What is the Procedure for Change in Legislation related Claims under the 1999 FIDIC Red Book?

“It may not be possible for the Contractor to price particular costs that may arise from changes in Law which are not foreseen at the time the contract was signed.”

In our case;  the government announces changes to the laws restricting the construction activities and works on site.

The Contractor proceeds with the Works in compliance with the restrictions.

But the restrictions affect the performance of the Contract adversely.

Moreover, the Contractor suffers delay and incurs additional cost.

So in the end, the Contractor claims extension of time and additional payment for change in legislation related costs.

In this document; you will find the key issues and the procedure to be followed while preparing and submitting the change in legislation related claims in accordance with the 1999 FIDIC Red Book.

1   Entitlement to Claim 

1.1 Base Date

The change in Laws of the country should have taken place after the Base Date.

Base Date [1]; The date 28 days prior to the latest date for submission of the Tender.

1.2 Laws

The particular event should constitute a change in Law.

Laws [2]; All national (or state) legislation, statues, ordinances and other laws, and regulations and by-laws of any legally constituted public authority.

1.3 Performance

The change in Law should affect the performance of the Contract.

1.4 Country

The claim will be limited to the country where the Works are being carried out.

2   Notice to the Engineer

Sub-Clause 20.1 defines and describes the “Notice to the Engineer” 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   Fully Detailed Claim

42 DAYS TIME LIMIT for the CONTRACTOR

Within 42 days or other period [4] 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.

4   Interim or Final Claim

If the Claim related event has a continuing effect;

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

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

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

5   Engineer’s Response

Within 42 days, after receiving a Claim or any particulars supporting a previous claim or within such other period as may be proposed by the Engineer and approved by the Contractor, the Engineer shall respond with approval or with disapproval and detailed comments [5].

6   Agreement or Determination of the Claim 

The Engineer is to proceed under Sub-Clause 3.5 [Determinations] to agree or determine;

1.  The Extension of the Timeunder Sub-Clause 8.4 [Extension of Time for Completion].

2.  The Additional Payment to which the Contractor is entitled under the Contract.

FOOTNOTES

1. The same Sub-Paragraph letters are used as in Sub-Clause 1.1.3.1 of the 1999 FIDIC Red Book.

2. The same Sub-Paragraph letters are used as in Sub-Clause 1.1.6.5 of the 1999 FIDIC Red Book.

3. The same Sub-Paragraph letters are used as in Sub-Clause 1.1.6.2 of the 1999 FIDIC Red Book.

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

5. The same Sub-Paragraph letters are used as in Sub-Clause 20.1 of the 1999 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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