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Construction Law/FIDIC 1987 CL: 70.1 & 70.2



I am currently administering a project under the FIDIC 1897 terms of contract in Bahrain.

There has been a change to the government fees on expatriate workers and the statutory number of holidays per year. These both happened well after the signing of the contract. We have made a claim under clause 70.2: Subsequent Legislation. It has been rejected on the basis that clause 70.2 only covers costs to the contractor other than that covered under 70.1; and as this is essential an increase labour cost which the client says is covered under 70.1.

The standard wording has been amended as below:

Clause 70.1   Increase or Decrease of Cost

Subject to Clause 70.2 no adjustments shall be made in respect of any rise or fall in the costs of labour and materials or any costs affecting the cost of execution of the Works, unless specifically referred to in the Bill of Quantities.

Clauses 70.2

If, after the date 28 days prior to the latest date for submission of tenders for the Legislation  Contract  here occur in the country in which the Works are being or are to be executed changes to any National or State Statute, Ordinance, Decree or other Law or any regulation or bye-law of any local or other duly constituted authority, or the introduction of any such State Statute, Ordinance, Decree, Law, regulation or bye-law which causes additional or reduced cost to the Contractor, other than under Sub-Clause 70.1, in the execution of the Contract, such additional or reduced cost shall, after due consultation with the Employer and the Contractor, be determined by the Engineer and shall be added to or deducted from the Contract Price-and the Engineer shall notify the Contractor accordingly, with a copy to the Employer.

Any assistance would be appreciated.



Dear Shane,

I would interpret Clause 70.1 as referring to normal commercial changes, such as fluctuating exchange rates, increases in material prices, variations in the price of fuel, variations in labour costs due to supply and demand, etc, which are a normal contractor's risk.  

I would interpret Clause 70.2 as referring specifically to changes in legislation affecting changes in costs, which are generally an Employer's risk. I would suggest that the Employer's interpretation is inconsistent with the principle of unfair enrichment under Sharia law.  In an extreme case, the Employer could increase all fees 100 fold and take a huge profit, while refusing to recompense the Contractor, which is against the spirit of FIDIC contracts.

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Peter M. Elliott


First response to queries regarding extensions of time, variations orders, site instructions and payment using FIDIC and other forms of Conditions of Contract, based on English Law, and derivatives only. Anyone who needs advice about EoT should download and study the SCL Delay & Disruption Protocol before submitting a question.


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