, relies extensively on FIDIC 2017 DAABs
@FIDIC
FIDIC 1999 Dispute Adjudication Boards (DAB)
Members
• DAB Members are to be independent of the Parties, impartial, experienced
in the type of Works being executed, and in the language of
communication of the Contract (see FIDIC RB/YB GC of Dispute
Adjudication Agreement Clause 3)
• DAB Members can be selected from various sources such as Lists of
Accredited Adjudicators
• FIDIC President’s List of Adjudicators (however mainly a « UK » list) http://fidic.org/president-
list - See FIDIC new certification initiatives: https://fcl.fidic.org/our-programmes/adjudicators/
• National Lists such as the ACE Sri Lanka list http://acesl.org/FIDIC-National-List-of-
Adjudicators.php, the Japanese list, the French List
https://www.syntec-ingenierie.fr/nos-services/juridique/les-contrats-fidic/
See FIDIC National Lists at http://fidic.org/node/812
• DAB Members fees – USD 3,000/day for international DB members as
recommended by ICSID (World Bank group), shared 50/50 in between the
Parties @FIDIC
Operation mode
Standing
Ad’hoc DAB
FIDIC Red DAB FIDIC Yellow
Book Book
Mobilized if & when a dispute
Mobilized from the outset of crystallizes / Disbanded upon
Contract performance decision issue
Carries out regular Site visits /

Enables the mobilization of
remains up to date with project
members with relevant skills &
developments => more efficient
experience to the dispute
dispute resolution
Can assist in preventing disputes

(see Procedural Rule No.2 FIDIC
Cheaper to the Parties
Pink Book, or Gold Book SC 20.5,
Red Book SC 20.2 - Opinions) @FIDIC
DAB Cost estimates
Simulation of tentative costs for a 3-international-member Dispute Board
Number of DB Members 3
(1)
Years of operation of the DB 3
(2)
A DAB at
Number of DB Site visits per year 3
(3)
Man-day inputs per Site visit per DB Member 6
(4)
Total man-day inputs on Site visits for all DB members 162
(5)=(1)*(2)*(3)*(4)
project level Daily fee rate of DB Member

International flight costs
Total flight costs for all DB members for site visits
3 000 USD
(6)
5 000 USD
(7)
135 000 USD
(8)=(7)*(3)*(2)*(1)
is sometimes Per diem for DB members during site visit

Total Per diem costs for all DB members for site visits
230 USD
(9)
37 260 USD
(10)=(5)*(9)
preferable
Total man-day costs for all DB members for all site visits 486 000 USD
(11)=(5)*(6)
Yearly man-day inputs on documentation review per DB Member 12
(12)
Total man-day costs for all DB members for documentation review 324 000 USD
(13)=(1)*(2)*(6)*(12)
than at Total "fixed" DB costs

DZUWSP capital value
Fixed DB cost weight on the project
982 260 USD
(14)=(8)+(10)+(11)+(13)
163 330 000 USD
(15)
0,60%
(16)=(14)/(15)
contract Number of major Works Contracts (capital value > 1 MUSD)

Average no. of opinion referral per major Works Contracts
14
(17)
2
(18)
level…
Man-day inputs spent per opinion per DB Member 2
(19)
Total man-day inputs on opinion for all DB Members 168
(20)=(1)*(17)*(18)*(19)
Total man-day costs for all DB members on opinions 504 000 USD
(21)=(6)*(20)
example with
Total man-day costs allocated to the Employer 252 000 USD
(22)=(21)/2
Number of disputes referred to the DB per major Works Contract 1
(23)
Man-day inputs spent per dispute per DB Member 15
(24)
a 163 MUSD Total man-day costs for all DB members on disputes

Man-days spent per dispute hearing on Site
Site hearings expenses per dispute for all DB Members
630 000 USD
(25)=(6)*(17)*(23)*(24)
5
(26)
18 450 USD
(27)=(1)((26)*(9)+(7))
project Hearings required - in percentage of disputes referred

Total DB members expenses for disputes
50%
(28)
129 150 USD
(29)=(17)*(23)*(27)*(28)
Total DB costs for disputes 759 150 USD
(30)=(25)+(29)
Total DB costs for disputes allocated to the Employer 379 575 USD
(31)=(30)/2
Total "variable" DB costs 1 263 150 USD
(32)=(21)+(30)
Total "variable" DB costs allocated to the Employer 631 575 USD
(33)=(32)/2
Variable DB costs weight on the project 0,39%
(34)=(33)/(15)
Total DB costs allocated to the Employer 1 613 835 USD (35)=(14)+(33)
Total DB costs weight on the project 0,99% (36)=(35)/(15) @FIDIC
DAB – integrating it properly at tendering stage
 Dispute Adjudication Board services
See JICA  Amendment to SC 13.5 – Provisional Sums – so as to make the Employer’s share
of the DAB (50% of DAB total costs, as 50% is borne by the Contractor) paid under
Dispute a Provisional Sum) – JICA’s approach for DAB
Board  Further stressing the dispute prevention role of the DAB through amendments to
Manual the GC of Contract
Example of
amendment
to the Gold
Book
See the Asian Development Bank Standard Bidding Document for DBO
Contracts: https://www.adb.org/documents/design-build-operate-guide @FIDIC
FIDIC 2017 Dispute Avoidance/Adjudication
Boards (DAAB)
Operation mode
2017
Edition
Standing DAAB in all 3 forms
(Red, Yellow, Silver)
Emphasis on
dispute avoidance
@FIDIC
Boards (DAAB)
Dispute avoidance became an increasingly prominent feature of FIDIC
forms of Contract since the release of the 1999 Edition
1999 FIDIC Red Book

SC 3.5: Whenever these Conditions provide that the Engineer shall proceed in
accordance with this Sub-Clause 3.5 to agree or determine any matter, the Engineer shall
consult with each Party in an endeavour to reach agreement
SC 20.2 – 7th paragraph General Conditions of D.A.Agreement

If at any time the Parties so Clause 4
agree, they may jointly refer a The Member shall:
matter to the DB for it to give its (k) be available to give advice and opinions, on any
opinion. Neither matter relevant to the Contract when requested
Party shall consult the DB on by both the Employer and the Contractor, subject
any matter without the to the agreement of the Other Members (if any).
agreement of the other Party. @FIDIC
Boards (DAAB)
Dispute avoidance became an increasingly prominent feature of FIDIC
forms of Contract since the release of the 1999 Edition
2008 FIDIC Gold Book

SC 20.5 – Avoidance of disputes:
If at any time the Parties so agree, they may jointly refer a matter to the DAB in writing
with a request to provide assistance and/or informally discuss and attempt to resolve
any disagreement that may have arisen between the Parties during the performance of
the Contract. Such informal assistance may take place during any meeting, Site visit or
otherwise….
2010 FIDIC Pink Book
Dispute Board Procedural Rule No. 2 – Avoidance of disputes:
The purpose of Site visits is to enable the DB to become and remain acquainted with the
progress of the Works and of any actual or potential problems or claims, and, as far as
reasonable, to endeavour to prevent potential problems or claims from becoming
disputes. @FIDIC
2017 Boards (DAAB)
SC 1.1.22 - “DAAB” 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)].
SC 21.1 – The DAAB is to be appointed from the outset of the Contract implementation in all
three Books (Red/Yellow/Silver Book – in 1999 this was only the case in the Red Book). Default
position = within 28 days after Contractor’s receipt of Letter of Acceptance
FIDIC Guidance Note on SC 21.1:

« It is generally accepted that construction projects depend for their success on the avoidance of Disputes
between the Employer and the Contractor and, if Disputes do arise, the timely resolution of such
Disputes..FIDIC strongly recommends that the DAAB be appointed, as a ‘standing DAAB’ – that is, a
DAAB that is appointed at the start of the Contract who visits the Site on a regular basis and remains in
place for the duration of the Contract to assist the Parties: a) in the avoidance of Disputes, and b) in
the ‘real-time’ resolution of Disputes if and when they arise to achieve a successful project.
@FIDIC
Boards (DAAB)
SC 21.3 – Avoidance of SC 21.3 – Avoidance of
Disputes Disputes
If the Parties so agree, they may If the DAAB becomes aware of an

jointly request (in writing, with a copy issue or disagreement, it may invite
to the Engineer) the DAAB to provide the Parties to make such a joint
assistance and/or informally discuss request.
and attempt to resolve any issue or
disagreement that may have arisen
between them during the
performance of the Contract.
At the initiative of the …as well as of the DAAB.

Parties… @FIDIC
Boards (DAAB)
SC 21.3 – Avoidance of Disputes
Such informal assistance may take place during any meeting, Site
visit or otherwise. However, unless the Parties agree otherwise,
Gold both Parties shall be present at such discussions. The Parties
Book are not bound to act on any advice given during such informal
terms meetings, and the DAAB shall not be bound in any future Dispute
resolution process or decision by any views or advice given during
the informal assistance process, whether provided orally or in
writing.
Avoiding meeting in caucus to prevent a Glenclot1-type

challenge for breach of the rules of natural justice (apparent
bias)
1: Glencot Development and Design Co Ltd v Ben Barrett & Son (2001) WL 239771 (TCC) @FIDIC
Boards (DAAB)
General Conditions of DAA Agreement
SC 1.5 – Informal Assistance SC 5.1(e) – General obligations

of the DAAB Member
“Informal Assistance” means the
informal assistance given by the The DAAB Member shall be available
DAAB to the Parties when requested to give Informal Assistance when
jointly by the Parties under Sub- requested jointly by the Parties
Clause 21.3 [Avoidance of Disputes]
of the Conditions of Contract.
SC 1.3 – DAAB’s Activities

“DAAB’s Activities” means the activities carried out by the DAAB in accordance with
the Contract and the GCs, including all Informal Assistance, meetings (including
meetings and/or discussions between the DAAB members in the case of a three-
member DAAB), Site visits, hearings and decisions @FIDIC
Boards (DAAB)
DAAB Procedural Rules
Rule 1 - Objectives Rule 3 – Meetings and Site Visits
« The purpose of meetings with the Parties and Site visits

« The objectives of these Rules are:
by the DAAB is to enable the DAAB to:
(a) “to facilitate the avoidance of …
Disputes that might otherwise (b) become aware of, and remain informed about, any
arise between the Parties; » actual or potential issue or disagreement between the
Parties; and
(c) give Informal Assistance if and when jointly requested
by the Parties ».
Rule 2 – Avoidance of Disputes

