FIDIC contracts—introduction

to the FIDIC Green Book 2021

Produced by LexisNexis in partnership with
Victoria Tyson

This Practice Note is an introduction to the FIDIC

Green Book 2021 (the Short Form of Contract). It is
not a fully detailed clause-by-clause commentary.

In December 2021, FIDIC launched the second edition

of the Green Book. For more information on the
background to the release of the second edition of the
Green Book, and the key differences between the first
and second editions, see News Analysis: FIDIC Green
Book 2021—what's changed?

For information on other contracts in the FIDIC suite,

see:

• FIDIC contracts 2017 onwards—overview

• FIDIC contracts pre-2017 editions— overview Victoria Tyson

Partner
For what type of project is the Green T +44 (0)20 3755 5733
Book suitable? M +44 (0)7546 695 614
[email protected]
The FIDIC Green Book is primarily intended 'for
projects where the perceived level of risk is low, and/or
where construction parties wish to use a form which is
simple to use and does not require significant contract • Particular Conditions Part B - Special Provision
administration and management resources'. Its use is
• General Conditions
not restricted to simple or repetitive works and/or
short duration and/or limited capital value projects. • Specification
The Green Book is an alternative to the FIDIC Red or
Yellow Book 2017. Like all the contracts in the FIDIC • Drawings
suite, the FIDIC Green Book is designed to be suitable
• Schedules
for use on international projects.

References: • The Contractor's tendered design (if any)

FIDIC Green Book (Short Form of Contract) 2021 • Any other documents forming part of the Contract
PDF Format The priority of the documents is listed in the Contract
Data rather than in the General Conditions.
The structure of the contract
The General Conditions are divided into 14 clauses:
The FIDIC Green Book is structured as follows (in order
of priority): • General Provisions

• Contract Agreement (incorporating the • The Employer

Contractor's offer and the Employer's acceptance
• The Engineer
in a single document)
• The Contractor
• Particular Conditions Part A - Contract Data

1
• Quality Sub-Clause 11.1.3 (m) which entitles the Contractor to
Cost (no profit) and/or EOT.
• Time
As in the FIDIC Red and Yellow Books 2017, the
• Variations Employer must 'make available' (rather than provide)
to the Contractor all the relevant data in the
• Payment
Employer's possession, before the Base Date and
• Taking-Over (importantly) on a continuing and prompt basis
throughout the course of the Works. The Contractor is
• Suspension and Termination responsible for interpreting that data. 'Data' is not a
defined term but the clause limits the obligation to
• Risk and Responsibility
data on 'the topography of the Site and on the sub-
• Insurance surface, hydrological, climatic and environmental
conditions at the Site'. Whether or not something
• Claims constitutes such data may be open to dispute. A
failure to provide such data as prescribed would also
• Disputes fall under Sub-Clause 11.1.3 (j).
Appended to the General Conditions is the Form of Under Sub-Clause 2.2.2 the Contractor is expressly
Adjudicator's Agreement. deemed to have 'obtained all necessary information as
The FIDIC Green Book also provides flow charts, to risks, contingencies and other circumstances which
detailed Guidance (which does not form part of the may influence or affect the tender or Works'. Further,
Contract Data) and sample forms including: the Contractor shall be deemed to have 'inspected and
examined the Site, access to the Site, its surroundings,
• Performance Security—Demand Guarantee the above data and other available information, and
to have been satisfied before submitting the tender as
• Advance Payment Guarantee to all matters relevant to the execution of the Works'.
Sub-Clause 2.2.2 is limited to 'the extent which was
• Retention Money Guarantee
practicable (taking account of cost and time)' and the
• Payment Guarantee by Employer deeming provision will not apply where it causes an
obviously inappropriate result.
• Insurance Certificate
The Contractor may ask the Employer to provide
In addition, there are many pro-forma FIDIC Forms of 'reasonable evidence' that financial arrangements are
Communication (which do not form part of the being made and maintained (as in the FIDIC Red Book
contract). 1999). Unlike the FIDIC Red or Yellow Books 2017, this
is not predicated on a Variation, failure to pay, or
Key features of the general conditions material change in the Employer's financial
arrangements. The Employer has 28 days (4 weeks) to
The Employer provide reasonable evidence, failing which the
Clause 2 sets out some of the Employer's obligations. Contractor may take the steps outlined in Sub-Clause
The Employer must give the Contractor access to the 10.1 [Suspension], and if the failure to provide
Site (as defined), and also ensure that its personnel reasonable evidence is a material breach, proceed
and other contractors co-operate. A failure to do so by under Sub-Clause 10.2. [Termination].
the Employer or the Engineer (as part of the The FIDIC Green Book 2021 does not include the
Employer's personnel) would fall under Sub-Clause clauses on 'Assistance', 'Employer's Personnel and
11.1.3 (j) which entitles the Contractor to Cost Plus Other Contractors', 'Site Data and Items of Reference'
Profit and/or EOT. and 'Employer-Supplied Materials and Employer's
The Contractor is responsible for access outside of the Equipment' found in the FIDIC 2017 editions.
Site, except where there is an 'Unforeseeable non- The Engineer
suitability or non-availability of an access route to the The FIDIC Green Book 2021 envisages an Engineer.
Site caused by the Employer or a third party' under This was not the case in the FIDIC Green Book 1999.

2
The Engineer must be named in the Contract Data and • Valuation of Variations under Sub-Clause 7.2, and
forms part of the Employer's personnel (Sub-Clause
1.1.22). • Payment after Termination under Sub-Clause 10.4

As in the FIDIC Red and Yellow Books 2017, the When exercising authority under Sub-Clause 3.5
Engineer (or, if a legal entity, the Engineer's [Agreement or Determination], the Engineer must act
authorised person who is the natural person 'neutrally' and 'shall not be deemed to act for the
appointed to act on the Engineer's behalf) must have Employer'. The Engineer cannot delegate its duties
suitable 'qualifications, experience and competence' to under this Sub-Clause, it is expressly forbidden under
act as an Engineer, and be fluent in the language of Sub-Clause 3.1.3.
the Contract. There is no express requirement for the The Engineer has 42 days (6 weeks) from receipt of a
Engineer to be a 'Professional Engineer' as in the FIDIC fully detailed claim (or Variation proposal under Sub-
Red and Yellow Books 2017 but under Sub-Clause Clause 7.1.1(a)) to give notice of an agreement or
3.2.1 the Engineer must 'act as a skilled professional' determination. This is shorter and simpler than in the
(which is also a requirement of Sub-Clause 3.2 of the FIDIC Red and Yellow Books 2017, where there are
FIDIC Red and Yellow Books 2017). two separate 42-day periods, (i) 42 days (6 weeks) for
As in the other FIDIC forms, the Engineer's role is to: the Engineer to give Notice of the Parties' Agreement
if agreement is achieved, and if no agreement is
• act on behalf of the Employer as its agent (other reached (ii) a further 42 days (6 weeks) for the
than as stated under Sub-Clause 3.5) Engineer to give Notice of the Engineer's
Determination. Meaning, the time in which the
• administer the Contract as it is written or can be Engineer must make a determination in the FIDIC Red
interpreted, and and Yellow Books 2017 is twice as long, ie 84 days (12
• make determinations weeks).

