A Comparative Analysis of the Claim & Dispute Resolution Provisions of FIDIC’s 1999 Major Forms of Contract Against its Earlier

Forms 1
by

Nael G. Bunni, BSc, MSc, PhD, CEng, FICE, FIEI, FIStructE, FCIArb, FIAE, MConsEI.
Chartered Engineer, Conciliator & Registered Chartered Arbitrator Visiting Professor in Construction Law & Contract Administration at Trinity College Dublin.

1.
1.1

Introduction
The construction contract is unique in that it seeks to provide for a specific remedy in the event of any breach of the terms and conditions within its framework and/or for a contractual entitlement in respect of specified events or perceived risks. 2 Comparatively viewed against other types of contract, the wording of a construction contract is therefore more extensive having to provide for and deal with detailed conditions in respect of the risks that might arise during the construction period and beyond.

1.2

Thus, as in other standard forms of construction contracts, the genesis and development of the various FIDIC Forms of Contract were, and remain to be, based on the need to redefine and reapportion the risk ascribed to the respective parties by the applicable law. By including a mechanism to give one party a certain remedy if a specified event arises, the risk of that event, which would otherwise remain with that party, is transferred to the other party. This process is in conformity with the established principle that the purpose of a contract is to identify and allocate the risks between the parties. It is also in accord with the legal concept that the purpose of a contract is to

1

FIDIC is the acronym for the International Federation of Consulting Engineers, established in 1913 in Ghent, Belgium, by three associations of consulting engineers from France, Switzerland and Belgium. At the present time, FIDIC represents 73 national member associations of independent consulting engineers from different countries around the World. 2 “The FIDIC Forms of Contract”, by Nael G. Bunni, Blackwell Publishing, Oxford, 3rd Edition, 2005, see Chapter 7 for the inherent characteristics of the construction contract and Chapter 13 for some of the unique obligations contained in it.

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identify and apportion the rights and obligations of the parties; since these rights and obligations stem from the allocation of the risks to which the contract is exposed, a principle which is particularly true in construction contracts. However, whether the remedy sought is in respect of a breach of the contract terms and conditions or for the occurrence of a specified event, the FIDIC Forms of Contract, as indeed in most construction contracts, place an obligation on the party who wishes to avail of that remedy to follow a set procedure, which is referred to as “the claims procedure”.

2.
2.1

Claims & Counterclaims
The first step of the claims procedure of any construction contract is the launch of a claim. Whilst this might be considered a straightforward exercise, the following

matters need to be fully understood by those involved in such a process: (a) (b) (c) The meaning and definition of “a claim”; The legal basis of claims, and for that matter counterclaims; The process by which claims & counterclaims should be formulated and managed; (d) (e) The parties’ rights and obligations under the Contract or in relation thereto; and The manner in which these rights and obligations might be protected or exercised under the Contract or in relation thereto. 3

2.2

Although no express definition of “a claim” appears in any of the FIDIC Forms of Contract, a claim in practice is generally taken to be an assertion for (additional) payment due to a party or for extension of the Time for Completion. This

interpretation of “a claim” is borne out by the wording of the contractual provisions relating to claims, as adopted in the earlier FIDIC Forms of Contract, either explicitly or implicitly. For example, Clause 44 of the Fourth Edition of the 1987 Red Book 4 provides for an entitlement to “an extension of the Time for Completion of the Works or any Section or part thereof” (emphasis added), albeit that the word “claim” appears
3

As for footnote no.2, but see Chapter 16 for more detailed description of the claims & counterclaims that are expected in such contracts. 4 Conditions of Contract for Works of Civil Engineering Construction (1987), better known as the Red Book.

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Contract Agreement and Dispute Adjudication Agreement. but here the word “claim” appears as a verb and as a noun. So.nowhere in this clause. Contract Agreement and Dispute Adjudication Agreement. respectively. but a substantive claim against the claimant which could have In September 1999.1(c) below. FIDIC published a new set of standard forms of contract alongside those that have been in use at that time. Nevertheless. General Conditions. see the quoted text in paragraphs 4. 2. (Conditions of Contract for Electrical and Mechanical Plant.1 includes the words “…… if the Contractor intends to claim any additional payment …” (emphasis added). in the end analysis. • The New Yellow Book: The Plant and Design-Build Contract. a party might assert that a clause in the specification gives a different meaning to that contended by the other party. (Conditions of Contract for EPC Turnkey Projects) . Forms of Tender. The new set is made up of the following four contract forms: • The Green Book: The Short Form of Contract . and for Building and Engineering Works. any of the FIDIC Forms of Contract. and Dispute Adjudication Agreement. It is not necessarily a defence. Accordingly. Bunni 3 . Designed by the Contractor) . and 5 • The Silver Book: The EPC & Turnkey Contract.General Conditions. Forms of Tender.3 The term “counterclaim” is also not defined in. and indeed does not appear in the text of.3 below. it should be noted that these sub-clauses do not preclude the parties from exercising their rights under the general concepts of the law by making claims based on the applicable law of the contract. Guidance for the Preparation of the Particular Conditions.1(b) below. Forms of Tender. Rules for Adjudication and Notes for Guidance.2 and 4.General Conditions. Designed by the Employer) . which can conveniently be examined and disposed of in an action originally initiated by the other party”. Guidance for the Preparation of the Particular Conditions. as explained in paragraph 3.1 of these Forms. or that a provision of the contract is not valid under certain circumstances. However.Agreement. However. for example. by the inclusion of the word “otherwise” in the first paragraph of each sub-clause. the generally accepted meaning given to a counterclaim is “an assertion made by a party.5 and 20. Comp’Analysis’FIDIC Contracts – © Nael G. Guidance for the Preparation of the Particular Conditions. Similarly. • The New Red Book: The Construction Contract. although such a claim is frequently made. Sub-Clause 53. nowhere in these Forms is there a reference to an assertion for a declaration. The 1999 FIDIC Forms of Contract for major works5 follow the same pattern by not defining “a claim”. Contract Agreement.General Conditions. but the word “claim” does appear in Sub-Clauses 2. Such an assertion forms a type of a claim within the legal basis set out in paragraph 3. a claim may therefore be defined as “an assertion of a right or a remedy”. (Conditions of Contract for Building and Engineering Works.

