FIDIC ‘Redbook’1999 Sub-Clause 20.1 Presented at: Quantum Senior Staff Meeting Date: 2 June 2014 By: David KellyFIDIC Redbook’ 1999 Sub-Clause 20.1 Commentary Contents 1 Introduction 1.1 Reference to Common Law. 2 Sub-Clause 20.1 Dissected 2.1 Arequirement for notice: . 24a 24.2 24.3 2.2. Time bar on claim. 22a 222 223 224 23 24 25° Afully detailed claim. 251 42 days... 252 283 25.4 — Continuing effect. 26 27 28 29 2.10 2a 212 243 Version 1 Contactor considers himself entitled. “become aware, or should have become aware of” Notice Condition precedent. Shall not be extended ....ornnennn ni dD ‘Common Law Jurisdictions. 13 16 Civil Law Jurisal Other notices may be required Contemporary Records... Agreement for longer period... Fully Detailed Claim. Interim claim... Further Interim claims .. Final claim Engineer to respond. Payments to include substantiated claims 27 28 Engineer shall determine Determinations are to “take account of” failure, prevention or prejudice... Sub-Clause 20.1 FlowcharFIDIC ‘Redbook’ 1999 ~ Sub-Clause 20.1 Commentary 1 Introduction This paper has been written to examine in detail the requirements and consequences of Sub- Clause 20.1 of FIDIC Redbook 1999 edition. | have specifically looked at the situation in Qatar and the UAE, but also referred to the situation in other jurisdictions by way of comparison, Baker states that: “the contract administration provisions of the FIDIC forms were to be characterised as one word, the word would be ‘communication’. While failure to observe notice requirements or other mandatory procedures may have consequences in terms of rights..t is not the primary purpose of those requirements to deprive the Parties of entitlements through the artificial creation of procedural hurdles.” ‘The purpose of Sub-Clause 20.1 isto give procedures for the dealing with notification of and justification of extension of time claims and additional payments under the FIDIC Redbook 1999 form of contract. It also sets out the decision process required to be undertaken by the Engineer. In simple terms, pursuant to Sub-Clause 20.1, a Contractor must: a) Notify the Engineer of a claim within 28 of when the Contractor became aware of or should have become aware of an event or circumstance b) Submit within 42 days of when the Contractor either became aware of or should have become aware of an event or circumstance, a “fully detailed claim and full supporting. particulars” ©) Keep “contemporary records" to support his claim and permit the Engineer to inspect these records, obtain copies and/or instruct for additional records (On the other hand, the Engineer must: a) Respond within 42 days of receipt of a claim either approving, disapproving or requesting further particulars, all with “detailed comments” b) In any determination pursuant to Sub-Clause 3.5 a. Consult with all parties to attempt to reach and agreement; and * Ellis Baker, “FIDIC Contracts: Law and Practice”, Informa, 2009, page 267 Version 1FIDIC ‘Redbook’ 1999 — Sub-Clause 20.1 Commentary tation if agreement cannot be reached in accordance with the terms of the contract, “taking due regard to all relevant circumstances”? Under FIDIC a claim is nothing more than a pipe dream unless notice has been given in accordance with the contract. A claim is an “assertion” ofa right in connection with or under the contract. 1.1. Reference to Common Law It is acknowledged that in the Middle East we are generally working in civil law jurisdictions which have been heavily influenced by Shari'ah law. | have included for the way of comparison only references to case law from common law jurisdictions. K & L Gates LLP presentation Version 1 3| PageFIDIC ‘Redbook’ 1999 ~ Sub-Clause 20.1 Commentary The Sub-Clause states: Paragraph Ifthe Contractor considers himself to be entitled to any extension of Time for Completion «and/or any additional payment, under any Clause ofthese Conditions or otherwise in connection with the Contract, the Contractor shall give notice to the Engineer, describing the event or circumstance giving rise to the claim. The notice shall be given as soon as practicable, and not later than 28 days after the Contractor became aware, or should have become aware, of the event or circumstance, If the Contractor fails to give notice of a claim within such period of 28 dys, the Time for Completion shall not be extended, the Contractor shall not be entitled to adeltional payment, and the Employer shall be discharged from all liability in connection with the Claim. Otherwise, the following provisions of this Sub-Clause shall apply. ‘The Contractor shail also submit any other notices which are required by the Contract, {and supporting particulars for the claim, all as relevant to such event or circumstance. The Contractor shall keep such contemporary records as may be necessary to substantiate any claim, either on the Site of at another location acceptable to the Engineer. Without admitting the Employer's liability, the Engineer may, after receiving any notice under this Sub-Clause, monitor the record-keeping and/or instruct the Contractor to keep further contemporary records. The Contractor shall permit the Engineer to inspect all these records, and shall if instructed) submit copies to the Engineer. Within 42 days after the Contractor became aware (or should have become aware) of the event or circumstance giving rise to the claim, or within such other period as may