How to Prepare Contractor’s Suspension related Claims in accordance with the 2017 FIDIC Silver Book

“Suspension of work may lead to significant financial consequences; therefore acting with great caution is essential.”

In accordance with the 2017 FIDIC Silver Book, the Employer can instruct the Contractor to suspend the Work at any time.

The Employer may suspend a part or all of the Work.

This suspension will entitle the Contractor to extension of time in respect of any delay.

And the Contractor will be able to claim cost plus profit in connection with the costs incurred such as; demobilisation, remobilisation, guarantees, insurances for the period of suspension.

In this document you will find the key issues and the steps for preparing Contractor’s suspension related claims.

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;

1.1 Employer’s Instruction for Suspension

Under Sub-Clause 8.9 [Employer’s Suspension], when the Employer 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 to the other Party 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 other Party is to be discharged from any responsibility regarding the claim related event.

3   Initial Response

Sub-Clause 20.2.2 defines and describes “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 OTHER PARTY

1.  Within 14 days, after receiving the Notice of Claim, the other Party 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 other Party does not give a Notice within 14 days, the Notice of Claim is to be deemed to be a valid Notice.

4   Fully Detailed Claim

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

4.1 (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.

4.2 (14) Days Time Limit for the Employer’s Representative

1.  After the above mentioned time limit has expired, within 14 days the Employer’s Representative 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 Employer’ Representative does not give a Notice within 14 days, the Notice of Claim is to be deemed  to be a valid Notice.

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

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 Employer’s Representative is to respond to the “First Interim Fully Detailed Claim” in accordance with the time limits under Sub-Clause 3.5.3 [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 Employer’s Representative is to proceed under Sub-Clause 3.5 [Agreement or Determination] to agree or determine the Additional Payment and Extension of Time.

1.  The Employer’s Representative is to give a Notice to the Contractor regarding the requirement of additional details with the reasons for it.

2.  The Employer’s Representative is to respond regarding the contractual basis of the Claim in accordance with the Sub-Clause 3.5.3 [Time Limits].

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

FOOTNOTES

1. Period which is proposed by the Contractor and agreed by the Other Party.

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