it may be a specified event under the contract. • Firstly. Christopher R. as set out below. and thirteen that would entitle the employer to make a claim. 3. Seppälä. claims in construction contracts may be based on any one of four legal and one non-legal concepts. subject to the effect of the applicable law: (a) A claim under the contract: This category is based on the grounds that should a certain event occur.1 Types of Claim Essentially. “The Arbitration Clause in FIDIC Contracts for Major Works”. referred to as “delay damages” in the 1999 FIDIC Contracts. which might or might not occur. It is explicitly referred to in SubClauses 2. 7 The 1999 Red and Yellow Forms of Contract contain some thirty provisions specifying events that. January 2005. then a claimant would be entitled to a remedy that is specified under a particular provision of the contract. Bunni 4 . 3.5 and 20.1 of the 1999 three Major Forms of Contract by the words “… under any Clause of these Conditions …” in their first paragraph with particular reference to the word “under”. when and if they occur. the contractor may be entitled to claim an additional payment and an extension of time if testing is delayed by. 7 6 The example is taken from a paper by Mr. under Sub-Clause 7. The 1999 Silver Form of Contract contains a lesser number of twenty provisions for the contractor and Comp’Analysis’FIDIC Contracts – © Nael G. The event described above may be one of two types. the employer. ICLR Vol. other than claims under statutory law. For instance. For example. Part 1. would entitle the contractor to make a claim. 22. a good example of a counterclaim is where a delay event causes the contractor to claim that he has been wrongfully denied an extension of time by the engineer and the same delay event gives rise to the employer’s counterclaim for liquidated damages.grounded an independent action.4 “Testing” of the 1999 Red Book. 6 The important point to note is that in respect of a counterclaim falling within the above definition. where in certain defined circumstances a party is entitled to claim a designated remedy. the procedural steps that apply to a claim do not have to be followed by the counter claimant. or on behalf of. The reference to convenience in this definition signifies that the background of the counterclaim must be similar to that of the claim and resulting from the same set of facts and events.

with particular reference to the word “otherwise” therein. or an extension of time. but was copyrighted in 2000. the other party may use this as a basis for cancelling the contract or for claiming damages. the provisions of the applicable law must be taken into consideration. for instance whether such damages are in effect a penalty. or some other benefit. A list of claims is contained in The FIDIC Contracts Guide. Comp’Analysis’FIDIC Contracts – © Nael G.5 and 20. This could lead to a claim under the law of tort.1 by the words “under any Clause of these Conditions or otherwise in connection with the Contract”. not under but. Bunni 5 . as provided in Sub-Clause 8. the remedy lies under the provisions of the applicable law of the contract. it is stipulated in the 1999 Red Book that failure by the contractor to complete the works on a specified date would entitle the employer to seek delay damages at a specified rate per day or week. Where the 1999 Major Forms of Contract are concerned. (b) A claim arising out of or in connection with the contract: The second category relates to a claim arising. the particular provision in the contract would apply and the remedy could be in the form of a payment of a sum of money. either by the parties to the contract or against third parties. appearing in the first paragraph.7 “Delay Damages”. (c) A claim under the principles of the applicable law: The third category relates to a claim arising under the application of the principles of the applicable law. Once again the important explicit word reference in this connection. or indeed in fourteen for the employer. see pages 90 to 93. In this connection. the specified event may be a breach of a particular provision in the contract entitling a claimant to a designated remedy if the terms of such provision are not. where the remedy is not designated in the contract and the claimant needs to invoke a provision of the applicable law to obtain a remedy. complied with. out of or in connection with the contract. or only partially. if the claim is valid. For example.• Secondly. Therefore. an example of this type of a claim is where one of the parties has misrepresented certain important facts. In such a case. If the claim is successful. or a combination of all three. whether or not such a claim can be treated as a valid claim. which was published separately by FIDIC during 2001. and if so. this category of claims is explicitly referred to in Sub-Clauses 2. as it is referred to in some jurisdictions. or delict.

(e) A claim for ex gratia payment: Finally there is the claim for an ex gratia payment (meaning out of kindness).this connection with claim category (d) below. or where a contract is in existence but the price is not stipulated. is “otherwise”. 4.1 Claim Procedures Under In the earlier FIDIC Forms of Contract. 4. the claim procedures were tolerant of lack of notice provisions in an attempt to ensure that payment is made where contemporary records are kept and a discipline evolved in a procedure set out Clause 53 of the 1987 Red Book. instead the amount to be paid is to be based on a reasonable sum or the price is to be agreed from time to time. as referred to in category (b) above. It does not have to include any details of the claim itself. where a contract existed. which is referred to in some legal systems as quantum meruit or as much as one has earned. but is deemed to be void. The notice is required whether the claim is pursuant to a clause of the Red Book or otherwise. they are sometimes tolerated on the basis that there may be some commercial sense or benefit in reaching a settlement between the parties without the acceptance of liability. Although claims for ex gratia payments are not claims which arise by virtue of a contractual or legal entitlement. (d) A claim arising out of the principle of quantum meruit: The fourth category comprises claims where no contract exists between the parties. Bunni 6 . The principle is that an individual has the right to be paid a reasonable remuneration for work done. Comp’Analysis’FIDIC Contracts – © Nael G. which required the contractor when submitting a claim to follow the procedural steps outlined below: • give a notice of intention to claim within 28 days of the event giving rise to the claim (note it is not after the consequences of the event).

and/or to any extension of the Defects Notification Period. within 28 days of the notice or an agreed period. Comp’Analysis’FIDIC Contracts – © Nael G. The notice shall be given as soon as practicable after the Employer became aware of the event or circumstances giving rise to the claim. notice is not required for payments due under Sub-Clause 4. 8 A list of the Records expected to be provided is given in Section 16. respectively.5 If the Employer considers himself to be entitled to any payment under any Clause of these Conditions or otherwise in connection with the Contract.2 of the Authors book quoted in Footnote 2 above. under Sub-Clause 4. a copy of accounts to be sent to the employer. final accounts to be submitted at end (by the contractor). submit particulars of the claim in respect of amount and grounds upon which it is based (by the contractor). “Employer’s Claims”. provide authority to instruct the contractor to keep further contemporary records (by the engineer).5.3 Sub-Clauses 2.20 [Employer's Equipment and Free-Issue Material]. interim and accumulated accounts to be submitted for continuing effects (by the contractor).1 of the 1999 FIDIC contracts for major works provide as follows: “Employer’s Claims 2. A notice relating to any extension of the Defects Notification Period shall be given before the expiry of such period. 8 inspect the records (by the engineer). 4. 4.1. the procedure for initiating a claim under the contract by an employer differs from that for initiating a contractor’s claim. by the contractor.• • • • • • • keep contemporary records (by the contractor). Bunni 7 . or for other services requested by the Contractor.2 Under the 1999 FIDIC contracts for major works. the Employer or the Engineer shall give notice and particulars to the Contractor. However.5. The two procedures are explained in two different Sub-Clauses: Sub-Clause 2. Water and Gas].19 [Electricity. “Contractor’s Claims”. if so required by the engineer .5 and 20. and Sub-Clause 20.