The Guidance states that in performing the Engineer's Each Party must give effect to each agreement or
duties, the Engineer should take due regard of 'FIDIC's determination unless and until revised under Clause
Code of Ethics for consulting engineers', and its duty to 14 [Disputes]. However, unlike the FIDIC Red and
prevent corruption and bribery as described in 'FIDIC Yellow Books 2017, there is no requirement to issue a
Guidelines for Integrity Management (FIM) in the Notice of Dissatisfaction if a Party is dissatisfied with
consulting industry, Part 1—Policies and principles the Engineer's determination.
first edition 2011' and 'FIDIC Guidelines for Integrity
Management System in the Consulting Industry 1st Ed The Contractor
(2015) Part 2, FIMS Procedures'
Many, but not all, of the Contractor's obligations are
Placing limits on the Engineer's authority is not set out in Clause 4.
encouraged.
The Contractor must 'execute the Works in accordance
Engineer's Instructions with the Contract' and is 'responsible for the adequacy,
Sub-Clause 3.3 [Engineer's Instructions] permits the stability and safety of all Site operations and of all
Engineer to issue instructions. An instruction must methods of construction'. It must correctly position
comply with Sub-Clause 1.3 [Communications] and be the Works and verify any original setting out points,
in writing. If an instruction constitutes a Variation, lines and levels of reference. However, errors in the
Clause 7 [Variations] applies. original setting out points etc specified in the Contract
or notified by the Engineer are Employer's risk under
Agreement or Determination Sub-Clause 11.1.3 (d).
The provisions for agreement or determination by the
Engineer apply not just to claims under Sub-Clause While the Contractor is responsible for the
13.2 but also to: Contractor's Documents and the Temporary Works, it
is not responsible for the design or specification of the
• Extension of Time for Completion under Sub- Permanent Works. Responsibility for the temporary
Clause 6.4 stages of the Permanent Works is arguably ambiguous
and open to dispute.

3
Further, the Contractor must not 'interfere • any act or default by the Employer, the Employer's
unnecessarily or improperly with the convenience of personnel or the Employer's other contractors,
the public'. under Sub-Clause 11.1.3 (a)(vi)
The Contractor has an express duty of co-operation This list is similar to that at Sub-Clause 17.2 [Liability
(for example, with the Employer's personnel, with any for Care of the Works] of the FIDIC 2017 editions.
other contractors employed by the Employer, and
with any authority or utility company working on or The Contractor is responsible for its subcontractors
near the Site). But any delay, impediment or including its agents and employees. It may not
prevention caused by or attributable to the Employer subcontract the whole of the Works, and it may not
or the Employer's personnel etc entitles the subcontract any part of the Works without the
Contractor to Cost Plus Profit and/or EOT under Sub- consent of the Engineer (except for sub-contractors
Clause 11.1.3 (j). Further, any Unforeseeable (defined) named in the Contract Data or for suppliers of
delay caused by or attributable to the Employer's Materials). A breach will fall under Sub-Clause 11.1.3
other contractors, or utility companies, on or near the (j) and a ground for immediate termination under Sub-
Site entitles the Contractor to Cost Plus Profit and/or Clause 10.2.3 (a). If a subcontractor's obligations to
EOT under Sub-Clause 11.1.3 (k). the Contractor extend beyond the expiry of the
relevant Defects Notification Period ('DNP'), the
The Contractor is responsible for the security of the Contractor must assign the benefit of that obligation
Site and for the care of the Works, the Goods and the to the Employer. There is a similar provision at Sub-
Contractor's Documents, from the Commencement Clause 4.5 of the FIDIC Red Book 1999. This has not
Date to the date of issue, or deemed date of issuance, been carried through to the FIDIC Red or Yellow Books
of the Taking Over Certificate. But loss and/or damage 2017 but the Guidance Note to the FIDIC Red Book
to the Works, Goods or Contractor's Documents 2017 provides optional additional wording for
caused by any of the following is an Employer's risk, inclusion at the end of Sub-Clause 5.1, while the
entitling the Contractor to Cost Plus Profit and/or EOT, Guidance Note to the FIDIC Yellow Book 2017 sets out
as a Variation, if an instruction to rectify is given by optional additional wording for inclusion at the end of
the Engineer: Sub-Clause 4.4.

• an Exceptional Event, under Sub-Clause 11.1.3 If it is desirable to use or encourage the Contractor to
(a)(i) employ local contractors, the Guidance provides
sample wording. The FIDIC Red Book 1999 provides
• an operation of forces of nature which is similar Guidance as does the Guidance for the FIDIC
Unforeseeable or against which an experienced 2017 editions. The FIDIC Pink Book 2010 goes further,
contractor could not reasonably have been and at Sub-Clause 6.1 states 'The Contractor is
expected to have taken adequate preventative encouraged, to the extent practicable and reasonable,
precautions, under Sub-Clause 11.1.3 (a)(ii) to employ staff and labour with appropriate
• interference, whether temporary or permanent, qualifications and experience from sources within the
with any right of way, light, air, water or other Country'.
easement (other than that resulting from the The Contractor must deliver to the Employer a
Contractor's method of construction) which is the performance security in the amount set out in the
unavoidable result of the execution of the Works Contract Data, within 28 days (4 weeks) after the date
in accordance with the Contract, under Sub-Clause the Contract comes into effect. There are limits on the
11.1.3 (a)(iii) Employer's ability to make a claim under the
performance security. The Employer must return the
• fault, error, defect or omission in the design of the
performance security within 21 days (3 weeks) after
Works attributable to the Employer, under Sub-
receiving the Performance Certificate.
Clause 11.1.3 (a)(iv)
Before a Contractor can start the Works, the Engineer
• use or occupation by the Employer of any part of
must review the Contractor's Documents and, within
the Permanent Works, except as specified in the
the prescribed period, give (i) a notice of No-objection
Contract, under Sub-Clause 11.1.3 (a)(v)
(with or without comments), or (ii) a notice that the
Contractor's Documents fail to comply with the

