Construction Law/Contractor's claim

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Question
I am working as Resident Engineer in Bulgaria. The project is based on Yellow Book edition 1999. My question is: Can I reject the Contractor’s claim on the grounds of the following information:

Contractor’s claim: When the Contrator made excavation on construction site he discovered different sub-surface conditions. They are different from the Employer’s data for sub-surface conditions given at Tender Stage. The Contractor submited a claim for extension of the time and additional costs.

In addition, in the particular conditions of Contract the Employer stated that the information given as part of the tender documents is ´for information only´and the Employer is no responsible for it. Furthermore, in the Employers requirements it is stated that  there will be a necessity for additional geotechnical surveys.

Best regards

B.Izoff

Answer
Dear Boyko,

Thank you for this question. Whilst the extent of information is limited I will try to assist you.

The answer cannot be a simple "yes" or "no".

Firstly, was the claim notified in time? Under sub-clause 20.1 of the FIDIC Yellow Book contract the Contractor should issue a notice of intention to claim within 28 days of becoming aware of or when he should have become aware of the event of circumstance. The sub-clause states that where the Contractor fails to provide the notification in time the Employer is discharged from all liability. You should check, however, the position under the law of the contract as it pertains to pre-condition clauses such as 20.1, as legal interpretation can vary between different legal jurisdictions.   

Assuming that the Contractor's notice was issued in good time, the next area to address is the principle of the claim. From your narrative I assume that the Contractor is claiming under sub-clause 4.12 - Unforeseeable Physical Conditions. Please note that this clause applies only when the conditions were unforeseeable; the fact that the conditions were not foreseen does not necessarily admit a claim under this sub-clause 4.12.

"Unforeseeable" is a defined terms; see sub-clause 1.1.6.8. If the Contractor should have foreseen such conditions then the claim ought not to be allowed.

By virtue of sub-clause 4.10, the Contractor is required to obtain all necessary information as to risks etc relating to Site Data. The sub-clause imports a requirement for the Contractor to act prior to submitting his tender. You should make enquiry of the Contractor to ascertain whether he made reasonable further investigation prior to submitting his bid and whether those investigations revealed, or ought to have revealed, the risk for which he is now claiming.

I note your reference to the Particular Conditions, the limitation of liability clause and the requirement for additional geotechnical surveys as stated in the Employer's Requirements. You have not indicated whether the Employer's Requirements state when the additional surveys are to be performed. If silent, I expect a reasonable interpretation to be that such would be performed upon instruction by the Engineer.   

Whether or not the limitation of liability provision is effective is a difficult question to answer definitively on such limited information. The Employer will be liable to some extent for the accuracy of information provided. This is to be balanced with the obligations on the Contractor under sub-clause 4.10.

The requirement for further geotechnical information may assist the Contractor. It will be important to understand why that was included within the Employer's Requirements and whether it was intended to limit the Contractor's obligations otherwise.

I hope that this assists you.


Kind regards,
John Dowse

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John Dowse

Expertise

Legal; contract interpretation; quantum; delay analysis. Practitioner in arbitration, adjudication and mediation.

Experience

Thirty-three (33) years experience in building and construction, at all levels both within contracting and consulting organisations. Practising arbitrator, adjudicator, and mediator. Faculty approved trainer for the Chartered Institute of Arbitrators. Lecturer on construction contract forms and dispute resolution practices.

Organizations
Chartered Institution of Civil Engineering Surveyors Chartered Institute of Arbitrators Institute of Directors Society of Construction Arbitrators

Publications
Various UK and International construction and legal publications.

Education/Credentials
LLB (Hons), Pg Dip (Legal Practice), MCInstCES MCIArb MIOD Barrister

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