Construction Law/Sub-Clause 3.5 GCC
I am working as a Contract Engineer for the Engineer on a project pertaining to FIDIC MDB 2010 Conditions of Contract. My query is related to Sub-Clause 3.5 [Determination] of General Conditions of Contract. In one of the Contracts, the Contractor has submitted an extension of time claim. We have reviewed Contractor’s Claim in details as per Sub-Clause 20.1 GCC and find out that the Contactor has not fulfilled the requirement of the Contract in order to qualify for an extension of time. As the Engineer has to proceed under Sub-Clause 3.5 GCC simultaneously, therefore we called for consultation meeting between the parties. In Consultation meeting, we represent our initial findings to the Parties that the Contractor’s Claim did not qualify for extension of time but the Employer in a consultation meeting agreed to give extension of time to the Contractor and this agreement was recorded and take effect accordingly. My queries are as follows;
(i) Is the Employer has the authority to discharge the Contractor from his liabilities in a consultation process? Keeping in view that the Contractor’s Claim did not qualify for any entitlement.
(ii) Both Parties has the authority to amend the Contract with mutual agreement, then is it correct to do this mutual agreement under Sub-Clause 3.5 in a consultation process or it can be done elsewhere. Because I think, if such agreements has to be made without considering merit of the Claim, then why a detailed procedure of claim analysis is laid down in Sub-Clause 20.1 & 3.5 GCC.
I will be glad to receive your comments.
Dear Umer Shabbir,
Thank you for this question.
The Engineer is engaged by the Employer and duties are prescribed by the agreement between the Employer and the Contractor (the Contract). Usually in the case of an external organisation acting as the Engineer there is a separate agreement between the Employer and the Engineer.
Whilst the Engineer can advise the Employer, the Employer has the discretion not to act in accordance with that advice. In the case you have outlined, for some reason the Employer desires to give the Contractor an extension of the Time for Completion without any meritorious claim. This is a value exercise of the Employer's power to amend the Contract in mutual agreement with the Contractor.
If the decision was the other way around, that the Engineer considered an award was valid but the Employer refused, the Employer may be in breach of the Contract by imposing limitations on the Engineer which were not agreed with the Contractor.
I suggest that in the consultation process such an agreement as you have described can be reached; however, my opinion is that the agreement should be recorded formally by the Engineer and signed by authorised representatives of both the Employer and Contractor.
The detailed process for considering of a claim is to ensure fairness is the process between the Employer and Contractor, to prevent the Engineer acting unjustly one way or another and to provide an auditable action trail which an independent third party can review, if necessary, in the dispute resolution process.
I hope that this assists you.
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