Clause 20 in FIDIC contracts

Clause 20 in FIDIC contracts refers to the Contractor's Claims. It outlines the procedures and requirements for the Contractor to submit claims for additional time and/or payment due to events or circumstances that have impacted the execution of the project.

Clause 20 typically covers the following key aspects:

1. Notice of Claims: The Contractor is required to provide timely written notice to the Engineer (or the Employer) regarding any event or circumstance that may give rise to a claim. The notice should include a description of the event, its impact on the project, and the Contractor's intention to submit a claim.

2. Detailed Particulars: The Contractor must then submit detailed particulars of the claim, including the cause, the effect on the Works, and supporting documentation. This information should be provided within a specified timeframe.

3. Examination and Determination: The Engineer (or the Employer) is responsible for examining the claim and making a determination. They may request additional information or clarification from the Contractor. The determination should be made within a specified timeframe.

4. Time Extensions and/or Additional Payment: If the claim is deemed valid, the Engineer may grant an extension of time and/or additional payment to the Contractor as compensation for the impact on the project. The specific terms and conditions for granting time and/or payment adjustments are outlined in the contract.

It's important for the Contractor to carefully follow the procedures outlined in Clause 20 to ensure that their claims are properly considered and evaluated. Compliance with the notice and documentation requirements, as well as adhering to the prescribed timelines, is crucial for the successful resolution of claims under FIDIC contracts.

Please note that the specific details of Clause 20 may vary depending on the particular FIDIC contract being used, such as the Red Book, Yellow Book, or Silver Book. It is advisable to refer to the specific contract and seek legal advice when dealing with claims under FIDIC contracts.

Red Book

if you consider clause 20 of red book, there is a 1999 Red Book and 2017 release. There are differences between Clause 20 in the 1999 edition and the 2017 edition of the FIDIC Red Book (Conditions of Contract for Construction). Here are some of the key differences:

1. Notice Requirements: In the 1999 edition, Clause 20.1 requires the Contractor to give notice of a claim within 28 days after the Contractor became aware, or should have become aware, of the event or circumstance giving rise to the claim. However, in the 2017 edition, Clause 20.1 has been revised to shorten the notice period to 28 days after the Contractor became aware, or should have become aware, of the event or circumstance "giving rise to the claim or likely to result in a claim."

2. Detailed Particulars: In the 1999 edition, Clause 20.1 requires the Contractor to submit detailed particulars of the claim within 42 days after the Contractor became aware, or should have become aware, of the event or circumstance giving rise to the claim. In the 2017 edition, Clause 20.1 shortens the time for submission of detailed particulars to 42 days "after the Contractor became aware, or should have become aware, of the event or circumstance likely to result in a claim."

3. Engineer's Determination: In the 1999 edition, Clause 20.4 provides that if the Engineer fails to give a determination within 42 days, the Contractor's claim is deemed to have been rejected. However, in the 2017 edition, Clause 20.4 removes the provision deeming a claim to be rejected if the Engineer fails to give a determination within the specified timeframe. This change gives more flexibility to the Engineer in making determinations and allows for further discussions between the Parties.

4. Dispute Adjudication Board (DAB): One significant difference between the 1999 and 2017 editions is the introduction of the DAB procedure in the latter. In the 2017 edition, Clause 20.6 provides the option for either Party to refer a dispute to a DAB for a decision before proceeding to arbitration. This introduces an additional step in the claims process and aims to facilitate timely resolution of disputes.

It's important to note that these are just a few examples of the differences between the 1999 and 2017 editions of the FIDIC Red Book regarding Clause 20. There may be other changes and modifications throughout the contract that should be carefully reviewed when using either edition. It is recommended to refer to the specific version of the contract and seek legal advice to understand the full implications and requirements of Clause 20.

Here are the comparisons of the key differences between Clause 20 of the 1999 edition and the 2017 edition of the FIDIC Red Book (Conditions of Contract for Construction):

1. Notice Requirements:

   • 1999 Edition: The Contractor must give notice of a claim within 28 days after becoming aware or should have become aware of the event or circumstance giving rise to the claim.
   • 2017 Edition: The Contractor must give notice of a claim within 28 days after becoming aware or should have become aware of the event or circumstance giving rise to the claim or likely to result in a claim.

2. Detailed Particulars:

   • 1999 Edition: The Contractor must submit detailed particulars of the claim within 42 days after becoming aware or should have become aware of the event or circumstance giving rise to the claim.
   • 2017 Edition: The Contractor must submit detailed particulars of the claim within 42 days after becoming aware or should have become aware of the event or circumstance likely to result in a claim.