Within 42 days after the Contractor became aware (or should have become aware) of the event or circumstance giving rise to the claim. Otherwise. under any Clause of these Conditions or otherwise in connection with the Contract. and shall (if instructed) submit copies to the Engineer. the Engineer may. This notice shall be given as soon as practicable. or to otherwise claim against the Contractor. and shall include substantiation of the amount and/or extension to which the Employer considers himself to be entitled in connection with the Contract. the Contractor shall give notice to the Engineer describing the event or circumstance giving rise to the claim. in accordance with this Sub-Clause.The particulars shall specify the Clause or other basis of the claim. This amount may be included as a deduction in the Contract Price and Payment Certificates. the following provisions of this Sub-Clause shall apply.1 If the Contractor considers himself to be entitled to any extension of the Time for Completion and/or any additional payment. the Contractor shall not be entitled to additional payment. and the employer shall be discharged from all liability in connection with the claim.” “Contractor’s Claims 20. Without admitting the Employer's liability. If the Contractor fails to give notice of a claim within such period of 28 days. all as relevant to such event or circumstance. and/or (ii) the extension (if any) of the Defects Notification Period in accordance with Sub-Clause 11. or should have become aware. The Contractor shall keep such contemporary records as may be necessary to substantiate any claim. and supporting particulars for the claim.3 [Extension of Defects Notification Period]. The Engineer shall then proceed in accordance with Sub-Clause 3. The Employer shall only be entitled to set off against or make any deduction from an amount certified in a Payment Certificate. monitor the record-keeping and/or instruct the Contractor to keep further contemporary records. the Contractor shall send to the Engineer a fully detailed claim which Comp’Analysis’FIDIC Contracts – © Nael G. Bunni 8 . and not later than 28 days after the Contractor became aware. The Contractor shall also submit any other notices which are required by the Contract. The Contractor shall permit the Engineer to inspect all these records. or within such other period as may be proposed by the Contractor and approved by the Engineer. after receiving any notice under this Sub-Clause. of the event or circumstance.5 [Determinations] to agree or determine (i) the amount (if any) which the Employer is entitled to be paid by the Contractor. the Time for Completion shall not be extended. either on the Site or at another location acceptable to the Engineer.

If the Contractor fails to comply with this or another Sub-Clause in relation to any claim. and the Contractor shall send a final claim within 28 days after the end of the effects resulting from the event or circumstance. unless the claim is excluded under the second paragraph of this Sub-Clause. or within such other period as may be proposed by the Engineer and approved by the Contractor. but shall nevertheless give his response on the principles of the claim within such time.5 and 20. 3. the Contractor shall only be entitled to payment for such part of the claim as he has been able to substantiate. any extension of time and/or additional payment shall take account of the extent (if any) to which the failure has prevented or prejudiced proper investigation of the claim.” 4.4 [Extension of Time for Completion].5.4 As can be seen from the above provisions. The Engineer shall proceed in accordance with Sub-Clause 3. Each Payment Certificate shall include such amounts for any claim as have been reasonably substantiated as due under the relevant provision of the Contract. the intermediate steps are different. (c) Within 42 days after receiving a claim or any further particulars supporting a previous claim. The requirements of this Sub-Clause are in addition to those of any other SubClause which may apply to a claim. and/or (ii) the additional payment (if any) to which the Contractor is entitled under the Contract. giving the accumulated delay and/or amount claimed. and such further particulars as the Engineer may reasonably require.5.1 are essentially the same Comp’Analysis’FIDIC Contracts – © Nael G. although both claim procedures start with an event or circumstance entitling the party to make a claim under one of the sub-clauses of the contract and end with the provisions of Sub-Clause 3. or within such other period as may be proposed by the Contractor and approved by the Engineer. He may also request any necessary further particulars. quoted below. the Engineer shall respond with approval or disapproval and detailed comments. the Contractor shall send further interim claims at monthly intervals. Sub-Clauses 2. Unless and until the particulars supplied are sufficient to substantiate the whole of the claim.includes full supporting particulars of the basis of the claim and of the extension of time and/or additional payment claimed. Bunni 9 . If the event or circumstance giving rise to the claim has a continuing effect: (a) (b) this fully detailed claim shall be considered as interim.5 [Determinations] to agree or determine (i) the extension (if any) of the Time for Completion (before or after its expiry) in accordance with Sub-Clause 8.

Delayed Drawings or Instructions. Consequences of Employer’s Risks.5. 10. simplifying the complex wording in these two sub-clauses. The Engineer shall give notice to both Parties of each agreement or determination. Unforeseeable Physical Conditions. Value Engineering. 2. 13.7.for the 1999 Red and Yellow Forms.2 A notice relating to an extension of the Defects Notification Period should be given before the expiry of such period.3. 17. Setting Out. but they differ slightly in the Silver Form in that the “Engineer” is replaced by the “Employer”. 4. 4. 2. 3. 12.4. Adjustments for Changes in Legislation. Although the wording of the three Forms of Contract is very similar and each contains 20 Clauses. the Engineer shall make a fair determination in accordance with the Contract. For Sub-Clause 2. 9 Comp’Analysis’FIDIC Contracts – © Nael G.4.3. Contractor’s Claims.24.5 and 20. Step 2: The Employer or the Engineer should give notice and particulars of the claim to the Contractor. Contractor’s Entitlement to Suspend Work. Water and Gas . Consequences of Suspension. Right to Access to the Site. Bunni 10 .5 The provisions of Sub-Clauses 2.3.20.1. 13.9. Yellow and Silver.4. Each Party shall give effect to each agreement or determination unless and until revised under Clause 20 [Claims. Contractor to Search. the Engineer shall consult with each Party in an endeavour to reach agreement. If agreement is not achieved. Valuation at Date of Termination. Evaluation. 10.1. Fossils.1 can be arranged in the following sequential steps. 10 Sub-Clause 3. Failure to Remedy Defects.5: 1. 9. 4. 9 “Determinations 3.7. 15. 14.4. 19.8.12. 4. Delegation by the Engineer. 11. 20. Step 1: An event or circumstance occurs with the potential of a claim by the Employer against the Contractor under any clause of the Contract Conditions or otherwise in connection with the Contract. 12.1 It should be given as soon as practicable after the Employer became aware of the event or circumstance.9. 4. taking due regard of all relevant circumstances. It is referred to throughout the Conditions in 27 Sub-Clause: 1. Taking Over of Parts of the Works. 11.2. 7. 16. Chapter 27 of the Author’s book referred to in footnote 2 above provides a comparative analysis between the texts of three Major Forms: Red. Schedule of Payments.1.5 Whenever these Conditions provide that the Engineer shall proceed in accordance with this Sub-Clause 3. 8. 2.4.5 of the three Major Forms of FIDIC is a very important clause from the point of view of Claims and Dispute Resolution. The reader is advised to establish whenever relevant these precise differences in wording. Employer’s Equipment and Free-Issue Material. Employer’s Claims.4.2. there are very important differences between them. with supporting particulars.4. Consequences of Force Majeure.” 10 4. Interference with Tests on Completion. Failure to Pass Tests on Completion.2. Testing. Omissions. Disputes and Arbitration].5 to agree or determine any matter. Electricity.19. This notice should be given with the following in mind: 2. 2.

