Construction Law/counterclaims

Advertisement


Question
We are a subcontractor with a back to back agreement with the Main Contractor based on 1999 red book. The project was for 2 years starting in January 2012 and completed in December 2013. According to the agreement, the Main Contractor is the Employer and we are the Contractor. We were doing the blasting with the Contractor providing drilled holes. In February 2013 the Main Contractor (Employer) issued a 20.1 notice to claim for delays and costs due to secondary and tertiary blasting. The claim was never followed up by the Main Contractor. When we issued our final claim in January 2014, Main Contractor pulled out a record of secondary blasted sections since January 2012 and presented a counterclaim. Their claim is one sentence : we incurred x meters of secondary blasting at y rate = cost of secondary blasting to your (subcontractor) account. while the x meters may not be under dispute, their rate y, was never substantiated till we presented our invoice, which they rejected. our question is :
1. is the counterclaim valid, taking into account that the Main Contractor had 2 years to compile such and deduct from the IPCs. The subcontract agreement empowered the non-defaulting party to terminate the agreement and sue for damages after 28 days notice to correct.
2.Was the right notice given since 20.1 is for Contractors Claim?
3. In your opinion, was the 20.1 notice the basis of their counterclaim ?
4. According to FIDIC 1999, what conditions does the Employer/ Main Contractor have to satisfy in order to prove / back up their counterclaim against their subcontractor.
We believe the sudden appearance of the counterclaim after the job is completed is an ambush strategy designed to silence us and avoid paying us. What is the position of FIDIC and relevant clauses.
5.What steps do you suggest that we follow to resolve this since our Main Contractor is abusively ignoring us ?
6. please note there is no penalty clause for secondary blasting in the subcontract agreement ?

thank you for your assistance.

Answer
Dear Jackie,


I just answered your other query, please read this answer, also in the light of that one.

To answer your points:

1. Since they are, as far as you are concerned, "the Employer", they should have issued a Notice of Claim under Sub-Clause 2.5. It is you (the Contractor) that should use Sub-Clause 20.1 for your claims. I take they issued a Notice of Claim against you.

As such, the flaw is not in the 2 years period, but in the wrong procedure they applied.

Time wise, there is no provision in the Red FIDIC '99, waving their rights. All you can try, is to demonstrate under the applicable Law of the Country, that since for 2 years they did not proceed with the claim substantiation, "the true will of the Parties" was to abandon that claim, for whatever reasons. Ask a local lawyer, first to ensure that such legal doctrine applies in the country.

2. Please see above.

3. I do not understand your query, please clarify.

4. Please see my answer to your other question, which I sent a few minutes before.

5. Notify a dispute and request the DAB Decision under Sub-Clause 20.4.

6. Not sure I understand what you mean by that, but there is no need for any specific penalty, the Main Contractor (the Employer) must demonstrate the contractual/ legal basis of their claim and the quantum of the amount they claim.

For demonstrating the quantum, there obviously, must be a rate agreed, or somehow brought in the Contract.

But do not forget answer to pint 1, so far, it seems they don't have a procedurally correct filed claim.

And even if Sub-Clause 2.5, which they should have used, indicates that Notice of Claim is to be issued "as soon as practicable", even that loose deadline is rather exceeded.

In comparison, 20.1 states a 28 days deadline for the Contractor to issue their claims.


Trust these will help, please read carefully, and as the case may be, come back with additional details for clarifying eventual outstanding details.

Good luck!

Construction Law

All Answers


Answers by Expert:


Ask Experts

Volunteer


Florin NICULESCU

Expertise

Questions related to Civil Engineering Contracts, using FIDIC or other Conditions of Contract, concerning Procurement procedures and documents (pre-qualification, tendering and contracting) and Services/ Works Contracts implementation matters including Determinations, Payments, Time Extensions, VOs, Claims/Disputes. Additionally, questions related to dealing with International Financing Institutions. Can also answer questions in Romanian. Can not answer improperly formulated questions.

Experience

Over 20 years of experience in the field of design, works supervision, construction, management of aid funds and technical assistance for various types of contracts implementation, including severe conflictual contractual situations leading to Claims and disputes. Claims/ Contract management, Disputes adjudication, Arbitration.

Organizations
Member of Romanian Professional Association of Roads and Bridges; Listed on President's List of Adjudicators of Romanian Association of Consulting Engineers www.aric.org Former member of the Disputes Resolution Board Foundation (DRBF) of United States – nominee on DRBF President’s Disputes Board Members List www.drb.org and of DRBF Chapter for Eastern Europe http://dabdrb.googlepages.com Former member of Polish Association of Consulting Engineers (SIDiR) – nominee on SIDiR President’s Disputes Board Members National List http://www.sidir.pl/sidir/index.php?action=czlonkowie&a2=r Member of “AllExperts.com” volunteers pool http://www.allexperts.com/user.cgi?m=4&expID=85358&catID=914 Member of the "Constructions Disputes Resolution Services” International Panel of Construction ADR Specialists" of United States www.constructiondisputes-cdrs.com

Education/Credentials
- Graduate in 1994 the Construction Institute - Graduate of several FIDIC,Procurement and other courses - Graduate of first Disputes Board Members Mentoring Scheme (http://www1.fidic.org/resources/adjudicators/pupilage.html) - FIDIC Accredited Adjudicator

Past/Present Clients
- Several State organisations/Ministries , such as Ministry of Transport, National Admistration of Roads, Ministry of Regional Development (former Ministry of European Integration), Public Works and Housing, Central Contracting and Financing Unit in Romania and also in Turkey, Croatia and Macedonia - Numerous Western based private consultancy companies - full CV and other relevant information available at www.abinitio.ro

©2016 About.com. All rights reserved.