Construction Law/Employer's Claim

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QUESTION: Dear Alina,

2010 FIDIC MDB Harmonized Conditions of Contract

In accordance with Sub-Clause 2.5 GCC, “the Employer or the Engineer shall give notice and particulars to the Contract”. This Sub-Clause further states “The notice shall be given as soon as practicable and no longer than 28 days after the Employer become aware, or should have become aware, of the event or circumstances giving rise to the claim”

I have following questions:

(i)   Is the Engineer obliged to give notice and particulars (substantiation of amount and/or time) to the Contractor on behalf of the Employer and then himself proceed under Sub-Clause 3.5 GCC to determine this matter?
(ii)   This sub-clause puts a time bar of 28 days on the Employer or the Engineer to give notice of the event or circumstance. Is the failure to give timely notice will entitle the Contractor to discharge from his responsibilities in connection with the claim as compared to Contractor’s notice claim provision in Sub-Clause 20.1?
(iii)   If the Engineer gives notice and substation of the Employer’s Claim, then how he is considered to give fair determination on his own produced claim?
(iv)   Sub-Clause 2.5 did not expressly require submitting proper fully detailed claim as compared to Contractor’s Claim instead it required to submit notice and particulars. My question is that is the Employer obliged to submit claim in the head of “Employer’s Claim” if he considers entitled to additional time or money?

Regards,

Qasim Zeeshan

ANSWER: Dear Qasim,
(i) the Engineer can give notice on behalf of the Employer - 2.5 says that "the Employer or the Engineer shall give notice and particulars". So, he is not obliged, but he can do this. 3.5 says that he will determine, therefore yes, it can be the case when the Engineer gives notice, gives the particulars of the claim and issue the FAIR determination 3.5. When giving the determination 3.5, the Engineer shall be FAIR, he is not acting on behalf of the Employer. It can be that the determination 3.5 is not (100%) in the favour of the Employer, since, let/s say, the Employer asks the Engineer to do the 2.5 for him, but obviously the Contractor is right, or the amount or extension of the DNP asked by the Employer could not be demonstrated 100%.
(ii) in 20.1 there is a second paragraph saying that "If the Contractor fails to give notice of a claim within such period of 28 days, the Time for Completion shall not be extended, the Contractor shall not be entitled to additional payment, and the Employer shall be discharged from all liability in connection with the claim." No such previsions are included within 2.5, therefore it can be interpreted that failing to give notice in 28 days will not dismiss the notice. It is the same as in case of 20.1, where "within 42 days... the Contractor shall send to the Engineer a fully detailed claim which includes full supporting particulars...", with no sanction for not submitting in 42 days. In case the Contractor sends the details after the 42 days, nothing happens - or the Engineer can give an answer and determination based on what ge received in 42 days - but this answer or determination on what was given in 42 days, even nothing, rarely happens in practice.
Though, it would be safer for the Employer to take care to observe the 28 days rule, just to avoid any undesired interpretation.
(iii) see (i) above. It can be that there are not enough arguments and reasons and proves available.
(iv) of course the Employer is obliged to submit claim in the head of “Employer’s Claim” if he considers entitled to additional time or money. 2.5 says: "If the Employer considers himself to be entitled to any payment under any Clause of these Conditions or otherwise in connection with the Contract, and/or to any extension of the Defects Notification Period, the Employer or the Engineer shall give notice and particulars to the Contractor"
and
"The Employer shall only be entitled to set off against or make any deduction from an amount certified in a Payment Certificate, or to otherwise claim against the Contractor, in accordance with this Sub-Clause."
So, only through 2.5 the Employer can ask time and/or money.
Hope it helps.
Regards,
Alina

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

QUESTION: Dear Alina,

Thanks for the answer, In answer (i)you have pointed out that Engineer is not obliged to submit notice and particulars. Although, the Sub-Clause 2.5 GCC deals with the Employer's Claim but for the submission it states "the Employer or Engineer shall give notice and particulars", I presume that this Sub-Clause address Employer or the Engineer equally.
Please advise...

Regards,

Qasim Zeeshan

Answer
Hi,
Indeed, the Engineer himself is not obliged to give notice and particulars 2.5. This notice and particulars shall be given by someone - Employer OR Engineer - but not necessarily by the Engineer.
So, the notice can be given EITHER by the Employer, OR by the Engineer - this is what I've meant by "the Engineer IS NOT OBLIGED".
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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