Step 1: An event or circumstance occurs with the potential of a claim under any clause of the Contract Conditions or otherwise in connection with the Contract. 3. Step 6: The amount determined may be included as a deduction in the Contract Price and Payment Certificates.19. or should have become aware. failing which he is required to make a fair determination in accordance with the Contract. Step 3: The Engineer should then proceed in accordance with Sub-Clause 3. or for other services requested by the Contractor.2 to 20. 4.3. the dispute arising should be resolved in accordance with Sub-Clauses 20. Comp’Analysis’FIDIC Contracts – © Nael G. Step 2: The Contractor should give notice of the claim to the Engineer describing the event or circumstance giving rise to the claim. Otherwise. The Employer shall only be entitled to set off against or make any deduction from an amount certified in a Payment Certificate. Failure to do so is fatal to the claim.4 Supporting substantiating particulars should also be submitted with the notice specifying the basis of the claim. 7. 2. 4.1 It should be given as soon as practicable. the Engineer is required to give a notice with supporting particulars.2. of the event or circumstance.8. 5. Step 4: The Engineer should consult with each Party in an endeavour to reach agreement. 2. Bunni 11 . he is required to give a notice of his determination with supporting particulars.1. and/or (ii) the extension (if any) of the DNP in accordance with Sub-Clause 11.5 to agree or determine (i) the amount (if any) which the Employer is entitled to be paid by the Contractor. the procedural steps may be presented as follows: 1. This notice should be given with the following in mind: 2. and not later than 28 days after the Contractor became aware. Step 5: If agreement between the parties is achieved. 4.20.3 Notice is not required for payments due under Sub-Clauses 4. Step 7: If the Engineer’s determination is not acceptable to any of the Parties. 6. or to otherwise claim against the Contractor.6 For Sub-Clause 20.

the Contractor should submit a fully detailed claim which includes full supporting particulars of the claim. which the Engineer may monitor and/or instruct the Contractor to keep further contemporary records. Step 5: Within 42 days after receiving a claim or any further particulars supporting a previous claim. It is to be noted that the requirements of Sub-Clause 20. the Contractor should submit further interim claims and any further particulars at monthly intervals. should also be submitted. 6. 3. Bunni 12 . Step 3: The Contractor should keep substantiating contemporary records. The period may be varied if approved by the Engineer.2. or within such other period approved by the Engineer. the Engineer should respond with approval or disapproval and detailed comments. but shall nevertheless give his response on the principles of the claim within such time. If the event or circumstance giving rise to the claim has a continuing effect: (a) (b) this fully detailed claim shall be considered as interim.2 All supporting particulars for the claim.5 to agree or determine (i) the extension of time (if any) and/or (ii) the additional payment (if any) to which the Contractor is entitled under the Contract. He may also request any necessary further particulars. 4. This period may be varied if approved by the Contractor.1 are in addition to those of any other Sub-Clause which may apply to the claim and failure to comply preventing or prejudicing proper investigation should be taken into account by the Engineer. as relevant to such event or circumstance. 2. 7. and (c) the Contractor should submit a final claim within 28 days after the end of the effects resulting from the event. Step 7: The Engineer should then proceed in accordance with Sub-Clause 3.3 Any other notices required by the Contract should also be submitted. giving the accumulated effect. Step 6: Substantiated amounts for any claim should be included in each Payment Certificate. Comp’Analysis’FIDIC Contracts – © Nael G. Step 4: Within 42 days of the event. 5.

‘In Hatrick the term “fairness” was avoided in the judgments. each with its own steps from the time that the event or circumstance occurs until the claim is properly dealt with or a dispute arises.5. he is required to give a notice of his determination with supporting particulars. Otherwise. Cooke J. two important questions arise as a result of the provisions of Sub-Clause 3. failing which he is required to make a fair determination in accordance with the Contract. Attempts have been made to grapple with the meaning of that term in a number of court cases. Figures No. it is perhaps easier to explain and better to understand them by using flow charts. The first relates to the precise meaning of the word “fair” in the phrase “the Engineer shall make a fair determination” in the first paragraph of the sub-clause. Step 8: The Engineer should consult with each Party in an endeavour to reach agreement. 2(a). then irrespective of whether it is the result of an Employer’s claim or a Contractor’s claim. 4.8 of the 1999 FIDIC contracts for major works. 10. Step 9: If agreement between the parties is achieved. Step 11: If the Engineer’s determination is not acceptable to any of the Parties.8 Besides the different claim procedures adopted in the 1999 FIDIC contracts for major works to those in the 1987 Red Book. the dispute arising should be resolved in accordance with Sub-Clauses 20.8.2 to 20.8. as illustrated below. In a case in the New Zealand Court of Appeal. 2(b) and 2(c) show the procedure for the Contractor’s claims. 4. Bunni 13 .2 to 20. the Engineer is required to give a notice with supporting particulars. This word embodies a broad and elastic concept that is extremely hard to capture in a precise manner. Comp’Analysis’FIDIC Contracts – © Nael G.7 Due to the numerous steps in these procedures and the different consequences that might follow. If a dispute does arise. it falls to be resolved under Sub-Clauses 20. 9. 1(a) and 1(b) show the procedure for the Employer’s claims and Figures No. said referring to Hatrick v Nelson Carlton Construction [1964] NZLR 72. 11. Step 10: Each Payment Certificate shall include such amounts for any claim as have been reasonably substantiated as due under the relevant provision of the Contract.

