The Process for Contractor’s Suspension-Related Claims in 2017 FIDIC Red Book

“A claim process should be managed in a professional manner to reach the required results.”  

The Contractor may claim Extension of Time and Cost if the Engineer instructs the suspension of progress.

Sub-Clauses 8.9 to 8.13 in the 2017 Edition of the Red Book deal with the suspension instructed by the Engineer, “Consequences of Suspension” including Payment for Plant and Materials. Also, these Sub-Clauses deal with the issues of “Prolonged Suspension” and “Resumption of Work”.

Clause 20 in 2017 Edition of the Red Book states the procedure for notification and substantiation of the “Additional Payment and Extension of Time Claims”. Clause 20 also defines the decision making process of the Engineer.

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 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 to the Engineer 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”.

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 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.

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.)

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