be ‘proposed by the Contractor and approved by the Engineer, the Contractor shall send to the Engineer a fully detailed cloim which includes full supporting particulars of the basis of the claim and of the extension of time and/or additional payment claimed. if the event or circumstance giving rise to the claim has a continuing effect: (a) this fully detailed claim shall be considered as interim; (b) the Contractor shall send further interim claims at monthly intervals, giving the ‘accumulated delay and/or amount claimed, and such further particulars as the Engineer may reasonably require; and Version 1 4a[PageFIDIC ‘Redbook’ 1999 ~ Sub-Clause 20.1 Commentary (€) the Contractor shall send a final claim within 28 days ofter the end of the effects resulting from the event or circumstance, or within such other period as may be proposed by the Contractor and approved by the Engineer. Within 42 days after receiving a claim or any further particulars supporting previous claim, or within such other period as may be proposed by the Engineer and ‘approved by the Contractor, the Engineer shall respond with approval, or with disapproval and detailed comments. He may also request any necessary further particulars, but shall nevertheless give his response on the principles of the claim within such time. Each Payment Certificate shall include such amounts for any claim as have been reasonably substantiated as due under the relevant provision of the Contract. Unless ‘and until the particulars supplied are sufficient to substantiate the whole of the claim, the Contractor shall only be entitled to payment for such part of the claim as he has been able to substantiate. The Engineer shall proceed in accordance with Sub-Clause 3.5 [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 8.4 {Extension of Time for Completion}, and/or (ii) the additional payment (if any) to which the Contractor is entitled under the Contract. The requirements of this Sub-Clause are in addition to those of any other Sub-Clause which may apply to a claim. if the Contractor fails to comply with this or another ‘Sub-Clause in relation to any claim, 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, unless the claim is excluded under the second paragraph of this Sub-Clause, Version 1 5|PageFIDIC ‘Redbook’ 1999 ~ Sub-Clause 20.1 Commentary 2 Sub-Clause 20.1 Dissected 2.1. Arequirement for notice: If the Contractor considers himself to be entitled to any extension of Time for Completion and/or any additional payment, under any Clause of these Conditions or otherwise in connection with the Contract, the Contractor shall give notice to the Engineer, describing the ‘event or circumstance giving rise to the claim. The notice shal be given as soon as practicable, ‘and not later than 28 days after the Contractor became aware, or should have become aware, of the event or circumstance. 244 Version 1 Contactor considers himself entitled ‘Anotice under Sub-Clause 20.1 should be given if the Contractor considers himself entitled to an extension of time and/or additional payment. In this way the clause is only concerned with events which have actually happened. There is ot requirement for a Contractor to notify for possible events or circumstances. However, Sub-Clause 8.3 also has a notice provision which states: “The Contractor shall promptly give notice to the Engineer of specific probable future events or circumstances which may adversely affect the work, increase the Contractor Price or delay the execution of the Works..." This stipulation is slightly liferent from the requirements of Sub-Clause 20.1 in that it is required promptly ie does not give a deadline. It also covers future events whereas tis suggested Sub-Clause 20.1 only covers events or circumstances which the Contractor has become aware of or should have become aware of and believes he may be entitled to an extension of time and/or additional payments. Within FIDIC 1999, the specific clauses which stipulate Sub-Clause 20.1 should be used are: ‘© 1.9. Delayed Drawings or instructions 2.1 Right to Access the site © 84 Extension of Time for Completion * 85. Delays Caused by Authorities (via Sub-Clause 8.4)FIDIC ‘Redbook’ 1999 ~ Sub-Clause 20.1 Commentary Version 1 8.9 Consequences of Suspension 10.2 Taking Over of Parts of the Works 10.3 Interference with Tests on Completion 13.7 Adjustments for Changes in Legislation 16.1 Contractor's Entitlement to Suspend Work 18.1 General Requirements for Insurances 19.4 Consequences of Force Majeure There is a degree of uncertainty as to which other clauses may give rise to claims pursuant to Sub-Clause 20.1. However clauses that require the Engineer to make a determination pursuant to Sub-Clause 3.5 are: 11.8 Contractor to Search 12.3 Evaluation 12.4 Omissions 13.2 Value Engineering 13.3 Variation Procedure 15.3 Valuation at Date of Termination Itis suggested that the reference under Sub-Clause 3.5 to “The Engineer shall give notice to both Parties of each agreement or determination, with supporting particulars. Each Party shall give effect to each agreement or determination unless and until revised under Clause 20 [Claims, Disputes and Arbitration|.”, may Indicate that clauses referencing Sub-Clause 3.5 may all come within the ambit of Sub-Clause 20.1. ‘Extension of Time for Completion’ ‘The events and circumstances in which a Contractor may be entitled to make a claim pursuant to Sub-Clause 20.1 are