FIDIC Sub 20.1 Important To Read
FIDIC Sub 20.1 Important To Read
FIDIC Sub 20.1 Important To Read
David Kelly
1 Introduction
This paper has been written to examine in detail the requirements and
consequences of Sub-Clause 20.1 of FIDIC Redbook 1999 edition.
The purpose of Sub-Clause 20.1 is to give procedures for the dealing with
notification of and justification of extension of time claims and additional
payments under the FIDIC Redbook 1999 form of contract. It also sets out the
decision process required to be undertaken by the Engineer.
Under FIDIC a claim is nothing more than a pipe dream unless notice has been
given in accordance with the contract. A claim is an “assertion” of a right in
connection with or under the contract.
1.2 Authorship
The notes and comments contained below are those of the author. It is
recommended that since all claims are unique that appropriate advise be sort
on an individual basis.
(Paragraph 2) - If the Contractor fails to give notice of a claim within such
period of 28 days, the Time for Completion shall not be extended, the
Contractor shall not be entitled to additional payment, and the Employer shall
be discharged from all liability in connection with the claim. Otherwise, the
following provisions of this Sub-Clause shall apply.
(Paragraph 3) - The Contractor shall also submit any other notices which are
required by the Contract, and supporting particulars for the claim, all as
relevant to such event or circumstance.
(Paragraph 5) - Within 42 days after the Contractor became aware (or should
have become aware) of the event or circumstance giving rise to the claim, or
within such other period as may be proposed by the Contractor and approved
by the Engineer, the Contractor shall send to the Engineer a fully detailed claim
which includes full supporting particulars of the basis of the claim and of the
extension of time and/or additional payment claimed. If the event or
circumstance giving rise to the claim has a continuing effect:
(a) this fully detailed claim shall be considered as interim;
(b) the Contractor shall send further interim claims at monthly intervals, giving
the accumulated delay and/or amount claimed, and such further particulars as
the Engineer may reasonably require; and
(c) the Contractor shall send a final claim within 28 days after the end of the
effects resulting from the event or circumstance, or within such other period as
may be proposed by the Contractor and approved by the Engineer.
(Paragraph 7) - Each Payment Certificate shall include such amounts for any
claim as have been reasonably substantiated as due under the relevant
provision of the Contract. Unless and until the particulars supplied are sufficient
to substantiate the whole of the claim, the Contractor shall only be entitled to
payment for such part of the claim as he has been able to substantiate.
“The Contractor shall promptly give notice to the Engineer of specific probable
future events or circumstances which may adversely affect the work, increase
the Contractor Price or delay the execution of the Works…”.
Within FIDIC 1999, the specific clauses which stipulate Sub-Clause 20.1 should
be used are:
· 8.9 Consequences of Suspension
· 12.3 Evaluation
· 12.4 Omissions
It is suggested that the reference under Sub-Clause 3.5 to “The Engineer shall
give notice to both Parties of each agreement or determination, with supporting
particulars. Each Party shall give effect to each agreement or determination
unless and until revised under Clause 20 [Claims, Disputes and Arbitration].”,
may indicate that clauses referencing Sub-Clause 3.5 may all come within the
ambit of Sub-Clause 20.1.
(a) a Variation (unless an adjustment to the Time for Completion has been
agreed under Sub-Clause 10.1 [Variation Procedure] or other substantial
change in the quantity of an item of work included in the Contract,
(b) a cause of delay giving an entitlement to extension of time under a Sub-
Clause of these Conditions,
2.1.1.2 “additional payment”
The phrase “additional payment” is not defined within the Contract and as
pointed out by Baker[3] raises the question “additional to what?”. It is
suggested that in addition to this question is “what should this additional
payment include?” It is suggested that the answer to the first question is any
payment in addition to that which was contemplated by the contract pursuant
to Sub-Clauses 12, 13 and 14.
With regards the second question, it is noted that the SCL Protocol states that
prolongation is a compensation payment based on placing the Contractor
back into the same position as he would have been had the event not
occurred; the “but for” principal. On this basis the Contracts definition for cost
contained at Sub-Clause 1.1.4.3 may be applicable. It defines “Cost” as:
The wording of Sub-Clause 20.1 suggests that notice should only be given
when the event or circumstance exist in a form that gives the Contractor an
entitlement to additional payment or extension of time and not before. That is
the Contractor should not give notice if a situation exists which may at some
time entitle him to additional payment of extensions of time.
If the sub-clause had of only used the term “become aware” then the situation
would be simply that when the Contractor gained actual knowledge of the
event or circumstance they should give note. This could lead to a situation
where notice could be given months after the event or circumstance and the
Contractor claiming that they had only just “become aware”. However the
sub-clause is broader than that and includes the phrase “or should have
become aware of”, this adds a new objective standard.
The 28 days’ notice period runs from when the Contractor was aware or
should have become aware, not necessarily from when the event or
circumstance commenced.
2.1.2.1 Awareness
“Some of the people in the company are mere servants and agents who are
nothing more than hands to do the work and cannot be said to represent the
mind or will. Others are directors and managers who represent the directing
mind and will of the company, and control what it does. The state of mind of
these managers is the state of mind of the company and is treated by the law as
such. So you will find that in cases where the law requires personal fault as a
condition of liability in tort, the fault of the manager will be the personal fault
of the company.” [5]
2.1.3 Notice
2.1.3.2 28 Days
2.1.3.3 Purpose of notice
2.1.3.4 Notice requirements
Notwithstanding, the above, it is still advisable for any notice given under
Sub-Clause 20.1 to actually state that it is done so.