3. Engineer's Determination:

   • 1999 Edition: If the Engineer fails to give a determination within 42 days, the Contractor's claim is deemed to have been rejected.
   • 2017 Edition: The provision deeming a claim to be rejected if the Engineer fails to give a determination within the specified timeframe has been removed.

4. Dispute Adjudication Board (DAB):

   • 1999 Edition: Does not include a provision for a Dispute Adjudication Board.
   • 2017 Edition: Provides for the option of referring a dispute to a Dispute Adjudication Board (DAB) for a decision before proceeding to arbitration.

Detail Analysis of Clause 20.1

Clause 20.1 of the 1999 edition of the contract provides guidelines for the Contractor to give notice of any claim for extension of time or additional payment. The Contractor is required to notify the Engineer of the event or circumstance giving rise to the claim within 28 days of becoming aware of it. Failure to give timely notice within the specified period may result in the Contractor losing the right to claim an extension of time or additional payment. The Contractor is also instructed to keep contemporary records and permit the Engineer to inspect them.

Within 42 days of becoming aware of the event or circumstance, the Contractor must submit a fully detailed claim to the Engineer, including supporting particulars. If the event or circumstance has a continuing effect, the Contractor should send interim claims at monthly intervals and submit a final claim within 28 days after the end of the effects. The Engineer is required to respond within 42 days with approval, disapproval, or detailed comments, and may request further particulars.

The Engineer is responsible for agreeing or determining the extension of time and/or additional payment to which the Contractor is entitled under the contract. Each payment certificate should include the substantiated amounts for any approved claim.

In the 2017 edition, Clause 20.1 introduces the concept of Claims, which can arise from various circumstances, including additional payment, reduction in contract price, extension of the Defects Notification Period (DNP), or any other entitlement or relief against the other party. The specific procedure for making claims related to payment and/or extension of time is outlined in Clause 20.2.

If there is a disagreement between the parties or the Engineer regarding a requested entitlement or relief, it is not considered a Dispute. In such cases, the claiming party can refer the Claim to the Engineer, following the procedures outlined in Sub-Clause 3.7 (Agreement or Determination). The claiming party is required to provide a Notice including details of their case and the disagreement, and the Engineer will then proceed to address the matter.

While there are differences in the wording and structure between the 1999 and 2017 editions, the fundamental idea of giving notice, submitting detailed claims with supporting particulars, and involving the Engineer in the assessment and determination of entitlements remains consistent in both versions. The 2017 edition provides some clarification and expands on certain aspects of the claims process.

Detail Analysis of Clause 20.2

Clause 20.2 of the 1999 edition of the contract deals with the adjudication of disputes by a Dispute Adjudication Board (DAB). Here are the key points of this clause:

1. Disputes shall be adjudicated by a DAB in accordance with Sub-Clause 20.4 [Obtaining Dispute Adjudication Board’s Decision].
2. The DAB can comprise either one or three suitably qualified persons, as stated in the Appendix to Tender. If the number is not stated, and the Parties do not agree otherwise, the DAB shall comprise three persons.
3. If the DAB consists of three persons, each Party nominates one member, and the Parties agree upon the third member to act as the chairman.
4. If a list of potential members is included in the Contract, the members must be selected from that list, excluding anyone who is unable or unwilling to accept the appointment.
5. The agreement between the Parties and the DAB members should incorporate the General Conditions of Dispute Adjudication Agreement contained in the Appendix to the General Conditions, with agreed amendments.
6. The remuneration of the DAB members, including any consulted expert, should be mutually agreed upon by the Parties.
7. The Parties may jointly refer a matter to the DAB for its opinion if they agree to do so. Neither Party can consult the DAB on any matter without the agreement of the other Party.
8. The Parties can appoint a replacement member if a member declines to act or is unable to act due to certain circumstances. The replacement is appointed in the same manner as the replaced person was nominated or agreed upon.
9. The appointment of any member may be terminated by mutual agreement of both Parties but not by the Employer or the Contractor acting alone. The DAB's appointment expires when the discharge referred to in Sub-Clause 14.12 [Discharge] becomes effective.

