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Construction Law/Repayment of Overpaid Foreign Currency

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Question
Dear Sir,

Thank You very much for taking your time in responding to my inquiry.
Some of the relevant information regaring  the project are:-
1. the Standard Contract Document is FIDIC 1987 edition
2. the applicable lay in my country is the Civil Code
3. the payment proportion is 50% in foreign currency (USD) and 50% in local currency (ETB)
4. the contract price is subjected to price adjustment

What happened is that the Contractor has been overly paid a significant amount of foreign currency mistakenly within 38 IPCs and needs to pay it back in accordance to clause 60.4 of GCC.

Accordingly, the Contractor has repaid some portion of the overly paid amount in USD but failed to repay the rest as he is short of dollar amount.

Hence, it is been agreed to repay the equivalent amount in local currency.

My question is whether the contractor should use the contract exchange rate (base rate) which is the prevailing exchange rate 28 days before submission of the bid or the current exchange rate (28 days before the 38th IPC) in calculating the equivalent amount.

Thank you very much for the usual cooperation!

Answer
Dear Yehuwalashet,

It all depends on the Contract.  What rate of exchange is used to calculate the proportions of foreign currency, or local currency for each IPC?  Is it the rate 28 days before the tender deadline or some other variable rate?  You should use the same rate.

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Peter M. Elliott

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First response to queries regarding extensions of time, variations orders, site instructions and payment using FIDIC and other forms of Conditions of Contract, based on English Law, and derivatives only. Anyone who needs advice about EoT should download and study the SCL Delay & Disruption Protocol www.eotprotocol.com before submitting a question.

Experience

Value . . .
It's unwise to pay too much, but it's unwise to pay too little. When you pay too much you lose a little money, that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing you bought it to do.
The common law of business balance prohibits paying a little and getting a lot. It can't be done. If you deal with the lowest bidder, it's well to add something for the risk you run.
And if you do that, you will have enough to pay for something better.
. . . John Ruskin (1819 - 1900)
"We are too poor to buy something cheap"
.Romanian Proverb 2002
A lean compromise is better than a fat lawsuit. George Herbert (English poet 1593-1633)
I said it in Hebrew, I said it in Dutch,
I said it in German and Greek:
But I wholly forgot (and it vexes me much)
That English is what you speak!" Hunting of the Snark - Lewis Caroll
Match your presentation to the reader!
The joy of food lasts but an hour, of sleep but a day, of a woman, but a month, but the joy of a building lasts a lifetime. Syrian proverb.
Comments and observations leading to improvements in the translation of FIDIC Red & Yellow books into Romanian prior to approval by FIDIC (reference 'Preface to the Romanian edition')

Organizations
Institution of Civil Engineers, Association of Chartered and Certified Accountants, Society of Construction Law, Dispute Resolution Board Foundation

Education/Credentials
B Sc(Hons) in Civil Engineering

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