Construction Law/Employer's missing resources
I'm currently working on behalf of the Engineer on a Highway project under Yellow FIDIC (1999) at Eastern Europe.
We're long since hearing various "whispers" about problems related to the funding of the Project on behalf of Employers' side. The Project is funded from EIB (almost 80%) and the rest of National resources. Before two days the Employer has noticed both the Engineer and the Contractor a letter, writing that he can't give any amount for the funding of the Project for all 2013.
Furthermore writes that every Work to be executed from now on won't be taken over (by the Engineer) and no payment can be claimed (both from Engineer and the Contractor).
The Contractor hasn't answered yet and additionally continues to execute Works. My question is, if the Employer has the right to act like this (while this is not described in the Contract). Of course has the right to terminate the project, but I believe not in this way. It seems so fuzzy notice without clear instructions or decisions.
Since the Engineer is legally committed through a contract to administrate and supervise the Contract, I think that Employer's action is absolutely wrong.
Dear Konstantions S.
The Employer has officially notified you and the contractor that he will not pay you in the future for a prolonged period of time (more than 84 days). It is the wright of the contractor as well the Engineer to notify the employer that the Contract is terminated effective immediately.
I suggest that you do that immediately as it is not wise to do any work under a notification of nil payment. Should you/contractor reach an agreement for delayed payment, then you can enter into a totally new contract.