principally described in Sub-Clause 8.4 of the Contract which states: “The Contractor shall be entitled to subject to Sub-Clause 20.1 [Contractor's Claims] to an extension of the Time for Completion if ‘and to the extent that completion forthe purposes of Sub-Clause 10.1 Taking Over ofthe Works and Sections] is or willbe delayed by any of the following causes:FIDIC ‘Redbook’ 1999 ~ Sub-Clause 20.1 Commentary (a) a Variation (unless an adjustment to the Time for ‘Completion has been agreed under Sub-Ciause 10.1 Wariation Procedure] or other substantial change in the ‘quantity of an item of work included in the Contract, (b) a cause of delay giving an entitlement to extension of time under a Sub-Clause of these Conditions, (c) exceptionally adverse climatic conditions, (4) Unforeseeable shortages in the availability of personnel or Goods caused by epidemic or Government actions, (e) any delay, impediment or prevention caused by or attributed to the Employer, the Employer's Personnel, or ‘the Employer's other contractors on Site. |f the Contractor considers himself to be entitled to an extension of the Time for Completion, the Contractor shall give notice to the Engineer in ‘accordance with Sub-Clouse 20.1 [Contractor's Claims}. When determining each extension of time under Sub-Clause 20.1, the Engineer shall review previous determinations and may increase, but shall not decrease, the total extension of time.” “additional payment” The phrase “additional payment" is not defined within the Contract and as pointed out by Baker’ raises the question “additional to what?". Itis suggested that in addition to this question is “what should this additional payment include?” It is suggested that the answer to the first question is any payment in addition to that which was contemplated by the contract pursuant to Sub-Clauses 12, 13 and 14, With regards the second question, Its noted that the SCI Protocol states that prolongation is a compensation payment based on placing the Contractor back into the same position as he would have been had the event not occurred; the “but for” principal. On this, basis the Contracts definition for cost contained at Sub-Clause 1.1.4.3 may be applicable. It defines “Cost” as: * Els Baker, “FIDIC Contracts: Law and Practice”, Informa, 2008, page 213, Version 1 8] PagFIDIC ‘Redbook’ 1999 ~ Sub-Clause 20.1 Commentary “all expenditures reasonably incurred (orto be incurred) by the Contractor, whether on or off the Sit, including overhead and similar charges, but does not include profit” It should also be remembered that an extension of time does not automatically mean that the Contractor is entitled to prolongation costs. 2.41.2 “become aware, or should have become aware of” ‘The wording of Sub-Clause 20.1 suggests that notice should only be given when the event or circumstance exist ina form that gives the Contractor an entitlement to additional payment or extension of time and not before. That is the Contractor should not give notice ifa situation exists which may at some time entitle him to additional payment of extensions of time. If the sub-clause had of only used the term “become aware” then the situation ‘would be simply that when the Contractor gained actual knowledge of the event or circumstance they should give note. This could lead to a situation where notice could be given months after the event or circumstance and the Contractor claiming that they had only just "become aware”. However the sub-clause is, broader than that and includes the phrase “or should have become aware of”, this adds a new objective standard, ‘As the example given by Baker‘, ina situation where a Contractor is feeling the ‘effects of adverse weather and the precise point of time where this adverse weather gets to a point to be covered under sub-clause 8.4(c) may not be obvious. ‘The 28 days’ notice period runs from when the Contractor was aware or should have become aware, not necessarily from when the event or circumstance commenced. 24.2.1 Awareness The question of who needs to be “aware” of the event or circumstance needs to be addressed. The principle is who is the “directing mind” as * Elis Baker, “FIDIC Contracts: Law and Practice”, Informa, 2009, page 320 Version 1 9|PageFIDIC ‘Redbook’ 1999 ~ Sub-Clause 20.1 Commentary 241.3, Notice 243.1 2133 * (1957) 1 08 159 at 172 Version 1 per Denning LI in HL Bolton (Engineering) Co. Ltd v TG Graham & Sons Utd: “Some of the people in the company are mere servants and agents who are nothing more than hands to do the work and cannot be said to represent the mind or will. Others are directors and managers who represent the directing mind and will of the company, and control what it does. The state of mind of these managers is the state of mind of the company and is treated by the law as such. So you will find that in cases where the law requires personal fault as @ condition of lability in tort, the fault of the manager will be the personal fault of the company.”* Its of course possible to delegate this directions, however in the absence of this delegations itis arguable that the awareness must be that of the “directing mind” ie. directors and managers. Requirement for notice The first paragraph of Sub-Clause 20.1 stipulates a requirement for Notice to be given to the Engineer. 