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Construction Law/Financial Charges Duration

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Question
Dear Sir!

I am in Pakistan at an Irrigation Project. Sub-Clause 14.8 FIDIC 1999 EPC says, if the Contractor does not receive payment in accordance with Sub-Clause 14.7 (Timing for Payment), the Contractor shall be entitled to receive financing charges compounded monthly on the amount unpaid during the period of delay. The Employer was to pay an IPC amount within 56 days but he actaully make payment on 156th day. So he delayed IPC payment for net 100 day. He calcualted Fin Charges for 100 delay days say X amount. But failed to pay the X amount of Fin Charges on the same date of payment of IPC amount on 156th day.

He after passing another 60 days (Total 156+60=216 days of submission of IPC)paid us the same X amount of Fin Charges calculated on 156th day. We are of the opinion that X amount is the Principle Amount for 60 delay days and Fin Charges shall be paid to us on X amount for 60 days as well.

while the Employer says that as per Sub-Clause 14.8, the Contractor is entitled to receive fin charges on amounts of an IPC unpaid during the delay. (he says only "IPC" is mentioned in Sub Clause 14.7 (b). So, claiming Fin charges for delay payment of fin charges claculated at the time of payment of IPC is extra contractual. I need your further advice sir.

Answer
Dear Sir,

Thank you for this question.

The financing charges under sub-clause 14.8 are an entitlement without the need for certification. They are also a contractual remedy that dies not limit the contractor's other, legal remedies. Whilst the Employer is correct to state that the financing charges relate only to delayed payment on IPCs, you are correct also in asserting your right to further compensation where the payment of financing charges is delayed. However, you should claim that further compensation as a general right to damages and not under dub-clause 14.8.



I hope that this assists you.

Kind regards,
John Dowse

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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

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