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Construction Law/Sub-Clasue 20.1, Interim Claims

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Question
Dear Madam,

Good to see you back...

FIDIC MDB Harmonized Conditions are being implemented in our Contract. In accordance with the Clause 20.1 of GCC, the Contractor has the obligation to send further interim claims to the Engineer if the event or circumstances giving rise to claim has a continuing effect. I have following questions:

(i)   Has the Contractor required to submit interim claims in case of approved legislation claim or simply add the interim claim amounts in Monthly Statements?
(ii)   Is it the obligation of the Engineer to respond approval or disapproval in case of each interim claim?
(iii)   In case of approval of interim claim, if the Engineer does not respond to the approved interim claim, then it can be construed as the interim claim is rejected by the Engineer?

Regards,

UMER SHABBIR

Answer
Dear Sir,
When it is about a claim with continuous effect, the Contractor shall submit his notice of claim in 28 days since he was or should have been aware, then submit details in 42 deys from the date when he became or should have been aware, and this is considered as the initial claim. Then, monthly, the Contractor is to submit monthly updates, which will be considered interim claims, up to the date when the effect ends and the Contractor submits his final claim, with the final effects. The Engineer should respond, at least in principle, in 42 days from receiving the details of the initial claim and he can even give a determination 3.5 monthly - first for the initial claim,then month by month. This is not an often situation, though. Usually, the Engineer gives a response in the 42 days, then a determination after the Contractor submits the final claim, at the end of the effects of that claim.
The Contractor can include the value of the claim in the monthly statement only after the Engineer gives a determination of the respective amount, since the clause 14.3 says that he should include "any amounts to be added and deducted for changes in legislation and changes in cost, in accordance with Sub-Clause 13.7 [Adjustments for Changes in Legislation]" and the clause 13.7 requires the Contractor to follow the claim procedure as per 20.1. The clause 20.1 says: "Each Payment Certificate shall include such additional payment for any claim as have
been reasonably substantiated as due under the relevant provision of the Contract. Unless and until the particulars supplied are sufficient to substantiate the whole of the claim, the Contractor shall only be entitled to payment for such part of the claim as he has been able to substantiate." The claim is about costs, which means expenses incurred, not foreseen.
So, to include an amount related to a change in legislation claim every month in the payment statement, the Contractor needs an Engineer determination either month by month.
Hope this clarifies the issue.
Best regards,
Alina

Construction Law

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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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