Note on FIDIC 2017 press release for FIDIC Linked in Forum

I’ve just read the press release from FIDIC about the 2017 editions. It is good to see the reasons for
some of the major changes explained so clearly. However, in the review I carried out on some of the
main clauses I found a lot of unintended consequences resulting from changes which are obviously
made with the best of intentions. And the statement that

“The additional length is the consequence of more prescriptive provisions, with greater
clarity, transparency and certainty being achieved by setting out in detail the step-by-step
requirements on the employer, the contractor, and the engineer during the course of a
project.”

is, unfortunately, wishful thinking.

For example, the new provision in Clause 13.1 [Variations] adds a ground for the Contractor to
refuse a VO that the variation was “Unforeseeable”. Unforeseeable is defined as “not reasonably
foreseeable by an experienced contractor by the Base Date”. Base Date is 28 days before the date
for submission of the Tender. So “Unforeseeable” does not really mean what it says – not
“reasonably foreseeable” is much less than what is implied by “unforeseeable” in its normal sense.
And the date on which this reasonable foreseeability test applies may be a very long time before the
contract even commences. By definition the Employer will not have forseen the need for a variation
at this date, otherwise it would have changed the Specification or Employer’s Requirements. So why
would the Contractor – even an experienced one be expected to have forseen it? The equivalent
right to object under the 1999 edition was much narrower. The change gives enormous leverage to
a Contractor to push the Employer into increased payments. No explanation is provided in the press
release for this change.

Another example of unintended consequences is the change in Clause 3.7 (Agreement or

Determination). The press release commentary on the changes makes the very acceptable comment
that the role of the Engineer as a neutral is now consolidated and the procedure set out in clear
steps. It is hard to disagree that there should be time limits on the process – otherwise an Engineer
may effectively undermine the process by delaying indefinitely. This may have happened in the past.
But now a series of time limits have been introduced – first for the achievement of agreement and
second for a determination.

Despite the new “clarity” claimed for the 2017 edition, I’ve just gone back to the Clause for a further
of many reads and I defy anyone to understand easily how long the time limit for a determination.
This is set out as follows in Sub-Clause 3.7.3:

“The Engineer shall give the Notice of his/her determination within 42 days or within such
other time limit as may be proposed by the Engineer and agreed by both Parties (the “time
limit for determination” in these Conditions) after the date corresponding to his/her
obligation to proceed under the last paragraph of 3.7.1….”

The last paragraph of 3.7.1 cross refers to 3.7.3.

 “If (a) no agreement is achieved within the time limit for agreement under Sub-Clause 3.7.3
[Time Limits]; or (b) both Parties advise the Engineer that no agreement can be achieved
within this time limit whichever is the earlier, the Engineer shall give Notice to the Parties
accordingly and shall immediately proceed under Sub-Clause 3.7.2 [Engineer’s
Determination].”

So, we then need to see what the time limit for agreement is under Sub-Clause 3.7.3. This sets a
time limit of 42 days for agreement from the starting date. There are a variety of starting dates for
time limits set out there, depending on the issue to be agreed or determined. The paragraph from
3.7.3 quoted above thus provides another 42 days for determination after the Parties fail to agree.

It therefore seems (if I have understood this extraordinarily convoluted piece of drafting correctly)
that the Engineer, who previously could have given a determination as soon as something was
referred to it under the 1999 equivalent must now wait until the parties agree they cannot agree
(which may be up to 42 days) before it can even start and then is entitled to another 42 days. Thus,
determinations may take 12 weeks to be issued.

FIDIC may think this is better than the old open-ended system but they do not explain why. In the
past the Engineer, faced with Parties, who it knew from experience were always at logger-heads and
would not agree on anything, was able to give a quick determination. Now it needs to wait for the
Parties to disagree or agree to there being a determination instead of an agreement.

This power to determine has now been extended to a number of situations to which it did not
previously apply. This is presented in the press statement as an improvement. But there are
unintended consequences which have obviously not been thought through. One example of this
extension is under Sub-Clause 13.3 [Variation Procedure]. In other words, the extension of time and
the valuation of a Variation go through this procedure. A Contractor is obliged to start a Variation as
soon as it is instructed, but the time and money implications have to be determined in 84 days. In
simple Variations this is doable, but where the Variation will take a lot longer than 84 days and
where valuation has to be on a cost-plus or measured basis, it will be impossible for the Engineer to
make a proper determination in the limited time available.

I have given a full analysis of a number of the new Clauses and the above pattern of lack of clarity
and unintended consequences appears repeatedly. For those who are interested, you can find my
and others’ commentaries on: https://www.georgerosenberglaw.com/ and more on
https://corbett.co.uk/fidic-2017-corbett-cos-guide-to-the-main-changes/

George Rosenberg

George.rosenberg@corbett.co.uk

04 April 2018