4
Contract (giving reasons) following which the Employer's risk, the instruction will constitute a
Contractor must rectify and resubmit them. If the Variation under Clause 7 [Variations].
Engineer fails to give a notice, a notice of No-objection
is deemed to have been given so that any delay by the In some circumstances, the Employer will be entitled
Engineer is no excuse for a late start to the Works. to an extension of the DNP in accordance with Sub-
Clause 5.5.2.
Contractor's Design
The Guidance states that the FIDIC Green Book has If the Contractor fails to remedy a defect for which it is
been drafted on the principle that the Contractor responsible when instructed to do so, the Employer
constructs the Works in accordance with the design may (subject to Clause 13 [Claims]):
provided by the Employer, although some Contractor • carry out the remedial work itself at the
design might be required. The FIDIC Green Book may Contractor's cost (not defined); or
also be used in a full Contractor's design scenario for
which some suggested amendments are given in the • accept the defect for a reasonable reduction in the
Guidance. Contract Price
Where the Contractor designs the Works, then it The Engineer must issue a Performance Certificate
undertakes that the Works will be in accordance with within 21 days (3 weeks) after the expiry of the DNP
all applicable Laws and the documents forming the and after the Contractor has supplied all the
Contract (Sub-Clause 4.7.1). A change in Laws of the Contractor's Documents, completed and tested all the
Country (or judicial or official governmental Works, remedied any defects and cleared the Site.
interpretation of such Laws) after the Base Date
entitles the Contractor to Cost (but not profit) and/or Time
EOT under Sub-Clause 11.1.3 (h).
Execution of the Works
The Works designed by the Contractor shall be, when The Commencement Date is, unless otherwise stated
completed, fit for the purpose(s) for which they are in the Particular Conditions, 28 days (4 weeks) after
intended, as defined in the Contract (Sub-Clause the date when the Contract comes into effect (Sub-
4.7.2). Where no purpose is stated in the Contract Clause 6.1.1). The wording in the precedent form
then they are required to be fit for their ordinary Contract Agreement at the front of the FIDIC Green
purpose(s). For more information on fitness for Book states that 'The Contract comes into effect on the
purpose obligations, see Practice Note: Fitness for date when the Contractor receives one original of this
purpose in construction contracts. Contract Agreement signed by the Employer, which
Quality date shall be immediately confirmed by the Contractor
Clause 5 provides for quality. Most of the detailed to the Employer'.
obligations in respect of this will be set out in the The Engineer must give the Contractor a Sub-Clause
Specification. 6.1 notice at least 7 days (1 week) before the
Generally, the Contractor must execute the Works 'in Commencement Date. In the FIDIC Red and Yellow
the manner (if any) specified in the Contract, and in a Books 2017 it is 14 days (2 weeks).
proper workmanlike and careful manner in accordance Programme
with recognised good practice'. 14 days (2 weeks) from the Engineer's Sub-Clause 6.1
Prior to the expiry of the DNP, the Engineer may notice (or as otherwise specified in the Contract Data)
instruct the Contractor to remedy any defect or the Contractor must submit an initial programme (in
damage in any part of the Works or the Contract the form specified in the Contract Data) for the
Documents. During the DNP the Employer has the execution of the Works.
same power. The Contractor must comply as soon as If the programme does not comply with the Contract,
possible. the Engineer may give notice stating the extent to
If the defect is a Contractor's risk, the Contractor must which it does not comply, and the Contractor must
pay for the remedial works. If the defect is an submit a revised programme within 14 days (2 weeks).

5
Sub-Clause 6.2.3 expressly states that no work shall be These causes are similar to those at Sub-Clauses 8.5
carried out on the Site outside the working hours [Extension of Time] and 8.6 [Delays Caused by
stated in the Contract Data, unless otherwise Authorities] of the FIDIC Red and Yellow Books 2017.
consented to by the Engineer. There are also many causes listed which are Employer
Risk, including the catch all provisions for Employer
Advance Warning prevention etc at Sub-Clause 11.1.3 (j) giving the
Under Sub-Clause 6.3 [Advance Warning] the Parties Contractor entitlement to Cost Plus Profit and/or EOT.
are obliged to warn 'of any known or probable future
events or circumstances which may delay or disrupt
the execution of the Works or increase the Contract Delay Damages
Price'. This is a narrower obligation than the Delay damages are set out in the Contract Data. In the
equivalent under the FIDIC Red and Yellow Books FIDIC Red and Yellow Books 1999 editions they are
2017. There is no time limit or express sanction for calculated as a percentage of the final Contract Price
failing to warn. Giving advance warning may impact and often capped. However, due to differences in
the timing of a notice under Sub-Clause 13.1 [Right to governing laws, FIDIC moved to a more general
Claim] which must be given within 28 days (4 weeks) approach in the FIDIC 2017 editions which it has
after the claiming Party 'became aware, or should carried through to the FIDIC Green Book.
have become aware' of the event or circumstance
giving rise to the claim. New wording has been introduced at Sub-Clause 6.5.2
so that delay damages are reduced proportionally
Extension of Time after taking-over.
The definitions first adopted in the FIDIC 2017 editions
for Extension of Time/EOT, and Date of Completion Delay damages are the exclusive remedy for the
have been retained. Employer for the financial consequences of delay,
other than in the case of termination for Contractor
The grounds for an EOT under Sub-Clause 6.4 are default. They protect the Employer from the
simplified and comprise: (a) Employer's Risks (defined consequences of time at large. For more information,
as those listed in Sub-Clause 11.1); (b) Variations; and see Practice Note: Liquidated damages in construction
(c) a cause of delay giving an entitlement to an contracts.
extension of time under the Contract conditions.

The Guidance states that EOT applies if completion is Exceptional Events

(or will be) delayed by any of the listed causes and,
Exceptional Events have been relocated to Sub-Clause
therefore, if there is float in the Contractor's
6.6 (from Clause 18 in the FIDIC 2017 editions).
programme, it will be preserved and owned by the
'Exceptional Event' is defined in Sub-Clause 1.1.23 in
Contractor 'contrary to some industry literature
such a way that it does not actually need to be
stating that the float is to be shared between the
exceptional, just:
Contractor and the Employer'. However, unlike the
FIDIC 2017 editions, the FIDIC Green Book does not • an event or circumstance
expressly address concurrent delay
• beyond a Party's control
The causes listed as Employer's Risks in Sub-Clause
11.1 which are shared risk giving the Contractor an • such Party could not reasonably have provided
entitlement to EOT only include: against before entering into the Contract

• any Unforeseeable (defined) adverse climatic • having arisen, such Party could not reasonably
conditions at Site itself, under Sub-Clause 11.1.3 (f) have avoided or overcome, and

• delays caused by authorities, under Sub-Clause • is not substantially attributable to the other Party
11.1.3 (g)
The list of example Exceptional Events has been
• any Unforeseeable (defined) shortages in the removed from the General Conditions but is
availability of personnel or Goods caused by mentioned in the Guidance.
epidemic or governmental actions, under Sub-
Clause 11.1.3 (l)

6
The Exceptional Event must prevent performance of • omission of work, unless it is to be carried out by
the affected Party's obligations. The affected Party is others
excused from performance of its obligations for the
duration of the prevention (subject to notice and • additional work, Plant, Materials or services
reasonable endeavours to avoid or minimise the necessary for the Permanent Works including
effects). If 'execution of substantially all the Works in tests; or
progress' is prevented for 84 continuous days, ie 12
• changes to sequence of timing of the Works.
weeks (or 140 non-continuous days, ie 20 weeks) due
to the same Exceptional Event, there is an entitlement A Variation may not comprise, expressly (Sub-Clause
to issue a notice of termination. 7.1.2):
Where an Exceptional Event causes loss and/or • the omission of any work which is to be
damage to the Works, Goods or Contractor's subsequently carried out by the Employer or
Documents, and an instruction to rectify is given by others unless otherwise agreed, unless the
the Engineer, the Contractor is entitled to Cost Plus Employer pays the Contractor Cost plus 10% for
Profit and/or EOT, as a Variation (Sub-Clause 11.1.3 (a) the omitted work
(i)).
• varied work which was Unforeseeable (as defined
Responsibility for a man-made Exceptional Event with reference to the Base Date, ie 28 days (4
(other than for loss and/or damage to the Works, weeks) before submission of the tender) having
Goods or Contractor's Documents) which actually regard to the scope and nature of the Works
prevents the Contractor from performing any of its described in the Specification, or
obligations is allocated under Sub-Clause 11.1.3 (b).
Essentially it is the Employer's risk where the • varied work which will adversely affect the
Exceptional Event incurs inside the Country (as Contractor's ability to comply with Sub-Clause 5.2
defined) entitling the Contractor to Cost (no profit) [Health, Safety and Environment]
and/or EOT, and a shared risk where the Exceptional
Variations may be initiated in one of two ways:
Event incurs outside the Country (as defined) entitling
the Contractor to EOT only. • the Engineer may instruct a Variation which the
Contractor will be bound by (Sub-Clause 7.1.1 (a)),
A natural Exceptional Event (other than for loss and/or
or
damage to the Works, Goods or Contractor's
Documents) which actually prevents the Contractor • the Engineer may request a proposal for a
from performing any of its obligations is a shared risk Variation from the Contractor (Sub-Clause 7.1.1
under Sub-Clause 11.1.3 (c) entitling the Contractor to (b))
EOT only.
If the Contractor does not wish to submit a proposal
Variations when requested to do so, it must provide reasons why
it cannot so do with reference to the three sub-
"Variation" is a defined term and means "any change paragraphs at Sub-Clause 7.1.2.
to the Specification and/or the Drawings or the Works,
which is instructed as a variation under Clause 7 Unlike the FIDIC Red and Yellow Books 2017, the
[Variations]". (Sub-Clause 1.1.45.) This is similar to the Contractor may not initiate its own proposals.
FIDIC 2017 editions post errata, but expressly includes There is a useful flow chart detailing the 'Variation
the Drawings. Procedure' which is located towards the front of the
A Variation may comprise, for example: FIDIC Green Book.