28 Days ‘Sub-Clause 1.1.3.9 defines "days” as calendar days. The requirement to submit a notice as soon as practicable but within 28 days, isa condition precedent under this Contract. Purpose of notice Basically notice serves two purposes: 1) Allows investigation of the matter at the time and permits contemporaneous information to be collected by all parties; and 2) Allows the Employer the opportunity to explore alternatives to Potentially reduce the time and/or cost of the situation. 10|PageFIDIC ‘Redbook’ 1999 ~ Sub-Clause 20.1 ‘Commentary “.Contractuel terms requiring a contractor to give prompt notice of delay serve @ valuable purpose; such notice enables matters to be investigated while they are still current. Furthermore, such notice sometimes gives the employer the opportunity to withdraw instructions when the financial consequences become apparent..."6 2.1.3.4 Notice requirements Sub-Clause 1.3 requires: “Wherever these Conditions provide for the giving or issuing of ‘approvals, certificates, consents, determinations, notices and requests, these communications shall be: (a) in writing and delivered by hand (against receipt), sent by mail or courier, or transmitted using any of the agreed systems of, ‘electronic transmission as stated in the Appendix to Tender; and (b) delivered, sent or transmitted to the address for the recipient's communications as stated in the Appendix to Tende/ Based on this definition, notice has to be specific and in writing. Oral Notice or notice via minutes of meeting may not satisfy this stipulation. However, if knowledge can be shown to have given to the Employer of tthe event or circumstance then that may prejudice their rights. This is particularly relevant in common law jurisdictions, but may have a different outcome in civil law countries, Finally the notice has to contain a description of the event or circumstance giving rise to the claim. Notwithstanding, the above, itis still advisable for any notice given is done so, under Sub-Clause 20.1 to actually state tha * Multiplex Construction UK) Ltd. v Honeywell Systems [2007] EWHC 447 (TCC) Version 1 niFIDIC ‘Redbook’ 1999 — Sub-Clause 20.1 ‘Commentary 2.2. Time bar on claim Hf the Contractor fails to give notice of a claim within such period of 28 days, the Time for Completion shall not be extended, the Contractor shall not be entitled to additional payment, land the Employer shall be discharged from all liability in connection with the claim. Otherwise, the following provisions of this Sub-Clause shall apply. 22.1 Condition precedent It is clear that the 28 day time limit is a condition precedent for the Contractor to be able to pursue his claim. This is even more evident if this paragraph is read in conjunction with the last paragraph of Sub-Clause 20.1. ‘There has been criticism of this time bar, however the approach taken by the FIDIC Task Group when drafting it explained: “after reflection, the conclusion of the FIDIC drafting committee was that there must be a notice within 28 days for there to be a valid claim so that all involved are aware that there is an event or circumstance where extra poyment or time may be due to the contractor. Twenty-eight days appeared tobe a reasonable periad. International contractors tend tobe fairly large companies and consortia companies, that employ staf that is experienced in claims and therefore is fully capable o recognising a claim situation when it arises. Consequently, ifthe contractor indeed has a boni fide claim, there would seem to be no good reason why an experienced Contractor should not be required under pain of forfeiture to give a notice of claim within 28 days (or four weeks) of the event or circumstance giving rise to the claim” 2.2.2 Shall not be extended ‘To emphasise the importance of the time-bar the contract states that the time period “shall” not be extended. ” Christopher R. Seppala, “Contractor's Claims under the FIDIC Contracts for Major Works”, (2006), 21(4) ICLR 278 at 287 Ver nd I/PaFIDIC ‘Redbook’ 1999 ~ Sub-Clause 20.1 Commentary 2.2.3 Common Law Jurisdictions iz 1 United Kingdom Lord Justice Salmon in the House of Lords stated in Bremer Handelsgesellschaft Schaft v Vandon Avenne Izegem (1978) that: “had it [the notice] been a condition precedent, | should have ‘expected the clause to state the precise time within which notice should have been served and to have made plain by express language that unless the notice was served within that the seller would lose their right under the clause. This principle was reaffirmed in Temloc Ltd v Erill Properties Ltd. ‘Two competing principles are emerged, the ‘prevention principle’ and ‘condition precedent’. The ‘prevention principle’ was illustrated in the ‘Australian case Gaymark Investments Pty Ltd v Walter Construction Group Ltd. The Australian court held that the prevention principle took precedent over the notification provisions. The ‘prevention principle’ states that: “Essentially its that a party to the contract has been prevented from {fulfling its contractual obligations by virtue of conduct of the other party. The consequence is said to be that the ‘preventing party’ cannot rely upon the foilure by the other party to comply with its contractual obligations, even ifthe other party is otherwise in breach 50 that it could not have complied with its contractual obligations in any event. tis said this lows from a generally stated principle that a party cannot benefit from its own wrong. Whilst the so-clled principle may be stated in general terms it seems to me it can only hhave that application, usualy in circumstances where the contract does not provide for the effect of breach causing prevention."