Clause 20.2 of the 2017 edition of the contract addresses the claim procedure for additional payments, extensions of time (EOT), and extensions of the Defects Notification Period (DNP). Here are the main points of this clause:

1. If a Party believes they are entitled to additional payment, reduction in the Contract Price, EOT, or extension of the DNP, they must follow the Claim procedure outlined in this clause.
2. The claiming Party must give a Notice of Claim to the Engineer, describing the event or circumstance giving rise to the Claim, as soon as practicable and no later than 28 days after becoming aware of the event or circumstance.
3. If the claiming Party fails to give a Notice of Claim within the 28-day period, they will not be entitled to additional payment, reduction in the Contract Price, EOT, or extension of the DNP, and the other Party will be discharged from liability.
4. The Engineer will provide an initial response within 14 days of receiving the Notice of Claim. If the Engineer fails to respond within this period, the Notice of Claim will be deemed valid.
5. The claiming Party must maintain contemporary records to substantiate the Claim and permit the Engineer to inspect these records.
6. The claiming Party must submit a fully detailed Claim within a specified time limit, including a detailed description of the event or circumstance, contractual and legal basis of the Claim, contemporary records, and supporting particulars of the amount claimed.
7. After receiving the fully detailed Claim, the Engineer will proceed to agree or determine the additional payment, reduction in the Contract Price, EOT, or extension of the DNP to which the claiming Party is entitled.
8. If the Engineer requires additional particulars, they will notify the claiming Party, who must promptly provide the requested information.
9. "If the event or circumstance has, meaning situation where an event or circumstance has occurred that entitles one party (usually the Contractor) to claim an extension of time for completing the works or additional costs

How does country wise Contractor's Claims

Each country has its own set of procedures, standards, and contract documents when it comes to construction projects and dispute resolution. The procedures and practices may vary from country to country, depending on their legal systems, industry practices, and regulatory frameworks. Here is a brief overview of how some of the mentioned countries handle these aspects:

1. Canada: In Canada, the Canadian Construction Documents Committee (CCDC) develops and publishes standard contract forms and guides that are widely used in the construction industry. Dispute resolution mechanisms such as arbitration, mediation, and litigation are commonly used to resolve construction disputes.

2. USA: The construction industry in the United States often relies on standard contract documents developed by organizations like the American Institute of Architects (AIA) and the ConsensusDocs. Dispute resolution methods can vary, including litigation, arbitration, mediation, or a combination thereof, depending on the contract and jurisdiction.

3. UK: In the United Kingdom, construction contracts may follow standard forms such as the Joint Contracts Tribunal (JCT) suite of contracts or the NEC Engineering and Construction Contract (NEC ECC). Dispute resolution procedures can include litigation, arbitration, adjudication, or mediation, depending on the contract terms and the Housing Grants, Construction, and Regeneration Act 1996.

4. Germany: Construction projects in Germany often rely on contracts based on the VOB/B (Vergabe- und Vertragsordnung für Bauleistungen/Bauvergabe- und Vertragsordnung), which is a set of regulations and standards for construction contracts. Dispute resolution can involve litigation or arbitration, with arbitration being a common choice for resolving construction disputes.

5. Singapore: The Singapore Institute of Architects (SIA) and the Building and Construction Authority (BCA) have developed standard contract forms commonly used in Singapore's construction industry. Dispute resolution mechanisms can include litigation, arbitration, mediation, or adjudication, depending on the contract and the applicable laws.

6. Australia: In Australia, construction contracts may be based on standard forms such as those published by the Australian Standard (AS) or the Master Builders Association (MBA). Dispute resolution methods can include litigation, arbitration, mediation, or expert determination, depending on the contract and the jurisdiction.

7. Sri Lanka: Sri Lanka's construction industry may use contract forms developed by organizations like the Institute for Construction Training and Development (ICTAD). Dispute resolution can involve litigation, arbitration, mediation, or negotiation, depending on the contract terms and the applicable laws.

It's important to note that the specific procedures and practices within each country can vary, and it is advisable to consult the relevant contract documents, industry associations, and legal professionals in each jurisdiction for detailed information and guidance.

The 1999 edition of the FIDIC contract provided a mechanism for resolving disputes through a Dispute Adjudication Board (DAB). However, in the 2017 edition of the FIDIC contract, some Clauses has been removed or renumbered,

Therefore removal of cwetain Clauses from the 2017 edition could indicate that the FIDIC contract has undergone changes in its dispute resolution process. The 2017 edition introduced the Dispute Avoidance/Adjudication Board (DAAB) concept, which may have led to the reorganization or removal of certain clauses related to dispute resolution.

To gain a comprehensive understanding of the dispute resolution mechanisms in the 2017 edition, it would be advisable to review the corresponding clauses, such as Clause 21 (Claims, Disputes, and Arbitration), in the 2017 FIDIC contract. These clauses should outline the current process for resolving disputes under the contract and the involvement of any relevant boards or panels.

It's essential to consult the specific edition of the FIDIC contract that applies to your situation and seek legal advice for accurate interpretation and guidance. However we will discuss in detail about the Clause 21 in another page.

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