“Where Sub-Clause 21.3 [Avoidance of Disputes] of the Conditions of Contract applies,
the DAAB (in the case of a three-member DAAB, all three DAAB Members acting
together) may give Informal Assistance during discussions at any meeting with the
Parties (whether face-to-face or by telephone or by video conference) or at any Site visit
or by an informal written note to the Parties. » @FIDIC
Boards (DAAB)
Conclusion
 The Dispute avoidance role of the DAAB is now much more
expressly laid down under the Contract, explaining the shift
from « DAB » to « DAAB » (Dispute Avoidance/Adjudication
Board), and the mobilization of the DAAB from the outset
of the Contract implementation in all 3 books
 « Informal assistance » is now further formalized
 DAAB Members are expected to be proactive in Dispute
avoidance, in line with the objectives of the Procedural
Rules, and the initiative they are given under SC 21.3, for the
benefit of the Contract implementation and of the project
@FIDIC
Dispute Boards/Adjudication
The essence of a dispute adjudication process
Macob Civil Engineering v Morrisson Construction Ltd (1999) (TCC) –
England & Wales case:
• Adjudication is a “…speedy mechanism for settling disputes in
construction contracts on a provisional interim basis, and requiring the
decisions of adjudicators to be enforced pending the final determination of
disputes by arbitration, litigation or agreement
• “…adjudication should be conducted in a manner which those familiar with
the grinding detail of the traditional approach to the resolution of
construction disputes apparently find difficult to accept”
• The timetable for adjudications is very tight. Many would say
unreasonably tight, and likely to result in injustice
@FIDIC
The essence of a dispute adjudication process
• Fast-track justice; « rough » justice

• Providing cheaper and faster justice than arbitration or litigation
• Temporary finality => decision subject to be reversed or varied in
arbitration or litigation
• Time is of the essence – mimicing arbitration or judicial
proceedings (especially if the Parties have legal representation)
might be adverse and defeat the adjudication objectives
@FIDIC
The Golden Rules to be followed by a Dispute Board/Adjudicator
1. Preserve natural justice – act fairly and impartially in between
the Parties, giving each of them an opportunity to make their case
and answer the other’s
2. Make sure you have jurisdiction, and stay within your

jurisdiction – answer to the questions raised, and only to those.
Be not tempted to « make » a Party’s case.
3. Comply with the Dispute Adjudication Agreement conditions

and procedural rules
Deliver justice
@FIDIC
Quick queries
What would you describe as being the main advantages of a Dispute Board decision vs an
Arbitration decision ?
a. Faster decision
b. Final decision
c. Binding decision
d. Cheaper decision
DB Arbitration
@FIDIC
Quick queries
An Employer, being the National Road Authority, and a Contractor have signed a
1999 FIDIC Red Book Contract for the construction of a road bridge over a river,
with an Accepted Contract Amount of Euro 25 million. The Contract requires a
standing single person DAB, to be appointed within 28 days of the
Commencement Date.
The Employer proposes a local lawyer who is familiar with the local construction
laws but had limited experience of construction. He is also married to the
daughter of the Minister for Construction but this is not mentioned in his CV. His
proposed fee is 50% of that of foreign potential DAB members.
Should the Contractor accept this nomination?

Yes or No?
@FIDIC
Quick queries
Dispute FIDIC Dispute

Resolution Adjudication
Board Federation
Foundation
What are the 2 main

international associations
promoting the use of Dispute
Boards ? Dispute Board
ICE Federation
@FIDIC
Module 2
Claim Management /
Dispute Resolution
@FIDIC
1999
DAB – Mandatory 1st tier of dispute resolution Edition
FIDIC Red Book - Sub-Clause 20.2 – 1st paragraph

Disputes shall be adjudicated by a DAB in accordance with Sub-Clause 20.4 [Obtaining
Dispute Adjudication Board's Decision]. The Parties shall jointly appoint a DAB by the date
stated in the Appendix to Tender.
Appendix to Tender – by default = 28 days from Commencement Date
FIDIC Yellow Book - Sub-Clause 20.2 – 1st paragraph

Disputes shall be adjudicated by a DAB in accordance with Sub-Clause 20.4 [Obtaining
Dispute Adjudication Board’s Decision]. The Parties shall 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
 Obligation to adjudicate disputes through the DAB

@FIDIC
1999
DAB – Mandatory 1st tier of dispute resolution Edition
FIDIC Red Book - Sub-Clause 20.4 – 6th paragraph
…neither Party shall be entitled to commence arbitration of a dispute unless a notice of
dissatisfaction [note: with a DAB decision] has been given in accordance with this Sub-
Clause.
Sub-Clause 20.6 – Arbitration – 1st paragraph
Unless settled amicably, any dispute in respect of which the DAB's decision (if any) has not
become final and binding shall be finally settled by international arbitration
FIDIC Yellow Book – Ditto but note SC 20.8 – Expiry of DAB’s appointment
If a dispute arises between the Parties in connection with, or arising out of, the Contract or
the execution of the Works and there is no DAB in place, whether by reason of the expiry of
the DAB’s appointment or otherwise:
(a) Sub-Clause 20.4 [Obtaining Dispute Adjudication Board’s Decision] and Sub-Clause 20.5
[Amicable Settlement] shall not apply, and
(b) the dispute may be referred directly to arbitration under Sub-Clause 20.6 [Arbitration].
@FIDIC
DAB – Mandatory 1st tier of dispute resolution – is it so under the YB/SB?
• Cases confirming the mandatory recourse to a DAB as

first instance of dispute resolution in FIDIC Yellow Book,
and despite the possible confusion caused by the
wording of SC 20.8:
• Swiss Supreme Court, case no. 4A_124/2014, 7 July 2014 –
Romanian Employer v French Contractor – Yellow Book
• Peterborough City Council v Enterprise Managed Services Ltd

[2014] EWHC 3193 (TCC) – Silver Book
@FIDIC
DAB – Mandatory 1st tier of dispute resolution – is it so under the YB?
• Swiss Supreme Court, case no. 4A_124/2014, 7 July 2014 – Romanian

Employer v French Contractor – Yellow Book
[3.4.3.2.] the text of the first paragraph of Sub-Clause 20.6 clearly establishes that the
existence of a decision by the DAB is a sine qua non condition to the initiation of
arbitral proceedings, except in the specific case of paragraph 5 of Sub-Clause 20.4,
i.e., the absence of a decision of the DAB within 84 days after its implementation.
[3.4.3.3.] …the FIDIC guide….in which the intransigence of a party is given as an

example of a situation in which the implementation of the DAB may be omitted. That
the mandatory recourse to the DAB may suffer certain exceptions does not suggest
that resorting to this body would allegedly be voluntary but rather confirms the
general rule making the recourse to this alternate dispute resolution mechanism
compulsory before introducing a request for arbitration.
@FIDIC
DAB – Mandatory 1st tier of dispute resolution – is it so under the SB?

[20] Ms. Sinclair submitted that sub-clause 20.8 was in effect an opt-out that enabled a party
who did not wish to have the dispute resolved by adjudication to refer the dispute directly to the
court. She relied strongly on the concluding words of the first sentence (“or otherwise”) and
submitted that this covered any situation where a DAB was not “in place” either after a dispute
had arisen or at the time when the party wishing not to adjudicate had commenced litigation
[32]…in every case where sub-clause 20.2 or 20.3 applies there will be in existence a dispute but
no DAB. Thus, since under sub-clause 20.8 sub-clause 20.4 is disapplied, on Ms. Sinclair’s
approach to the construction of sub-clause 20.8 there can never be a reference of a dispute to
adjudication in any contract which provides that the DAB is to be appointed in accordance with
the provisions of sub-clause 20.2 or sub-clause 20.3.
@FIDIC

[33] It seems to me that sub-clause 20.8, which is in the same form in all three of the FIDIC
Books, probably applies only in cases where the contract provides for a standing DAB, rather
than the procedure of appointing an ad hoc DAB after a dispute has arisen
[35] For all these reasons, therefore, I reject the Council’s submissions that sub-clause 20.8 gives
it a unilateral right to opt out of the adjudication process, save in a case where at the outset the
parties have agreed to appoint a standing DAB and that, by the time when the dispute arose,
that DAB had ceased to be in place, for whatever reason. Further, I also reject the Council’s
submissions that the adjudication provisions in the contract are unenforceable
@FIDIC
• Peterborough City Council v Enterprise Managed

Services Ltd [2014] EWHC 3193 (TCC) – Silver Book
[36] Accordingly, I accept EMS’s case that the contract requires that the
determination of the current dispute is to be by way of adjudication and amicable
settlement under sub-clauses 20.4 and 20.5 and, only failing that, by litigation
• Note: Beware in that case – SC 20.6 was amended so as to refer a

dispute to litigation instead of arbitration as final tier of dispute
resolution
@FIDIC
1999
DAB – Formation Edition
FIDIC Red Book - Sub-Clause 20.2 – 2nd to 4th paragraph
The DAB shall comprise, as stated in the Appendix to Tender, either one or three suitably
qualified persons ("the members"). If the number is not so stated and the Parties do not
agree otherwise, the DAB shall comprise three persons.
If the DAB is to comprise three persons, each Party shall nominate one member for the
approval of the other Party The Parties shall consult both these members and shall agree
upon the third member, who shall be appointed to act as chairman.
However, if a list of potential members is included in the Contract, the members shall be
selected from those on the list, other than anyone who is unable or unwilling to accept
appointment to the DAB.
 Beware with lists of members / Good practice to refer to recognized