• changes in quantities Those drafting the FIDIC Green Book 2021 did not
consider that either value engineering or provisional
• changes to quality and other characteristics sums clauses were required as core provisions. The
Guidance states that if provision is required, reference
• changes to levels, positions and/or dimensions might be made to Sub-Clauses 13.2 and 13.4 of the
FIDIC Red Book 2017.

7
Valuation of Variations [Payment] and Clause 11 [Risk and Responsibility]. See
In the event of a Variation, the Engineer will agree or below.
determine the adjustment in the Contract Price and/or
an EOT under Sub-Clause 3.5. The Contractor does not Payment
need to comply with the claim procedures under
Clause 13 [Claims]. There is a useful flow chart detailing the 'Typical
Sequence of Payment Events Envisaged in Clause 8'
Adjustments to the Contract Price are valued as which is located towards the front of the FIDIC Green
follows (in order of priority according to the Book.
Guidance):
The Contract Price is defined in Sub-Clause 1.1.9 as
• at a lump sum price agreed between the Parties '…the agreed amount stated in the Contract
(the Guidance states that the Parties 'shall Agreement for the execution of the Works, and
endeavour to agree a lump sum price' but the includes adjustments (if any) in accordance with the
wording in Sub-Clause 7.2.2(a) does not express Contract'.
such obligation)
The Works are valued, and paid for, at the times
• using appropriate rates or prices in the Contract (if stated in the Contract Data (subject to contractual
any) adjustments).
• in the absence of appropriate rates or prices: Like the NEC forms, the Contract Data includes an
Options clause. The Options are:
• based on the rates or prices in the Contract for
similar work to be carried out under similar • Option A - Lump sum price with single payment
conditions, or failing which,
• Option B - Lump sum price with stage payments
• at appropriate new rates, derived from the Cost
Plus Profit of executing the work, or • Option C - Lump sum price with bill of quantities

• if the Engineer so instructs, at daywork rates (if • Option D - Remeasurement with bill of quantities
any) set out under the Contract for which the
• Option E - Cost plus
Contractor must keep records of hours of labour
and Contractor's Equipment, and of Materials used • Option (other) - to be specified by the Parties
Sub-Clause 7.2.3 states that 'Valuation of Variations There is also the possibility of a combination of
shall take due regard of the associated Prolongation Options.
Cost, if any'. In other words, delays caused by
Variations are compensable. This wording is a Advance Payment
welcome addition. While it is obvious that the If an advance payment is specified in the Contract
Contractor ought to be entitled to prolongation costs Data, it ought to be expressed as a percentage of the
for delay caused by a Variation, the FIDIC Red Book Contract Price stated in the Contract Agreement.
1999 includes no explicit wording and Sub-Clause Typically, this is 10%–20%.
13.3.1 (ii) in the FIDIC 2017 editions is not explicit
The Engineer will certify it within 7 days (1 week) after
enough.
receipt of (i) a copy of the Contractor's application for
Under Sub-Clause 11.1.3 (n) the Contractor is entitled advance payment, (ii) the advance payment guarantee
to EOT and Prolongation Cost for any re-measurable under Sub-Clause 8.2.2 (if required in the Contract
item of work where the measured quantity of that Data), and (iii) the performance security (if any) under
item is more than 10% of the estimated quantity Sub-Clause 4.5.1. A failure to do so by the Engineer (as
stated in the Contract (after taking account of any part of the Employer's personnel) would fall under
significant reduction in the measured quantities of Sub-Clause 11.1.3 (j) which entitles the Contractor to
other items of work). Cost Plus Profit and/ or EOT. Payment is in the
currencies stated in the Contract Data.
Changes in Cost and changes to the Laws of the
Country are provided for respectively in Clause 8

8
The advance payment may only be used to finance the this is calculated as 28 days (4 weeks) from the
Contractor's obligations under the Contract. In other Contractor's application (receipt of the Statement and
words, the money cannot be used to fund other supporting documentation) so that any delay by the
projects. Engineer is no excuse for late payment by the
Employer. Different periods may be specified in the
The amount of the advance payment certificate may Contract Data.
be reduced progressively by the amount repaid by the
Contractor as stated in the payment certificates. Neither the interim payment certificate, nor payment
itself, indicate the Employer or Engineer's acceptance,
The amount certified in the advance payment approval, consent or notice of No-objection to any
certificate will be paid within 28 days (4 weeks) after corresponding part of the Works or Contractor's
the Employer receives (i) the Contractor's application Documents.
for advance payment, (ii) the advance payment
guarantee under Sub-Clause 8.2.2 (if required in the If the Employer does not pay, the Contractor has a
Contract Data), and (iii) the performance security (if number of options:
any) under Sub-Clause 4.5.1.
• Sub-Clause 2.3 [Employer's Financial
Any outstanding balance is immediately repayable on Arrangements] allows the Contractor to demand
issue of the Taking-Over Certificate for the Works, or reasonable evidence of the Employer's ability to
before termination of the Contract. pay
Payment process • Sub-Clause 8.7 [Delayed Payment] provides for
To trigger payment, the Contractor issues to the financing charges, which is essentially a form of
Engineer an application (ie a statement and interest for delayed payment. Unless altered by
supporting documentation) under Sub-Clause 8.3 the Contract Data the figure is at 3% above a rate
[Statements] at the time for payment stated in the in the country of the currency of payment. If
Contract Data, in accordance with Sub-Clause 8.1 payments were partly in currency local to the
[Valuation of the Works]. There are some prescribed project, then a different base rate would apply
things that the statement must include.
• Clause 10 [Suspension and Termination] permits
The Engineer responds with the issue of an interim both suspension and termination for non-payment
payment certificate under Sub-Clause 8.4 [Interim by the Employer and non-certification by the
Payments] stating the amount which the Engineer Engineer. Suspension under Sub-Clause 10.1
'fairly considers' to be due. It must be accompanied by requires 14 days' (2 weeks') notice. If the Employer
supporting particulars identifying any differences in fails to cure the defect notified within those 14
any amount between what is certified and what the days (2 weeks) the Contractor may issue an
Contractor included in its statement giving reasons for intention to terminate. If the Employer fails to
the difference. remedy the defect within this further 14 days, the
Contractor may give a second notice to
The Engineer will not certify or pay the Contractor
immediately terminate the Contract
until the performance security has been received by
the Engineer. Sub-Clause 8.8 [Changes in Cost] provides for price
escalation. If the Contract is to be adjusted for rises or
In the interim payment certificate, the Engineer may
falls in the cost of labour, Goods and other inputs to
make any correction or modification that should be
the Works, the Employer must tick 'Yes' in the
properly made to any previous interim payment
Contract Data, and it will be calculated 'in accordance
certificate.
with the details provided in the Schedule of cost
The Contractor makes its application at the time for indexation'. Unforeseeable shortages in the
payment stated in the Contract Data, in accordance availability of personnel or Goods caused by epidemic
with Sub-Clause 8.1 [Valuation of the Works] and the or governmental actions is a shared risk event under
Engineer has 14 days (2 weeks) to issue the interim Sub-Clause 11.1.3 (l) entitling the Contractor to EOT
payment certificate. The Employer essentially has 14 only.
days (2 weeks) to pay the amount certified in the
interim payment certificate under Sub-Clause 8.4.4;

