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Construction Law/Subcontractor Advance payment

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Question
Hi,
We are currently negotiating a subcontract engagement with our long term main contractor under a FIDIC main contract.

One of our conditions to the main contractor is that we would request an advance payment once we have finalised our negotiations. This seems to have irked the main contractor in terms of whether, under FIDIC we(subcontractor) are entitled to advance payment or not. My understanding of the subcontract under FIDIC is that the main contract conditions apply in trickle down effect to the subcontractor unless expressed otherwise. Please advice.

Answer
Hi,
If the main Contractor receives, under the FIDIC main contract, an advance payment (for mobilization) from the Employer, I see no reason why the subcontractor would not receive an advance payment from the main Contractor, too. This should be stated in the subcontract agreement, which is the internal business of the main Contractor and the Subcontractor, and the Employer or the Engineer have nothing to do with it.
The Subcontractor needs money for his mobilization, too.
In the FIDIC Contract there is nothing stated about the subcontracts - this is purely according the willingness of the main Contractor and his Subcontractor. There is absolutely no indication in the main Contract regarding this relationship. In the main FIDIC Contract it is only stated that the Contractor is responsible of the actions of his subcontractors, in relation with the Employer, like the personnel of the Sub-contractor is his own personnel, and like the works performed by the Subcontractor are performed by the main Contractor. The Sub-clause 4.4 from the main FIDIC Contract refers to this.
In conclusion, I see no reason why the Sub-contract agreement would not include provisions regarding advance payment for the Subcontractor. The main FIDIC Contract does not refer to what the Subcontract agreement should include or not. Indeed, the common sense and the fairness says that whatever is in the Subcontract should reflect the provisions of the main FIDIC Contract.
Hope it helps.
Best regards,
Alina

Construction Law

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Alina Valentina Oprea

Expertise

I can answer to questions regarding FIDIC 1999 contracts, including practical use of these conditions of contract, as well as to questions regarding dispute boards, both from theoretical and practical point of view. I cannot answer to questions related to other kind of contracts or to procurement process, except to some (limited) extent.

Experience

Implementation of works contracts (FIDIC 1999) financed by different financial institutions, including European Union; claims and disputes; dispute boards See more on www.alinaoprea.com

Organizations
Dispute Resolution Board Foundation

Publications
see http://alinaoprea.com/publications/ ; DRBF Forum Newsletter; Drumuri si Poduri; Revista Constructiilor; SIDiR Newsletter

Education/Credentials
Graduated the University of Civil Engineering Bucharest, Faculty of Railways, Roads and Bridges (1985-1990); Trained under Mr. Gwyn Owen’s pupilage program for arbitrators/adjudicators under FIDIC mentoring program (2006 – 2007)

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