lists (FIDIC International and/or National lists) but listing names can
cast suspicion as to independence & impartiality of people so named @FIDIC
1999
DAB – General Conditions of Dispute Adjudication Agreement Edition
Clause 3 – Warranties
The Member warrants and agrees that he/she is and shall be impartial and independent of
the Employer, the Contractor and the Engineer. The Member shall promptly disclose, to
each of them and to the Other Members (if any), any fact or circumstance which might
appear inconsistent with his/her warranty and agreement of impartiality and independence.
When appointing the Member, the Employer and the Contractor relied upon the Member's
representations that he/she is:
(a) experienced in the work which the Contractor is to carry out under the Contract,
(b) experienced in the interpretation of contract documentation, and
(c) fluent in the language for communications defined in the Contract
@FIDIC
DAB – General Conditions of Dispute Adjudication Agreement 1999
Edition
Clause 4 – General Obligations of the Member
• no interest financial or otherwise in the Employer, the Contractor or the
Engineer
• not previously have been employed as a consultant or otherwise by the
Employer, the Contractor or the Engineer, except in such circumstances as
were disclosed in writing to the Employer and the Contractor before they
signed the Dispute Adjudication Agreement
• have disclosed in writing to the Employer, the Contractor and the Other
Members (if any), before entering into the Dispute Adjudication Agreement
and to his/her best knowledge and recollection, any professional or
personal relationships with any director, officer or employee of the
Employer, the Contractor or the Engineer, and any previous involvement in
the overall project of which the Contract forms part; @FIDIC
Edition
• not, for the duration of the Dispute Adjudication Agreement, be employed as a
consultant or otherwise by the Employer, the Contractor or the Engineer, except as
may be agreed in writing by the Employer, the Contractor and the Other Members (if
any);
• comply with the annexed procedural rules and with Sub-Clause 20.4 of the
Conditions of Contract;
• not give advice to the Employer, the Contractor, the Employer's Personnel or the
Contractor's Personnel concerning the conduct of the Contract, other than in
accordance with the annexed procedural rules;
• not while a Member enter into discussions or make any agreement with the
Employer, the Contractor or the Engineer regarding employment by any of them,
whether as a consultant or otherwise, after ceasing to act under the Dispute
Adjudication Agreement;
@FIDIC
Edition
• ensure his/her availability for all site visits and hearings as are necessary;
• become conversant with the Contract and with the progress of the Works
(and of any other parts of the project of which the Contract forms part) by
studying all documents received which shall be maintained in a current
working file; (Red Book only)
• treat the details of the Contract and all the DAB's activities and hearings as
private and confidential, and not publish or disclose them without the prior
written consent of the Employer, the Contractor and the Other Members (if
any); and
• be available to give advice and opinions, on any matter relevant to the
Contract when requested by both the Employer and the Contractor, subject
to the agreement of the Other Members (if any). (Red Book only) @FIDIC
DAB – Conflict of interest? Want of impartiality
• Relevant guidance/support can be found with the

IBA Guidelines on Conflicts of Interest in International Arbitration –
2014 versions downloadable at
http://www.ibanet.org/Publications/publications_IBA_guides_and_free_mat
erials.aspx
• Selected extracts:
– Page 8 It is also essential to reaffirm that the fact of requiring disclosure – or of an
arbitrator making a disclosure – does not imply the existence of doubts as to the
impartiality or independence of the arbitrator.
– Page 14 If the arbitrator has doubts as to his or her ability to be impartial and independent,
the arbitrator must decline the appointment.
@FIDIC
Preserving natural justice 1999
Edition
Two overarching natural justice features – the DAB shall:

1. Act fairly and impartially as between the Parties – FIDIC DAB
Procedural Rule No.5 (a) (Red Book) / UK Arbitration Act 1996 s.
33.
No bias
2. Give each party a reasonable opportunity of putting his case

and dealing with that of his opponent – Procedural Rule No.5
(b) / AA 1996 s.33. The adversarial process / « le principe du
contradictoire »
@FIDIC
Jurisdiction of the DAB 1999
Edition
• FIDIC Red Book (RB) DAA GC Procedural Rules No. 8 empower
the DAB to decide on its own jurisdiction
• Similar provisions are found in arbitration - see UK Arbitration Act

1996 s. 30
Unless otherwise agreed by the parties, the arbitral tribunal may rule on its
own substantive jurisdiction, that is, as to—
(a) whether there is a valid arbitration agreement,
(b) whether the tribunal is properly constituted, and
(c) what matters have been submitted to arbitration in accordance with
the arbitration agreement
@FIDIC
Jurisdiction of the DAB
What if one of the Parties (or both) challenge the DAB

jurisdiction?
• Typical jurisdictional challenges:
• Before or during adjudication proceedings. E.g: « no dispute »

argument, or a party resisting the adjudication process (leading to
possible ex-parte proceedings)
• After adjudication proceedings – DAB exceeding its jurisdiction by

deciding on matters he was not required to decide, or deciding
late
@FIDIC
Edition
Does a DAB has to put on hold the adjudication while there is challenge on its
jurisdiction ?
• FIDIC RB Procedural Rule No. 5, item (b): « the DAB shall…adopt procedures
suitable to the dispute, avoiding unnecessary delay or expenses »
• If DAB decides to carry on, it preserves the fast-track essence of adjudication, but
what about the expenses?
• Pausing the DAB process until the challenge is resolved? The challenge might just
be a delaying tactic…
• Under FIDIC DAB Rules, DAB decides on its own jurisdiction (PR 8 item (b) – Red
Book) and there is no immediate institution support for jurisdictional challenges.
Court or arbitration assistance ? generally unlikely and untimely. If there is and DAB wants to
wait for the outcome of the jurisdictional challenge, it must get an agreement of both Parties for
extending the SC 20.4 84-day time period for decision
@FIDIC
• Otherwise, if the DAB decides beyond the 84 days without the agreement
of both Parties, then DAB is « functus officio » => it no longer has
jurisdiction, and its decision becomes invalid on that ground.
• See Vision Homes Ltd v Lancsville Construction Ltd [2009] EWHC 2042
(TCC) => there is no implied term that time should not run in an
adjudication between the date of issue of proceedings challenging an
adjudication and the date of resolution of those proceedings
Most practical way out for the DAB – forget any resorting to court or other outside institutions,
given the short time frame for decision, and DAB to decide on its own jurisdiction as per PR
8(b) (Red Book 1999) either as a preliminary ruling/decision on jurisdiction (bifurcation) or
within its decision on the merits of the dispute.
@FIDIC
• See the UK Arbitration Act 1996, s. 32(4) Unless otherwise agreed by the
parties, the arbitral tribunal may continue the arbitral proceedings and
make an award while an application to the court under this section is
pending
• See the Farmex case, 13/22288, Paris Court of Appeal, 4 November 2014
=> DAB decision (converted into arbitration award) set aside under art
1520 of French Code of Civil Procedure, for lack of jurisdiction (decision
delivered late). Breach of natural justice was also referred to by the
Claimant – One of the Parties could not be fairly/properly heard
@FIDIC
1999
Natural justice challenges against the DAB Edition
How to react in case of natural justice challenge before or during
adjudication proceedings ?
• Contrast cases of institutional adjudication (e.g. ICC – Dispute
Board rules Art.8) with cases where there is no institutional support
(FIDIC DAB Rules)
• ICC: Should any Party wish to challenge a DB Member on the basis of an
alleged lack of impartiality, independence or otherwise, it may, within 15
days of learning of the facts upon which the challenge is based, submit to
the Centre a request for a decision upon the challenge including a written
statement of such facts. The Centre will finally decide the challenge after
having given the challenged DB Member, any other DB Members and the
other Party an opportunity to comment on the challenge.
@FIDIC
Edition
• If no institutional support, the « lex arbitri » or « curial law » or

« procedural law » (contrast with substantive law, i.e. governing the
terms of the Contract) defined in the Contract (check Appendix to
Tender/Contract Data, Particular Conditions, in particular for FIDIC
R/Y/S Books SC 20.6 to assess what is the seat of arbitration) can
possibly provide for court assistance…but more difficult in countries
where adjudication is rare/unknown
2017 Now provides for a specific procedure, resorting to ICC – see GC of
Edition DAAB Agreement Clause 11 + Procedural Rules 10 and 11
@FIDIC
1999
DAB – Formation
Edition
FIDIC Red Book - Sub-Clause 20.2 – 5th and 6th paragraph

The agreement between the Parties and either the sole member ("adjudicator") or each of
the three members shall incorporate by reference the General Conditions of Dispute
Adjudication Agreement contained in the Appendix to these General Conditions, with such
amendments as are agreed between them.
The terms of the remuneration of either the sole member or each of the three members,
including the remuneration of any expert whom the DAB consults, shall be mutually agreed
upon by the Parties when agreeing the terms of appointment. Each Party shall be
responsible for paying one-half of this remuneration.
@FIDIC
DAB – Formation 1999
Edition
• In case the Parties cannot agree on a DAB member, the nominating body
under SC 20.3 (generally the President of FIDIC) will make a final and
conclusive appointment
• Each Party shall be responsible for paying one-half of the remuneration of
the appointing entity or official
• But what if a Party is still reluctant to proceed ?
• Ex-parte proceedings
• Considering a SC 20.8 situation => no DAB = possible dispute referral
straight to arbitration (the Swiss Supreme Court decision’s case)
• Court support – order for specific performance – generally unlikely, especially
as courts have no jurisdiction under a FIDIC Contract
@FIDIC
1999
DAB – Formation
Edition
[28] As to Ms. Sinclair’s argument that there can be no DAB “in place” if a Dispute Adjudication
Agreement has not been concluded so as to be effective, whether because the parties have been
unable to agree the adjudicator’s fees or that it has not been signed by the parties and the
adjudicator, I think that Ms. Sinclair was disposed to accept that, in the absence of any
agreement between the parties, the effect of incorporating the Appendix to the Conditions as
the terms of the Dispute Adjudication Agreement was that all the relevant terms of that
agreement would be in place save for agreement of the adjudicator’s fees. In my view, there
would be an implied term of that agreement - reflecting the common intention of the parties to
it - that the adjudicator would be entitled to his or her reasonable fees and expenses
@FIDIC
1999
DAB – Formation
Edition
[31] As I have already mentioned, Ms. Sinclair also relied on the requirement for the Dispute
Adjudication Agreement to be signed by all the parties before it became effective. I see nothing
in this. If a party without good reason refused to sign the agreement, I cannot see why it could
not be compelled to do so by an order for specific performance at the suit of one or more of the
other parties. I therefore reject Ms. Sinclair’s submissions that the contract is unenforceable
• Again beware that in that case arbitration was replaced by litigation => hence
providing court support for contract obligations enforcement.
• In the absence of an efficient court support, hard to proceed further in the absence
of agreement on fees or signature of DAA – though not impossible with ex-parte
proceedings) Now provides for a remedy – DAAB Agreement deemed to be signed
2017 upon President of FIDIC appointment under SC 21.2, who will also set
Edition the monthly and daily fees @FIDIC
1999
Edition
DAB fees – GC of DAA – Clause 6
Red Book Yellow Book
(a) A retainer fee per calendar month, which shall be N/A
considered as payment in full for:
• being available on 28 days' notice for all site visits
and hearings;
• becoming and remaining conversant with all
project developments and maintaining relevant
files;
• all office and overhead expenses including
secretarial services, photocopying and office
supplies incurred in connection with his duties; and
• all services performed hereunder except those
referred to in sub-paragraphs (b) and (c) of this
Clause.
@FIDIC
DAB fees – GC of DAA – Clause 6 1999
Edition
Red Book Yellow Book
(b) a daily fee which shall be considered as payment in full for: Ditto but titled (a) to (c)
• each day or part of a day up to a maximum of two days' travel time in each
direction for the journey between the Member's home and the site, or
another location of a meeting with the Other Members (if any);
• each working day on site visits, hearings or preparing decisions; and
• each day spent reading submissions in preparation for a hearing.
(c) all reasonable expenses incurred in connection with the Member's duties,
including the cost of telephone calls, courier charges, faxes and telexes, travel
expenses, hotel and subsistence costs: a receipt shall be required for each item
in excess of five percent of the daily fee referred to in sub-paragraph (b) of this
Clause;
(d) any taxes properly levied in the Country on payments made to the Member
(unless a national or permanent resident of the Country) under this Clause 6.
@FIDIC
DAB fees
• International Reference – USD 3,000 per meeting day or per 8-hour

