Home » News & Speeches » Guest blog: It’s easy when you know how – An explanation of the ins and outs of Claims under FIDIC 2017

The ICC-FIDIC Conference on International Construction Contracts took place in Sao Paolo, Brazil from 10-11 February 2020. Reflecting on the event, Paul Battrick of Driver Trett discusses the importance of understanding the FIDIC rules of contract in construction projects in this guest blog for the International Chamber of Commerce (ICC).

Paul Battrick of Driver Trett

I recently attended the highly successful ICC-FIDIC Conference, where more than 140 participants from 27 countries were in attendance.  When discussions regarding contractual matters had a break as is often the case, the topic became sport. The emergence of Liverpool as a world champion at soccer was of great interest to the Latin American delegates. After a while one of the delegates said: “Ah, but you also have cricket in England.  How does anyone understand that game?”  I started by saying that it was simple but soon found myself looking at the Internet for assistance.  I found this:

You have two sides: one out in the field and one in to bat. Each player that’s in has to bat and when they are out, they come back in, and the next player bats until he or she is out. When they are all out, the side that’s out in the field comes in, and the side that’s been in to bat goes out into the field, and tries to get out those coming in. Sometimes you get players that are still in and not out. When both sides have been in and out, including the not outs, a winner is declared…if there is one.

So, the rules of the game are clear and revolve around being in or out. 

Likewise, any construction contract, say FIDIC, is no more than a rule book for administering the game of construction. In its 1999 edition of FIDIC had clear rules for the administration of a contractor’s claim.  Sub-clause 20.1 required the contractor to provide a notice within 28 days of it becoming aware, or should have become aware, of the event or circumstance giving rise to the claim.

Provide the notice within 28 days and the claim was in the engineer’s in tray; failure to do so and it was in the engineer’s out tray—or more commonly known as either the waste bin or delete button.  It was quite clear and certainty existed (which is never a bad thing). However, the case softened the harsh reality that many contractors found themselves facing. No doubt the drafters of the had Obrascon in mind when they considered the in or out situation contained within the heavily amended sub-clause 20.2 (claims for payment and/or extension of time claims).

Sub-clause 20.2.1 (Notice of Claim) states that the claiming party—the conditions now apply to both the contractor and employer—should give a notice and is now called a “notice of claim” within clause 20 to the engineer no later than 28 days after the claiming party became aware, or should have become aware, of the event or circumstance. It goes on to state that if the claiming party fails to give a notice of claim within 28 days, the claiming party is not entitled to its claim.  In other words, they are caught out.

The engineer’s out tray has a new addition.  Sub-clause 20.2.2 (the Engineer’s initial response) notes that to confirm this failure, the engineer must give a notice within 14 days after receiving the notice of claim stating that the notice was time barred. However, if the engineer fails to comply with this 14- day time period, the notice of claim is deemed to be a valid notice and the claim goes back into the in tray…but does it stay there?

Sub-clause 20.2.2 continues to note that if the other party disagrees with the deemed valid notice of claim it should give a notice to the engineer, including the details of the disagreement. The engineer has to take this into account within the review when determining the claim under sub-clause 20.2.5 (Agreement or Determination of the Claim).  So, the claim could again be in the out tray or in the in tray depending upon the outcome of the review.  Secondly, if the claiming party disagrees with the engineer and considers that there were circumstances which justified the late submission of the notice of claim , details of the disagreement must be included within a “fully detailed claim” as defined within sub-clause 20.2.4 (Fully Detailed Claim).  Note that the fully detailed claim should still be submitted although the engineer has stated that the notice of claim was time bared.  So, the claim could later be back in the in tray or back in the out tray again depending upon the outcome of the review. There are now time limits for the submission of a fully detailed claim—unless the claim is of “continuing effect,” in which case a new set of procedures under sub-clause 20.2.6 (Claims of Continuing Effect) apply. So, after the engineer has given an initial response, no matter what this was, the claim could still be in either the in or out tray.

It is a requirement that the fully detailed claim should contain a “statement of the contractual and/or other legal basis of the claim” and this, together with all other requirements, must be submitted within 84 days of the claiming party becoming aware—or should have become aware of the event or circumstance giving rise to the claim or another period if proposed and agreed by the engineer. Whichever period applies, on first glance there is another fatal time bar. If the claiming party does not provide the statement of the contractual and/or other legal basis of the claim within time, the notice of claim should be deemed to have lapsed and the claim goes back into the out tray provided that the engineer gives a notice to that effect.

If the engineer does not give such notice, the notice of claim is deemed to be valid and the claim stays in the in tray, even if there is still a pending decision from the disagreement(s) under sub-clause 20.2.2. The other party can disagree with the deemed valid notice of claim by issuing a notice that must include details of the disagreement (i.e. noting the failure of the claiming party to comply with the requirement to confirm the contractual/legal basis of the claim and this will be reviewed by the engineer when making a determination under sub-clause 20.2.5.)

Similarly, the claiming party can disagree with the engineer’s notice, rejecting the claim and the reasons will be detailed within the fully detailed claim, which may have already been submitted. The engineer’s determination (or agreement by the parties) will finally decide whether the claim stayed in the in tray or was confined to the out tray; subject as before to referral to third party neutrals.

FIDIC have without doubt created a sub-clause that allows a claiming party, which the vast majority of the time will be the contractor, a few more bites of the cherry to ensure that a claim remains in the in tray by what appears to be a complex web of time limits and deeming provisions.

I started my explanation of cricket by saying “it’s simple” and, believe it or not, the submission of claims under FIDIC 2018 is also simple.  Those who play the game must fully understand the rules and most importantly not “flirt with a ball wide of the ”(a cricketing term – explanation provided if required) and risk the possible rejection of a claim for failing to comply with a stated time period.  To do so contractors (and employers) will need adequate and competent resources to succeed with claims but it can be achieved.

Understanding the rule book is the first very important step.  After all, it’s not rocket science…

*Disclaimer: The content of this article does not reflect the official views of the International Chamber of Commerce. The opinions expressed are solely those of the authors and other contributors.

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