Welcome to the new issue of Grow Your Knowledge Newsletter where you get free, ready to use, actionable, clear information regarding FIDIC Contracts and Construction Claims.

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Today at a Glance;

➤   Term of the Week

➤   One Tweet

➤   Suspension-related Claims

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TERM of the WEEK

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ONE TWEET

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What will happen if you carry the suspension costs?

 

It doesn’t matter whether suspension is the result of;

➤   An Engineer’s instruction, or,

➤   A wrongful decision of the other party,

 

You will;

➤   Suffer delay, and,

➤   Incur costs

 

Which means you will be entitled to;

➤   Extension of Time, and,

➤   Payment

 

At that point;

➤   Clearly understanding the process, and,

➤   Effectively preparing the claim

will be critical for you.

 

Thankfully, 2017 FIDIC Red Book provides a proper framework regarding that claim process.

 

In today’s newsletter, we broke that process down into 6 steps.

Step #1:  Entitlement to Claim

Step #2:  Notice of Claim

Step #3:  Engineer’s Initial Response

Step #4:  Fully Detailed Claim

Step #5:  Interim or Final Fully Detailed Claim

Step #6:  Agreement or Determination of the Claim

 

1   Entitlement to Claim

Under Sub-Clause 20.2 [Claims for Payment and/or EOT] the Contractor is to be entitled to Extension of Time and/or Payment if the Contractor suffers delay and/or incurs cost due to;

➤  Engineer’s Instruction for Suspension

➤  Resumption of Work

 

1.1 Engineer’s Instruction for Suspension

Under Sub-Clause 8.9 [Employer’s Suspension], when the Engineer instructs suspension, the Contractor is to protect and secure the Works against any loss or damage.

 

1.2 Resumption of Work

Under Sub-Clause 8.13 [Resumption of Work], the Contractor is to make good all the deterioration, loss and damage regarding the Works and Plant and Materials which are affected by the suspension.

 

 

2   Notice of Claim

Sub-Clause 20.2.1 defines and describes the “Notice of Claim” procedure.

 

28 DAYS TIME LIMIT for the CONTRACTOR

1.  The Notice of Claim is to be given within 28 days after the Contractor became aware or should have become aware of the claim related event.

2.  If the Notice of Claim is not given within 28 days, the Contractor is not to be entitled to any additional payment, the Time for Completion is not to be extended and the Employer is to be discharged from any responsibility regarding the claim related event.

 

 

3   Engineer’s Initial Response

Sub-Clause 20.2.2 defines and describes “The Engineer’s Initial Response” procedure.

If the Contractor fails to give the Notice of Claim within 28 days under Sub-Clause 20.2.1 [Notice of Claim];

 

14 DAYS TIME LIMIT for the ENGINEER

1.  Within 14 days, after receiving the Notice of Claim, the Engineer is to give a Notice to the Contractor with the reasons included.

If the Contractor disagrees with the Notice or believes the presence of the circumstances which justify late submission of the Notice of the Claim, the Contractor is to include these details in its “Fully Detailed Claim” under Sub-Clause 20.2.4 [Fully Detailed Claim].

2.  If the Engineer does not give a Notice within 14 days, the Notice of Claim is to be deemed to be a valid Notice.

3.  If the Employer disagrees with deemed valid Notice of Claim, a Notice including the details of the disagreement is to be given to the Engineer by the Employer. Then, the Claim is to be reviewed by the Engineer.

 

 

4   Fully Detailed Claim

Sub-Clause 20.2.4 defines and describes the procedure regarding the “Fully Detailed Claim”.

➤   84 Days Time Limit for the Contractor

➤   14 Days Time Limit for the Engineer

 

84 DAYS TIME LIMIT for the CONTRACTOR

1.  Within 84 days or other period [1] after the Contractor became aware, or should have become aware of the Claim related event, the Contractor is to submit the “Fully Detailed Claim” to the Engineer.

2.  If within 84 days the Contractor fails to submit the statement under Sub-Paragraph (b) of Sub-Clause 20.2.4 [Fully Detailed Claim], the Notice of Claim is not considered as a valid Notice.

 

14 DAYS TIME LIMIT for the ENGINEER

1.  After the above mentioned time limit has expired, within 14 days the Engineer is to give a Notice to the Contractor.

If the Contractor disagrees with the Notice or believes the presence of the circumstances which justify late submission of the statement under sub-paragraph (b) Sub-Clause 20.2.4 [Fully Detailed Claim], the Contractor is to include these details in its “Fully Detailed Claim”.

2.  If the Engineer does not give a Notice within 14 days, the Notice of Claim is to be deemed  to be a valid Notice.

3.  If the Employer disagrees with the deemed valid Notice of Claim, a Notice including the details of the disagreement is to be given to the Engineer by the Employer. Then, the Claim is to be reviewed by the Engineer.

 

Fully Detailed Claim Includes [2];

➤   A detailed description of the event or circumstances giving rise to the Claim.

➤   A statement of the contractual and/or other legal basis of the Claim.

➤   All the contemporary records [3] on which the Claiming Party relies.

➤   Detailed supporting particulars of the amount of Additional Payment claimed and/or EOT claimed.

 

 

5   Interim or Final Fully Detailed Claim

Sub-Clause 20.2.6 defines and describes the relevant procedure. If the Claim related event has a continuing effect;

 

1.  The Fully Detailed Claim submitted is to be considered as interim.

2.  The Engineer is to respond to the “First Interim Fully Detailed Claim” in accordance with the time limits under Sub-Clause 3.7.3 [Time Limits].

3.  Monthly, the Contractor is to give further “Interim Fully Detailed Claims” with the accumulated Additional Payment claimed and/or Extension of Time claimed.

4.  After the end of the effects of the claim related event, the Contractor is to give a “Final Fully Detailed Claim” within 28 days.

 

 

6   Agreement or Determination of the Claim

The Engineer is to proceed under Sub-Clause 3.7 [Agreement or Determination] to agree or determine the Additional Payment and Extension of Time.

1.  The Engineer is to give a Notice to the Contractor regarding the requirement of additional details with the reasons for it.

2.  The Engineer is to respond regarding the contractual basis of the Claim in accordance with the Sub-Clause 3.7.3 [Time Limits].

3.  The date which the additional details are received from the Contractor is the “Commencement Date” of the Time Limit.

 

Learn the process.

But do not forget every claim has unique needs.

Build your own claim preparation system.

Formulate the effective claim and present it in a professional way.

 

FOOTNOTES

1. Period which is proposed by the Contractor and agreed by the Engineer.

2. The same Sub-Paragraph letters are used as in Sub-Clause 20.2.4 of the FIDIC Red Book.

3. Contemporary Records means; Records that are prepared or generated at the same time or immediately after the event or circumstance giving rise to the Claim. (The same Sub-Paragraph letters are used as in Sub-Clause 20.2.3 of the 2017 FIDIC Red Book.)

 

 

This information is provided for your convenience and does not constitute any “Legal Advice”. This document is prepared for the general information of the interested persons. This should not be acted upon in any specific situation without appropriate legal advice.

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