Construction Law/A clarification on Sub clause 1.13 “Compliance with Laws” -FIDC Harmonized May'2005
QUESTION: Dear Sir,
I am working in a road project in India under the World Bank fund as a Resident Engineer on behalf of consultants. The contract is under FIDC, Harmonized Edition May’2005.
I want a clarification on Sub clause 1.13 “Compliance with Laws”. The Contractor has not obtained the NOC’s for some plants like stone crusher, Hot Mix Plant and WMM plant from the pollution control board even after lapse of the original contract period of 30 months. The contract now is in under the extension of period. The contractor at one instance notified the Employer, the difficulties in obtaining the NOC’s and sought assistance from them for getting the NOC’s. There has been no official communication from them on the matter. But, they expressed in a meeting that it the obligation of the contract to comply with the contract. Please, note that the works are not been stopped due to this non-compliance by the contractor.
In this regard, I would like to seek guidance from you on what kind of action shall be taken as an Engineer. Is the responsibility of obtaining permissions is ambiguous? (Refer cl 2.2 also). What Shall I write to the contractor and/or Employer?
ANSWER: Dear Saravanan
Thanks for your question.
Yes the reponsibility to obtain permission is ambiguous.
I would like to refer to excerpts from a friendly review carried out by EIC for FIDIC harmonised version.
I trust this will provide you enough guideline to draft a proper response to the Contractor and provide advise to the Employer as well.
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Sub-clause 1.13(b) states that:
‘‘ the Contractor shall give all notices, pay all taxes, duties and fees, and obtain all
permits, licences and approvals, as required by the Laws in relation to the execution and
completion of the Works and the remedying of any defects.’’
Responsibility for obtaining permissions is ambiguous and should be clarified. For instance, what is ‘‘similar permission’’ for which the employer is responsible pursuant to sub-clause 1.13(a) and how does it fit with the contractor’s obligations under sub-clause 1.13(b)? Ideally, the contract should include a detailed schedule of the permits required and should identify the party responsible for obtaining the same. A good way of making such division is by allocating the obligation to obtain permits, licences and approvals for the permanent works (or, what is to be built) to the employer and to allocate the obligation to obtain permits etc. for the temporary
works (or, how it is to be built) to the contractor. Where the contractor is responsible then, under sub-clause 2.2.b(i) [Permits, Licences and Approvals]
‘‘ the Employer shall (where he is in a position to do so) provide reasonable assistance to the Contractor ’’ . Consequently, any delays caused by the employer’s failure entitle the contractor to an extension of time in accordance with sub-clauses 8.4(e) [Extension of Time for Completion].
Any delays caused by authorities entitle the contractor to an extension of time under sub-clause 8.5 [Delays Caused by Authorities]: sub-clause 8.4(b).
In particular, all permits that are required to allow the project to be developed at the site of the works should be specifically identified in the contract as being the responsibility of the employer.
In the event that the contractor undertakes the design of any part of the works, he must clarify who is to be responsible for the provision of permits, licences or approvals for that part of the works.
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As a summary the overall responsibility lies with the Contractor. In your case you may withheld some percentage of interim application so that the Contractor is pressurised to obtain permissions.
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QUESTION: Dear Sir,
Thanks for your reply. Really helpful.
In general I asked the clarification.
But, in my contract, clause 2.2 Ist paragraph amended as " The Employer shall provide, at all the request of the contractor, such reasonable assistance as to allow the contractor to obtain properly".
My worry is by writing a simple letter under this clause the contractor is evading from his responsibility. The Employer also showing ignorance on this matter.
In this situation what action shall be initiated as an Engineer.
Thanks for your folow-up question.
" The Employer shall provide, at all the request of the contractor, such reasonable assistance as to allow the contractor to obtain properly"...where he is able to do so.
Under Sub-clause 3.1 you may refer " any approval, check, certificate, consent, examination, inspection, instruction,notice, proposal, request, test, or similar act by the Engineer (including absence of disapproval) shall not relieve the Contractor from any responsibility he has under the Contract, including responsibility for errors, omissions, discrepancies and non-compliances."
In view of the above it is suggested that the Contractor still has the responsibility abd the Employer in the interest of project should assist the Contractor to obtain necessary clearances from Authorities. However any delays etc from this event shall be attributed to the Contractor.
Hope this helps, else please revert with another follow-up question along with further details for COC.