9
Retention Suspension and Termination
In the Contract Data, the amount of retention to apply
to each statement ought to be expressed as a Suspension
percentage of the Contract Price. Typically, this is 5 -
The Engineer may instruct the Contractor to suspend
10%. The limit of retention money to be applied
progress on all or part of the Works (as defined) under
should also be expressed as a percentage of the
Sub-Clause 10.1.1.
Contract Price.
The Contractor may suspend work or reduce the rate
The standard practice is for the first 50% of the
of work under Sub-Clause 10.1.2 if (i) one of the four
retention monies to be released after the Taking-Over
grounds set out below are met, (ii) the Contractor has
Certificate for the Works is issued (via the next
issued a notice to the Employer specifying what is
statement), and the second 50% of the retention
wrong, and (iii) the default has not been remedied
monies to be released after the Performance
within 14 days (or a reasonable period of time in
Certificate is issued (also via the next statement).
respect to an Employer's failure to perform an
Alternatively, the Parties may agree to substitute all or
obligation which constitutes a material breach).
part of the retention money with a guarantee which
the Employer returns to the Contractor within 21 days The four grounds listed are:
(3 weeks) after receiving a copy of the Performance
Certificate. • the Engineer has failed to certify, or the Employer
has failed to pay, in accordance with Clause 8
Final Payment [Payment]. A failure to certify or pay are grounds
To trigger the final payment, the Contractor issues an for suspension which are also found expressly in
application (ie a statement and supporting the FIDIC Red and Yellow Books 1999 and 2017
documentation) under Sub-Clause 8.6 [Final Payment]
within 14 days (2 weeks) after issue of the • the Employer has failed to comply with Sub-Clause
Performance Certificate. 2.3 [Employer's Financial Arrangements]. A failure
to comply with the Employer's Financial
If the Contractor and Engineer can agree the amount Arrangements is a ground for suspension which is
finally due, the Contractor will submit a final also found expressly in the FIDIC Red and Yellow
statement, discharge (confirming that such amount Books 1999 and 2017
represents 'full and final settlement of all monies due
to the Contractor under or in connection with the • the Employer has failed to comply with an
Contract') and supporting documentation. agreement or determination under Sub-Clause 3.5
[Agreement or Determination], or with a decision
If the Contractor and Engineer cannot agree the of the Adjudicator under Sub-Clause 14.1
amount finally due, and it becomes evident that a [Adjudication] and such failure is a material breach
dispute exists, the Contractor must issue a statement of the Employer's obligations under the Contract.
for the agreed parts, and Sub-Clause 8.4 [Interim Provided they constitute a material breach, a
Payments] applies. The disagreed parts are deemed to failure to comply with an agreement or
be a dispute which may be referred to adjudication determination, and a failure to comply with an
under Sub-Clause 14.1 [Adjudication]. If the dispute is adjudicator's decision, are grounds for suspension
then resolved, the Contractor will submit the final which are also found expressly in the FIDIC Red
statement, discharge and supporting documentation. and Yellow Books 2017 (but not in the 1999
From the date of submission of the final statement, editions)
discharge and supporting documentation: • the Employer substantially fails to perform, and
• the Engineer will, within 28 days (4 weeks), issue a such failure is a material breach of the Employer's
final payment certificate, and obligations under the Contract. A substantial
failure to perform appears to be a new ground for
• the Employer will, within 56 days (8 weeks), pay suspension (rather than termination) which is not
the Contractor the amount certified found in the FIDIC 1999 and 217 editions.

The time period for remedying the default is 14 days

(2 weeks), or in the case of the Employer's substantial

10
failure to perform which is a material breach, within a • third is a notice, issued 14 days (2 weeks) after
reasonable time. (Under the FIDIC 1999 editions and the Contractor has received the second notice
the FIDIC Red and Yellow Books 2017 the Contractor but not remedied the default, immediately
has 21 days (3 weeks) to remedy the default.) If the terminating the Contract. (Sub-Clause 10.2.2)
Employer fails to remedy the defaults within the
notified time period it may suspend work (or reduce • subcontracts the whole or part of the Works in
the rate of work) under Sub-Clause 10.1, or it may breach of Sub-Clause 4.4.1. This is a ground for
(subject to the prescribed additional notices) proceed termination which is also found expressly in the
with termination under Sub-Clause 10.3. In other FIDIC Red and Yellow Books 1999 and 2017. The
words, the Contractor may choose to reduce the rate Employer is entitled to terminate the Contract
of work, suspend or seek to terminate. See below for immediately by giving notice to the Contractor
further details on termination. (Sub-Clause 10.2.3)

Clause 11 [Risk and Responsibility] provides at Sub- • assigns the Contract without the required
Clause 11.1.3 (i) that the Contractor is entitled to Cost agreement under Sub-Clause 1.6 [Assignment].
Plus Profit and/or EOT for a suspension (or reduction This is a ground for termination which is also found
of the rate of work) under Sub-Clause 10.1, if it is not expressly in the FIDIC Red and Yellow Books 1999
attributed to a failure by the Contractor. This is not and 2017. The Employer is entitled to terminate
expressed as an exclusive remedy. The Contractor's the Contract immediately by giving notice to the
entitlement is subject to Clause 13 [Claims]. Contractor (Sub-Clause 10.2.3)

