Introduction
FIDIC is a body that was formed in 1913 by France, Belgium and Switzerland stands for ‘Federation Internationale des Ingenieurs-Conseils’. On behalf of FIDIC and FIBTP, the first version of the conditions of international agreement for works of civil engineering construction was published in August 1957. The earlier FIDIC contracts had several difficulties and were founded on the detailed design that was provided to the contractor by the employer or his Engineer.
As a matter of fact, these contracts were suited for civil engineering and infrastructural projects such as tunnels, bridges, roads, and water and sewage facilities. The contracts did not suit where the chief items of the firm were manufactured away from the location. As a result, this led to the first edition of the “Yellow Book”. On this, the classical contract became known as the “Red Book” and were produced in 1963 by FIDIC for electrical and mechanical works.
Construction Law
The second edition of the “Red Book was published in 1980. FIDIC and new editions released in 1987 amended the Yellow and Red books. A recognizable and key characteristic of the fourth publication of the Red Book was the preface of an express term which required the Engineer to act unbiased when giving a decision or taking any action which might in one way or the other affect the rights and obligations of the parties.
The previous editions had assumed this fact implicitly. Whereas FIDIC has undergone several reviews and amendments, the contract of choice in most Middle East and particularly the United Arab Emirate remains that of the Old Red Book. For the purpose of this essay, clause 20.1 would be given emphasis and elaborated for further development of the content.
FIDIC clause 20.1
This clause covers the issues behind disputes and claims that may arise between the Employer and the Contractor pertaining to issues of compensation, extension of time or both. 1Although the Employer is required to be personally involved in supervising the construction process by the contractor, on the side of the contractor, the clause stipulates clearly that, under any case a contractor regards himself as entitled to any extension to the time of completion and additional payment in connection with the agreement, he shall give notice to the Engineer, establishing the occurrence bringing forth to the said claim. According to that, an urgent notice requires to be given within twenty-eight days.
The clause goes on to stipulate that, failure of the Contractor to issue notice of a request; there is no extra time to complete, and the supplier can’t be provided with extra payment. On the contrary, various supplies of the clause will be effective. It is worth noting that clause 20.1 refers only to claims by the Contractor. The clause specifies the course of actions, which the contractor should follow in pursuit of a claim, and the repercussions of failure to do so.
Notices under clause 20.1 by the Contractor should comply and be in accordance with clause 1.3. Under this clause, the contractor is supposed to send a notice to the Engineer with a copy of the same to the Employer. In this case, the recipient is only expected to recognize receipt but not to respond and the clause must not consider the notice as an antagonistic undertaking but simply as an act, which enables the Employer to be aware of the possibility that the Contractor has an improved power. It is the responsibility of the Contractor to ensure that notices are given at the right time in order to cushion his rights under the agreement. On the reverse, where the Contractor does not issue notices in due time, he is deprived all his entitlement to any extension of time and compensation or both.
The clause states the Contractor to inform to the Engineer of money or time extensions requirements, ASAP and not any time later than a month (twenty eight days) after the date on which Contractor became aware, or rather should have become aware of the relevant incident or condition. Besides, any claim to time or money will be lost if there is no notice within the specified time limit. The Contractor in all the capacity should ensure supporting documents are taken and he should keep such current records as may be needed to authenticate the claims that may arise. Furthermore, the clause goes on to 2stipulate that the Contractor should present fully exclusive claim after 42 days and that the Engineer is to give response in law within stipulated time of 42 days.
The 28 days deadline does not necessarily begin on the date of the occurrence of the claim but on the date, the Contractor objectively should have become aware of the occurrence. Clause 20.1 is a circumstance precedent and potentially offers the Employer a complete defence to any claim for time or money by the Contractor not beginning within the stipulated time scale and frame. A court in England would take the observation that timescales in construction contracts are directory rather than compulsory so that Contractor should not misplace its right to bring its claim if such claim is not brought within the stipulated timescale.
Common Law
It is a type juridical system of justice, which derives its authority from the universal consent, and historical practice of the people. The system of jurisprudence originated in England and which was later adopted in the U.S. that is based on precedent instead of statutory laws. It is also the traditional law of an area or region; also known as case law. The law is created by judges when deciding individual disputes or cases.
The law is commonly used in civil cases that relate to marriage, contracts, law of torts and many other issues. In England’s law of tort, contractors are expected to adhere to legal requirements, which dictate that they should take a reasonable standard of caution while performing any acts that could probably harm others. The responsibility can be between individuals who have no straight relationship be it familial, contractual, or different defined by law.
