QUESTION: Dear Sir,
In Contractor scope of work Contractor has to supply material such as pipes and in mechanical erection works Contractor has to supply Equipment, my questions is “then how much tolerance is applicable in accordance to following contractual clauses applicable for delays from contractor’s obligations against contract”. Since Subcontractor claims for failure of Contractor in supplying of material due to delays in delivery of equipment mainly for erection subcontractor and pipes for pipe fabrication and erection works.
We have a clause 1.1.14 in Subcontract Agreement covering nonproductive period due to weather downtime that may occur during the period of Agreement shall be considered or deemed to be included in Subcontract price. No standby charges are payable in the event of work stopped due to safety, breakdown or non-availability of Contractor’s material, equipment and general miss match of each Subcontractor works.
As per another clause 1.1.15 The Subcontract charges shall be include adequate allowance due to Port Congestions and surcharges, all duties and taxes of customs clearance etc.
ANSWER: Dear Mohammed Mujtaba,
It looks as if the main contractor has done this work and suffered claims due to failure on his part or by others. The phrases 'reasonable' and 'unjust enrichment' come to mind. If the delays are excessive, then you might have a claim; otherwise no, unless the main contractor has been negligent. Sorry.
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QUESTION: Dear sir, a followup question
I think you are right the clause is ambiguous in fact where I have been working is an oil & gas project and it is large project, since there is no any such clause available to claim against Company (client) late investigation, or approvals Subcontractor agree but denies to accept. Claiming company discrepancies are Contractor’s liability Subcontractor cannot anticipate such loses. But contract says to anticipate such problems in subcontractor’s rate by allowance inclusion in its rate at tendering stage.
Considering such circumstances and most of the items are imported it needs time to complete the custom clearance completions and some material comes on site lately.
As you said the claim is huge based on loss of productivity if it is not valid then, what is the use of such clauses introducing in contract that’s why they (Contractor) are asking to consider sufficient allowances in Subcontractor’s rates at bidding stage as a Site requirements. Contractor says the delays are from company side due to late inspection and late approvals.
Secondly Subcontractor has worked in co-ordination with other co subcontractor due to its co-subcontractor mistake( Companies coding and decoding procedure system) the project activities suffered and delayed and he faced loses on stoppage of work and now he claimed loss of productivity Contractor replied it’s a co-ordination failure Contractor should not be held responsible since there is a clause for co-ordination for works.
Now Subcontractor intimated he will seek help from arbitration.
Please advise since I am alone to handle the situation.
ANSWER: Dear Mohammed Mujtaba,
If another subcontractor made mistakes that caused you extra expense, then you have a claim against that subcontractor.
If you can show what allowances you made in your tender for delays in port clearances etc and that the actual delays are far larger, then you may have a claim, but not certain. Next time state the allowance that you have made, providing that it is reasonable and say that you do not accept the cost of further delays.
You still do not mention the form of contract, but I guess that it is a bespoke contract and not one of the standard forms.
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Please find the below answers for the previous question as you have been asked.
1) The contract is a re-measure contract, 2) there are no allowance had been specified against any delays due to contractor supplied material or port clearance case only it’s a guide line for bidder to consider the allowances in their bid rates.
I represent to a Contractor under oil and gas project, our subcontractor has a disputed claim, I reject the claim two time based on time bar clause since I came to know time bar clause have some flexibility considering the arbitration terms and even Subcontractor urged to approach arbitration in case if we not accepting his claims, then I reject it based on subcontractor’s discrepancies but still the matter is under dispute now I have to reply its letter.
My question is can I use the time bar clause and other clauses for rejection of the claim simultaneously is it appropriate and acceptable or after using time bar clause we cannot use any other clause as a status of the claim.
Dear Mohammed Mujtaba,
If the time bar clause is valid, then you can use it, but I would advise against relying entirely on the time bar clause, especially if, in this case, the Contractor has caused the delay. FIDIC 99 suffers from a fault that it does not allow for prevention. FIDIC 99 DBO (the Green Book) has modified clause 20.1 to allow claims to be brought before the DAB, if considered worthy, even if they are time barred. There is some interesting case law in the UK courts regarding the effect of time bar clauses. Generally, they are not liked if the fault lies with the client.
FIDIC 4 was better in this respect as it allowed the Engineer to award a claim, even if it was submitted late, but the Engineer had to use the information available to him at the later date. The time bar in FIDIC 99 arose out of the previous custom of delaying the submission and settlement of claims until well after the issuing of the taking over certificate. The intention behind the time bar clause is to force contractors to submit their claims early to allow the Employer to take mitigating action if possible. It also has the intention of quick resolution so that the Contractor has certainty to plan his work.
I suggest that you look sympathetically at the claim and try to settle it without arbitration costs. Talk to the subcontractor and try to find a middle way. Jaw, jaw is better than law, law to misquote a famous English politician.