Termination by the Employer for contractor Default • becomes bankrupt or insolvent. This is a ground
There is a useful flow chart detailing the 'Typical for termination which is also found expressly in the
Sequence of Events for Termination by the Employer FIDIC Red and Yellow Books 1999 and 2017. The
under Sub-Clause 10.2' which is located towards the Employer is entitled to terminate the Contract
front of the FIDIC Green Book. immediately by giving notice to the Contractor
(Sub-Clause 10.2.3)
The Guidance recommends expert legal advice before
any termination process. For more information on • is found, based on reasonable evidence, to have
termination, see Practice Note: Termination of a engaged in corrupt, fraudulent, collusive or
construction contract. coercive practice at any time in relation to the
Works or to the Contract. This is a ground for
There are five grounds for termination by the termination which is also found expressly in the
Employer in the FIDIC Green Book. These are where FIDIC Red and Yellow Books 2017 and there is
the Contractor: wording in the FIDIC 1999 editions in respect of
bribes etc. The Employer is entitled to terminate
• substantially fails to perform, and such failure is a
the Contract immediately by giving notice to the
material breach of, the Contractor's obligations
Contractor (Sub-Clause 10.2.3)
under the Contract (Sub-Clause 10.2.1). Three
notices are required under Sub-Clause 10.2 The notices must be in accordance with Sub-Clause 1.3
[Termination by the Employer] to affect the [Communications].
termination:
Unlike the FIDIC 2017 editions, the Contractor's non-
• the first is a notice of default (under Sub-Clause compliance with a final and binding Engineer's
10.2.1) specifying the default and a reasonable Determination and a binding or final and binding
time within which the Contractor must remedy adjudicator's decision is not a separate and distinct
it. This is a described as a Notice to Correct in ground for termination but such non-compliance is,
the FIDIC Red and Yellow Books 1999 and 2017. arguably, a substantial failure to perform which might
fall within Sub-Clause 10.2.1. Further, maxing out the
• the second is a notice of the Employer's
Delay Damages is not a separate and distinct ground
intention to terminate the Contract if the
for termination.
default is not remedied a reasonable time (Sub-
Clause 10.2.2). Upon termination by the Employer for default, the
provisions of Sub-Clause 10.2.5 apply and the

11
Contractor shall (i) cease work, (ii) deliver to the • the third is a notice, issued 14 days (2 weeks)
Engineer all Contractor's Documents, and (iii) after the Employer has received the second
demobilise the Site leaving behind all Goods required notice but not remedied the default,
by the Employer. If and to the extent instructed by the immediately terminating the Contract under
Employer, the Contractor shall also assign any Sub-Clause 10.3.1
subcontract to the Employer.
• assigns the Contract without the required
Termination by the Employer for Convenience agreement under Sub-Clause 1.6 [Assignment].
Under the FIDIC Green Book, the Employer has the This is a ground for termination which is also found
right to terminate at any time for convenience in expressly in the FIDIC Red and Yellow Books 1999
order to execute the Works itself or to arrange the and 2017. The Contractor is entitled to terminate
Works to be executed by another contractor under the Contract immediately by giving notice to the
Sub-Clause 10.2.4. But the Employer must first give 28 Employer (Sub-Clause 10.3.2)
days' (4 weeks') notice (which must be in accordance
with Sub-Clause 1.3 [Communications]) and return the • becomes bankrupt or insolvent. This is a ground
performance certificate. The Employer will, of course, for termination which is also found expressly in the
incur financial penalties for such termination—see FIDIC Red and Yellow Books 1999 and 2017. The
'Payment After Termination' below. Contractor is entitled to terminate the Contract
immediately by giving notice to the Employer (Sub-
Upon termination for convenience, the provisions of Clause 10.3.2)
Sub-Clause 10.3.3 (a) apply and the Contractor shall (i)
cease work, (ii) deliver to the Engineer all Contractor's • is found, based on reasonable evidence, to have
Documents, and all Plant, Materials and other work engaged in corrupt, fraudulent, collusive or
for which the Contractor has received payment, (iii) coercive practice at any time in relation to the
remove all other Goods (in which case property of the Works or to the Contract. This is a ground for
removed Plant and Materials shall revert to the termination which is also found expressly in the
Contractor), and (iv) demobilise, from the Site. FIDIC Red and Yellow Books 2017 (but not 1999).
The Contractor is entitled to terminate the
Termination by the Contractor Contract immediately by giving notice to the
There is a useful flow chart detailing the 'Typical Employer (Sub-Clause 10.3.2)
Sequence of Events for Suspension/Termination by the
Contractor under Clause 10' which is located towards The notices must be in accordance with Sub-Clause 1.3
the front of the FIDIC Green Book. [Communications].

There are four grounds for termination by the Unlike the FIDIC 2017 editions, the Employer's non-
Contractor in the FIDIC Green Book. These are where compliance with a final and binding Engineer's
the Employer: determination and a binding or final and binding
adjudicator's decision is not a separate and distinct
• fails to remedy the default(s) notified within the ground for termination but such non-compliance is a
time specified under Sub-Clause 10.1.2 (and in the ground for suspension under Sub-Clause 10.1.2 (c)
case of sub-paragraph (d) has no reasonable which, if not remedied, may lead to termination under
excuse for such failure)— as discussed above. Sub-Clause 10.3.1.
Three notices are required under Sub-Clause
10.3.1 to affect the termination: Upon termination, the provisions of Sub-Clause 10.3.3
apply and the Contractor must (i) cease work, (ii)
• the first is a notice of suspension under Sub- deliver to the Engineer all Contractor's Documents,
Clause 10.1.2 and all Plant, Materials and other work for which the
Contractor has received payment, (iii) remove all
• the second is notice of the Employer's intention other Goods (in which case property of the removed
to terminate the Contract under Sub-Clause Plant and Materials shall revert to the Contractor),
10.3.1 if the default(s) is not remedied within and (iv) demobilise, from the Site. The Employer must
14 days (2 weeks) or reasonable period in the also return the performance security, promptly
case of Sub-Clause 10.1.2 (d)

