Construction Law/Price Adjustment FIDIC 1999
I am working on a FIDIC 1999 Bank Harmonized based contract.
The contract specifies two currencies for payment, Rs & Dollar.
The source of index for foreign currency is Hongkong Statistics. Clause 13.8 specifies:
"In cases where the “currency of index” (stated in the table) is not the relevant currency of payment, each index shall be converted into the relevant currency of payment at the selling rate, established by the central bank of the Country, of this relevant currency on the above date for which the index is required to be applicable. "
My question is: The values mentioned in the Table of Indices are Index/indices not the "Currency",
then What is the purpose of converting currency of index to currency of payment? and
do we have to convert these foreign index into Rs by multiplying with relevant HKD ?
waiting for your valuable response.
Thank you for your question.
As i could understand, normally such conversion factor is seldom asked for. However it has the logic if we go deeper in to the purpose of "indices" of specified materials/items. It is basically to calculate price variation fro the base date on the basis of an index number which varies and is fixed on the basis of prices prevalent at a particular time and is of-course based on local currency. Here in your case it has been linked to another currency that is HKD and also mention that exchange rate variation of Rs. and HKD also to be taken in to count. I feel here the drafts-man of the bid document has intended to take advantage of inter currency variation also and hence it is in order. There should normally be not much difference b/w the value mentioned in the table of indices in relevant currency and Hong Kong currency Dollar. What sort of difference your are getting in both scenarios? Here Drafts-man has tried to be very meticulous and he is not wrong there.