In other cases this is not necessarily so. provided that it is given honestly and independently and that it is in truth a properly considered decision. and fairness obliges the Engineer. Fairness is a broad and even elastic concept. 4. Lord Justice May said ‘I would not be coy about saying that the Engineer has to act “fairly”. Presumably. what is the definition of a dispute and how and when does it precisely arise? 4. the matter becomes a dispute and has to be dealt with under the remaining part of Clause 20? But then. acting fairly is elastic and “flexible and tempered to the particular facts and occasion”. it seems that acting fairly has to be viewed in two different ways. in Canterbury Pipe Lines v The Christchurch Drainage Board (1979) 16 BLR 76. which has usually to be resolved first as a Quoted from Cooke J. … Fairness also entitles one or both of the parties to ask for a speedy decision. …. fairness requires “compliance with the rules of natural justice”. He added that 11 Comp’Analysis’FIDIC Contracts – © Nael G. but in all other situations. to give a speedy decision in such circumstances.’ 11 In the subsequent Amec case in the English Court of Appeal.12 and footnote 14 below. so long as what is regarded as fair is flexible and tempered to the particular facts and occasion.5 of the 1999 FIDIC contracts for major works relates to its final sentence: “Each Party shall give effect to each agreement or determination unless and until revised under Clause 20”.’ So. sitting in the New Zealand Court of Appeal. referred to in paragraph 4. but it is not altogether the worse for that. if limitation is becoming a problem.. Litigation and arbitration in the construction field has frequently commenced with such an issue posed from the beginning. at 98. When acting in a judicial capacity. Bunni 14 . I think.Richmond J saying that he resisted it partly because of its vagueness and partly because it might be regarded as equivalent to natural justice. In relation to persons bound to act judicially fairness requires compliance with the rules of natural justice.10 The questions posed in the preceding paragraphs form some of the very contentious issues that are usually met under the Conditions of Contract for construction project.9 The second question that arises from Sub-Clause 3. The question is: What happens if one or all the parties do not “give effect to each agreement or determination”.

Despite the simple meaning of the word “dispute”. There may be discussions between the parties from which objectively it is to be inferred that the claim is not admitted. In that case. 4. 5. It does not have some special or unusual meaning conferred upon it by lawyers. 2. thus giving rise to the same inference. The mere fact that one party (whom I shall call “the claimant”) notifies the other party (whom I shall call “the respondent”) of a claim does not automatically and immediately give rise to a dispute. [2004] EWHC 2339 (TCC). a very short period of silence may suffice to give rise to this inference. This litigation has not generated any hard-edged legal rules as to what is or is not a dispute. which has similar. the accumulating judicial decisions have produced helpful guidance. Comp’Analysis’FIDIC Contracts – © Nael G. 12 13 See Chapter 16 of the Author’s book quoted in footnote 2 above. there may be an express rejection of the claim. Bunni 15 . 4. 3. The respondent may simply remain silent for a period of time.11 In a recent case in the English Technology and Construction Court. Jackson J. procedures. both as a matter of language and from judicial decisions.preliminary point before dealing with the merits of the case. The period of time for which a respondent may remain silent before a dispute is to be inferred depends heavily upon the facts of the case and the contractual structure. derived the following propositions: 13 “1. However. thus giving rise to the inference that he does not admit the claim. but not precisely the same. having reviewed the authorities. that a dispute does not arise unless and until it emerges that the claim is not admitted. particularly as there is usually a great deal of money at stake. there has been much litigation over the years as to whether or not disputes existed in particular situations. The respondent may prevaricate. The circumstances from which it may emerge that a claim is not admitted are Protean. the judge had to deal with this specific point under Clause 66 of the standard ICE (Institution of Civil Engineers) Conditions of Contract. Where the gist of the claim is well known and it is obviously controversial. Amec Civil Engineering Ltd v Secretary of State for Transport. It is clear. 12 It is therefore of great general interest and importance. For example. Where the claim is notified to some agent of the respondent who has a legal duty to consider the claim independently and then give a considered response. The word “dispute” which occurs in many arbitration clauses and also in section 108 of the Housing Grants Act should be given its normal meaning.

These issues are 14 Collins (Contractors) Limited v Baltic Quay Management (1994) Limited [2004] EWCA Civ 1757. I note that Jackson J does not endorse the suggestion in some of the cases. I make these observations in the hope that they may be of some assistance and not because I detect any disagreement between them and the propositions advanced by Jackson J.12 In a subsequent case in England. The Court approved Jackson J’s decision and made further observations regarding other important areas and issues that are frequently debated in construction disputes. Clarke LJ quoted Jackson J’s seven propositions and accepted them: 14 “63. 64.13 The decision of Jackson J in the Amec case was appealed to the English Court of Appeal where it came before Lord Justice May. In my opinion he was right not to do so. 7.” 4. It appears to me that negotiation and discussion are likely to be more consistent with the existence of a dispute. either that a dispute may not arise until negotiation or discussion have been concluded. than with an absence of a dispute. or that a dispute should not be likely inferred. 6. Lord Justice Rix and Lord Justice Hooper. I entirely accept that all depends on the circumstances of the particular case. I would. If the claim as presented by the claimant is so nebulous and ill-defined that the respondent cannot sensibly respond to it. neither silence by the respondent nor even an express non-admission is likely to give rise to a dispute for the purposes of arbitration or adjudication. It also appears to me that the court is likely to be willing readily to infer that a claim is not admitted and that a dispute exists so that it can be referred to arbitration or adjudication. a dispute will be held to exist once it can reasonably be inferred that a claim is not admitted. Bunni 16 . For my part I would accept those propositions as broadly correct. On the other hand. Comp’Analysis’FIDIC Contracts – © Nael G. The logical analysis of the decision in the Court of Appeal is well worth reading and considering in full by all construction professionals. If the claimant imposes upon the respondent a deadline for responding to the claim. a stated deadline and the reasons for its imposition may be relevant factors when the court comes to consider what is a reasonable time for responding. endorse the general approach that while the mere making of a claim does not amount to a dispute.” 4.a longer period of time may be required before it can be inferred that mere silence gives rise to a dispute. in particular. albeit an as yet unresolved dispute. that deadline does not have the automatic effect of curtailing what would otherwise be a reasonable time for responding.

