Construction Law/Taking Over - EOT

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Question
Dear Madam

Our contract is based on FIDIC 1999, there are two sections defined in Time for Completion with different completion dates delay damages rates. Both the sections are under progress presently. Section 1 has 1096 days for completion and Section 2 which is related to building works and has 270 days. However due to variations/culpable delays on part of Contractor, the 270 days were elapsed and contractor's EOT was not approved and the works are in progress. Delay Damages have also not been imposed yet. Later some buildings were substantially completed by the Contractor and the Engineer's staff occupied those buildings. Contractor then requested for issuance of TOC under 10.2. 10.2 requires Employer's sole discretion for Engineer to issue TOC but if some parts are used by him, TOC deemed to have been issued but no TOC has been issued to date.
My question is in such case, if there is no EOT granted, no new date has been fixed for Time for Completion, no delay damages were imposed, Engineer (on behalf) of Employer have started using these buildings (1) Should Engineer issue the TOC for these parts of the works? what would be the repercussions ? and (2) how the last paragraph of 10.2 would interpret/apply especially for reduction in delay damages as the work is already delayed. (3) Can delay damages be imposed after the whole completion of the Section. ? Please advise. Thank you and best regards.

Answer
Hi,

This is an entire case here! Let's take it piece by piece... To not forget anything, I will write MY ANSWER WITH CAPITAL LETTERS within your question:
"Our contract is based on FIDIC 1999, there are two sections defined in Time for Completion with different completion dates delay damages rates. Both the sections are under progress presently. Section 1 has 1096 days for completion and Section 2 which is related to building works and has 270 days. However due to variations/culpable delays on part of Contractor, the 270 days were elapsed and contractor's EOT was not approved and the works are in progress."
EOT IS GIVEN TO THE CONTRACTOR ONLY IF THE DELAY IS NOT BECAUSE OF HIS FAULT - IF THE WORKS WERE DELAYED BY OTHERS, AS PER THE SUB-CLAUSE 8.4.
"Delay Damages have also not been imposed yet."
APPLYING DELAY DAMAGES IS THE RIGHT, NOT THE OBLIGATION OF THE EMPLOYER. SO, THE EMPLOYER CAN CHOOSE TO APPLY DELAY DAMAGES OR TO NOT APPLY IN CASE HE WORKS ARE DELAYED AFTER THE COMPLETION DATE BECAUSE OF THE CONTRACTOR. STILL, AUDITING AUTHORITIES MAY ASK WHY THE DELAY DAMAGES WERE NOT APPLY, IF THE EMPLOYER HAD THIS RIGHT AND THE CONDITIONS WERE FULFILLED - ESPECIALLY IF IT IS ABOUT PUBLIC MONEY.
"Later some buildings were substantially completed by the Contractor and the Engineer's staff occupied those buildings. Contractor then requested for issuance of TOC under 10.2. 10.2 requires Employer's sole discretion for Engineer to issue TOC but if some parts are used by him, TOC deemed to have been issued but no TOC has been issued to date."
THIS MEANS THAT THE CONSEQUENCES ARE LIKE IN THE CASE WHEN TOC WAS ISSUED: THE MAINTENANCE AND THE TAKING CARE F THE WORKS THAT ARE USED - BY THE ENGINEER, IN YOUR CASE - IS NOT THE RESPONSIBILITY OF THE CONTRACTOR ANYMORE, LIKE THEY WERE ALREADY TAKEN OVER - THE 10.2 (B) AND (C). THE CONTRACTOR CAN ASK THE ENGINEER TO ISSUE THE TOC.
"My question is in such case, if there is no EOT granted, no new date has been fixed for Time for Completion, no delay damages were imposed, Engineer (on behalf) of Employer have started using these buildings (1) Should Engineer issue the TOC for these parts of the works?"