working, as defined by ICSID
See https://icsid.worldbank.org/apps/ICSIDWEB/icsiddocs/Pages/--
Memorandum-on-the-Fees-and-Expenses-English.aspx
• Also referred to by JICA in their Dispute Board Manual

http://www.jica.go.jp/activities/schemes/finance_co/procedure/guideline/pd
f/DisputeBoardManual_201203_e.pdf
• In practice – can vary a lot depending on countries & Parties
@FIDIC
DAB fees
• FIDIC 1999 provisions do not provide for express support in fees
negotiation, even under a SC 20.3 scenario
• Contrast with ICC Dispute Board Rules (2015 edition), Article 28

If the Parties and the DB Members cannot agree upon the fees of the DB
Members, the Centre, at the request of any Party or any DB Member, shall fix
such fees after consulting the Parties and the DB Members. The Parties shall
be bound by the Centre’s determination. The DB Members shall either accept
the determination or decline the appointment
• FIDIC 2017 provisions – President of FIDIC will set the fees in case
he/she is to make a DAAB Member appointment
@FIDIC
DAB fees 1999
Edition
Clause 6 of the General Conditions of DAA:

• The Contractor shall pay each of the Member's invoices in full within 56
(Note: 28 in YB & SB) calendar days after receiving each invoice
• If the Contractor fails to pay to the Member the amount to which he/she
is entitled under the Dispute Adjudication Agreement, the Employer shall
pay the amount due to the Member and any other amount which may be
required to maintain the operation of the DAB
• Red Book: If the Member does not receive payment of the amount due
within 70 days after submitting a valid invoice, the Member may (i)
suspend his/her services (without notice) until the payment is received,
and/or (ii) resign his/her appointment by giving notice under Clause 7.
@FIDIC
DAB fees 1999
Edition
Clause 5 of the General Conditions of DAA (Red Book only)
• Whenever the Employer or the Contractor refers a dispute to the DAB
under Sub-Clause 20.4 of the Conditions of Contract, which will require
the Member to make a site visit and attend a hearing, the Employer or the
Contractor shall provide appropriate security for a sum equivalent to the
reasonable expenses to be incurred by the Member. No account shall be
taken of any other payments due or paid to the Member.
• SC 20.4 of the General Conditions of Contract + Clause 6 of the

General Conditions of DAA (Yellow + Silver Books)
• DAB entitled to advance payment of 25% of estimated fees, and of estimate of
expenses – no obligation to proceed until payment received
• DAB not obliged to render a decision until invoices paid in full @FIDIC
Liability of the DAB 1999
Edition
General Conditions of Dispute Adjudication Agreement – Clause 5
The Employer and the Contractor undertake to each other and to the Member that the Member
shall not, except as otherwise agreed in writing by the Employer, the Contractor, the Member and
the Other Members (if any):
(a) be appointed as an arbitrator in any arbitration under the Contract;
(b) be called as a witness to give evidence concerning any dispute before arbitrators) appointed
for any arbitration under the Contract; or
(c) be liable for any claims for anything done or omitted in the discharge or purported
discharge of the Member's functions, unless the act or omission is shown to have
been in bad faith.
 This is an immunity commensurate to the one given to judges or

arbitrators since the DAB acts in a quasi-judicial capacity
@FIDIC
Liability of the DAB 1999
Edition
 Contrast however with:
General Conditions of Dispute Adjudication Agreement – Clause 8

If the Member fails to comply with any obligation under Clause 4, he/she shall not be entitled to
any fees or expenses hereunder and shall, without prejudice to their other rights, reimburse each
of the Employer and the Contractor for any fees and expenses received by the Member and the
Other Members (if any), for proceedings or decisions (if any) of the DAB which are rendered void
or ineffective.
 DAB could well be liable to reimburse the Parties of fees they incurred
in case delivering a decision beyond the time limit set in
Contract…and being accordingly ineffective at law
@FIDIC
DAB – Expiry 1999
Edition
FIDIC Red Book - Sub-Clause 20.2 – 10th paragraph
The appointment of any member may be terminated by mutual agreement of both Parties,
but not by the Employer or the Contractor acting alone. Unless otherwise agreed by both
Parties, the appointment of the DAB (including each member) shall expire when the
discharge referred to in Sub-Clause 14.12 [Discharge} shall have become effective.
FIDIC Yellow Book - Sub-Clause 20.2 – 8th paragraph

Unless otherwise agreed by both Parties, the appointment of the DAB (including each
member) shall expire when the DAB has given its decision on the dispute referred to it under
Sub-Clause 20.4 [Obtaining Dispute Adjudication Board’s Decision], unless other disputes
have been referred to the DAB by that time under Sub-Clause 20.4, in which event the
relevant date shall be when the DAB has also given decisions on those disputes.
(emphasis added)
@FIDIC
Module 2
Claim Management /
Dispute Resolution
@FIDIC
DAB – Operation in practice – Procedural Rules
• The FIDIC 1999 Suite of Contracts lay down Procedural Rules to be
followed by the Parties and the DAB in the conduct of the DAB
proceedings
• Those are appended to the General Conditions of Dispute Adjudication
Agreement which are found after the General Conditions of Contract in the
relevant FIDIC Book
• There are:
• 6 Procedural Rules in the FIDIC Yellow and Silver Books (1999 Edition)
• 9 Procedural Rules in the FIDIC Red Book (1999 Ed.) as well as in the FIDIC
Pink Book 2010 MDB Harmonised Edition
• 12 Procedural Rules in the FIDIC Gold Book (2008 Edition)
• 11 Procedural Rules in the FIDIC R/Y/S Book Update (2017) @FIDIC
DAB – Operation in practice – Procedural Rules
@FIDIC
DAB – Operation in practice – Procedural Rule 1 – FIDIC Red Book
DAB Procedural Rule No.1 – Red Book

Unless otherwise agreed by the Employer and the Contractor, the DAB shall visit the
site at intervals of not more than 140 days, including times of critical construction
events, at the request of either the Employer or the Contractor. Unless otherwise
agreed by the Employer, the Contractor and the DAB, the period between consecutive
visits shall not be less than 70 days, except as required to convene a hearing as
described below
• Under the FIDIC Red Book the DAB is under a so-called « standing »
mode i.e. it is mobilized from the outset of the Contract performance
(FIDIC recommends within 28 days from the Commencement Date – see
Appendix to Tender in the Red Book)
• Accordingly, the DAB is to regularly visit the Site as per PR (Procedural
Rule) No. 1 – in practice every 3 to 4 months @FIDIC

The timing of and agenda for each site visit shall be as agreed jointly by the DAB, the
Employer and the Contractor, or in the absence of agreement, shall be decided by the
DAB. The purpose of site visits is to enable the DAB to become and remain acquainted with the
progress of the Works and of any actual or potential problems or claims.
• This is consistent with the obligation of the DAB under GC of DAA Clause 6(a)(ii):
« becoming and remaining conversant with all project developments and maintaining
relevant files » - DAB is to remain up to date as to project development, both by
performing distant documentation review (GC DAA Cl.6) and Site visits (PR 1)
• These are routine duties, delivered even when no dispute has crystallized in between the
Parties
@FIDIC
DAB – Operation in practice – Procedural Rule 2
• Contrast the FIDIC Red Book PR2 with the FIDIC Pink Book PR 2
DB Procedural Rule No.2 – Pink Book
The timing of and agenda for each Site visit shall be as agreed jointly by the DB, the Employer
and the Contractor, or in the absence of agreement, shall be decided by the DB. The purpose of
Site visits is to enable the DB to become and remain acquainted with the progress of the Works
and of any actual or potential problems or claims, and, as far as reasonable, to endeavour to
prevent potential problems or claims from becoming disputes
• There is also a similar provision under the FIDIC Gold Book
• Since 1999 FIDIC is constantly insisting on the dispute prevention capacities of the DAB
/ Not only the dispute resolution capacities
• Pragmatic approach – since both Parties pay the DAB from the outset of the Contract, why
not making use of his routine duties to serve dispute prevention purposes?
@FIDIC
DAB – Operation in practice – Dispute prevention
• Under the FIDIC Red Book and the FIDIC Pink Book, Parties can jointly (not one Party acting alone)
refer a matter to the opinion of the DAB
FIDIC Red Book SC 20.2 – 7th paragraph
If at any time the Parties so agree, they may jointly refer a matter to the DAB for it to give its
opinion. Neither Party shall consult the DAB on any matter without the agreement of the other
Party.
• No similar provision under the FIDIC Yellow Book or FIDIC Silver Book since the DAB is mobilized on
an ad’hoc basis, i.e. only if and when a dispute occurs. No standing mode => DAB not available outside
the frame of a dispute.
• Procedure for asking and issuing an opinion is not defined – left to the Parties and the DAB to agree
upon it
• Effect of a DAB’s opinion is not defined either, under the Red Book or the Pink Book. It is assumed that
it has no binding effect (unlike a decision – see SC 20.4), otherwise the Contract would have said so.
@FIDIC
• The FIDIC Gold Book makes this an express term under SC 20.5, which is a specific SC
fully dedicated to Dispute prevention
FIDIC Gold Book SC 20.5 – Avoidance of disputes
If at any time the Parties so agree, they may jointly refer a matter to the DAB in writing with a request to provide
assistance and/or informally discuss and attempt to resolve any disagreement that may have arisen between
the Parties during the performance of the Contract. Such informal assistance may take place during any
meeting, Site visit or otherwise. However, unless the Parties agree otherwise, both Parties must be present
at such discussions. The Parties are not bound to act upon any advice given during such informal
meetings, and the DAB shall not be bound in any future Dispute resolution process and decision by any
views given during the informal assistance process, whether provided orally or in writing
If a Dispute of any kind whatsoever arises between the Parties, whether or not any informal discussions have
been held under this Sub-Clause, either Party may refer the Dispute in writing to the DAB according to the
provisions of Sub-Clause 20.6 [Obtaining Dispute Adjudication Board's Decision].
@FIDIC
• This growing Dispute prevention capacity of the DAB under FIDIC Contracts (which will be
confirmed/strengthened with the 2017 Update) echoes a growing similar use of Dispute
Boards in the construction industry
• Even in the UK where there is statutory adjudication (hence the FIDIC provisions for DAB
dispute resolution would be overriden by the HGCR Act 1996 provisions – though for
construction operations which are subject to the Act hence those defined under section
105 of the Act), growing consideration is given to the dispute prevention role that a Dispute
Board can deliver
• Examples:
• Olympic 2012 - Dispute Avoidance Panel
• Transport for London – Conflict Avoidance Panel
• Should standing Dispute Boards be adopted in England and Wales, and, if so, would this
require amending the current legislation ? See my article at http://exequatur.pro/standing-
dispute-boards-from-the-england-and-wales-perspective/ @FIDIC

