Construction Law/FIDIC 1999 Clause 20 Notices
QUESTION: Hi Peter,
Have a contract here in Bahrain...which ended up with 4No EOT's determined and awarded by the Engineer. Client is now questioning the EOT's awarded on the basis that the EOT's should not have been awarded because of 'non-compliant' notices....so, under Clause 20.1 which is unamended
1.Can you advise what constitutes a "Notice" to the Engineer
Does advising the Engineer that the regular progress of the works is being or likely to be delayed and will impact upon the time for completion constitute a 'Notice"
2.When should it be given.?..I note the contents of Clause 20.1,#28 days, 42 Days, etc# however the 'events' continued for a while before being confirmed and actually becoming applicable...and at this point the "Notice" given was as noted in 1. above and was given every 28 days because we were unable to ascertain the full impact and cost implication until the "event" was confirmed and instructed to the Contractor to proceed with.
ANSWER: Dear Neil,
Two general points; one it is a bad idea to reject a claim for being time barred. An adjudicator, arbitrator or even court might overrule that rejection as being against natural justice and there is more expense. There is also an argument as to who is the Contractor and when he knew or should have known that he had suffered loss or delay. It could be that the loss or delay was uncertain until an instruction was given or a law passed, thus the relevant date is the date of the instruction or the law.
Secondly, the Employer's should address his claim against the Engineer, either for exceeding his authority or for being negligent in awarding the claim. Under the Contract, the award stands once it is awarded by the Engineer.
1. Clause 1.3 is relevant. Provided the notice was given in writing and delivered correctly, it was valid. Normally, I would include the words 'in accordance with clause 20.1, we hereby give notice ....'. I like to include the relevant clause or specification in any notice to be sure that I have the right to issue the notice. I would argue that minutes of a meeting are not a notice in respect of clause 1.3.
2. It is not unusual for claims to be continuing until the final result is known. Notices and updated records are often given on a monthly basis, as required by clause 20.1 a.
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QUESTION: Hi Peter,
Thanks for the prompt response....always appreciated!
With regards to your second para, "Under the Contract, the award stands once it is awarded by the Engineer".....this is where the problem occurs..!
The Engineer was required to receive the approval of the Employer before confirming the EOT Determination...as clause 3.1 was amended. Unfortunately, despite going through the correct process and the Engineer, and the Project Manager (representing the Employer)confirming and agreeing that an EOT was contractually correct to be awarded...the Employer never gave his approval......
Clause 1.3, last para requires Approvals, Certificates, Consents, and Determinations shall not be unreasonably delayed or withheld.....
As there was a no Employer Approval....and there was no instruction from the Engineer to mitigate the delay in the absence of Employer Approval....we continued along the lines of the Determination...as there was no alternative at that point in time......(related to power supply from Electric Authority)
Do you belive the Employer can still object to the award??
The road to hell is paved with good intentions. We've all been there with employers who cannot or will not give a decision. The Employer can always object, but he must do it in the correct manner.
The Engineer appears to have exceeded his authority in that he gave an EoT without the Employer's approval. Clause 3.1 para 4 is relevant. The Contractor does not have the right to question whether or not the Engineer has the Employer's approval where required. The Contractor must assume that approval has been given, so once the Engineer awards an EoT, the Contractor plans his work accordingly, and the award stands. The Employer has to take action against the Engineer for exceeding his authority, not the Contractor, who has the right to interest for any delayed payments. Of course the Engineer might claim mitigation in case of delayed approval in that it was in the Employer's best interest to award the EoT, and anyway he had the Employer's approval from the PM.
A nasty situation that will only end in tears for all parties, except the lawyers who will have some fine lunches on the proceeds of the consequential court action.