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Construction Law/Foreign Currency Claim


QUESTION: Dear Sir, I am Working on a Project, the Contractor has submitted a Foreign Currency Claim. under sub section 13.1 (Page-IB-5), contractor indicated 15% payment proportion in Dollar 28 days prior rate of 1$=85Rs. Now after 10 months taking all 100% IPCs payments in Rupees, now claims he should be given the already submitted 15% proportion payment in Dollars at convertible rate of corresponding months and it turns up in millions. please clarify whether it is justifiable to make payment and under which clause of FIDIC 1987 Reprint 1992 please.

ANSWER: Dear Ahmed,
Thanks for your interesting question
I need to know two things before i can give a firm reply firstly,what is exchange rate mentioned in COC part-2 of your contract in response to provisions of clause 72.2 ? and secondly,What variations has been incorporated in COC part-2 in clauses  71 and 72 from GCC (part-1).Generally speaking,the Employer shall reimburse loss or damage to the contractor due to currency restrictions imposed  by the govt.under clause 71.1 after 28 days prior to tender datefor any such order.Now answers to following questions may resolve your present problem regarding currency but you have to re-go through  contractual provisions very carefully.
How and what he has provided as proof of his loss or damage in currency amount transfer due to imposition of govt. regulation imposed after tender date ,if any.Normal currency fluctuations are dependent on market demand and not covered in my views.This is so specially when he has already been paid and accepted it without any reservation.Even if it it is a claim, it should have been notified as it is time barred now as per clause 53.
The IPCs can be corrected any time before final statement as per clause 60.4 and for  any omission correction can be made in principle.This is dependent on Q1 now.
Regards-liaqat hayat

---------- FOLLOW-UP ----------

QUESTION: Thanks for a prompt Reply.Dear Sir, exchange rate for expenditure 15% of the Bid Price excluding provisional sum of foreign currency for US Dollars prevailing on the date 28 days prior to dead line for submission of bid rate by central Bank which was 85. However, in 72.2 CoC Part-2, there is Electrical Mechanical Works, the payment is required to be expended in Dollars.
Q1 of urs is not relevant, as Contractor wants payment for his IPCs in 85% Rupees+ 15% Dollors as per his submission vide 13.1 instruction to bidder.

Contractor wants the payment of 15% in Dollars convertible rate in Rs. This make me feel that contractor is trying to get extra benefit due to his submission as 13.1 being quoted at 1$=85Rs, now Dollar is trading at 100, even though he is not expending it due to no work of Electrical Mechanical is going on.
Q2 ok.

Dear Ahmed,
Thanks for coming back .As cl. 72.2 states the rate of exchange shall be those prevailing on the day 28 days  prior to tender date of tender submission,the rate should be one dollar equal to Rs.85.00 unless noted otherwise in part-2.Beyond this ,it is to be covered as contractor's risk as for I can understand from the stated position.
Regards-liaqat hayat

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Liaqat Hayat


I can answer questions based on FIDIC 4 and FIDIC 1999 [design-build] with particular reference to time extension , price adjustment and disputes. I am in particular more inclined for response to points pertaining to how claims should be framed and put up in case of technical or other contractual shortcomings. Regarding procurement matters I have spent over 5 years as procurement specialist for highway authority and dealt with numerous claims and disputes in the capacity of "The Engineer" .

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