Site visits shall be attended by the Employer, the Contractor and the Engineer and
shall be co-ordinated by the Employer in co-operation with the Contractor. The
Employer shall ensure the provision of appropriate conference facilities and secretarial
and copying services. At the conclusion of each site visit and before leaving the site,
the DAB shall prepare a report on its activities during the visit and shall send copies
to the Employer and the Contractor.
@FIDIC
DAB – PR 4 – FIDIC Red Book / PR 1 – FIDIC Yellow Book

The Employer and the Contractor shall furnish to the DAB one copy of all documents which the
DAB may request, including Contract documents, progress reports,variation instructions,
certificates and other documents pertinent to the performance of the Contract. All
communications between the DAB and the Employer or the Contractor shall be copied to the
other Party. If the DAB comprises three persons, the Employer and the Contractor shall send
copies of these requested documents and these communications to each of these persons.
• You may consider amending the DA Agreement and the Procedural Rules by allowing
email communication in between the Parties and the DAB.
• However hard copy version is still useful in case of large submissions (especially exhibits
bundles in the frame of the dispute resolution process under SC 20.4)
@FIDIC

If any dispute is referred to the DAB in accordance with Sub-Clause 20.4 of the
Conditions of Contract, the DAB shall proceed in accordance with Sub-Clause 20.4
and these Rules. Subject to the time allowed to give notice of a decision and other
relevant factors, the DAB shall:
(a) act fairly and impartially as between the Employer and the Contractor, giving
each of them a reasonable opportunity of putting his case and responding to
the other's case, and
(b) adopt procedures suitable to the dispute, avoiding unnecessary delay or
expense..
• Item (a) covers the obligation for the DAB to comply with the rules of natural justice which
apply to those acting in judicial or quasi-judicial (adjudicator, arbitrator) capacity
@FIDIC
Natural justice requirements
• Similar duties are found for arbitrators – see UK Arbitration Act 1996
@FIDIC
Natural justice requirements
• The right to a fair trial is enshrined in most of the legal systems as well as in
international treaties
E.g with the 1950 European Convention on

Human Rights, article 6
”In the determination of his civil rights and
obligations or of any criminal charge against
him, everyone is entitled to a fair and public
hearing within a reasonable time by an
independent and impartial tribunal established
by law “
@FIDIC
The « Golden Rules » of the FIDIC DAB Member
1. Preserve natural justice – act fairly and impartially in between the Parties, giving
each of them an opportunity to make their case and answer the other’s
2. Make sure you have jurisdiction, and stay within your jurisdiction – answer
to the questions raised, and only to those. Do not be tempted to « make » a
Party’s case (see Module 2 Session 7 for jurisdictional matters)
3. Comply with the DAA conditions and procedural rules
Deliver justice
@FIDIC
The DAB may conduct a hearing on the dispute, in which event it will decide on the
date and place for the hearing and may request that written documentation and
arguments from the Employer and the Contractor be presented to it prior to or at the
hearing.
In practice, additional procedural rules for hearings can be found suitable:
• Agenda – alternative presentations Claimant / Respondent
• Conduct – No interruption except by DAB / No mobile phones/No new evidence/ No new issues raised
=> no one to be taken « by surprise » with new arguments otherwise risk of unfair treatment, hence
breach of natural justice
• Principal presenter for each Party / total number of people attending per Party
• Records – generally no minutes made (unlike in arbitration), but audio recording can be accepted
• Venue cost sharing in between the Parties
If no hearing is deemed required, additional PR can describe the process to be followed in a so-called
« document-based procedure »
@FIDIC
Except as otherwise agreed in writing by the Employer and the Contractor, the DAB
shall have power to adopt an inquisitorial procedure, to refuse admission to hearings or
audience at hearings to any persons other than representatives of the Employer, the Contractor
and the Engineer, and to proceed in the absence of any party who the DAB is satisfied received
notice of the hearing; but shall have discretion to decide whether and to what extent this power
may be exercised.
An inquisitorial procedure is one where the DAB (or arbitrator or judge) will directly ask questions to the
Parties reps, counsels and witnesses as to/ challenge their respective positions, and take initiatives in
finding out the truth
This is the way to deliver justice in most of civil law countries, whereas in common law countries
proceedings are merely adversarial – each Party will put forward its own position and will directly challenge
the position of the other Party by means of cross-examination of witnesses
@FIDIC
However such inquisitorial procedure is also recognized in common law countries for
adjudication of disputes, owing to its fast track nature
Macob Civil Engineering v Morrisson Construction Ltd (1999) (TCC) – England
& Wales case
•Adjudication is a “…speedy mechanism for settling disputes in construction
contracts on a provisional interim basis, and requiring the decisions of
adjudicators to be enforced pending the final determination of disputes by
arbitration, litigation or agreement
•“…adjudication should be conducted in a manner which those familiar with the
grinding detail of the traditional approach to the resolution of construction
disputes apparently find difficult to accept”
…..
• “[the adjudicator]…may, therefore, conduct an entirely inquisitorial process,
or he may, as in the present case, invite representations from the parties
@FIDIC
Inquisitorial vs adversarial procedure
• Inquisitorial procedure is expressly allowed for DAB proceedings (PR 7 in RB)

• See France Code of Civil Procedure – Article 16 which provides for the judge to
systematically allow an opportunity to each Party to respond to the other Party’s case, as
well as to the judge’s own views & assertions.
• In practice, DAB proceedings combine an adversarial (Parties are invited to make
representations, and rebut the one of the other Party) and inquisitorial procedure / similar
approach in France
France Code of Civil Procedure – Article 16
•The judge shall, in all circumstances, make Parties comply, and comply himself with the « principe du
contradictoire » / adversarial principle
•He/she can not, in his/her decision…use means, documents, explanations submitted by the Parties unless
they have been able to discuss those adversarily
•He/she can not base his/her decision of matters of law that he/she has by himself/herself found unless he/she
has invited the Parties to present their observations on those matters @FIDIC
Inquisitorial vs adversarial procedure
A regular pitfall to be avoided by DABs – do not decide based on a finding (of fact, of law)
of your own unless you have invited the Parties to comment on it, otherwise it will be held
that you have breached natural justice => decision unenforceable / Beware the « frolic of
your own »!
Herbosch-Kiere Marine Contractors Ltd v Dover Harbour Board [2012] EWHC 84

(TCC)
In essence, and doubtless for what he believed were good and sensible reasons, the
adjudicator has gone off "on a frolic of his own" in using a method of assessment which
neither party argued and which he did not put to the parties. In some cases, this may not be
sufficient to prevent enforcement of the decision where the "frolic" makes no material difference to the
outcome of the decision. Thus, an adjudicator who refers to a legal authority which neither party relied
upon, may have his or her decision enforced nonetheless if the application of that legal authority
obviously makes no difference to the outcome. The breach of the rules of natural justice has to be
material. Here, for the reasons indicated above, the breach is material and has or has apparently led
to a very substantial financial difference in favour of HKM but necessarily against the interests of DHB
@FIDIC
DAB Procedural Rule No. 8 – Red Book
The Employer and the Contractor empower the DAB, among other things, to:
(a) establish the procedure to be applied in deciding a dispute,
(b) decide upon the DAB's own jurisdiction, and as to the scope of any dispute
referred to it,
(c) conduct any hearing as it thinks fit, not being bound by any rules or procedures other than
those contained in the Contract and these Rules,
(d) take the initiative in ascertaining the facts and matters required for a decision,
(e) make use of its own specialist knowledge, if any,
(f) decide upon the payment of financing charges in accordance with the Contract,
(g) decide upon any provisional relief such as interim or conservatory measures, and
(h) open up, review and revise any certificate, decision, determination, instruction, opinion or
valuation of the Engineer, relevant to the dispute.
• Items (d) and (e) support the inquisitorial procedure, where the adjudicator can
take initiatives in conducting the proceedings @FIDIC
DAB – Decision process
• PR No. 8(a) states that the Parties empower the DAB to establish the procedure to be
applied in deciding a dispute (DAB = « Servant to the Parties, but Master of the
Procedure »)
• But PR are silent as to any detailed procedure to be followed / the only obligation is then
for the DAB to issue a decision within 84 days after having received a dispute referral as
per SC 20.4
• In practice additional Procedural Rules can be inserted in order to detail requirements
related to:
• What submissions will be accepted
• Statement of Case from the Claimant and Statement of Defence from the Defendent
• Any Rebuttal to the Response / Reply to the Rebuttal ?
• Timing for submissions