The common law in England in regard to the case where the contractor wants an extension of time, the judgement is varied depending on the circumstances which have made the contactor to seek for an extension of deadline. In circumstances where the client may be unwilling to extend the deadline on the work being done, the client can seek compensation for the time wasted. The contractor is therefore expected to compensate damages to the client. These damages otherwise known as the duty of care are dependent on the jurisdiction of the circumstances. The damages may be more in some areas and lower in other areas.
In England this compensation are guided by delays and disruption protocol, which evaluate compensation and the interest, which can accrue to damages caused by delay and disruptions.
The UAE civil code
As a Muslim nation, one of the basic principles stated in the Constitution provides that Islamic Law is recognized to be the most important source for law in the UAE. The Federal Government controls propagandizing law in relation to basic and central aspects of the Federation. These aspects include external policy, protection, safety, executive system, federal finance and loans, mail and other services, federal public works, aviation engineering, system of systematic instruction, medicine, money, electricity services, nationality and corresponding issues, control of federal possessions.
The UAE civil code is an expansion of the legal jurisprudence of the sharia law to include matters concerning business transactions in a manner that will not violate the right of others who are not governed by sharia law. Article 892 of the code states that a construction agreement is to come to an end after a certain time by arrangement of the sides or upon request to the court. There are some cases, which are considered to be the exceptions; certain agreements in the Emirates have complete necessary conditions allowing the side to end for neglecting.
The principal aim of the section of the code is to obviously preserve and protect the inviolability of the purchase, struck between boss and provider, to let and to fulfil a contract of works. Although, it does not absolutely subordinate an agreement’s entire length of time to the jurisdiction of the code, or do points including termination provisions proof the compulsory contract between the sides – entitling one or other of them to bring their agreement to an end, providing the relevant conditions are met.
A supplier under a single payment agreement should realize that certain requests for some additional costs and outgo being briefly refused by its entrepreneur according to the section 887 of the code, despite an agreement including provisions for such an entitlement.
In other words, one may point out that there are the consequences of an explanation of the section 887 (1); it says that suppliers can not claim about an increase in respect of a single payment which appears in relation to the accomplishment of the agreed works. The supplier can draw his or her attention to the section 887 of the code (2) although the article examines the fulfilling or respecting the requirements of the contract according to numerous points agreed to by an entrepreneur.
The UAE argument
Article 1 of the Civil Code refers to Sharia as one of the most important sources of law in case of shortage of any legislative supply. In addition, Article 3 of the Civil Code states that official policy principles are those, which are not contrary to the central fundamentals of Sharia.
On the other hand, Article 27 of the Civil Code states that if there are some conflicts of laws no law contrary to Sharia is to be used, and official policy and ethics are applicable.
So, we have legislative supplies according to which Sharia is regarded only as an origin of law; on the other hand, the Civil Code and the aforesaid law of 1973 of the Supreme Court fornming the highest court recognizes Sharia as THE source of law.
The scope of the request of Sharia was uplifted in a set of cases in the highest court of appeal in UAE. Thus, one can make a conclusion that the Sharia is THE principal spring of law, in relation to all other laws. However, there are the persons who make laws or the members of a legislative body who decide whether implement a law or no.
It should be pointed out that in Arab countries there are numerous other cases, which remind of the above-mentioned and demonstrate the contradictions as well as the conflict between the fundamentals of Sharia and the secular laws.
In my own opinion, a Contractor should observe the prudence principle and avoid the complex harsh legal framework imposed by the clause. He should not assume that conflicts will be solved informally and instead take into consideration the timescales stipulated in sub-clause 20.1 and issue out notices within the stipulated time of 28 days. The idea behind the difference in treatment between the Contractor and the Employer is that in most situations the Contractor presumably will be in a better position to recognize what is happening on site and as a result far much better placed to know if a claims situation may arise than the Employer.
The danger of the Contractor not being able to claim for an extension of time or loss thereof due to failure to communicate within the allocated time is stipulated clearly in the clause. Employers will always tend to induce time bars in the contracts as it gives them confidence in the outturn costs. This implies that the Contractor should get to understand the contracts before signing them in order to see whether there are any time bars.
Conclusion
The condition precedent is being reviewed all the time and the FIDIC is inclined in following the global trend to encourage dispute avoidance. It is clear that no matter the softening of the clause 20.1, the Contractor remains bound by the condition precedent whereby it must give notice of any or circumstance giving rise to a claim. It is always good for the Contractor to issue out notices within the stipulated time.
Bibliography
Glover, J. Understanding the New FIDIC Red Book, Oxford Press, London, 2008.
Quinn, D. A Perfect Claim and its Settlement the non Adversarial Way, Middle East Press, Middle East, 2000.
Footnotes
- D Quinn A Perfect Claim and its Settlement the non Adversarial Way. Middle East Press, Middle East, 2000.
- D Quinn, A Perfect Claim and its Settlement the non Adversarial Way. Middle East Press, Middle East, 2000.