Construction Disputes

under the FIDIC Contracts

in our Region
Piotr Nowaczyk

22 November 2013

FIDIC - International Federation of Consulting

Engineers

Fdration
Internationale
Des
Ingnieurs
Conseils

SIDiR

Stowarzyszenie
Inynierw
Doradcw
i
Rzeczoznawcw

FIDIC

FIDIC is the international federation of consulting engineers founded in

1913 by a French initiative.
Its Headquarters are in Geneva, Switzerland.
Germany has been a member since its conception.
Great Britain joined in 1948 and the USA in 1959.

FIDIC

Currently over 90 countries have joined the Federation and have decided
to uphold its primary goals:
1. Represent the consulting engineering industry globally,
2. Enhance the image of consulting engineers,
3. Be the authority on issues relating to business practice,

4. Promote the development of a global and viable consulting

engineering industry,
5. Promote quality,
6. Actively promote conformance to a code of ethics and to business
integrity,
7. Promote commitment to sustainable development.

1999 Suite of Contracts

New 1999 collection of FIDIC Standard Forms of Contract

The new Suite differentiates between who will be responsible for the
Design
The practical result was 4 new distinct Forms of Contract:
The new RED

Book

1999

The new YELLOW

Book

1999

The

SILVER

Book

1999

The

GREEN

Book

1999

The FIDIC Approach

Employers Risk

Contractors Risk

The exception to these rules would be the SILVER Book where the Risk
between the Employer and the Contractor is willingly transferred to the
Contractor in return for higher Price, but with greater certainty on eventual
Project Cost and Duration.

RED Book The fourth edition (1987)

RED Book Conditions of Contract (international) for Works of Civil

Engineering Construction
A need for an international Form of Contract, independent of any particular
Judicial System
FIDIC updated its RED Book (fourth Edition 1987)

The New RED Book

Conditions of Contract for

Construction
for building and engineering works
designed by the Employer
Recommended for building or
engineering works
designed by the Employer
(or its representative, e.g. the
Engineer).

The New YELLOW Book

Conditions of Contract for

Plant and Design-Build
for electrical & mechanical plant &
for building and engineering works
designed by the Contractor

10

The SILVER Book

Conditions of Contract for

EPC / Turnkey Projects
Recommended for the provision on
a turn key basis of a plant.
Applicable where one party takes
total responsibility for the design
and execution of a privately
financed infrastructure project.
EPC means Engineering,
Procurement and Construction.

11

The GREEN Book

Short Form of Contract

Recommended for relatively simple
work, for work of short duration or
for work of small capital value.

12

The GOLD Book

Conditions of Contract for

Design, Build and Operate
Projects

13

FIDIC publications

Client / Consultant Model Services Agreement (WHITE Book)

Conditions of Contract for Construction for Building and Engineering
Works designed by the Employer (MDB Harmonized Edition)
Form of Contract for Dredging and Reclamation Works (Dredging)
Conditions of Contract for Design, Build and Operate Projects (Gold
Book)
Conditions of Subcontract for Construction for Building and Engineering
Works designed by the Employer
In addition FIDIC published Contract Guides for some of its most
frequently used documents:
The FIDIC Contracts Guide - guide to Red / Yellow / Silver Books
FIDIC DBO Contract Guide
14

Risks

Insurable Risks risks of loss or damage or injury occurring

during the projects Life, including:
Consequences of accidents due to defective design
Acts of God
Fire
Human Error

Un-Insurable Risks leading to Financial and/or time Loss

including:
Late Possession of Site
Changes in design
Variations

15

Notice clause 20.1

Sub-Clause 20.1 [Contractors Claims] mainly for time or money

The Contractor shall give a 28 days Notice to the Engineer after it
became aware of any event giving rise to a claim for:
Additional Payment or Extension of Time for completion

Failure to give notice within 28 days will make the claim time-barred

16

Claim clause 20.1

Fully detailed Claim with supporting particulars within 42 days

The Contractor shall keep contemporary records

17

Determination clause 20.1

Within 42 days after receiving a claim

The Engineer shall make a fair Determination with approval or
disapproval
agree or determine the Extension of Time
and/or the Additional Payment

18

Dispute Adjudication Board (DAB)