• Structure to be followed for submissions @FIDIC
Claimant DAB Respondent
Dispute referral with
D0 Statement of Case
D28 Statement of Defence

latest
Possible Reply May request for
D28 to clarification / further
D49 D42 / 7 days before information Possible Rejoinder
hearings latest
D49 Hold
latest hearings
D56 Possible Hearings closing May request for Possible Hearings closing
latest submissions clarification / further submissions
information
D84
latest Issue decision @FIDIC
DAB – Decision process – SoC structure
A Statement of Case can typically be structured as follows:

• A clear and concise description of the nature and circumstances of the dispute;
• A list of the issues submitted to the DAB for a decision, and a statement of the Claimant’s
position thereon, including any relevant factual and contractual and/or other basis;
• The relief sought by the Claimant (such as, for illustrative purposes only and without
necessarily being limited to: additional payment and/or time, decision on contract terms
interpretation, certificate issue, or any other relief)
• As a conclusion, a summary of the decision(s) which the Claimant expects from the DAB
• All evidences deemed relevant by the Claimant to support the above (such as, for illustrative
purposes only and without necessarily being limited to: correspondence, reports, drawings,
schedules, invoices, certificates, vouchers, receipts, and any other document deemed
relevant), which shall be included in a separate file/bundle of exhibits appended to the main
body of the Statement of Case.
@FIDIC
DAB – Decision - Binding effect
• The decision is immediately binding on the Parties, even if challenged by one of the
Parties i.e. even if a notice of dissatisfaction has been issued

The decision shall be binding on both Parties, who shall promptly give effect to it unless and until it shall be
revised in an amicable settlement or an arbitral award as described below.
• Possible notice of dissatisfaction

If either Party is dissatisfied with the DAB's decision, then either Party may, within 28 days after receiving the
decision, give notice to the other Party of its dissatisfaction. If the DAB fails to give its decision within the period
of 84 days (or as otherwise approved) after receiving such reference, then either Party may, within 28 days
after this period has expired, give notice to the other Party of its dissatisfaction
SC 20.5 – Amicable Settlement and

SC 20.6 – Arbitration - See Module 2 Session 9
©2016 @FIDIC
DAB – Post-decision – What if there are errors in the decision?
• FIDIC 1999 Suite of Contracts is silent on this
• If the Parties and the DAB so agree, the DAB could issue a corrected decision, though
care should be given to make sure that the decision is keeping the same binding effect as
an initial decision => proper wording to be considered
• But what if the Parties disagree that the decision is corrected ?
Bouygues UK Ltd v Dahl-Jensen UK Ltd [2001] C.L.C 927 (CA), England and Wales
The first instance judge referred to an expert determination case (Nikko Hotels v MEPC 1991) where it was
said:
"If he has answered the right question in the wrong way, his decision will be binding. If he has answered the
wrong question, his decision will be a nullity"
Regarding the adjudicator’s calculation error, the Court of Appeal held as follows:
Par 14 - "That was an error, but an error made when he was acting within his jurisdiction. Provided that the
adjudicator acts within that jurisdiction his award stands and is enforceable" @FIDIC
DAB – Post-decision – What if there are errors in the decision?
• Hence a risk that a decision, unless and until revised in amicable settlement or arbitration,
is binding and enforceable at law despite being wrong…
• As of the FIDIC Gold Book 2008, express provisions inserted to deal with the matter of
errors in DAB decisions
FIDIC Gold Book – DAB Procedural Rule 7

If, within 14 days after giving its decision, the members of the DAB find and agree that such decision contained
errors of fact or principle, the Chairman of the DAB (or the sole Member if applicable) shall advise the Employer
and the Contractor of the error and issue an addendum to its decision in writing to both Parties.
FIDIC Gold Book – DAB Procedural Rule 8

If, within 14 days of receiving a decision from the DAB, either Party believes that such decision contains an
ambiguity, that Party may seek clarification from the DAB in writing with a copy of such request to the other
Party. Within 14 days of receiving such a request, the DAB shall respond with a copy to the other Party, and if
the DAB is of the opinion that the decision did contain an error or ambiguity, it may correct its decision by
issuing an addendum to its original decision. @FIDIC
DAB Procedural Rule No. 9 – Red Book

The DAB shall not express any opinions during any hearing concerning the merits of
any arguments advanced by the Parties. Thereafter, the DAB shall make and give its
decision in accordance with Sub-Clause 20.4, or as otherwise agreed by the
Employer and the Contractor in writing.
If the DAB comprises three persons:
(a) it shall convene in private after a hearing, in order to have discussions and
prepare its decision;
(b) it shall endeavour to reach a unanimous decision: if this proves impossible the
applicable decision shall be made by a majority of the Members, who may
require the minority Member to prepare a written report for submission to the
Employer and the Contractor; and
(c) if a Member fails to attend a meeting or hearing, or to fulfil any required function,
the other two Members may nevertheless proceed to make a decision, unless:
(i) either the Employer or the Contractor does not agree that they do so, or
(ii) the absent Member is the chairman and he/she instructs the other
Members to not make a decision.
@FIDIC
• DAB not to “express any opinions during any hearing concerning the merits of any
arguments advanced by the Parties” => this would indeed otherwise leads the Parties to
believe that the DAB is already having a pre-formed opinion, hence is possibly under a so-
called « apparent bias »
• An actual bias occurs when it is demonstrated that the DAB has a bias => see session 7
and the requirement for impartiality under GC of DAA – Clause 3 and the IBA Conflict of
Interest Guidelines (2014 edition)
• An apparent bias occurs when the acts or omissions lead the Parties to suspect that the
DAB is biased, whether that it is actually the case or not. An apparent bias amounts to a
breach of natural justice and is then sufficient to set aside an adjudicator’s decision. A
breach of the warranties under GC DAA Clause 3 can then be argued by a dissatisfied
Party.
@FIDIC
DAB – Actual vs apparent bias – position at law – England and Wales
Magill v Porter [2002] 2WLR 37 (HL)

Leading case setting the test to be applied for determining the existence of apparent bias - this is
whether a fair minded and informed observer would conclude that there was a real possibility of bias
Glencot Development and Design Co Ltd v Ben Barrett & Son (2001) WL 239771 (TCC)
16. Paragraph 12 (note: of the Scheme - duty to act impartially) is a term of the contract. This has two material
consequences. First, it means that each party is entitled to a decision that has been arrived at impartially and,
conversely, a decision which has not been arrived at impartially is not binding. The parties have not authorised the
adjudicator to be other than impartial. Each has therefore a right to an adjudication to be carried out by someone
who is and will remain impartial
The phrase ‘actual bias’ has not been used with great precision and has been applied to the situation
(1) where a Judge has been influenced by partiality or prejudice in reaching his decision and
(2) where it has been demonstrated that a Judge is actually prejudiced in favour of or against a party.
‘Apparent bias’ describes the situation where circumstances exist which give rise to a reasonable apprehension that
the Judge may have been, or may be, biased.
@FIDIC
DAB – Actual vs apparent bias – position at law – England and Wales
Glencot Development and Design Co Ltd v Ben Barrett & Son (2001) WL 239771 (TCC) (continued)
19. An adjudicator may not be a classic judicial tribunal but in practice an adjudication will probably be
closer to an arbitration rather an expert determination
23. In contrast to the role of an adjudicator, arbitrator or judge, which is primarily to decide the facts and to
apply the law (in the case of an adjudicator, the law of the contract), a third party (whether called a
mediator, conciliator or neutral, the terms are sometimes interchangeable — the function is what counts)
may well not be required to make any decision or express any view, still less a binding one
24. ....Mr Talbot went to and from between the parties. We do not know what he heard or learned. He was
under no obligation to report it, nor given that the content was “without prejudice” and confidential ought
there to be any inquiry as to what happened. Those private discussions could have conveyed material or
impressions which subsequently influenced his decision.
31."It is accepted that the adjudicator has to conduct the proceedings in accordance with the rules of
natural justice or as fairly as the limitations imposed by Parliament permit…’”
An adjudicator acting as mediator, then turning back to his adjudication role, could see his decision challenged for breach of
natural justice, owing to an apparent bias – it was held in this case that he may have had access to private information, not
challenged by the other Party, when dealing with Parties in caucus @FIDIC
Module 2
Claim Management /
Dispute Resolution
@FIDIC
Main changes introduced
in the 2017 DAAB vs 1999 DAB
Main changes DAAB vs DAB
Strenghtening of the Dispute Avoidance role of the Dispute Board

• DAB becomes DAAB for Dispute Avoidance/Adjudication Board
• Much more explicit dispute avoidance provisions – see:
• SC 21.3 – Avoidance of Disputes
• General Conditions of DAA Agreement – SC 1.3, 1.5 and 5.1(e) refer to « Informal
Assistance » to be provided by the DAAB
• DAAB Procedural Rules: Rules 1, 2, 3 and 7
DAAB mobilized in standing mode from the outset of Contract implementation in ALL 3 books
(Red, Yellow, Silver), while it was only the case for the Red Book in 1999 – see SC 21.1
SC 21.1 - Constitution of the DAAB – In case of a Party reluctance to initiate the DAAB, then the
other Party can refer the matter under SC 21.2 to the appointing entity named in the Contract
Data. The app. entity will set the monthly and daily fees for the Member, and a DAAB
Agreement will be deemed to have been signed
@FIDIC
SC 21.4 – If a Dispute is not referred within 42 days from a NOD (or deemed NOD), the NOD is
deemed to have lapsed => Engineer’s determination (or deemed determination rejecting a
Claim) becomes final and binding
SC 21.4 – DAAB may require appropriate security from the payee of a decision amount, in case
of doubt as to its capacity to repay that amount
SC 21.7 – Nael Bunni’s gap now closed – failure to pay a binding, or final and binding, decision
can be referred to arbitration
GC DAAB Agreement – Clause 9
• « retainer fee » replaced by « monthly fee »
• Possibility to refer to the appointing entity in case appointment principle is agreed, but fees
remain to be agreed. In the interim, the DAAB Member proposed rate shall apply
• More details about the fee structure and payment process
@FIDIC
GC DAAB Agreement – Clause 11 / Procedural Rule 10 & 11