@ His honour went on to state that strict compliance with the notice requirements: * [1987] 3981R34 CA * Peak Constructions (Liverpool) v McKinney Foundations Ltd (1970) 1 BLR 114 Version 1 BI] PagFIDIC ‘Redbook’ 1999 ~ Sub-Clause 20.1 Commentary “would result in an entirely unmeritorious award of liquidated damages for delay ofits own making.”"” This took the principle of Peak Constructions (Liverpool) v McKinney Foundations Ltd". In Multiplex Construction v Honeywell Control Systems Ltd (No, 2)” Jackson J dismissed the “prevention principle”. This was then reaffirmed in Steria Ltd v Sigma Wireless Communications Ltd” where HHJ Davis held that the time bar in Sub-Clause 20.1 was enforceable. He went on to say that: “If Gaymark is good law, then a contractor could disregard with {impunity any provision making proper notice a condition precedent. At his option the contractor could set time at large.”"* ‘The most recent English case on the issue of notice and FIDIC 1999 was Obsrascon Huarte Lain SA v Her Majesty's Attorney General for Gibrattar* where Akenhead J found that the “event or circumstance” at the heart of the claim must have occurred before any notice is given and there must have been some awareness by the Contractor or means of the Contractor becoming aware of the event or circumstance for the condition precedent to be activated. Akenhead J also stated that he could see: “no reason why this clause should be construed strictly against the Contractor and can see reason why it should be constructed reasonably broadly, given the serious effect on what could otherwise be good claims for instance for breach of contract by the Employer.” He went on to say that it was the Employer burden of proof to show the notice was given to late and that the form of notice was not restrictive Gaymark investments Pty Ltd v Walter Construction Group Ltd [1999] NTSC 143; (2005) 21 Const U 71, (1970) 1 BLR 114 [2007] EWHC 447 (TCC) [2008] 118 Con LR 177, [2008] BLR 79 TCC, [2007] EWHC 3454 (TCC), [2008] EWHC 3454 (TCC), and [2008) ca. 2544 ™ Steria Ltd v Sigma Wireless Communications Ltd [2008] 118 Con LR 177, [2008] BLR 79 TCC, [2007] EWHC $3454 (TEC, 2008) EWHC 3454 (TCC). and [2008] CLL 2544 * [2014] EWHC 1028 (TCC) Version 1 14|PageFIDIC ‘Redbook’ 1999 ~ Sub-Clause 20.1 Commentary Version 1 except that it was given in writing to the Engineer and identifiable as a claim. Referring to extension of time claims pursuant to Sub-Clause 8.4 hhis Honour noted this clause did not have any requirement for predicting a future delay, he therefore suggested that this notice requirement did not accrue until it was clear there would be a delay or the delay had started. He provided his own example of this: “{a) A variation instruction is issued on 1 June to widen a part of the dual carriageway well away from the tunnel area in this case. (b) At the time of the instruction, that part of the carriageway is not on the critical path. (¢) Although its foreseeable that the variation will extend the period reasonably programmed for constructing the dual carriageway, itis not foreseeable that it will delay the work. (d) By the time that the dual carriageway is started in October, itis only then clear that the Works overall will be delayed by the variation. It is only however in November that it can be said that the Works are actually delayed. (e) Notice does not have to be given for the purpose of Clause 20.1 until there actually s delay (November) although the Contractor can give notice with impunity when it reasonably believes it will be delayed (say October). (A) The ‘event or circumstance’ described in the first paragraph of Clause 20.1 in the appropriate context can mean either the incident (variation, exceptional weather or one of the other specific grounds for extension) or the delay which results or will inevitably result from the incident in question.” His Honour finished by stating that he doubted this exercise required any complex mental gymnastics because a detailed electronic critical path programme was being used so it should be fairly straight forward In determining when the delay was actually being suffered. 15|PageFIDIC ‘Redbook’ 1999 ~ Sub-Clause 20.1 ‘Commentary 2.2.4 Civil Law Jurisdictions ‘Talk to two different lawyers on time bars and you will end up with at least three different answers. With regards the Middle East there have been various publications stating the under Shari‘ah law and its concept of good faith, time bars may not be applicable. However this simple statement ignores: 2) The Middle East does not have a monopoly amongst the Civil Law jurisdictions for “good faith”, other countries use and the time bar has been implemented; 3) The Middle East sa big place and has many different approaches to Shari'ah law; and 4)_ The incorporation of Shar'ah law into the individual legal systems within the Middle East varies from country to country. To start to understand you need to realise the position Shari'ah law has. It is different in the jurisdictions. In Qatar the Civil Code states: “Where there is no statutory provision, the Judge shall rule according to the relevant provision of the islamic Shariah, if any. Otherwise the Judge shall rule according to the customary practice. In the absence of such customary practices the Judge shall rule in accordance with the rules of justice.”"