12
Payment After Termination This payment is the only amount due between the
After termination, the Contractor is entitled to Parties in respect of loss and/or damage resulting
'payment of the unpaid balance of the value of the from the termination.
Works executed (and any other work executed) and of
the Plant and Materials reasonably ordered for the Risk and Responsibility
Works (once delivered to the Employer)'to the extent
that they comply with the Contract. The phrase 'any Employer's Risks and Contractor's Entitlement
other work executed' covers design work, or other
The Employer's Risks and corresponding Contractor's
types of work not falling within the definition of
entitlement (subject to Clause 13 [Claims] unless the
Permanent or Temporary Works.
Engineer gives an instruction which constitutes a
The payment is adjusted by: Variation) are tabulated in Sub-Clause 11.1.3. This is a
good idea. The Contractor's entitlements as listed in
• any amount to which either Party is entitled under this table are not expressed as exclusive remedies. The
Clause 13 [Claims] or otherwise Guidance states that the table ought not to be
amended as this might contravene FIDIC Golden
• in the case of Employer termination for Contractor
Principle 3 which states 'The Particular Conditions
default - the Employer will be entitled to 20% of
must not change the balance of risk/reward allocation
the value of the parts of the Works not executed at
provided for in the General Conditions.' But it is likely
the date of termination (it is a liquidated amount
that it will be amended.
to avoid the time and expense of substantiating
actual loss) The Contractor is entitled to Prolongation Cost where
the Contractor's entitlement is described as 'Cost
• in the case of termination for the Employer's
and/or EOT' or 'Cost Plus Profit and/or EOT', ie in
convenience, or Contractor termination for
respect of an Employer risk event ('ERE') where delay
Employer default - the Contractor will be entitled
is compensable. The Contractor is not entitled to
to (i) the Cost of demobilisation, (ii) any other Cost
Prolongation Cost for shared risk events ('SREs')
or liability reasonably incurred by the Contractor in
(which give rise to additional time but not money)
the expectation of completing the Works, and (iii)
where delay is excusable.
10% of the value of the parts of the Works not
executed at the date of termination (as above, it is The Guidance states that Prolongation Cost is a sub-
a liquidated amount to avoid the time and expense category of the Cost incurred by the Contractor, in
of substantiating actual loss) accordance with the definition at Sub-Clauses 1.1.13.
Prolongation Cost is defined at Sub-Clause 1.1.35 of
Supporting particulars must be submitted by the
the Contract Data as 'on-Site and off-Site overheads
relevant Party within 42 days (8 weeks) after the
associated with compensable EOT, as stated in the
notice of termination. Although there is no express
Contract Data'. It is a liquidated amount to avoid the
sanction for a failure to do so, the time for payment
time and expense of substantiating actual loss. This is
runs from the date of submission.
a first for FIDIC.
The Engineer will agree or determine the payment due
The Contract Data states that 'Prolongation Cost shall
under Sub-Clause 10.4.1 in accordance with Sub-
be the only compensation due from the Employer to
Clause 3.5 [Agreement or Determination]. The
the Contractor for an EOT resulting from a
resulting balance must be paid by the Employer or
compensable delay'. Therefore, if the Cost is more
Contractor within 70 days (10 weeks) after submission
than the amount recovered in the Prolongation Cost,
of the supporting particulars. Many of the remedies
the difference would not be recoverable. But the
for non-compliance with an Engineer's determination
limitation does not affect the Contractor's
are not available post termination (for example,
compensation rights for other Cost, such as disruption
suspension). If a Party is dissatisfied with the
Cost (if any) which would need to be substantiated
Engineer's determination, it becomes a dispute which
and avoid any overlap with the Prolongation Cost. As
the dissatisfied Party may refer to adjudication under
explained in the Guidance, the Contract Data expressly
Sub-Clause 14.1—see below.
states, 'For the avoidance of doubt, this provision shall

13
not affect Contractor's compensation rights for other Indemnities
Cost (if any), such as disruption Cost (if any)'.
There are the usual indemnities for:
The Contract Data details how the Prolongation Cost is
to be calculated. It is done so on the basis that • bodily injury, sickness, disease or death
construction progress is a Gaussain function (a bell-
curve). The default daily rate for on-Site and off-Site • damage to or loss of any property, real or personal
overheads in the Contract Data is 20% of the Contract (other than the Works)
Price stated in the Contract Agreement, divided by the • infringement of a patent, registered design,
number of days in the Time for Completion. The copyright, trademark, trade name, trade secret or
Contract Data provides that the Contractor is entitled other intellectual or industrial property right
to:

• 60% of this daily rate in the first third of the Insurance

certified value of the Works (when the Contractor
The Guidance recommends expert insurance advice.
progressively mobilises its resources which are
ramping up) By default, the insuring Party is named as the
Contractor in a comprehensive table included in the
• 125% of this daily rate in the second third of the
Contract Data. It must effect and maintain
certified value of the Works (during peak
insurance(s) in the joint names of the Parties.
production when resources are expected to be
mobilised in full and working at full capacity), and The insuring Party must provide the other Party with
endorsed insurance certificates in the prescribed
• 60% of this daily rate in the remaining period
form. The policies themselves must be provided upon
(when completion is nearing, and demobilisation
request.
progressively starts to occur)
If a Party fails to effect, or maintain, the insurances, or
The Contract Data may be amended if this weighting
does not provide the other Party with endorsed
of the site overheads is not appropriate for the
insurance certificates, the other Party may pay the
project.
premiums due. It may recover the same from the
Sub-Clause 11.1.3 does not address concurrent delay. defaulting Party as an addition or deduction in the
The Guidance states that concurrency of delays may amount certified for payment without any need to
be handled differently under different national laws proceed under Clause 13 [Claims].
and refers to the Society of Construction Law Delay
If either Party fails to comply with a condition of the
and Disruption Protocol (2nd edition, 2017). This is,
insurance(s), the failing Party must indemnify the
perhaps, a missed opportunity. Much governing law
other Party against all direct losses and claims
gives authority to the express wording of a contract.
(including legal fees and expenses) arising from such
Contractor's Risks and Employer's Entitlement failure.
The Contractor's Risks require compliance with Clause
13 [Claims] and are: Claims
• a decrease in Cost caused by a change in the Laws Employer's Claims and Contractor's Claims both fall
of the Country (or in the judicial or official within Clause 13 [Claims]. However, entitlements
governmental interpretation of these Laws) after associated with Variations do not need to follow the
the Base Date claims procedure in Clause 13 (Sub-Clause 7.2.1).

• a failure by the Contractor to fulfil its obligations There is a useful flow chart detailing the 'Typical
which causes the Employer to incur costs (not Sequence of Claim Management under Clause 13 and
defined), or Sub-Clause 3.5' which is located towards the front of
the FIDIC Green Book.
• any cause giving the Employer an entitlement
under or in connection with the Contract

14
Employer's claims became aware, or should have become aware, of
The Employer may claim for (i) additional payment (or the event or circumstance
reduction in the Contract Price), and/or (ii) extension
of the DNP, and/or (iii) another entitlement or relief As for Employer's Claims, unlike the FIDIC Red or
against the Contractor, under any Clause of the Yellow Books 2017, there are no time bars associated
Contract Conditions, or otherwise in connection with with these time periods. But the entitlement or relief
the Contract. will take account of any prevention or prejudice
caused to the proper investigation of the claim and/or
Claims for payment will usually be for delay damages, mitigation of the effects of the claim by a failure to
other claims specifically provided for by the Contract, comply with any Sub-Clause in relation to a claim.
and/or for damages for breach of contract by the
Contractor. Claims Procedure
The same claims procedure applies to both the
The first step requires the Employer to give to the Employer and the Contractor.
Engineer:
After receiving the fully detailed claim under Sub-
• notice describing the event or circumstance giving Clause 13.1 [Right to Claim], the Engineer shall reach
rise to the entitlement within 28 days (4 weeks) agreement or make a determination under Sub-Clause
after it became aware, or should have become 3.5 [Agreement or Determination]. The Engineer must
aware, of the event or circumstance, and give notice to both Parties of each agreement or
determination (with supporting particulars) within 42
• a fully detailed claim with supporting particulars, days (6 weeks) of receipt of the fully detailed claim.
including contemporary records, of the There is no prescribed sanction if this time period is
entitlement within 56 days (8 weeks) after it not met.
became aware, or should have become aware, of
the event or circumstance The entitlement or relief must take into account the
extent (if any) to which a failure by a Party to comply
Unlike the FIDIC Red or Yellow Books 2017, there are with any Sub-Clause of the Conditions has prevented
no time bars associated with these time periods. But or prejudiced (i) proper investigation of the claim,
the entitlement or relief will take account of any and/or (ii) mitigation of the effects of the claim event
prevention or prejudice caused to the proper or circumstance.
investigation of the claim and/or mitigation of the
effects of the claim by a failure to comply with any There is an express obligation on the Parties to use
Sub-Clause in relation to a claim. 'reasonable endeavours' to avoid or minimise the
effects of all claim events or circumstances, ie to
Contractor's claims mitigate loss. This should go without saying.
The Contractor may claim for (i) additional payment,
and/or (ii) an EOT, and/or (iii) another entitlement or Each Party must give effect to the Engineer's
relief against the Employer as a result of any of the agreement or determination unless and until revised
Employer's Risks, or under any Clause of the Contract under Clause 14. As previously discussed, a failure to
Conditions, or otherwise in connection with the by the Employer to give effect to the Engineer's
Contract. determination would fall under Sub-Clause 11.1.3 (j)
and could entitle the Contractor to suspend progress
The first step requires the Contractor to give to the of all or part of the Works under Sub-Clause 10.1.2 (c)
Engineer: and, if not remedied, terminate via Sub-Clause 10.2.2.
It is possible that a failure by the Contractor to give
• notice describing the event or circumstance giving
effect to the Engineer's determination could also
rise to the entitlement within 28 days (4 weeks)
constitute a substantial failure to perform which might
after it became aware, or should have become
entitle the Employer to pursue termination under Sub-
aware, of the event or circumstance, and
Clause 10.2.1.
• a fully detailed claim with supporting particulars,
If a Party is dissatisfied with the Engineer's
including contemporary records, of the
determination, it becomes a dispute which the
entitlement within 56 days (8 weeks) after it
dissatisfied Party may refer to adjudication under Sub-

