William Godwin - The 2017 FIDIC Contracts

Clause 2.3 provides for the Employer's personnel and any other contractors on or near the site to cooperate with the Contractor and comply with relevant health and safety obligations and environmental protections.

Clause 2.4 contains important provisions relating to the Employer's financial arrangements. This clause is far more extensive, and gives the Contractor greater protection, than the corresponding clause 2.4 in the 1999 editions. It is particularly important for the Contractor to be confident, or as confident as possible, about the Employer's ability to sustain payments during the project and to comply with any other Employer's financial obligations since, although the Contractor may be able to obtain security against performance of the Employer's financial obligations, this is often not obtained or may be inadequate. The Employer's failure to provide the appropriate evidence of his financial arrangements, in accordance with clause 2.4, is one of the grounds for suspension and termination by the Contractor under clause 16.

Clause 2.4 of the 2017 editions provides that the Employer's arrangements for financing his obligations under the Contract are to be detailed in the Contract Data. If the Employer intends to make any material change to these arrangements, which are such that they might affect his ability to pay whatever balance of the Contract Price might be remaining, as estimated by the Engineer, or Employer if Silver Book, or if he has to do so because of changes in his financial situation, then the Employer must immediately give a notice to the Contractor with full supporting details.

Additional protection is provided where the original Contract works are substantially changed by variations under clause 13, or where there has been non‐payment or a material change in the Employer's financial arrangements of which the Contractor has not received any notice. Thus if the Contractor:

1 receives an instruction to execute a variation with a price greater than 10% of the Accepted Contract Amount (in the Red and Yellow Books) or the Contract Price stated in the Contract Agreement (in the Silver Book), or if the cumulative total of variations exceeds 30% of that Amount or Price; or

2 does not receive payment in accordance with clause 14.7; or

3 becomes aware of a material change in the Employer's financial arrangements of which he has not received a notice under clause 2.4,

then the Contractor may request and the Employer, within 28 days of receiving the request, must provide reasonable evidence that financial arrangements have been made and are being maintained to enable him to pay whatever part of the Contract Price remains to be paid at that time, as estimated by the Engineer (if the Red or Yellow Books) or the Employer (if the Silver Book).

Clause 2.5 in the 2017 editions deals with site data and items of reference. This clause provides for the Employer to make available to the Contractor before the Base Date all relevant data in his possession as to the topography of the site and sub‐surface, hydrological, climatic and environmental conditions at the site. If the Employer comes into possession of any such data after the Base Date then he is to provide them promptly to the Contractor. Original survey control points, lines and levels of reference, referred to collectively as ‘items of reference’ in the general conditions, are to be specified in the Employer's Requirements (in the Silver Book), or in the Employer's Requirements or issued to the Contractor by a notice from the Engineer in the Yellow Book, or (in the Red Book) in the Drawings and/or Specification or again issued to the Contractor by a notice from the Engineer. The Silver Book moreover expressly disclaims any responsibility of the Employer for the accuracy, sufficiency or completeness of the data and/or items of reference except to the extent stated in clause 5.1 (discussed in Section 5.1 below).

Clause 2.6 provides for the Employer to make any Employer‐supplied materials and/or Employer's equipment listed in the Employer's Requirements (Yellow and Silver Books) or Specification (Red Book) available to the Contractor in accordance with specified details as to time, arrangements, rates and prices, the Contractor to be responsible for each item of Employer's equipment while in use or operation by any of the Contractor's personnel.

As already mentioned in Section 1.2.1above, the Engineer in both editions of the Red and Yellow Books has a central role. He is involved in all aspects of the project from start to finish and its success or failure depends significantly on his willingness and ability to perform his duties properly. In the FIDIC contracts those duties are essentially twofold:

1 (i) the Engineer administers the Contract, being responsible for such matters as certifying payments and taking‐over of the works, monitoring progress, instructing variations, inspecting and attending the Contractor's testing, including tests on completion; and

2 (ii) the Engineer has the function of seeking agreement on or, in default, determining various matters arising under the Contract including extensions of time, adjustments to the Contract Price for variations and a range of other matters.

Clause 3 in the 2017 Red and Yellow Books sets out the authority, functions and duties of the Engineer in far more detail than under the same clause of the 1999 editions. Noticeably, whereas under the 1999 editions the Engineer was required under clause 3.5 merely to consult the parties in order to seek to reach agreement and, if agreement was not achieved, to make a fair determination in accordance with the Contract, taking due regard of all relevant circumstances, clause 3.7 of the 2017 Red and Yellow Books sets out a detailed step‐by‐step process with time limits and deeming provisions for the Engineer to agree or determine a matter and involves him far more closely in seeking to facilitate agreement and to resolve issues as they arise.

Under the 2017 Books the Engineer's determinations are also to be fair, in accordance with the Contract and take account of all relevant circumstances but he is also now expressly required to act neutrally between the parties in discharging his functions under clause 3.7 and is not to be deemed to act for the Employer in doing so, thus affecting the process as well as the outcome of a determination. 1 The Engineer's enhanced role in the 2017 editions reflects the greater emphasis placed on active project management and the avoidance of disputes. The qualities of the Engineer, his powers and authority, including appointing a Representative to act on his behalf at the site, are set out more clearly and fully in the two new Books and are considered in Section 3.2.1below.

Instead of an Engineer, the Employer in the 2017 Silver Book must appoint an Employer's Representative. Unlike the 1999 edition, this is no longer optional for the Employer. The Contractor's Representative now has a single point of contact during the course of the project, including when instructions are issued, and the Employer's Representative alone is now responsible for agreeing or determining claims and other matters under clause 3.5 of the 2017 Silver Book. 2

The procedure for dealing with claims and other matters set out in clause 3.5 of the 2017 Silver Book is the same as in clause 3.7 of the other two Books, and the qualities of the Employer's Representative, his powers and authority are similar to those of the Engineer, as described in more detail below. One significant difference, however, is that the Employer's Representative is not required to act neutrally in carrying out his duties under clause 3.5 whereas the Engineer is so required, under clause 3.7 of the other two Books; the Employer's Representative is, however, still not to be deemed to act for the Employer in discharging these duties and any determination he makes must also be fair, in accordance with the Contract and take due regard of all relevant circumstances.