* Whereas in the UAE the Chill Code states: “The rules and principles of Islamic jurisprudence (fiqh) shall be relied upon in the understanding, construction and interpretation of these provisions.””” In essence what it means is that in Qatar, Shari'ah law is only referred to when the statutory codes do not cover and issue, whereas in the UAE, the Civil Code hhas to be interpreted using Shari'ah law. ‘One factor is the sect of Islam followed in a jurisdiction with Sunna and Shiite, The Sunna schools are: * Mali strict application of the Sunna with minimum role for opinion ° article 1(2) - Qatar Civil Code 2004 article 2 - UAE Chil Code 1987 Version 1 16 |PagFIDIC ‘Redbook’ 1999 ~ Sub-Clause 20.1 Commentary ‘© Hanifi—follows and relies on reason and opinion © Shafi tries to reconcile Maliki and Hanif ‘* Hambali~ strict adherence to Quran and Sunna ‘The Shiite schools are: ‘© Ja'fari— Intellect rather than analogy ‘© Zaidi ~ simitar to Hanafi and Sunni schools The other factor withthe position of Shari'ah law is thatf you have local judges ‘or mediators (that is with a Muslim background), they have most likely been brought up with a very deeply rooted conditioning with regards the Hadith. It should be borne in mind there are 7562 Sunna inthe Hadith, only a handful deal with contract law as such. The rest deal with everything from how they undertake their Wudo to how they prayer, what to wear etc. It covers a very broad list of topics. Therefore, it would only be natural for someone with this upbringing to bring their own prejudices into their decisions. Ultimately, regardless of what the “on paper” position of Shar’ah laws, it may be a factor anyway. 2.2.4.1. United Arab Emirates Generally a contract in the UAE should be read in its natural state, article 265(1) of the UAE Civil Code states “If the wording of @ contract is clear, it may not be departed from by way of interpretation to ‘ascertain the intention of the parties.”. However the performance of the contract should be performed in accordance with its contents, and {na manner consistent with the requirements of good faith.”*. There has been frequently suggestion that time bars contradict the concept of “good faith”. The concept of “good faith” is not really defined anywhere, however, it has been described as “with loyaity inherent to the contractual dealings, without fraud, deception of ‘malevolence’. The concept of “good faith” also occurs in French Civil civil Code Article 254(1) ** Jaeger Axel-Volkmar and Hok Gotz-Sebastian, “FIDIC A Guide for Practitioners”, Springer 2010 page 23 Version 1 a7] PaFIDIC ‘Redbook’ 1999 ~ Sub-Clause 20.1 Commentary Codes” and this does not seem to prevent time bars arising from French construction contracts. Itis also suggested that if a Contractor knew of an “event or circumstance” covered under Sub-Clause 20.1 and did not inform the Employer; then it would be the Contractor not acting in “good faith”. That being said, Article 473 states: “A right shall not expire by the passage of time but no claim shall be heard if denied after the lapse of fifteen years without lawful excuse, ‘but having regard to any special provisions relating thereto. However when does this right actually commence? This right may commence upon the giving of notice of when the Contractor “considers himself to be entitled to any extension of Time for Completion and/or ‘any additional payment, under any Clause ofthese Conditions or ‘otherwise in connection withthe Contract, the Contractor shal give notice to the Engineer”. This also refers to a right arising, rather than the notice, Article 487(1) states: “rt shall not be permissible to waive a time-bar defence prior to the establishment of the right to raise such defence, nor shall it be permissible to agree that a claim may not be brought ofter a period differing from the period laid down by law.” Accourt or tribunal may determine that Sub-Clause 20.1 is contrary to this article. This could work in the other direction also in that the right {isn’t being waived as such, but has criteria being placed con it. Also Article 106 states inter alia: (2) The exercise of a right shall be unlawful: ()if the interests desired are disproportionate to the harm that will be suffered by others; * French Ciuil Code Article 1134(1) Version 1 18 |PageFIDIC ‘Redbook’ 1999 ~ Sub-Cause 20.1 Commentary * [1950] 1 kB 616 at 626 * [2010] CHIH 68 CA 101/00 Version 1 Therefore ifa claim is disallowed purely due to a time bar then it may be unlawful However, ifa time-bar is held not to be permissible under the UAE. Code, Article 290 states: “It shall be permissible for the judge to reduce the level by which an act has to be made good or to order that it need not be made good if the person suffering harm participated by his own actin bringing about or aggravating the damage. It is suggested that in such a circumstance any damages award to a Contractor may be reduced by the Contractor's own actions particularly in light of the Employer being prejudiced in not having the opportunity to take alternative action, Within the UAE Civil Code there are provisions which are similar to the ‘common law principle of a waver. At Common Law (particularly UK ‘common law) Lord Denning in Richards v Oppenheim’ held that: “Im order to constitute a waiver there must be conduct which leads the other porty reasonably to believe