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Question
Hi
I am working with one of the well-known MEP sub-contractor in UAE. Our Contract is based on FIDIC – Conditions of subcontract for works of Civil Engineering Construction (1st Edition 1994) with little amendments. Our Main Contract is based on FIDIC 1987 reprinted in 1992.

We have some issue with EOT and the Main Contractor is interpreting the clause 7.2 and 8.2 in different ways. I want to know what is the relief for the Sub-Contractor

m/c – Main Contractor
s/c – sub Contractor
TFC – time for completion
LD – Liquidated damages
EOT – extension of Time

1. What if the s/c is delayed by m/c more that the EOT granted to m/c?
2. Sometimes EOT to m/c will be 100 days while the s/c Time for completion (TFC) will only be  50 days, how will m/c decide how much EOT to grant to s/c?
3. What if there is enough float in the m/c programme and s/c delays beyond the s/c TFC, but it does not delay the m/c and m/c does not suffer a LD, will m/c apply a penalty on s/c?
4. What happens when ‘the extension shall not in any event exceeds the extension of time to which the Contractor is entitled under the Main Contract’?
5. If m/c negotiates a penalty with the employer and succeeds in reducing it, will he pass on the reduction to the s/c?
6. If m/c is delayed by s/c and is liable for 10%CP penalty and 10%CP is >= CP of s/c, how much will m/c recover?
7. What if s/c is delyed by m/c does he get EOT & cost from m/c?
8. Delays in ordering material, advance payments, Bill of Lading/LC issue. Who is responsible for these delays


7.2 Extension of Subcontractor’s Time for Completion
If the Subcontractor shall be delayed in the execution of the Subcontract Works or if applicable, any Section thereof by any:
a) circumstances in regard to which the Contractor is entitled to receive from the Engineer an extension of his time for completion of the Main Works under the Main Contract,
b) instruction pursuant to Sub-Clause 8.2 to which paragraph (a) of this Sub-Clause does not apply, or
c) breach of the Subcontract by the Contractor or for which the Contractor is responsible,

then in any such event the Subcontractor shall be entitled to such extension of the Subcontractor's Time for Completion of the Subcontract Works or such Section thereof as may in all the circumstances be fair and reasonable.

Provided that the Subcontractor shall not be entitled to such extension of time unless he has submitted to the Contractor notice of the circumstances which are delaying him within 14 days of such delay first occurring together with detailed particulars in justification of the extension of time claimed in order that the claim may be investigated at the time and, in any case to which paragraph (a) of this Sub-Clause applies, the extension shall not in any event exceed the extension of time to which the Contractor is entitled under the Main Contract.

Provided also that, where an event has a continuing effect such that it is not practicable for the Subcontractor to submit detailed particulars within the period of
14 days referred to in this Sub-Clause, he shall nevertheless be entitled to an extension of time provided that he has submitted to the Contractor interim particulars at intervals of not more than 14 days and final particulars within 14 days of the end of the effects resulting from the event.
 
8.2 Instructions under Subcontract
Subcontractor shall take instructions only from the Contractor. The Contractor shall have the like authority in relation to the Subcontract Works to give instructions as the Engineer has in relation to the Main Works under the Main Contract. The Subcontractor shall have the like obligations to abide by and comply therewith and the like rights in relation thereto as the Contractor has under the Main Contract. The said authority of the Contractor shall be exercisable in any case irrespective of whether the Engineer has exercised like authority in relation thereto under the Main Contract.

Thanks & Regards
Dan

Answer
Dear Dan,

Appreciate your well articulated Question and apologies for delay

your questions can be replied at 2 levels, one is within the contract and other is Under UAE law.

1. What if the s/c is delayed by m/c more that the EOT granted to m/c?

Unless otherwise somewhere else provided in contract, s/c shall only be entitled to what m/s received from Engineer in terms of EOT, a critical view can be taken to see if current project circumstances cant be addressed under the provisions of contract/ clauses conflicting to each other and therefore, a Quantum meruit approach may be followed in such case.

Under UAE Civil Code, courts often don't bond 3rd parties to agreements of 1-2 parties, unless proved that 3rd party (s/c) has expressly agreed to it, even then Shariah Law says, A just claim never expires and party ( in this case m/c) shall repair injuries caused to injured party (s/c)

2. Sometimes EOT to m/c will be 100 days while the s/c Time for completion (TFC) will only be  50 days, how will m/c decide how much EOT to grant to s/c?

to calculate it, one must refer to time schedule to see which are the affected activities in schedule and the effect of the same on s/c, approved programmes are key in this case

3. What if there is enough float in the m/c programme and s/c delays beyond the s/c TFC, but it does not delay the m/c and m/c does not suffer a LD, will m/c apply a penalty on s/c?

under contract he can, but under civil code of UAE, he cant, you (s/c) will only repair the injuries caused to injured party, in this case no injury is cased. Common law, supported the same concept here with civil code but burden of proof lies with petitioner (you). a experienced m/c may never apply LDs in such case.

4. What happens when ‘the extension shall not in any event exceeds the extension of time to which the Contractor is entitled under the Main Contract’?

same concept as in Answer 1

5. If m/c negotiates a penalty with the employer and succeeds in reducing it, will he pass on the reduction to the s/c?

contractually he is not bond to do so, but again same as in Answer 3, he may choose to reduce it considering, if not, a competent court might, overturn whole of LDs and he may face, arguments of Bad faith and fraudulent intent.

6. If m/c is delayed by s/c and is liable for 10%CP penalty and 10%CP is >= CP of s/c, how much will m/c recover?

under contract, s/c only pays 10% of his contract amount, surely if LDs applied to m/c, it will be much more than s/c LDs amount, but contract limits it to 10% normally, if m/c believes, he need to recover more than 10% (if no other remedies are under contract), he might choose to use the same principle as described above under UAE Law, Judge may increase/ decrease the LD amount to represent injury

7. What if s/c is delayed by m/c does he get EOT & cost from m/c?

Under your contract, s/c receives, provided other conditions are met, eot + ass. cost proportional to what m/c receives from engineer/ employer, but again considering all above, different approach can be adopted, depending upon circumstances.

8. Delays in ordering material, advance payments, Bill of Lading/LC issue. Who is responsible for these delays.

1st, The party who is contractually responsible for these activities, 2nd, after that, to deal them, root causes of these delays must be established, so actual responsibility can be defined.

I hope above replies

regards,

Nas

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