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Construction Law/Currency Fluctuations compensation


Hi Mike,
We are a contractor signed a contract for road construction in Afghanistan in Euros but we spend in US Dollars.
In the past 4 years, we have suffered from currency fluctuation to exchange Euros to USD and spend for construction.
Recently Euro to Dollar has sunk to the lowest1Euro=$1.08 which made of to lose big money on exchange rate.
The contract is Lump Sum fixed price in Euros and carbon copy of FIDIC except in Special condition of contract.
Please do me a big favor and let me know, how this burden can be compensated by the client/Financier by means of any clause or justification in FIDIC typical contract?

Very Truly Yours,
MT Alikhani

Hi Mohammed
Would you be complaining if the exchange rate was the other way round? I thought not.
However four years is a long time for a Fixed Price Lump Sum contract.
Was it intended to be for that duration or was it originally a shorter period that just got extended.
If you have an extended contract period then you can claim for the difference provided you did not cause the delay.
In the special conditions is there a stated exchange rate? If not then the rate that applied when you signed the contract will apply.
If the contract really is four years or more and there is no contractual mechanism for exchange rate adjustment then your only options are:
1. Politely request re-imbursement of the exchange rate losses.
If not Granted:
2. Rescind the contract and forfeit your bond
3. Carry on with the losses and complete the works.
Sorry that I cannot be more helpful.
Best regards
Mike Testro

Construction Law

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Mike Testro


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45 years in the Construction Industry 15 Years as a consultant delay analyst - I now hold myself to be expert in this field.

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Currently employed in India by Punj Lloyd as expert delay analyst. Engaged in ongoing arbitrations and EoT claims. Prior an Indepenent consultant in delay analysis.

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