that the strict legal rights will ‘not be insisted upon. The whole essence of waiver Is that there must ‘be conduct which evinces an intention to affect the legal relations of the parties. If that cannot properly be inferred, there is no waiver.” In the Scottish case of City Inn Ltd v Shepherd Construction Ltd, Lord Osborne stated that: “tn recognising that waiver involved the abandonment of aright, he expressed the view that the concept of aright, in this context, should ‘be given a wide meaning. He considered that it should include, not ‘only aright inthe narrowest sense, consisting of a claim against ‘another person, but should also extend to other forms of legal entitlement. These included entitlements that might more properly 19|PageFIDIC ‘Redbook’ 1999 ~ Sub-Clause 20.1 Commentary Ibid para 67 Version 1 2242 be described as privileges or immunities. Quoting W. N. Hohfeld in his work Fundamental Legal Conceptions as Applied in Judicial Reasoning, (New Haven 1923), he said that a privilege was an entitlement to prevent another person from exercising a claim-right, and an immunity was an entitlement to prevent another person from ‘exercising a power...The respondents had a power to use the clause t0 claim and extension of time and the reclaimers had an immunity against that power ifthe respondents did not fulfil the requirements of the clause” The UAE Civil Code contains versions of waivers, including Article 487(2) which states: “It shall be permissible for any person having the competence to ‘make dispositions in respect of his rights to walve the defence, even by way of implied waiver, after the right has been established, but provided that such waiver shall not be effective in respect of obliges If itis made so as to cause them detriment.” Then Article 246(2) states: “In contracts binding upon both parties, ifthe mutual obligations are due for performance, each of the parties may refuse to perform his obligation ifthe other contracting party does not perform that which he is obliged to do.” In conclusion, whether or not a time bar will stand in the UAE is a matter of conjecture, however, of more importance is that even ifthe time bar does not hold, a Contractor's entitlement to damages may be affected by his own actions including not providing notice, Qatar To start with, Article 169 of the Qatar Civil Code states: “1. Where the wording of the contract is clear, it shall not be ‘capable of deviating from or construing the intent of the contracting parties. 20)FIDIC ‘Redbook’ 1999 ~ Sub-Clause 20.1 Commentary Version 1 2. Where a contract must be construed, the common intention of the parties shall be sought without restriction to the literal ‘meaning ofthe words, taking into account the nature of the transaction as well as the honesty and confidence that should prevail between the partes in accordance with commercial custom.” On this basis, the contract provision contained within Sub-Clause 20.1, containing a time bar would stand, however Article 4181) states: “Prescription may not be waived before the right thereto is ‘established. The period for prescription shall be established by law only.” Although it could be argued that Sub-Clause is seeking to waive the underlying rights, rather than the ability to claim. It should also be stated that Article 199 says: “Any person who commits an act that causes damage to another party shall be liable to indemnify such damage.” In common with the UAE Civil Code and the idea of “good faith’, Article 172 (1) of the Qatar Civil Code also states: “A contract shall be performed in accordance with its provisions and in such manner consistent with the requirements of good faith.” Similarly to the UAE, even ifa time bar does not stand up, the Contractor may have his compensation payment reduced because he denied the Employer the opportunity to mitigate his potential losses Under Article 257 which states: “The court may decrease the amount of indemnity or reject any request for indemnity where the negligence of the obligee contributed to or aggravated the damage.” In conclusion, whether or not a time bar will stand in the Qatar is @ ‘matter of conjecture, however, it probably has more chance than in the 21|PageFIDIC ‘Redbook’ 1999 ~ Sub-Clause 20.1 Commentary LAE because of the position of Shari'ah law in the Civil Code and the ‘general construction ofthe Civil Code. What is of more importance though is that even ifthe time bar does not hold, a Contractor's entitlement to damages may be affected by his own actions including not providing notice. 2.3. Other notices may be required ‘The Contractor shall also submit any other notices which are required by the Contract, and supporting particulars for the claim, all as relevant to such event or circumstance, Should the contract require other notices other than the notice given under Sub-Clause 20. they are still required to be given along with a notice for 20.1. A notice given under another requirement of the Contract is not sufficient to satisfy the requirements of Sub- Clause 20.1. 