When and How Prolonged Suspension evolves to Termination under the 1999 FIDIC Red Book?

“Under various circumstances, Prolonged Suspension allows the Contractor to Terminate the Contract.”

The Engineer instructs the Contractor to suspend the Works in accordance with Sub-Clause 8.8 [Suspension of Work].

Despite not having responsibility, the Contractor suspends the Works in line with the Engineer’s Instruction.

During the suspension, the Contractor protects the Work against any deterioration, loss or damage.

Then, the suspension becomes prolonged and exceeds 84 days.

The Contractor requests the Engineer’s permission to proceed.

However, the Engineer does not permit.

The Contractor gives Notice and treats suspension as omission under Clause 13 [Variation].

At the end, suspension affects the whole of the Works and the Contractor gives notice of termination under Sub-Clause 16.2 [Termination by Contractor].

In this document, you will find the key issues and the procedure to be followed in the event of prolonged suspension’s evolving to termination under the 1999 FIDIC Red Book.

1   The Engineer Instructs Suspension

In accordance with Sub-Clause 8.8 [Suspension of Work];

The Engineer may instruct the Contractor to suspend a part or all of the Works.

In the event of suspension, the Contractor secures parts or the Works against loss or damage.

2   Entitlement to Payment for Plant and Materials

The Contractor shall be entitled to payment of the value (as at the date of suspension) of Plant and/or Materials which have not been delivered to Site, if [1];

The work on Plant or delivery of Plant and/or Materials has been suspended for more than 28 days, and

The Contractor has marked the Plant and/or Materials as the Employer’s property in accordance with the Engineer’s Instructions.

3   The Suspension Exceeds 84 Days

In accordance with Sub-Clause 8.11 [Prolonged Suspension];

When the event of suspension continues for more than 84 days,  The Contractor requests the Engineer’s permission to proceed.

4   The Contractor Treats Suspension as an Omission

In accordance with Sub-Clause 8.11 [Prolonged Suspension];

Within 28 days after being requested, if the Engineer does not give permission to proceed, the Contractor gives notice and treats suspension as an omission under Clause 13 [Variations and Adjustments] of the affected part of the Works.

5   Entitlement to Claim

In accordance Sub-Clause with 8.9 [Consequences of Suspension];

In case of any delay or cost in line with the Engineer’s instructions in accordance with Sub-Clause 8.8 [Suspension of Work], the Contractor is to give Notice to the Engineer and be entitled subject to Sub-Clause 20.1 [Contractor’s Claims] to;

An Extension of Time, if completion is or will be  delayed under Sub-Clause 8.4 [Extension of Time for Completion], and

Payment of any such Cost that will be added to the Contract Price.

The Engineer is to continue in accordance with Sub-Clause 3.5 [Determinations] to agree or determine these issues.

6   Notice of Termination

If the prolonged suspension affects the whole of the Works, the Contractor may give notice of termination under Sub-Clause 16.2 [Termination by Contractor];

The Contractor may by notice terminate the Contract immediately.

7  After Termination

When the Notice of Termination under Sub-Clause 16.2 [Termination by Contractor] comes into force, the Contractor is to;

(a)  Continue the work only which is instructed  by the Engineer for the protection of life or property or safety.

(b)  Hand over plant, materials and other work that the Contractor has received payment for,

(c)   Leave the Site.

8   Payment Procedure

Sub-Clause 16.4 defines and describes the “Payment Procedure”. After the Notice of Termination comes into force, the Employer is to;

Return the Performance Security.

Pay in accordance with Sub-Clause 19.6 [Optional Termination, Payment and Release].

Pay the amount of any loss of profit or other loss or damage that is related with the Termination.

FOOTNOTES

1. The same Sub-Paragraph letters are used as in Sub-Clause 8.10 of the 1999 FIDIC Red Book.

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