“Dispute or difference” seems to me to be less hard-edged than “dispute” alone’. but to the earlier FIDIC Forms of Contract. which was first published in 1991. 16 15 Comp’Analysis’FIDIC Contracts – © Nael G. In the Author’s book on the FIDIC Forms of Contract. Amec Civil Engineering Ltd v Secretary of State for Transport. It is the difference between the words “difference” and “dispute”. Lord Justice Rix added in this connection: “I agree that the word “difference” probably goes wider than the concept of a “dispute”. [2005] EWCA Civ 291. this decision is binding on all lower courts and on arbitrators in England and Wales. an interesting point was also decided in this appeal. 15 4. it is suggested here that its logic ought to be followed also in all international arbitrations where the same issues are dealt with.outside the scope of this paper except those referred to above and perhaps one other. Lord Justice May discussing Clause 66 of the ICE Contract stated that ‘Clause 66 refers. However. and is persuasive in other common law countries. but also to a “difference”. the author suggested that the word “difference” is wider in concept than the word “dispute”. see page 150 of the third edition of the book. which is dealt with in following paragraph. Bunni 17 . 16 In his judgment. not only to a “dispute”. but some lawyers disagreed. Of course. which had eluded lawyers for some time.14 Although not of immediate relevance to the 1999 FIDIC contracts for major works.

Proceed to Sub-Clause 3. Bunni 18 . Yes Does the Em or E give the C the particulars required with the notice? STEP 3 No The Contract Conditions are silent on the consequences in that connection.3 The particulars shall specify the Clause or other basis of the claim.5 of the Contract Conditions. and shall include substantiation of the amount and/or extension to which the Em considers himself to be entitled in connection with the Contract. and C = Contractor. Figure No.1 Yes Does the Em or E give notice to the C* as soon as practicable after the Employer became aware of the event or circumstances giving rise to the claim of entitlement? No No notice is required for payments under Sub-Clauses 4. Notice for extension of the DNP shall be given before to the expiry of such period. 1(a).4 STEPS 2.19 and 4. STEP 2. Em = Employer. of which the Em* considers himself to be entitled to payment and/or to any extension of the Defects Notification Period. Comp’Analysis’FIDIC Contracts – © Nael G. STEP 2.5 of the 1999 FIDIC contracts for major works. E = Engineer.20. Figures 1 & 2 .STEP 1 An event or circumstance occurs.2 & 2. or for services requested by the C. as in Figure 1(b) * In these Flow Charts. Claim Procedure under Sub-Clause 2. the Em or the E* shall give notice and particulars to the C under any clause of the Conditions or otherwise.

5 to agree or determine (i) the amount (if any) which the Em is entitled to be paid by the C. Comp’Analysis’FIDIC Contracts – © Nael G. 1(b). Bunni 19 .5 requires the E to consult with each Party in an endeavour to reach agreement. Yes STEP 5 a Does the Engineer proceed in accordance with S-C 3. Is determination acceptable to the P’s? STEP 7 No End A dispute results & the provisions of Sub-Clauses 20. The Em shall only be entitled to set off against or make any deduction from an amount certified in a PC. under this Sub-Clause. ‘PC’.5 and continued as required under Sub-Clause 3.Continued from Figure 1(a) above STEP 3 STEP 4 The E shall then proceed in accordance with Sub-Clause 3.5 Sub-Clause 3.5 & consult with each party? STEP 5b No Is agreement between the parties achieved & notice with particulars given by the E? No Does the E make a fair determination & give notice with support particulars? No Yes STEP 6 Yes Yes This amount may be included as a deduction in the Contract Price & Payment Certificate.8 apply Figure No. Claim Procedure under Sub-Clause 2. S-C 2.3.5 of the 1999 FIDIC contracts for major works. or to otherwise claim against the C. If agreement is not achieved. and/or (ii) the extension (if any) of the DNP in accordance with Sub-Clause 11.3 to 20. the Engineer shall make a fair determination in accordance with the Contract.

and for which he considers himself to be entitled to EoT and/or additional payment. (b) the C to send further monthly interim claims. under any clause of the Conditions or otherwise. Figure No.2 & 2. of which the C became aware or should have become aware. and (c) the C to send a final claim within 28 days after the end of the effects resulting from the event or circumstance. and such further particulars as the E may reasonably require.** the C should send to the E fully detailed claim which includes full supporting particulars of the basis of the claim and of the EoT and/or additional payment claimed. The C is to keep & E to monitor contemporaneous records. giving the accumulated delay &/or amount claimed. 2(a). Claim Procedure under Sub-Clause 20.STEP 1 An event or circumstance occurs.1 Does the C give notice to the E Yes STEPS 2. STEPS 2 & 2.** Proceed to Figure 2b below ** or within such other period as may be proposed by the C and approved by the E. and the employer is discharged from all liability in that connection. STEP 3 No entitlement to EoT & no additional payment.1of the 1999 FIDIC contracts for major works Comp’Analysis’FIDIC Contracts – © Nael G. Bunni 20 .3 within 28 days after the event or circumstance giving rise to a claim of entitlement? No The C should also submit supporting particulars and notices as required by the Contract. STEP 4 Within 42 days after the C became aware (or should have become aware) of the event or circumstance. End Yes Does the event or circumstance giving rise to the claim have a continuing effect? STEPS 4 a to c No (a) the fully detailed claim shall be considered as interim.

5 apply Yes End Each Payment Certificate shall include such amounts for any claim as have been reasonably substantiated as due under the relevant provision of the Contract. but shall nevertheless give his response on the principles of the claim within such time.** the E shall respond with approval or disapproval and detailed comments. Comp’Analysis’FIDIC Contracts – © Nael G. Unless and until the particulars supplied are sufficient to substantiate the whole of the claim. Claim Procedure under Sub-Clause 20. Figure No. ** or within such other period as may be proposed by the E and approved by the C.Continued from Figure 2(a) above Yes Does the C comply with this Sub-Clause & all others? No Any EoT and/or additional payment shall take account of the extent (if any) to which failure to comply has prevented or prejudiced proper investigation of the claim. 2(b).1 of the 1999 FIDIC contracts for major works. STEP 5 Within 42 days after receiving a claim or any further particulars supporting a previous claim. Yes Does the Engineer comply with this clause? No Are the Parties satisfied with the E’s Response? ii No STEP 6 The provisions of Sub-Clause 3. He may also request any necessary further particulars. the Contractor shall only be entitled to payment for such part of the claim as he has been able to substantiate. Bunni 21 . continued below.