• Either Party can object against a DAAB Member – typically for an alleged lack of
independence or impartiality, but that can also be for other matters (conduct, etc).
• DAAB Member is given an opportunity to answer, following which the objecting Party may
formally challenge the DAAB Member => in which case the ICC will decide on the
challenge (see ICC Dispute Board Rules Appendix)
GC DAAB Agreement – Procedural Rule 2
• Requirement for a face-to-face meeting upon DAAB appointment / However in practice it
might well be that video conference calls are organized instead, and that the first face-to-
face meeting remains the first Site visit
GC DAAB Agreement – Procedural Rule 3 – Logistics for each meeting/Site visit to be arranged
by the Contractor, and coordinated with Employer and Engineer
@FIDIC
GC DAAB Agreement – Procedural Rule 4 – typical detailed list of documentation required

from the Parties by the DAAB
GC DAAB Agreement – Procedural Rule 7 – More detailed provisions for the conduct of
hearings
GC DAAB Agreement – Procedural Rule 8 – Provisions for rectifying a decision which is flawed
with typos and/or arithmetical error
@FIDIC
Amicable Settlement
1999
SC 20.5 – Amicable settlement Edition
Where notice of dissatisfaction has been given under Sub-Clause 20.4 above, both
Parties shall attempt to settle the dispute amicably before the commencement of
arbitration. However, unless both Parties agree otherwise, arbitration may be
commenced on or after the fifty-sixth day after the day on which notice of dissatis-
faction was given, even if no attempt at amicable settlement has been made
• This is in effect acts as a « cooling off » 56-day-period before any

arbitration of the dispute is initiated
• Note that the Parties are only to « attempt » to settle the dispute
amicably, and the SC provides that arbitration may be commenced
after that 56-day-period even if no such attempt was made
@FIDIC
Arbitration
1999
SC 20.6 – Arbitration / SC 20.8 Expiry of DAB’s Appointment Edition
Unless settled amicably, any dispute in respect of which the DAB's decision (if any) has not
become final and binding shall be finally settled by international arbitration.
• As seen under Session 7, a DAB decision is a pre-requisite for initiating
arbitration, meaning that a dispute shall be referred first to a DAB and not
straight to an arbitration tribunal – See the UK and Swiss cases mentioned
under Session 7
• The use of « if any » is then somehow meant to cover the cases where there
is no DAB in place when a dispute arises – see SC 20.8
If a dispute arises between the Parties in connection with, or arising out of, the Contract or the
execution of the Works and there is no DAB in place, whether by reason of the expiry of the
DAB's appointment or otherwise:
(a) Sub-Clause 20.4 [Obtaining Dispute Adjudication Board's Decision] and Sub-Clause 20.5
[Amicable Settlement] shall not apply, and
(b) the dispute may be referred directly to arbitration under Sub-Clause 20.6 [Arbitration]. @FIDIC
Arbitration
1999
SC 20.6 – Arbitration / SC 20.8 Expiry of DAB’s Appointment Edition
• As per the FIDIC Contracts Guide (2000 Edition) view:
Page 317
There may be "no DAB in place" because of a Party's intransigence (e.g., in respect of the first
paragraph of P&DB/EPCT 20.2), or because the DAB's appointment had expired in accordance with
the last paragraph of Sub-Clause 20.2
• Accordingly, and as highlighted in the UK and Swiss cases, going straight to
arbitration, and by-passing the DAB proceedings, would be limited to cases
of:
• intransigence of a Party in mobilizing the DAB, or
• the end of the DAB mobilization under the Contract, when the SC 14.12
discharge is effective under the Red Book only
@FIDIC
Arbitration
SC 20.6 – Arbitration / SC 20.4 Obtaining DAB’s decision 1999
Edition
Unless settled amicably, any dispute in respect of which the DAB's decision (if any)
has not become final and binding shall be finally settled by international arbitration.
• The dispute related to a final and binding DAB decisions cannot be

referred to arbitration, since it is then held to be finally settled
• This happens if neither Party issues a notice of dissatisfaction within
28 days after the receipt of the DAB decision
SC 20.4 – last paragraph

If the DAB has given its decision as to a matter in dispute to both Parties, and no
notice of dissatisfaction has been given by either Party within 28 days after it
received the DAB's decision, then the decision shall become final and binding
upon both Parties. @FIDIC
Arbitration
SC 20.6 – SC 20.7 / Enforcement of DAB decision
• SC 20.7 provides for a remedy in case the DAB final and binding decision is not
complied with by a Party
In the event that:
(a) neither Party has given notice of dissatisfaction within the period stated in Sub-Clause 20.4
[Obtaining Dispute Adjudication Board's Decision],
(b) the DAB's related decision (if any) has become final and binding, and
(c) a Party fails to comply with this decision,
then the other Party may, without prejudice to any other rights it may have, refer the failure
itself to arbitration under Sub-Clause 20.6 [Arbitration]. Sub-Clause 20.4 [Obtaining Dispute
Adjudication Board's Decision] and Sub-Clause 20.5 [Amicable Settlement] shall not apply to this
reference.
• Note that this is not the dispute itself which is then referred to arbitration (because it
is already held to be finally settled under SC 20.4), but the failure to comply with the
decision on the dispute.
@FIDIC
Arbitration
SC 20.6 – SC 20.7 / Enforcement of DAB decision 1999
Edition
• Note that SC 20.7 only relates to the failure to comply with a final and
binding decision
• But what happens to a binding but not final decision?
• This happens when a Party challenges a DAB’s decision by issuing a
notice of dissatisfaction under SC 20.4 => however the decision remains
binding although it is of course not final since it can now be further
challenged (for instance in arbitration under SC 20.6)
SC 20.4 – 4th paragraph
The decision shall be binding on both Parties, who shall promptly give effect to it unless and until
it shall be revised in an amicable settlement or an arbitral award as described below.
• Often the dissatisfied Party erroneously believes that issuing a notice of
dissatisfaction does suspend the effect of a DAB decision
@FIDIC
Arbitration
SC 20.6 – SC 20.7 / Enforcement of DAB decision 1999
Edition
• However the succeeding Party, willing to enforce the DAB binding
decision, does face an issue in that SC 20.7 refers to final and binding
decision, but not to binding only decisions.
• This gap was first identified by Nael Bunni, and is often called the « Nael
Bunni’s gap »
• This was recognized by FIDIC which published on 1st April 2013 a
Memorandum (downloadable at http://fidic.org/node/1615 for Contract
users), suggesting amendments to be made such as:
Replace Sub-Clause 20.7 in its entirety with:
‘In the event that a Party fails to comply with any decision of the DAB, whether binding or final and binding,
then the other Party may, without prejudice to any other rights it may have, refer the failure itself to
arbitration under Sub-Clause 20.6 [Arbitration] for summary or other expedited relief, as may be
appropriate. Sub-Clause 20.4 [Obtaining Dispute Adjudication Board’s Decision] and SubClause 20.5
[Amicable Settlement] shall not apply to this reference @FIDIC
Arbitration
SC 20.6 – SC 20.7 / Enforcement of DAB decision – The Persero saga
• The Memorandum was published in connection with the Persero case
(Indonesia, but seat of arbitration = Singapore)
• PT Perusahaan Gas Negara (Persero) TBK acted as Employer, and CRW Joint
Operation as Contractor under a Red FIDIC Book Contract, 1999 Edition:
• In 2009 an arbitration tribunal issued a final award enforcing the binding but not final decision of
the DAB under that Contract, ordering the Employer to pay app. 17 MUSD to the Contractor
• The Employer challenged that award towards the Singapore High Court, arguing that the
arbitration tribunal had no jurisdiction to issue such award since, as per SC 20.7, only final and
binding DAB decision could be referred to arbitration
• The Singapore High Court upheld that approach in 2010, and set aside the award, stating that
the failure to comply with the DAB decision should have been considered as a separate dispute,
and the Contractor should have referred that dispute to the DAB instead of going straight to
arbitration => hence the arbitrators exceeded their jurisdiction
@FIDIC
Arbitration
• The Contractor appealed on the HC decision, but in 2011 the SGCA upheld the HC decision, but
they did not adopt the HC « 2 disputes » approach and instead commented, obiter, that the
Contractor should have submitted the full merits of the DAB decision (not only the failure to
comply with the DAB decision, hence reopening the decision in full) to arbitration, and, pending a
final award, should have sought for an interim or partial award enforcing the DAB binding but not
final decision.
• The Contractor proceeded accordingly in 2011, and the arbitration tribunal issued an interim
award enforcing the DAB binding decision.
• This was again challenged by the Employer towards the Singapore High Court but this time
(2014) the court refused to set aside the interim award. The Employer appealed on that decision,
but that was rejected in 2015 by the Singapore Court of Appeal
@FIDIC
Arbitration
• The Court of Appeal furthermore overruled the decisions made by the HC and CA in 2011, and by
the HC in 2014, and stated that:
“[subcl.20.4] imposes a distinct contractual obligation on a paying party to comply promptly with a
DAB decision regardless of whether the decision is final and binding or merely binding but non-
final, and this obligation is capable of being directly enforced by arbitration without the parties
having to first go through the preliminary steps set out in clauses 20.4 and 20.5. Further, we
consider that a tribunal would be entitled to make a final determination on the issue of prompt
compliance alone if that is all it has been asked to rule on, as was the case in the 2009 Arbitration”
• The Court of Appeal finally recognized that the initial 2009 Arbitration award was correct and
enforceable (!)…and that a binding but not final DAB decision could be enforced by an interim or
final arbitral award
@FIDIC
Arbitration
• It has required 2 arbitration awards, 4 court decisions, and more than 6 years of
proceedings to reach that conclusion, and to finally have the CA overruling the approach
taken by SG courts since 2010…
• You can read the full details of the « Persero saga » through Christopher Seppala’s
articles on the case – in particular his comments on the 2015 CA decision:
http://fidic.org/sites/default/files/2015_ConstLJ_Issue_Print_7FINALSEPPALA.PDF
• C Seppala (FIDIC Legal Adviser) has been highly influential (through his former articles
on the case) in the CA 2015 decision – his name is mentioned 32 times in the CA
decision!
• That decision is now a binding precedent for Singaporean courts only… but persuasive
authority for others
@FIDIC
Arbitration
SC 20.6 - Arbitration
Unless otherwise agreed by both Parties:
(a) the dispute shall be finally settled under the Rules of Arbitration of the International Chamber
of Commerce,
(b) the dispute shall be settled by three arbitrators appointed in accordance with these Rules, and
(c) the arbitration shall be conducted in the language for communications defined in Sub-Clause
1.4 [Law and Language].
ICC Arbitration Rules Under the Pink Book

