Construction Law/Delay Payment

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Question
Dir Sir
i want to ask Sub Clause 14.8 in the fidic Red book /1999
1- When the Employer is causing delays and costs to the contractor he should grant costs and profit , my question is
why is the contractor Entitled the profit ?
2- if the late payment caused the contractor to suspend progress unless and until tha contractor has received the payment certificate , or Employers Financial Arrangement , my question is
if the "Government" is owner of the project , is the contractor entitled to suspend the work ? because the government has the financial arrangement ....
best regards

Answer
Dear Shadi,
1. When it is a breach of the Contract by the Employer, and the Employer is causing, therefore, delays and costs to the Contractor, the FIDIC Contract’s principle is that the Employer should pay cost and profit. If the Contractor was delayed and had supplementary costs by other causes than his own fault or Employer’s own fault, but the cause is an event that is in the Employer’s risk (see, also, the Sub-clause 17.3), such as was, rebellion, munitions of war, any operation of the forces of nature…, but was not caused directly by the Employer (as in the points f) and g) from 17.3, i.e. occupation of the Permanent Works by the Employer, design of any part by the Employer… ), then the Contractor is entitled to costs, without profit. This is the FIDIC principle.
2. The FIDIC Contract makes no difference between different kinds of Employers, be they private or public, or governments. The principle is that everybody should be treated in the same way and the rights and responsibilities are the same for everybody, irrespective of being a small company, o huge company or a government.
Though, in case of non-payment or non-issuance of the IPC, or other cases, as per the Sub-clause 16.1 from FIDIC 1999, the Contractor is entitled, not obliged to suspend the works. Suspending the works is a management decision that the Contractor should make, and he might have another approach to the Contract than to use all his rights against the Employer.
Hope my answers help.
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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