Construction Law/Possession of Site


A Contractor has been hired for a Design, Build contract being guided by the FIDIC Yellow Book. The Contractor submitted the Performance Guarantee, and Advance Payment Bond. The Client issued the Advance Payment. The Contractor installed all required hoarding around the project site, and proceeded with the Design. Soon after, I (FIDIC Engineer) submitted IPC#01 related to the Contractor's application for payment. This IPC#01 is overdue and has not been paid to date (6 months overdue). The Contractor suspended all works for non-payment of IPC#01.

Due to the duration of the suspension, and the deteriorating hoarding, maintaining the hoarding is an expense to the Contractor.
The Client has indicated their temporary difficulty in releasing payments. The Contractor has indicated their difficulty in maintaining the hoarding while no payments have been received by the Client.
Also, the Performance Guarantee expired yesterday.

Finally, the End User, who normally maintains the site, has funds budgeted for the site maintenance.

I do not want the Contractor to terminate the Contract, since the project is important, and procuring another Contractor may take a long time. I do not want the Contractor to have to maintain the site for much longer, due to the associated expense.

Can possession of the site return to the End User without Terminating the Contract, since the Performance Guarantee has expired, thereby requiring the End User to maintain the site (with or without hoarding, since the site itself has not been altered to present a safety hazard)?

The Contract, as in your case Yellow Book gives right to Terminate to the Contractor in accordance with clause 16.2 in case of such delay on payment. However if Contractor does not want to terminate, a financing charge has to be paid to the Contractor. Otherwise, Contractor and Employer may agree for payment to the Contractor on cost plus profit as clarified in clause 16.2. This is default of the Employer however if both parties agree, they can continue by providing compensation to the Contractor. Otherwise, if the Contractor takes legal action, it may not be possible returning of site to end user before getting decision.

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Construction Law

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FIDIC, Arbitration Procedures, Claim Management, Project Management.


I have experience of working at 6 countries in MENA region (algeria, Libya, Saudi Arabia, Oman, Pakistan)as the Regional Director and General Manager of a construction company. I have experience on various applications of FIDIC and construction law, arbitration procedures, claim management, project management.

CEO of TURCON Construction presently.

M.S. Civil Engineer, Various Courses on Project Management, Seminars on FIDIC.

Past/Present Clients
National Highway Authorities of various countries, Water and Power Development Authorities, Karachi Port Trust, etc.

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