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:
-
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.
-
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.
-
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.
-
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:
-
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."
-
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."
-
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.
-
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):
-
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.
-
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.
-
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.
-
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:
-
Disputes shall be adjudicated by a DAB in accordance with Sub-Clause 20.4
[Obtaining Dispute Adjudication Board’s Decision].
-
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.
-
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.
-
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.
-
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.
-
The remuneration of the DAB members, including any consulted expert,
should be mutually agreed upon by the Parties.
-
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.
-
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.
-
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:
-
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.
-
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.
-
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.
-
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.
-
The claiming Party must maintain contemporary records to substantiate the
Claim and permit the Engineer to inspect these records.
-
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.
-
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.
-
If the Engineer requires additional particulars, they will notify the
claiming Party, who must promptly provide the requested information.
-
"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:
-
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.
-
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.
-
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.
-
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.
-
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.
-
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.
-
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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Harmonisation based on the Type of Project