YES, IF REQUESTED BY THE CONTRACTOR. IF NOT REQUESTED, THE TOC WILL BE ISSUED WHEN ALL THE WORKS OF THAT SECTION WILL BE (SUBSTANTIALLY OF TOTALLY)COMPLETED.
"what would be the repercussions ?"
IF TOC IS REQUESTED BY THE CONTRACTOR, IS SHALL BE ISSUED, OTHERWISE IT IS A BREACH OF CONTRACT BY THE EMPLOYER/ENGINEER. IF TOC IS NOT REQUESTED, IT MAY BE WITHER ISSUED, AT THE ENGINEER/EMPLOYER'S DISCRETION, EITHER NOT ISSUED, SINCE IT WAS NOT REQUESTED. IF NOT ISSUED, EITHER NOTHING CHANGE, LIKE THOSE SOME BUILDINGS WERE NOT OCCUPIED BY THE ENGINEER, AND THE T.O. WILL BE MADE AND TOC WILL BE ISSUED WHEN THE WORKS WILL BE FINALIZED, EITHER 10.2 (B) WILL APPLY, THE LIABILITY AND THE RESPONSIBILITY OF THE OCCUPIED WORKS WILL BE OF THE EMPLOYER, AND AT THE FINALIZATION OF ALL THE WORKS FORM THAT SECTION THE T.O. WILL BE MADE AND THE TOC WILL BE ISSUED.
"and (2) how the last paragraph of 10.2 would interpret/apply especially for reduction in delay damages as the work is already delayed"
BESIDES WHAT I WROTE ABOVE: IN THE TOC THE ENGINEER WILL WRITE THE DATE WHEN THE WORKS OR WERE COMPLETED - AS PET 10.1 (A). AFTER, ACCORDING TO 8.7 [DELAY DAMAGES], THE CONTRACTOR SHALL PAY DELAY DAMAGES IF THERE IS AN EMPLOYER'S CLAIM 2.5 IN THIS VIEW, IN THE PERCENT INCLUDED IN THE APPENDIX TO TENDER, "FOR EVERY DAY WHICH SHALL ELAPSE BETWEEN THE RELEVANT TIME FOR COMPLETION AND THE DATE [SAYING WHEN THE WORKS OR SECTION WERE COMPLETED] STATED IN THE TOC". SO, IF A TOC IS ISSUED FOR THE PART OF THE WORKS THAT WAS OCCUPIED, THE DELAY DAMAGES FOR THAT PART, FOR WHICH THE TOC WAS ISSUED (AND ONLY IF SUCH A TOC WAS ISSUED FOR THAT PART) WILL BE CALCULATED FOR THE DAYS BETWEEN THE TIME OF COMPLETION AND THE DATE WRITTEN IN THE TOC AS BEING THE DATE WHEN THE WORKS WERE FINALIZED.
"(3) Can delay damages be imposed after the whole completion of the Section. ?"
THE DELAY DAMAGES CAN BE APPLIED/IMPOSED AT ANY TIME - AFTER THE TOC FOR THAT PART OCCUPIED, IF THESE IS A TOC FOR THAT PART, OR AFTER THE ENTIRE SECTION WAS TAKEN OVER AND THE CORRESPONDING TOC(S) ISSUED (EITHER A SINGLE TOC FOR THE WHOLE SECTION, IF THE TOC WAS NOT ISSUED FOR THE PART OF THE SECTION THAT WAS OCCUPIED, EITHER 2 TOCs: ONE FOR THE PART OCCUPIED, AND ANOTHER 1 FOR THE REMAINING WORKS)
Please advise. Thank you and best regards.
HOPE THIS WILL SOLVE YOUR CASE :)
BEST REGARDS,
ALINA

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Alina Valentina Oprea

Expertise

I can answer to questions regarding FIDIC 1999 contracts, including practical use of these conditions of contract, as well as to questions regarding dispute boards, both from theoretical and practical point of view. I cannot answer to questions related to other kind of contracts or to procurement process, except to some (limited) extent.

Experience

Implementation of works contracts (FIDIC 1999) financed by different financial institutions, including European Union; claims and disputes; dispute boards See more on www.alinaoprea.com

Organizations
Dispute Resolution Board Foundation

Publications
see http://alinaoprea.com/publications/ ; DRBF Forum Newsletter; Drumuri si Poduri; Revista Constructiilor; SIDiR Newsletter

Education/Credentials
Graduated the University of Civil Engineering Bucharest, Faculty of Railways, Roads and Bridges (1985-1990); Trained under Mr. Gwyn Owen’s pupilage program for arbitrators/adjudicators under FIDIC mentoring program (2006 – 2007)

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