19

Appointment of DAB clause 20.2 Red Book

permanent DAB
Sub-Clause 20.2 [Appointment of the Dispute Adjudication Board]
Standing DAB jointly appointed within the period stated in Appendix to Tender
DAB shall include one/three members
A three Members DAB each Party shall nominate one member
The Parties will consult both members and shall agree upon the Chairman
Dispute Adjudication Board Agreement

Each Party shall pay half of the DABs total remuneration

Other FIDIC Conditions provide for ad hoc DABs, unless otherwise provided in
the Special Conditions

20

Disputes clause 20.4

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

connection with, or arising out of, the Contract or the execution of the
Works () either Party may refer the Dispute in writing to the DAB for
its decision

21

Adjudication

Clause 20.2
Disputes shall be adjudicated by a DAB

Clause 20.4
Within 84 days the DAB shall give its decision
The decision shall be binding

22

Dissatisfaction

Either Party may within 28 days after receiving the Decision give:
Notice of its Dissatisfaction

23

Amicable Settlement clause 20.5

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 56 day after the day after the day on which
Notice of Dissatisfaction was given, even if no attempt at amicable
settlement has been made.

24

Arbitration clause 20.6 - general

Unless settled amicably, any dispute in respect of which the DABs

decision (if any) has not become final and binding shall be finally settled
by international arbitration. Unless otherwise agreed by both Parties:
The dispute shall be finally settled under the Rules of Arbitration of the
International Chamber of Commerce (ICC)
The dispute shall be settled by 3 arbitrators appointed in accordance with these
Rules

Arbitration may be commenced prior to or after completion of the Works.

The obligations of the Parties, the Engineer and the DAB shall not be
altered by reason of any arbitration being conducted during the progress
of the Works

25

Failure to Comply clause 20.7

In the event that:

neither Party has given Notice of Dissatisfaction,
the DABs related decision (if any) has become final and binding, and
a Party fails to comply with this decision,
then the other Party may refer the case to Arbitration under Sub-Clause 20.6.

26

Expiry of DABs Appointment clause 20.8

If a Dispute arises and there is no DAB in place:

Sub-Clause 20.4 [Obtaining Dispute Adjudication Boards Decision] and SubClause 20.5 [Amicable Settlement] shall not apply, and
The Dispute may be referred directly to Arbitration under Sub-Clause 20.6

27

International Court of Arbitration ICC

Established in 1923
The most recognized ADR
institution world-wide
132 members of the Court from
85 countries
International Chamber of Commerce
33-43 avenue du Prsident Wilson
75116 Paris, France
Tel.: +33 1 49 53 28 28
Fax: +33 1 49 53 28 59

28

ICC Arbitration Clause

Wszelkie spory wynikajce z niniejszego kontraktu lub w zwizku z nim

bd rozstrzygane ostatecznie stosownie do Regulaminu Arbitraowego
Midzynarodowej Izby Handlowej przez jednego lub wicej arbitrw
wyznaczonych zgodnie z tym Regulaminem.
All disputes arising out of or in connection with the present contract shall
be finally settled under the Rules of Arbitration of the International
Chamber of Commerce by one or more arbitrators appointed in
accordance with the said Rules.
Visi ginai, kylantys i ios sutarties ar su ja susij, turi bti sprendiami
arbitrau pagal Tarptautini prekybos rm (International Chamber of
Commerce) arbitrauo taisykles vieno ar daugiau arbitr pagal mintas
taisykles, kari sprendimas bus galutinis.

29

The Court of Arbitration

at the Polish Chamber of Commerce in Warsaw
The biggest and the most
recognized arbitration court in
Poland
Established in 1950
Domestic and international cases
Number of Recommended
Arbitrators: 249
SA KIG
Trbacka 4
00-074 Warszawa
T: +48 22 827 47 54
F: +48 22 827 94 01
E: info@sakig.pl

30

SA KIG statistics

Year

2008

2009

2010

2011

2012

2013
(do 20.09)

Total number of cases

260

352

440

396

304

210

Construction disputes

64
(25%)

79
(22%)

94
(21%)

79
(20%)

79
(26%)

47
(22%)

31

Contact details
Piotr Nowaczyk
Partner
Tel.: 22 242 52 52
Fax: 22 242 52 42
Email : piotr.nowaczyk@dentons.com

Thank you
DENTONS

Dzikuj
Dkui

Rondo ONZ 1
00-124 Warszawa
T: +48 22 242 52 52
F: +48 22 242 52 42
E: warsaw.europe@dentons.com
www.dentons.com

32