Continued from Figure 2(b) above STEP 7 STEP 8 The E shall proceed in accordance with Sub-Clause 3. and/or (ii) the additional payment (if any) to which the C is entitled under the Contract.8 apply ** or within such other period as may be proposed by the C and approved by works. 2(c).5 requires the E to consult with each Party in an endeavour to reach agreement. Claim Procedure under Sub-Clause 20. required under Sub-Clause 3. Unless and until the particulars supplied are sufficient to substantiate the whole of the claim.5 & consult with each party? STEP 9 b No Is agreement between the parties achieved & notice with particulars given by the E? No Does the E make a fair determination & give notice with support particulars? No Yes STEP 10 Yes Yes Each Payment Certificate shall include such amounts for any claim as have been reasonably substantiated as due under the relevant provision of the Contract.3 to 20.4. S-C 20.5 of the 1999 FIDIC contracts for major Figure No. the Contractor shall only be entitled to payment for such part of the claim as he has been able to substantiate.1 Sub-Clause 3.1 and continued as Comp’Analysis’FIDIC Contracts – © Nael G. If agreement is not achieved. the E. Yes STEP 9a Does the Engineer proceed in accordance with S-C 3. the Engineer shall make a fair determination in accordance with the Contract. Bunni 22 . Is determination acceptable to the P’s? STEP 11 No End A dispute results & the provisions of Sub-Clauses 20.5 to agree or determine (i) the EoT (if any) for Completion (before or after its expiry) in accordance with Sub-Clause 8.

5. resolution can be initiated by one party alone once a dispute arises. 3 shows the procedure itself and Figure No. Once again. it is easier explained and better understood by using flow charts. it is also a multi-tier process. but the role of the Engineer as an adjudicator of disputes has been relegated in favour of allocating the role of adjudication to a board of in dependent professionals.2 The dispute resolution procedure of the 1999 FIDIC contracts for major works is contained in Sub-Clauses 20. due to the fact that the procedure is a difficult and complex one. As can be seen from Figure No. the role of the DAB has been made wider to encompass dispute avoidance as well as dispute resolution. 3. It starts with a dispute adjudication procedure followed by an amicable dispute resolution mechanism and if both of these fail.1 Dispute Resolution In a comparative sense. Step 1: A dispute arises. However. As mentioned above.5. then arbitration. “DAB”. essentially. 3. referred to as Dispute Adjudication Board.4. the procedure comprises only five steps that can be summarised as follows: 1. 2. Figure No.4.2 to 20. interested readers could refer to Chapter 26 of the Author’s book quoted in footnote 2 above. 4 illustrates the compliance requirements contained in the fourth paragraph of Sub-Clause 20. under SubClause 20. 17 Dispute avoidance can only be used if both parties wish it to take place whereas dispute 5. and also to a paper by the author on “Dispute Boards & Dispute Resolution” presented at an ICC/FIDIC Conference held in Paris on 17th and 18th of October 2005. the multi-tier dispute resolution procedure of Clause 67 of FIDIC’s well established fourth edition of the Red Book (1987) has been retained in the 1999 FIDIC contracts for major works. 17 As this topic is extremely wide and goes beyond the scope of this paper. Bunni 23 . Step 3: The DAB gives notice of its decision within 84 days or it fails to give a decision within that period.8 of the Contract Conditions. Comp’Analysis’FIDIC Contracts – © Nael G. Step 2: The dispute is referred to the DAB in writing for its decision. usually three.

and thus notifies the other Party of its dissatisfaction within 28 days. or with its lack of decision. the decision of the DAB will become final and binding and the provisions relating to Step 4(a) will apply. …”. a contractual obligation on both Parties such that non-compliance with it by either of them is a breach of contract and the Party in breach would be liable in damages. who shall promptly give effect to it unless and until it shall be revised in an amicable settlement or an arbitral award as described below.4. 5. which is a characteristic feature of the FIDIC DAB procedure under the 1999 FIDIC contracts for major works distinguishing it from the DRB procedure under other forms of contract. the decision of the DAB becomes binding on the Parties pursuant to the terms of Sub-Clause 20. 18 In this case. However. which could be one of two possibilities: (a) Both Parties are satisfied with that decision. or (b) At least one of the Parties is dissatisfied with the decision of the DAB. the dispute is resolved.6. under Sub-Clause 20. Step 5: If the attempt to amicably resolve the dispute fails. under SubClause 20. the Parties are given 56 days to attempt resolving their dispute by amicable settlement. which provides in its fourth paragraph the following wording: “The decision shall be binding on both Parties. The decision must be complied with by both parties. in effect. If the attempt is successful. the dispute is resolved and such decision becomes final and binding. 5.3 It is important to note that irrespective of whether the dispute is resolved through steps 4(a) or 4(b). such liability for damages on its own is: If the notice of dissatisfaction is not given within the required 28 days. Step 4: The Parties react to the decision of the DAB. 5.4. The decision becomes. If not. Bunni 24 . step 5 applies.4 The effect of this provision on the decision of the DAB is known technically as a “temporarily final & binding” effect. 18 Comp’Analysis’FIDIC Contracts – © Nael G. such dispute is to be finally settled by international arbitration.5.

4 STEP 3 DAB provides its decision within 84 days under Sub-Clause 20.5 Is the dispute settled amicably? Yes Dispute is settled No STEP 5 Dispute shall be finally settled by International Arbitration. SubClause 20.4 ** or DAB fails to do so within 84 days under Sub-Clause 20.4 STEP 4 Yes STEP 4b Is either Party dissatisfied with the decision? No STEP 4a Does that Party give its notice of dissatisfaction under 20. Dispute Resolution Procedure under Clause 20 of the 1999 FIDIC contracts for major works. 3.6 ** The decision shall be binding on both Parties. Figure No. see 4th paragraph of Sub-Clause 20. who shall promptly give effect to it unless and until it shall be revised in an amicable settlement or an arbitral award. Sub-Clause 20. Sub-Clause 20.STEP 1 A dispute arises under Sub-Clause 20. Comp’Analysis’FIDIC Contracts – © Nael G.4 Yes The Parties have 56 days to resolve the Dispute amicably. Bunni 25 .1 or 2.4 in the time allowed (28 days)? No Dispute is settled and the decision is final and binding.4.5 STEP 2 The dispute is referred to the DAB for its decision under Sub-Clause 20.

