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Construction Law/No claim clause of subcontract agreement

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Question
QUESTION: Sir
I would request you to please share your knowledgeable opinion regarding following issues

1-In one of our subcontract agreement for E&M works, there is no provision for claim against idling of resources and we as main contractor, are delaying the payments and also not able to give the deliverable to our subcontractor to complete his scope.
On the other hand there is a clause in subcontract agreement that subcontractor is fully familiar with T&C of main contract (That is based on FIDIC EPC)technical specifications relevant to subcontract

Question:
-Is subcontractor not entitled to any claim against idling charges and delay of payments?

-can a subcontractor claim if main contract is implemented back to back without any modification, as if he is not restricted to technical specifications only?

There is another irrelevant issue for which i need your assistance please.

Question: While drafting a standard contract for a company under FIDIC (Whether Yellow or Red Book)is it mandatory to copy all the contents of general&Particular conditions or we can modify it? if it can be modified then what is %age of modification permitted to consider any contract falling under FIDIC.

Regards
Mohammad Shaiba Hassan

ANSWER: Mohammad Bey Sellam,


Thank you for your questions.

1. In respect of the first one, I am afraid I do not understand what do you mean by "idling". Do you mean "delaying"?

What do you mean by "idling resources" and then, by "idling payments"?

If you refer to "delayed payments" and if Silver (EPC) FDIC Book is relevant, then, please check Sub-Clause 14.8, which shows entitlement for delayed payments.

As well, if you as main contractor, are "not able to give the deliverable" to your subcontractor, it is likely they will be able to claim against you (Sub-Clause 8.4 c).

Please have a look at this answer and see if it is what you need. If not, please come back with a few clarifications and make sure you clearly define your current case and sought answer.

2. In respect of your second question, I assume you refer to preparation of the Particular Conditions, which are modifying, amending, etc the General Conditions.

Your Contract does not fall under FIDIC, but uses, or is based on the FIDIC Conditions of Contract.

In general, there is a "reasonable" degree of changes that you can include in the Particular Conditions, for including in the Contract the specificities of the country, law, project, location, Employer, etc. As long as you preserve the FIDIC spirit of having a balance and fair contract.

Of course, starting from the FIDIC Conditions of Contract, you can modify anything you want, in any way you want, until the Particular Conditions will no longer allow any resemblance with the original General Conditions, but that is not recommended.

Hope that answer your second question.

Good luck!

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

QUESTION: Sorry for being not putting my situation clearly, i try again to make things more clarified.

activity was planned on 1st day of the month and due to negligence of main contractor, this could not start till 22nd of the same month, as a result main contractor received a claim against idling of direct resources i.e. gantry crane, riggers, lifting engineer etc.

My question is, since in our subcontract agreement (Which is in a sort of labor & materials contract, as main contractor is supplying all direct materials) there is no clause at all for claiming the cost from main contractor against any delays (although we have clause to impose penalty in case of delay on subcontractor), then how a subcontractor can claim cost that is not attributable towards him? Also please note that our signed agreement seems to be modified or very simple form of agreement, because neither the content of subcontract agreement are similar to FIDIC contracts nor the general and particular terms are being used.

If there is clause in the agreement that subcontractor is fully familiar with main contract i.e.FIDIC EPC contract, does this entitle the subcontractor for claim even in absence of any clause for claims against delays.

If at any stage subcontractor decides to go in arbitration, then what reference will be used by the arbitrators for decision making?

I am really sorry that i am not able to communicate exactly what my concern is but even then hope, that you will support me in developing clear picture.

Regards
Shaiba

ANSWER: Dear Shaiba,


Thank you for coming back with these details. And do not worry, none of us was born knowing everything. That's why we're here, to help. As long as there is understanding from your side to provide the necessary information, we'll get to an end.

Firstly, suggest you use the word "delaying" instead of "idling".

Secondly, the answer seems to be somewhere else, not in the Contract, which as you say, seems to have been very poorly drafted.

Hence, I can not give a definite answer, but to rather direct you on where to look for it.

That clause saying the Subcontractor is familiar with the FIDIC EPC, is indeed useless, as it has no relevance whatsoever, as long as there is nothing in the Subcontracting Agreement saying that FIDIC EPC applies. That is one thing you need to check.

As long as I did not see that Subcontracting Agreement, I can not assess the matter completely.

But, as long as you, Main Contractor, put the Subcontractor in the position of not being able to carry out their duties, you might need to check the applicable law, as there may be legal principles such as "natural justice" (one must be given a fair chance), "unjust enrichment", "one can not benefit of his own mistake", etc.

Hence, I can not say what the Subcontractor may claim in an arbitration, but I would suggest you try finding a mutually acceptable compromise.

Because regardless if Subcontractor goes for arbitration or not, surely, they will not serve you well and your ultimate goal is to have the job done properly.

Try to sit down with the Subcontractor and see how you can solve the matter for the best benefit of both of you.

Mind you, you have to deliver yourself to your Employer and regardless what actions you may want to take later against the Subcontractor, you will suffer because of the actions the Employer will take against you. A lean compromise is always better than a fat lawsuit!

Trust that answers your query, let me know if I can be of any further assistance.


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

QUESTION: Thank you very much for your encouraging behavior, actually i wanted to know the answer for my future assignment, because currently every thing is messed up e.g Project was suppose to complete in Dec 2012 and it will still take appx 2 more years to complete and getting EOT by a main contractor is not an issue due to political environment.
Subcontractor is a sister concern of main contractor therefore we know that there is not going to be any arbitration.
Subcontracts are totally unbalanced and put all the responsibilities toward subcontractor
but I got my answer which I was looking for But, "as long as you, Main Contractor, put the Subcontractor in the position of not being able to carry out their duties, you might need to check the applicable law, as there may be legal principles such as "natural justice" (one must be given a fair chance), "unjust enrichment", "one can not benefit of his own mistake", etc.

Further thank you very much for your supportive response and i wil be in contact with you again, because i know that lot of other issues must be waiting for me where I'll be needing your valuable opinions.

Regards
Shaiba

Answer
Dear Shaiba,


Thank you for that feedback, I am glad that one way or the other, you got your answer.

You are obviously always welcomed with further queries.

But by the way, if you don't have an actual question, but you only want to provide a feedback, you better use the scoring facility that this site offer, rather than sending the feedback as a follow-up question.

Good luck!

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Florin NICULESCU

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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.

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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.

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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

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- 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

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