= default position (2010 Edition),
under FIDIC 1999 UNCITRAL Rules are
Suite of Contract. also referred
Currently 2021 version
of the Rules
@FIDIC
Arbitration
Arbitration Rules
• ICC Rules provide for an administration of the case by the International
Chamber of Commerce (through its International Court of Arbitration). This
provides for:
• All communications in between the Parties and the Arbitrators to be channelled through the ICC
• Court decision as to the existence of a valid arbitration agreement (such as SC 20.6), hence as
to whether the arbitration tribunal has jurisdiction and can proceed further
• Court to possibly consolidate two or more arbitration – joinder of additional parties
• Court can decide on the appointment, confirmation, challenge or replacement of an arbitrator
• Court will scrutinize the arbitration tribunal award for correctness – normally only on matters of
form of the award, but comments on matters of substance can be raised to the attention of the
arbitrators
Useful support in practice, since when Parties are in
• Payments channelled through ICC, etc. arbitration the relation between them often make
it hard to agree on procedural matters
@FIDIC
Arbitration
Arbitration Rules
• UNCITRAL Rules are only rules, and UN does not administer the case – this is
called ad’hoc arbitration, as opposed to institutional arbitration as where ICC
Rules apply
@FIDIC
Arbitration
Main comparative features DAB vs Arbitration
Feature DAB International Arbitration
Duration Quick – 84 days for a decision Longer: ICC – 2 years as an average / LCIA : 20
months (see LCIA 2015 report at
http://www.lcia.org/News/lcia-releases-costs-and-
duration-data.aspx )
Adjudicator or DAB Member fees: generally from 2 to 3,000 Arbitrator fees: average 3,000 USD/day (see
USD/day https://icsid.worldbank.org/en/Pages/arbitrators/Claims-for-
arbitrator fees + Fees-and-Expenses.aspx )
institutional costs No institutional costs Median costs (arbitrator fees + institution – ICC, LCIA, etc. –
costs)
ICC: around USD 150,000,
LCIA: around USD 100,000
Legal fees Normally limited, possibly nil if Parties High – generally 80% of the total arbitration costs
Counsel/ not represented (20% is for arbitrator fees + costs of the institution)
Experts
Enforcement Not directly enforceable Enforceable through the 1958 New York Convention
@FIDIC
Arbitration
Arbitration – New York 1958 Convention
• Despite its much longer and more costly proceedings, the main asset of an
international arbitration award against DAB decisions is its possible recognition
and enforceability in any jurisdiction being a signatory of the United Nations
Convention on the Recognition and Enforcement of Foreign Arbitral
Awards (New York, 10 June 1958)
Article III
Each Contracting State shall recognize arbitral awards as binding and enforce them in accordance
with the rules of procedure of the territory where the award is relied upon, under the conditions laid
down in the following articles.
• List of Contracting States (156 to date) is given at

http://www.newyorkconvention.org/countries
• Recognition and enforcement process is often called the exequatur of an award
@FIDIC
Arbitration
Arbitration – Importance of the seat of arbitration
• « Seat of arbitration » means the judicial seat of the arbitration, i.e. where the
arbitration award will be considered as delivered
• The seat will define the procedural law (also called curial law, lex fori) which will
apply to the arbitration proceedings, as opposed to the substantive law
applicable to the dispute, i.e. the governing law for the interpretation of the
contract terms (the one defined under SC 1.4)
• Seat of arbitration can be different from the place where the hearings are held
Example:
• Party A from Germany enters into a contract with Party B from UAE
• Governing law (SC 1.4) is England & Wales, seat of arbitration is Geneva
• During arbitration, it is agreed that hearings will be held in Cairo
• Arbitration will be conducted under Swiss procedural law, but arbitrators will
decide on the dispute based on England & Wales substantive law @FIDIC
Arbitration
• The procedural law rules matters related to the arbitration proceedings (in
conjunction with the arbitration rules, if any – ICC for example)
• Exemple with the UK Arbitration Act 1996 – see
http://www.legislation.gov.uk/ukpga/1996/23/contents
• Court support (in France « juge d’appui ») for:
• Section 12 - Extension of the time to begin arbitral proceedings
• Section 18 – Appointment of arbitrators if Parties fail to agree on those
• Section 23 – Revocation of arbitrator’s authority
• Section 24 – Removal of arbitrator
• Section 32 – Determination of preliminary point of jurisdiction of the arbitral tribunal
• Section 42 – Enforcement of peremptory orders (for disclosure of evidences, etc.) from the
arbitration tribunal
@FIDIC
• Section 43 – Securing the attendance of witnesses
Arbitration
• Court support (in France « juge d’appui ») for:
• Section 44 – General support to the proceedings (orders for preservation of evidence, custody or
detention of property, etc.)
• Section 45 – Determination of a preliminary point of law
• Section 50 – Extension of time for making an award
• Section 63 – Determination of the recoverable costs of the arbitration
• Section 66 – Enforcement of the award
• Section 67 – Challenging the award for lack of jurisdiction
• Section 68 – Challenging the award for serious irregularity causing substantial injustice
• Section 69 – Appeal on point of law (would not apply if ICC Rules are used) – but only of England
& Wales for a England & Wales court
@FIDIC
Arbitration
1958 New York Convention - Article 1.
This Convention shall apply to the recognition and enforcement of arbitral awards made in the
territory of a State other than the State where the recognition and enforcement of such awards
are sought, and arising out of differences between persons, whether physical or legal. It shall also
apply to arbitral awards not considered as domestic awards in the State where their recognition
and enforcement are sought.
• This is why it is recommended to avoid setting the seat of arbitration in the country where
each Party has its main place of business => otherwise possible issue of recognition of
the award in the country where the award is to be enforced. See World Bank guidance in
their Standard Bidding Documents.
• Note that the FIDIC Red Book / Yellow Book / Silver Book 1999 do not specify the seat of
arbitration in the Appendix to Tender => this is deliberate because in pratice Employers
will often select their capital city => possible exequatur issues. ICC International Court of
Arbitration would then decide as to the seat (see Article 18.1 of the ICC Rules) – typically
in a pro-arbitration country – unless the Parties agree upon the seat @FIDIC
Arbitration
Arbitration – Practical issues related to proceedings & award enforcement
• Seat in a no-arbitration friendly country => little or no court support
• Seat in an arbitration friendly country (France, UK, etc.) => grounds for challenge will be limited to a
minimum extent (jurisdiction, serious irregularities such as breach of natural justice, public policy
matters, etc.) – this gives optimal efficacy to the arbitration process
• Seat in one of the Parties’ main place of business country => could face exequatur issues, but still
possible to seek enforcement in any NYC Contracting State where the losing Party holds assets
Party A from Country, Party B from Country B which is a not a Contracting State to the NYC. Seat of arbitration is
in Country B. Award issued, Party B loses. Party A seeks recognition and enforcement of the award to the courts
of Country B. They refuse as B is not Contracting State of NYC. Party B goes to Country C, where B holds assets,
to have the award recognized & enforced. Courts accept because Country C is Contracting State of NYC and
seize B’s assets in Country C
• A challenge of the award is to be made at its seat. If the winning Party tries to enforce it in another
country, normally there should be a stay of the legal proceedings in that country until such time the
challenge legal proceedings at the seat of arbitration are over
• Enforcement issues can lead to interesting « sagas » - see the Yukos case for instance
@FIDIC
Questions & Answers
@FIDIC

FIDIC Contracts Training Course: Claim Management / Dispute Resolution

Uploaded by

Copyright:

Available Formats

FIDIC Contracts Training Course: Claim Management / Dispute Resolution

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

FIDIC Contracts Training Course: Claim Management / Dispute Resolution

Uploaded by

Copyright:

Available Formats

What are the main topics covered in the FIDIC training modules?

What are the main topics covered in the FIDIC training modules?

What are some typical risks in construction projects?

What are some typical risks in construction projects?

FIDIC Contracts training course

Based on the 1999 Edition

In broad terms risk is

“the impact of uncertainty on objectives, but is also

Definition from ISO 31000 (2009), page 1

• their possible timing of occurrence (pre, during or post

• and their effect if they eventuate:

Risk inherently exists “a sensible, balanced

Risk Responsibility Liability Indemnity Insurance

Nael G. Bunni, "The FIDIC Form of Contract” (Third Edition, Blackwell

• Liability – However the truck driver is employed by the Contractor. At

The Contractor will declare the damage to the insurance firm,

The insurer would then cover the cost of repair to be incurred

The Engineer however should normally hold a so-called « PI insurance »,

The risks referred to in Sub-Clause 17.4 below are:

(a) The Employer's Commercial Risks, which are:

(b) The Employer's Risk of Damage, which are:

CLAUSE 2 The Employer CLAUSE 4 The Contractor

CLAUSE 12 (RB) – Measurement & Evaluation

Sub-Clause 2.5 Employer’s Claim

Clause 4 The Contractor – 23 Sub-Clauses

Clause 20 Employer’s and Contractor’s Claim

Contractor’s Project cost

Employer’s risks Employer design

When a contract obligation is not fulfilled by the Party which is obliged,

There are then :

Notices are typically short: a few lines

Do you see a claim notice as an agression from one Party

Nael Bunni, « FIDIC Forms of Contract » (Blackwell, 3rd Edition, 2005)

As per SC 1.3, a Notice is:

A Notice submitted within the prescribed time is

FIDIC Contracts Guide, 2000 Edition :

The « event or circumstance giving rise to the claim »,

• A Variation is instructed by the Engineer, but affects a task which is not on

Is the Engineer correct ? « You have failed to notify

Has the Contractor lost his

From an Employer/Engineer’s perspective,

A time bar only

Scrutiny period Error could have Variation

(6) ‘Contemporary records‘…means original or primary documents, or copies

2. That the breach/event caused damages to the Contractor

3. Proof of damages => contemporary records

For Claim event/circumstance with continuing effect

Quantum and EoT – obligation to proceed under SC 3.5

SC 3.5 – 2nd step – if no agreement, make a « fair

Remind Contractor of contemporary records keeping and time

Inspections of records-keeping – possible joint signature process for

At Engineer’s Require further claim particulars

Way to organize SC 3.5 Consultation – joint meetings,

« Pouvoir d’appréciation / using his own discretion » on

• An Engineer’s determination is immediately binding on the

• An Engineer’s determination can then be reflected in a

Should any or both of the Parties be dissatisfied with

• Under SC 20.4 in the FIDIC Red Book (standing DAB)

• Under SC 20.2 (for DAB nomination) then SC 20.4 in