2.2.1 Condition precedent
It is clear that the 28 day time limit is a condition precedent for the Contractor
to be able to pursue his claim. This is even more evident if this paragraph is
read in conjunction with the last paragraph of Sub-Clause 20.1.
Should the contract require other notices other than the notice given under
Sub-Clause 20.1, they are still required to be given along with a notice for
20.1. A notice given under another requirement of the Contract is not
sufficient to satisfy the requirements of Sub-Clause 20.1.
2.4 Contemporary Records
The Contractor shall keep such contemporary records as may be necessary to
substantiate any claim, either on the Site of at another location acceptable to
the Engineer. Without admitting the Employer’s liability, the Engineer may,
after receiving any notice under this Sub-Clause, monitor the record-keeping
and/or instruct the Contractor to keep further contemporary records. The
Contractor shall permit the Engineer to inspect all these records, and shall (if
instructed) submit copies to the Engineer.
The Contractor has to keep contemporary records. Acting Judge Sanders in
Attorney General for the Falkland’s Islands v Gordon Forbes Construction
(Falkland’s) Limited[24] stated that contemporary records were “original or
primary documents, or copies thereof, produced or prepared at or about the
time giving rise to a claim, whether by or for the contractor or the employer”.
Furthermore Judge Sanders found that it was not possible to avoid the
requirement of detailed record keeping at the time of the event by the use of
witness statements as witnesses memories may fail over time. There is no
substitute for contemporaneous records.
What is important with contemporary records is that they are the records
taken at the time of the event with an emphasis on instantaneous keeping of
records or at least very close to the time of the event.
Ellis Baker suggests that “in relation to claims for both an extension of time and
additional cost due to the Contractor being delayed in his progress of the
Works, such records might include:
· minutes of meetings”[25]
2.5.1 42 days
The Contractor can propose a longer period than the 42 days for the Engineer
to accept or reject should additional time be required.
The Contractor should remember that he has the burden of proof for any
claims. Therefore it should be set out in a clear and logical manner, including
details of the legal basis.
“McApline outlines the general approach which should be taken with respect to
EOT claims. More specifically, with EOT claims, the burden of proof is on the
claimant to establish actual delay. Whilst theoretical calculations, particularly
those contained in computer software programs, are useful tools in the building
industry, generally further information will be required. Whilst there may be
assumptions and calculations, it is necessarily a matter of the claimant proving
in the proper way that there has been actual delay such as to substantiate
claims for reimbursement.”
2.5.4 Continuing effect
2.6 Interim claim
(a) this fully detailed claim shall be considered as interim;
Any interim claims have to be fully detailed the same as final claims.
Should the event continue on for more than a month, monthly interim claims
should be submitted. These would be fully detailed as (a) above denotes.
2.8 Final claim
(c) the Contractor shall send a final claim within 28 days after the end of the
effects resulting from the event or circumstance, or within such other period as
may be proposed by the Contractor and approved by the Engineer.
After the event or circumstance has finished the Contractor has to submit his
final claim within 28 days after the end of the effects of the event of
circumstance. This claim has to be also fully detailed as per (a) above. The 28
day period is not a condition precedent, however the use of the word “shall”
makes the 28 day period mandatory although there is no actual sanction
should the period not be adhered to except perhaps the last paragraph of
20.1 in that the failure to do so may be taken into account.
2.9 Engineer to respond
Within 42 days after receiving a claim or any further 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. He may also request any necessary
further particulars, but shall nevertheless give his response on the principles of
the claim within such time.
The Engineer has his own timetable which he has to adhere to. The Engineer
has 42 days after the receipt of a claim in which to respond. This response can
be acceptance, rejections (in which case a detailed commentary is required), or
request for further particulars.
This requirement applies to interim claims in the same way, the Engineer has
42 days from the submission of an interim claim to make his assessment.
Furthermore, it is clear that even if the Engineer does not consider the
Contractor has provided a valid case or sufficient detail to permit an
assessment, the Engineer is still under an obligation to respond.
This is not a condition precedent and there is not specific sanction should this
time period not be adhered to except it would in theory be a breach of
contract.
This period may be extended but only upon agreement between the Engineer
and the Contractor.
When part or the entire claim has been substantiated, prompt payment
should be made. This provision does allow for part payment of a claim where
only a portion of it has been substantiated.
If anything this reinforced the notion that the second paragraph of Sub-Clause
20.1 is a condition precident. The concept is that if a claim fails because it is
time-bared then there is no need to make any further assessment of it so the
previsions of this paragraph become surpurflus.
[1] Ellis Baker, “FIDIC Contracts: Law and Practice”, Informa, 2009, page 267
[3] Ellis Baker, “FIDIC Contracts: Law and Practice”, Informa, 2009, page 313
[4] Ellis Baker, “FIDIC Contracts: Law and Practice”, Informa, 2009, page 320
[8] [1987] 39BLR34 CA
[13] [2008] 118 Con LR 177, [2008] BLR 79 TCC, [2007] EWHC 3454 (TCC),
[2008] EWHC 3454 (TCC), and [2008] CILL 2544
[14] Steria Ltd v Sigma Wireless Communications Ltd [2008] 118 Con LR 177,
[2008] BLR 79 TCC, [2007] EWHC 3454 (TCC), [2008] EWHC 3454 (TCC), and
[2008] CILL 2544
[23] Ibid para 67
[25] Baker, Ellis – “FIDIC Contracts: Law and Practice” Informa, 2009, page ???
[26] The FIDIC Contracts Guide, FIDIC, 1st Edition, 2000, page 302
[28] (1992) 58 BLR 1