UK: Dispute Resolution Under FIDIC 2017

Last Updated: 10 January 2018
Article by Graeme Barton, Ron Nobbs, Paul Thwaite and Amy Crocker-White

What you need to know

Following our briefing note which covered the new features in the FIDIC 2017 Suite more generally, this note deals specifically with the dispute resolution updates.

A number of key changes seek to encourage dispute avoidance, such as the heightened role of the Dispute Avoidance / Adjudication Board ("DAAB") and the splitting out of the 'Claim' and 'Dispute' procedures. The 2017 Suite also includes more prescribed notice and time bar provisions in relation to Claims and Disputes which will increase the administrative burden on the Parties and the Engineer. The Procedures for Contractor and Employer Claims have also been changed.

Key changes to dispute resolution provisions

The broad dispute resolution framework of the FIDIC 1999 Suite remains the same in the FIDIC 2017 Suite, i.e. Notice of Claim; Determination by Engineer / Employer's Representative; Decision by DAB / DAAB; Arbitration. However, significant changes in the detail have been made. These include:

  • Splitting 'Claims' and 'Disputes': Clause 20 (Claims, Disputes and Arbitration) of the 1999 Suite has been split in two. Under the 2017 Suite, Clause 20 addresses Claims and Clause 21 addresses Disputes. This change emphasises the FIDIC distinction between Claims and Disputes, i.e. a Claim is an assertion of an entitlement under the terms of the Contract, and a Dispute arises when a Claim is rejected.
  • Employer and Contractor Claims: Under the 1999 Suite, Contractor and Employer Claims were dealt with separately, and had different procedural requirements under Sub-Clauses 2.5 and20.1 respectively. Clause 20 of the 2017 Suite deals with Contractor Claims and Employer Claims together and the same rules apply to both.
  • Early Warning System: New Sub-Clause 8.4 provides that each Party (and the Engineer, where applicable) shall advise the other in advance of any known or probable events or circumstances which may adversely affect the works, Contract Price or progress. Here, FIDIC appears to have borrowed from the approach taken in the NEC Suite of Contracts.
  • Notice of Claim: New Sub-Clause 1.3 requires Notices (including Notices of Claim) to be identified as a Notice and refer to the provision of the Contract under which it is issued, which aims at limiting the scope for Disputes relating to the validity of a purported Notice.
  • Claim Time Bars:

    • Under new Sub-Clause 20.2, both the Contractor and the Employer wishing to make a Claim must provide a Notice of Claim to the Engineer (or the other Party under the Silver Book) within 28 days of the date it became aware or should have become aware of the event or circumstance giving rise to the Claim. Failure to provide a Notice of Claim on time will mean that the Claim is time-barred (i.e. the claiming Party loses any entitlement and the other Party is discharged from all liability in connection with the relevant event or circumstance).
    • The claiming Party must also provide a "fully detailed Claim" within 84 days (rather than 42 days under the 1999 Suite) of the date it became aware or should have become aware of the event or circumstance giving rise to the Claim. The new Suite prescribes the contents for a fully detailed Claim, whereas the 1999 Suite simply required "full supporting particulars". If the fully detailed Claim is not provided on time, the Notice of Claim lapses.
    • If the Engineer considers that a Notice of Claim or fully-detailed Claim is out of time, it must notify the Parties within 14 days of receipt of the Notice of Claim or expiry of the fully detailed Claim time limit respectively. If the Engineer or other Party says that a Notice of Claim is time-barred, but the claiming Party disagrees or believes that there are justifying circumstances, it may raise this in the fully-detailed Claim and the Engineer or Employer's Representative then proceeds with the determination taking this into account.
  • DAAB Time Bar Waiver: The onerous nature of the time bar provisions is softened by new Sub-Clause 20.2.5, which empowers the Engineer (or the Employer's Representative under the Silver Book) to waive a failure to comply with a time bar requirement in making its agreement or determination of the relevant Claim. Sub-Clause 20.2.5 provides that the Engineer / Employer's Representative may find that late submission of a Notice of Claim was justified, taking into account factors including whether the other Party would be prejudiced by the late Notice and whether the other Party had prior knowledge of the event or circumstance giving rise to the Claim. Notably, the Sub-Clause provides that the factors which may be taken into account "shall not be binding". One view put forward at the FIDIC International Users Conference was that this contemporaneous determination by the Engineer / Employer's Representative will provide clarity to parties. This may be so if the description of the factors as non-binding is given full force, however, it would remain open for a party dissatisfied with such agreement or determination to refer the matter to a DAAB under Sub-Clause 21.4, which may in fact lead to more Disputes being referred to the DAAB.
  • The New Dispute Avoidance / Adjudication Board ("DAAB"): One of FIDIC's new 'FIDIC Golden Principles', which enshrine FIDIC's core contracting philosophy, provides that "All formal disputes must be referred to a Dispute Adjudication Board for a provisionally binding decision as a condition precedent to arbitration." Parties are therefore discouraged from amending a FIDIC form to state otherwise. As signalled by the name change, the new DAAB differs considerably to the Dispute Adjudication Board ("DAB") of the 1999 Suite.

    • The default position is that all DAABs are 'standing', i.e. appointed at the outset of the Contract and throughout its lifetime;
    • The Parties may jointly request DAAB assistance in relation to any issue, and the DAAB may also invite the Parties to make such a request;
    • The 2017 Suite expressly provides that upon termination of the Contract, the DAAB will expire 28 days after the DAAB has given its decisions on all Disputes referred to it or (if earlier) when the Parties reach final agreement on all matters in connection with the termination;
    • A Party may provide a Notice of Dissatisfaction ("NOD") in relation to part only of a DAAB Decision; that part is then deemed severable from the rest of the DAAB decision and the remainder becomes final and binding to the extent that no NOD is given in respect of it;
    • Even if a NOD has been issued, if a Party fails to comply with a DAAB Decision, the winning party under the Decision may refer the losing party's failure to comply with the DAAB decision directly to arbitration (i.e. without a separate DAAB Decision and amicable settlement period).

Conclusions

The separation of Claims and Disputes in the new FIDIC 2017 Suite emphasises that one Party's assertion of a right under the Contract may be resolved without a fully developed Dispute between the Parties. Updates to the DAAB and Notice of Claim requirements seek to encourage early awareness and resolution of events and circumstances which may give rise to a Dispute. It remains to be seen whether such provisions will prove to be helpful tools for avoiding disagreements or whether they will simply create new grounds for dispute. It is also uncertain whether the Parties (in particular, Employers) will accept or revise the new dispute resolution provisions to reflect the familiar 1999 provisions governing Employer Claims.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions