How to Suspend Works by the Contractor under the 2017 FIDIC Red Book

“Legal and practical consequences of suspension should be considered in-depth before the Notice is given.”

Some specified events entitle the Contractor to suspend the Works.

Executing the suspension process properly has a significant importance.

The process has to be managed correctly, otherwise it causes various problems.

It affects whole of the Works and even leads to termination.

When the suspension process is well understood and well executed, it will act as a constructive pressure on the Employer to fulfill his obligations.

Furthermore, it will minimize the additional costs and the need for extension of the project duration.

The Contractor will be entitled to receive financing charges in the event of delayed payment.

And, at the end, the Contractor will resume normal working in accordance with the procedures.

However, some of the Contractors fail while determining the specified grounds for suspension, such as;

➤  The Engineer’s failure to certify interim payments

➤  The Employer’s failure to make payments

➤ The Employer’s failure to comply with the binding determination of the Engineer or the decision of the DAAB.

At the same time they do not well-document the events leading up to suspension.

And, additionally they do not consider the notice requirements.

In this document; you will find the key issues and the procedure to be followed regarding the suspension of Works under the 2017 FIDIC Red Book.

1   The Grounds for Suspension 

Clause 16.1 [Suspension by Contractor] defines and describes the suspension related events and circumstances [1], these are;

(a) The Engineer fails to certify in accordance with Sub-Clause 14.6 [Issue of IPC].

(b)  The Employer fails to provide reasonable evidence in accordance with Sub-Clause 2.4 [Employer’s Financial Agreements].

(c)  The Employer fails to comply with Sub-Clause 14.7 [Payment].

(d)   The Employer fails to comply with;

➤ (i) a binding agreement or final and binding determination under Sub-Clause 3.7 [Agreement or Determination]

➤ (ii) a decision of the DAAB under 21.4 [Obtaining DAAB’s Decision] (whether binding or final and binding)

and such failure constitutes a material breach of the Employer’s obligations under the Contract.

2   Notice of Suspension

Before exercising the right regarding the Suspension;

1. The Contractor should give Notice to the Employer.

2. Notice should state that it is in line with Sub-Clause 16.1 [Suspension by Contractor].

3   Suspension 

21 days (or more) after giving the Notice, the Contractor may suspend the Work, if the default is not remedied.

4 Resume Working 

When the Employer remedies the default in line with the Notice, before the Contractor’s Notice of Termination in accordance with Sub-Clause 16.2 [Termination by Contractor], the Contractor is to resume working.

5   Entitlement to Claim 

In case of any delay or cost due to suspension of work or reducing the rate of work in accordance with Sub-Clause 16.1 [Suspension by Contractor], the Contractor is to be entitled subject to Sub-Clause 20.2 [Claims for Payment and/or EOT] to;

➤ An Extension of Time, and

➤ Payment of any such Cost plus reasonable profit.

FOOTNOTES

1. The same Sub-Paragraph letters are used as in Sub-Clause 16.1 [Suspension by Contractor] of the 2017 FIDIC Silver Book.

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