15
Clause 14.1. There is no facility or need for a Notice of have not done so on their own initiative. Any opinion
Dissatisfaction in respect of an Engineer's given by the Adjudicator is non-binding.
determination in the FIDIC Green Book.
If the Adjudicator adopts the 'standing' mode
providing regular informal assistance and binding
Disputes decisions, a retainer will be required.
The FIDIC Green Book adopts the usual FIDIC multi-tier
If not amicably settled, any dispute between the
approach to the resolution of disputes. Unlike the
Parties, which arises out of or in connection with the
FIDIC 2017 editions, there is no definition of a dispute.
Contract (including any opinion, instruction,
There is a useful flow chart detailing the 'Typical certification, valuation or determination of the
Sequence of Dispute Events Envisaged in Clause 14' Engineer) shall be referred by either Party and shall be
which is located towards the front of the FIDIC Green decided by the Adjudicator in accordance with the
Book. Rules for Adjudication.

The FIDIC Green Book adopts a sole Adjudicator to be The Rules for Adjudication provide that the
appointed at the commencement of the project (28 Adjudicator has 84 days (12 weeks) to make a decision
days after the Contract comes into effect), ie before if a hearing is required and has 56 days (8 weeks) to
any dispute has arisen. The Guidance states that the make a decision if a hearing is not required. (It is
Adjudicator mechanism under the Contract is possible that a short hearing might be sought for no
equivalent to a dispute board composed of one other purpose than to extend the period for a
member. The Contract Data requires each Party to decision.)
propose three names. If the Parties fail to appoint an
The Rules do not state what will happen if the
Adjudicator, the Adjudicator will be appointed in
Adjudicator does not meet those deadlines (although
accordance with the Rules for Adjudication which are
an Adjudicator may hold back its decision if an invoice
appended to the General Conditions. If necessary, an
remains unpaid). Arguably, a late decision is null and
application to the President of FIDIC may be made.
void. The Rules for Adjudication also make provision
The Rules for Adjudication do not require that FIDIC
for the Adjudicator to correct the decision.
consults with the Parties before making the
appointment which shall be final and conclusive. The Unlike the FIDIC 2017 editions, there is no express
Parties are deemed to have signed and be bound by provision to stop the limitation period running by
the Adjudicator's Agreement (this appears to include referring the dispute to the Adjudicator. Therefore,
the Adjudicator's fee which could be high). One Party, this will be a matter of governing law.
acting alone, may not terminate the Adjudicator's
Agreement. If a Party is dissatisfied with the Adjudicator's decision,
or if no decision is given within the prescribed time, a
The Guidance states that the Parties have several party may issue a notice of dissatisfaction within 28
options available: days (4 weeks) of (i) receipt of the decision, or (ii)
expiry of the time for the decision. If the Adjudicator
• Option 1: only for binding decisions has given a decision, and no notice of dissatisfaction
• Option 2: for time-to-time informal assistance and has been given within the specified time, then the
binding decisions decision shall be final and binding on both Parties.

• Option 3: for regular informal assistance (including Regardless of any notice of dissatisfaction, the
through regular Site visits) and binding decisions decision is binding on the Parties who must give effect
to it unless and until it is revised in arbitration (Sub-
Sub-Clause 14.1.2 provides that the Adjudicator may Clause 14.1.5).
provide assistance and/or informally discuss and
attempt to resolve any issue or disagreement which If a party fails to comply with a 'binding' or 'final and
may have arisen between the Parties during the binding' decision, the other Party (without prejudice
performance of the Contract if such a request has to its other rights) may refer the failure to comply with
been made by the Parties jointly. The Adjudicator may the decision to arbitration under Sub-Clause 14.2
invite the Parties to make such joint request if they [Arbitration] without obtaining a further Adjudicator's

16
decision or conducting further amicable settlement The list of exemptions is:
negotiations.
• Sub-Clause 6.5 [Delay Damages];
In such event, the arbitrator will have the power to
order interim or provisional measures or an award to • Sub-Clause 7.1.2 (a)—omission of work which the
enforce the Adjudicator's decision, subject to the Employer intends to do itself
express reservation that the rights of the Parties as to
• Sub-Clause 10.4.1 (b)—Employer termination for
the merits of the dispute are reserved until they are
Contractor default
resolved by an arbitral award.
• Sub-Clause 10.4.1 (c) (ii)—10% of value of parts of
Arbitration Works not executed at the date of termination

A notice of dissatisfaction with an Adjudicator's • Sub-Clause 11.3 [Indemnities]

decision is a pre-condition to arbitration.
Sub-Clause 1.10.2 specifies a maximum liability of the
The FIDIC Green Book adopts a sole arbitrator, unless sum stated in the Contract Data (or the Contract Price
otherwise agreed by the Parties. stated in the Contract Agreement). Sub-Clause 1.10.3
removes any limitation for fraud, gross negligence,
Unless the Parties agree otherwise, the arbitration will deliberate default and reckless misconduct.
be conducted under the expedited procedure
provisions of the ICC Rules (Rules of Arbitration of the Please get in touch at
International Chamber of Commerce) by a sole [email protected] with your
arbitrator in the language referred to in Sub-Clause 1.3 thoughts or to discuss any concern
[Communications].

There is no express reference to the seat of

arbitration. The Guidance explains why.

The arbitrator has the power to open up, review and

revise any certificate, determination, instruction,
opinion or valuation of the Engineer, and any decision
of the Adjudicator (other than a final and binding
decision, ie one where a notice of dissatisfaction has
not been given) relevant to the dispute.

The Engineer may be called as a witness in the

arbitration.

The Parties are not limited to the arguments or

evidence they submitted to the Adjudicator or the
reasons for dissatisfaction given in the notice of
dissatisfaction. The Adjudicator's decision is
admissible evidence.

Limits on Liability
Sub-Clause 1.10 [Limitation of Liability] provides:
'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…' This
is identical wording to that in the FIDIC Red and Yellow
Books 2017 at Sub-Clause 1.15.

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