Bunni 26 . Yes No End Do the Parties comply with the DAB’s decision? Proceed to SubClause 20. who shall promptly give effect to it unless and until it shall be revised in an amicable settlement or an arbitral award.4** STEP 4a STEP 4 STEP 4b No Is either Party dissatisfied? Yes No Does that Party give its notice of dissatisfaction within 28 days? The Decision is final & binding Yes Do the Parties comply with DAB’s decision? Proceed under SubClauses 20.6. Compliance with the Decision of the DAB under the 1999 FIDIC contracts for major works.4. Comp’Analysis’FIDIC Contracts – © Nael G.5 & 20. see 4th paragraph of Sub-Clause 20.7 & refer the failure itself to arbitration No Yes GAP … Non-compliant Party is in breach of contract & subject to damages Dispute will be settled through arbitration ** The decision shall be binding on both Parties. Figure No.STEP 3 DAB provides its decision within 84 days under Sub-Clause 20. 4.

as can be seen from Figure No.5 Sub-Clause 20. remains without a prompt and decisive mechanism to enforce it promptly.4 [Obtaining Dispute Adjudication Board’s Decision]. 2. Accordingly. resolves this problem in the event that a DAB’s decision is not complied with.2 with all of its serious consequences. since additional investigation. where one of the Parties is dissatisfied with the decision. (b) (c) the DAB’s related decision (if any) has become final and binding. instruction or drawing might be quickly required. Not decisive enough to ensure the smooth running of a project or a contract to proper completion. since (a) The dissatisfied party might feel so strongly against the decision that it might ignore it and continue its work. it might be vindicated and found not to be liable in damages. For completeness sake. wording of Sub-Clause 20. material or workmanship under Sub-Clause 15. taking on board the risk that in the end.e. and a Party fails to comply with this decision. 19 Comp’Analysis’FIDIC Contracts – © Nael G.7 Failure to Comply with Dispute Adjudication Board’s Decision In the event that: (a) neither Party has given notice of dissatisfaction within the period stated in Sub-Clause 20. Bunni 27 .7.1. in breach of the DAB’s decision. i. but unfortunately it only deals with the situation when the decision of the DAB has become final and binding. since the dispute might require instantaneous attention such as the case where the DAB’s decision is in connection with allegations of defective design. or the position it had adopted. Insufficient to ensure that the decision of the DAB is complied with “promptly”. in its present wording quoted below. Unlikely to be an appropriate remedy in the circumstances of a dispute. 5.7 is as follows: “20.1 entitles the Employer to terminate the Contract under Sub-Clause 15. the compliance by the Parties with the decision of the DAB where the decision has not become final and binding. 4 above. (b) The dissatisfied party might simply keep silent and not respond. the present Failure to comply with a Notice to Correct under Sub-Clause 15.1. 19 and 3. at some future date.

) 3.5 and 20. before commencement of arbitration. Comp’Analysis’FIDIC Contracts – © Nael G. then the decision shall become final and binding upon both Parties”. These two paragraphs also provide that.6 The provisions that describe the situation where one Party is dissatisfied with the DAB’s decision are contained in the fifth and sixth paragraphs of Sub-Clause 20. unless settled amicably. any dispute in respect of which the DAB’s decision has not become final and binding may be finally settled by international arbitration. The decision of the DAB affects the Parties’ rights and obligations and as such it is binding on the Parties who are required to “promptly give effect to it unless and until it shall be revised in an amicable settlement or an arbitral award”. Sub-Clause 20.6 of the contract conditions. neither Party shall be entitled to proceed to arbitration of the dispute unless such notice of dissatisfaction has been given. Furthermore. as described in Sub-Clauses 20.4 [Obtaining Dispute Adjudication Board’s Decision] and Sub-Clause 20.” 5.4 of the 1999 FIDIC contracts for major works.6. setting out the matter in dispute and the reason(s) for dissatisfaction. They provide that the dissatisfied Party must give a notice to this effect to the other Party within 28 days of the DAB’s decision. Sub-clause 20. without prejudice to any other rights it may have. refer the failure itself to arbitration under Sub-Clause 20.8).then the other Party may. 5.5. (emphasis added. Bunni 28 . except as stated elsewhere (Sub-Clauses 20. These are as follows: 1.5 [Amicable Settlement] shall not apply to this reference.7 and 20. However. if a notice of dissatisfaction is given by either Party within 28 days after receiving the decision. 2. as stipulated under Sub-Clause 20. as set out in Sub-Clause 20.7 There are three consequences to a properly given decision by the DAB under SubClause 20.4. then both Parties are required to attempt to settle their dispute amicably.6 [Arbitration].4 also stipulates that “If the DAB has given its decision and no notice of dissatisfaction has been given by either Party within 28 days after it received the DAB’s decision.

That position presented a problem in circumstances where the dispute arises after the works had been completed and the Engineer has departed from the Site.8 of the 1999 FIDIC contracts for major works provides that where there is no DAB in place. any dispute arising should proceed directly to arbitration without the benefit of the two intermediate steps of DAB and Amicable Settlement. although the clear intention of SubClause 20. 5. However. it is in stark contrast with the provisions of the 1987 Red Book. The draftsmen did not deal with circumstances where the parties are dissatisfied with the decision. which required an Engineer’s decision before either party could proceed to arbitration. Nael G. leaving that situation without any prompt solution or elucidation.9 It is also worth noting in connection with the amicable dispute resolution requirement in the 1987 Red Book and the 1999 FIDIC contracts for major works that it is obligatory on the parties.8 As a result of the first consequence. Sub-Clause 20. Sub-Clause 20. unless and until it is revised in a subsequent forum (amicable settlement or arbitration). it is worth mentioning that Sub-Clause 20. This problem does not exist any longer in the 1999 FIDIC contracts for major works.7 deals with the possibility of noncompliance with the DAB’s decision. hence creating a gap. There are two reasons for the process being obligatory. January 2006.7 is worded in such a way that it only deals with the event where the Parties are satisfied with the decision.5. the first is to remove any perceived idea that a proposal by one party towards amicable settlement is a sign of weakness in its case and second reason of making the process a mandatory step before reference to arbitration is the avoidance of any possible blame being attached to the decision maker who pursues amicable settlement of a dispute instead of the ultimate forum of arbitration.4 is that the DAB’s decision should be complied with promptly. Comp’Analysis’FIDIC Contracts – © Nael G.10 Finally. 5. and to correct the erroneous belief that some commentators have that this is intended to be a “cooling off period”. In this regard. Bunni. Bunni 29 . and irrespective of whether or not one of the Parties is dissatisfied with it.