You are here:

Construction Law/Sub-CLause 10.1 & 10.2

Advertisement


Question
QUESTION: Dear Sir,

FIDIC MDB Harmonized Conditions are being implemented in our Contract. In accordance with the Sub-Clause 10.1 of GCC, the Engineer shall issue TOC for the Works when they are completed in accordance with the Contract, except for any minor outstanding work which will not substantially affect the use of the Works for their intended purpose.
Is the Intended Purpose has to be defined in the Contract or it has to be interpret from the Contract like design reports? Actually I am working on a Barrage Project which includes Rehabilitation and Upgradation of Barrage and Head Regulators. The Contractor has demanded TOC for some part of the Barrage which is substantially completed but nothing in Contract defined its intended purpose. In my point of view almost all parts are inter-related with each other in respect of design and discharge of the barrage and TOC for any part cannot be given until and unless all Works are completed.
In this regard your expert opinion is solicited.  

Regards,

UMER SHABBIR

ANSWER: Dear Umer,

Thank you for this question. The purpose of the Works is that purpose for which they were designed. A hospital is designed for the purpose of catering for the sick and infirm and for the practice of medicine; a swimming pool is intended for the purpose of providing a water based recreational facility; a barrage project is designed for controlling tidal flow.

Under the Contract (MDB 2006 is the version I have to hand) the Employer can choose to instruct the issue of a Taking-Over Certificate for any part of the Permanent Works. If you refer to the GCC you will find that the phrase "intended purpose" does not appear in either of sub-clauses 10.1 or 10.2. In sub-clause 10.2 there is no reference to completion "in accordance with the Contract". This implies a different standard between those two sub-clauses.

The Contractor has no right to demand any partial taking-over, that discretion rests with the Employer; however there would be a deemed taking-over as provided for under sub0-clause 10.2. Is this what the Contractor is referring to?



I hope that this assists you.

Kind regards,
John Dowse

Follow me on Twitter: @CernoOrg
For my regular industry newsletter e-mail to info@cerno.org, stating SUBSCRIBE in the subject line

Training and consulting services are available, bespoke to companies and individuals.
John Dowse can be contacted by e-mail to info@cerno.org (When e-mailing, please include “AllExperts” in the subject line.)


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

QUESTION: Dear sir,

Yes , the Contractor is asking for some part of Works which in Contractor's opinion has been taken over by the Employer and in accordance with Sub-Clause 10.2, its TOC deemed to be issued. But Engineer does not agree with the Contractor that these parts are being used by the Employer.

The scope of work includes rehabilitation of existing barrage and head regulator and further include new construction of Flood spillway and another new head regulator.

The Contractor has demanded TOC for civil works of existing Head Regulator which are completed but no mechanical works pertaining to Gates works is done by the Contractor. This means Head Regulator does not passing increased discharge due to non-completion of Gate works. In my opinion, Head regulator as a whole does not fulfill its intended purpose, so TOC for civil works only is rejected. Secondly, it is written under the Contract that these structures will be operated by the Employer throughout the Contract period. Contractor take a plea that these are under use by the Employer, which is totally wrong. Thatswhy Contractor request for TOC has to be rejected.

Secondly the Contractor has completed the works of the divide wall which now under water, and Contractor again said that it is under use of the Employer. the TOC for this part has to be rejected because it is not used by the Employer.

your opinion is requested.

Answer
Dear Umer,

Thank you for this further information.

As I noted previously where there is no deemed taking-over it is at the Employer's discretion. In this case you have indicated that the Contractor has indicated there is a deemed taking-over. You have not stated the grounds relied upon by the Contractor but you have indicated why the request was rejected. In this request I have one question, has the Employer indicated also that it is not prepared to accept the Contractor's request?

If the Contractor is dissatisfied it does have a further course of action. It can ask for the Engineer to make a determination on the matter and refer it subsequently to the DAB if dissatisfied with that determination.


Regarding the point about the Employer using the works, I note that the Contract specifies the continuing use of the work throughout the Contract period. In what respect does the Contractor argue that this is something more than is allowed in accordance with sub-clause 10.2, whereby the Employer is allowed to use any part of the Works as a temporary measure specified in the Contract or agreed by both Parties?


Finally, regarding the divide wall which is now under water. This issue is not si clear to me on the facts given. Was it always intended that the Employer would flood this section of the work at a particular point is time and was this specified? If not the act of flooding the area and submerging the divide wall could be considered as a deemed taking-over. If you can clarify I will be happy to review this aspect.



I hope that this assists you.

Kind regards,
John Dowse

Follow me on Twitter: @CernoOrg
For my regular industry newsletter e-mail to info@cerno.org, stating SUBSCRIBE in the subject line

Training and consulting services are available, bespoke to companies and individuals.
John Dowse can be contacted by e-mail to info@cerno.org (When e-mailing, please include “AllExperts” in the subject line.)

Construction Law

All Answers


Answers by Expert:


Ask Experts

Volunteer


John Dowse

Expertise

Legal; contract interpretation; quantum; delay analysis. Practitioner in arbitration, adjudication and mediation.

Experience

Thirty-three (33) years experience in building and construction, at all levels both within contracting and consulting organisations. Practising arbitrator, adjudicator, and mediator. Faculty approved trainer for the Chartered Institute of Arbitrators. Lecturer on construction contract forms and dispute resolution practices.

Organizations
Chartered Institution of Civil Engineering Surveyors Chartered Institute of Arbitrators Institute of Directors Society of Construction Arbitrators

Publications
Various UK and International construction and legal publications.

Education/Credentials
LLB (Hons), Pg Dip (Legal Practice), MCInstCES MCIArb MIOD Barrister

©2016 About.com. All rights reserved.