2.4 Contemporary Records The Contractor shall keep such contemporary records as may be necessary to substantiate any claim, either on the Site of at another location acceptable to the Engineer. Without admitting the Employer's liability, the Engineer may, after receiving any notice under this Sub-Clause, monitor the record-keeping and/or instruct the Contractor to keep further contemporary records. The Contractor shall permit the Engineer to inspect all these records, and shall (if instructed) submit copies to the Engineer. The Contractor has to keep contemporary records. Acting Judge Sanders in Attorney General for the Falkland’s Islands v Gordon Forbes Construction (Falkland's) Limited stated that contemporary records were “original or primary documents, or copies thereof, produced or prepared at or about the time giving rise to a claim, whether by or for the contractor or the employer”. * (2003) 6 BLR 280 Version 1 221PFIDIC ‘Redbook’ 1999 ~ Sub-Clause 20.1 Commentary Version 1 Furthermore Judge Sanders found that it was not possible to avoid the requirement of detailed record keeping at the time of the event by the use of witness statements as witnesses memories may fail over time. There is no substitute for contemporaneous records The Contractors obligation to keep records is very broad and has to be undertaken without instruction from the Engineer. ‘What is important with contemporary records is that they are the records taken at the 18 of records or at least very time of the event with an emphasis on instantaneous kee} close to the time of the event. Ellis Baker suggests that “in relation to claims for both an extension of time and additional cost due to the Contractor being delayed in his progress of the Works, such records might include: ‘© regular updates to the programme setting out the actual progress of the Works, in particular the activities affected by the delaying events, the impact ofthe delays to the affected activities on the progress of the Works and revisions to the planned sequence and timing of the remaining work to accommodate the delaying event; * records of the actual resources involved, including personnel, equipment and ‘materials, based on progress; © records of actual expenditure incurred, including invoices and purchase orders; ‘+ records of any resources which were standing or uneconomically employed; © records of any overtime worked and the cost of such overtime; © regular progress photographs and/or videos, taken monthly, weekly or even daily, if appropriate; © regularly updated registers, for example the drawings register, which should record all revisions made to drawings and when they were made; © site diaries © records relating to specific work activities such as piling records, concrete ‘pour records and steel fabrication records; and 23|PageFIDIC ‘Redbook’ 1999 — Sub-Clause 20.1 Commentary © minutes of meetings ‘The Engineer may request additional records be either kept or submitted. In determining what records are kept both the Contractor and Engineer need to keep in mind what records may be required to substantiate a claim. 2.5. A fully detailed claim Within 42 days after the Contractor became aware (or should have become aware) of the event or circumstance giving rise to the claim, or within such other period as may be proposed by the Contractor and approved by the Engineer, the Contractor shall send to the Engineer a fully detailed claim which includes full supporting particulars of the basis of the claim and of the extension of time and/or additional payment claimed. If the event or circumstance giving rise to the claim has a continuing effect: 25.1 42 days Te time stipulation contained within this paragraph isnot a condition precedent like the 28 day provision ofthe second paragraph of the sub-louse because there is no consequence stipulated should the 42 days not be met, however, failure to meet this time is still technical breach of the contract as the use of the term “shall” makes it mandatory. 2.5.2 Agreement for longer period The Contractor can propose a longer period than the 42 days for the Engineer to accept or reject should additional time be required Fully Detailed Claim The Contractor should remember that he has the burden of proof for any claims. Therefore it should be set out in a clear and logical manner, including details of the legal basis. * Baker, Elis ~ “FDIC Contracts: Law and Practice” Informa, 2008, page ??? Version 1 24|PageFIDIC ‘Redbook’ 1999 ~ Sub-Clause 20.1 ‘Commentary “The importance of good record-keeping cannot be over-emphasised. The resolution of disputes frequently rests on the adequacy or contemporaneous records. If Party declines to agree matters for record purposes, on the ‘spurious ground that agreement of facts indicates admission of lability, the DAB or arbitrator(s) may decide to rely upon the other Party's unchallenged ‘contemporaneous records."** In the Australian Case of Kane Constructions Pty Ltd v Sopov” which adopted the UK case of McAlpine Humberoak v McDermott” it was found: “McApline outlines the general approach which should be taken with respect to EOT claims. More specifically, with EOT claims, the burden of proofis on the claimant to establish actual delay. Whilst theoretical calculations, particularly those contained in computer software programs, are useful tools Jn the building industry, generally further information will be required. Whilst there may be assumptions and calculations, itis necessarily a matter of the claimant proving in the proper way that there has been actual delay such as to substantiate claims for reimbursement.” 2.5.4 Continuing effect Where events of circumstances are of a continuing nature after the initial point in time where the Contractor becomes aware of or should have become aware of it, there is a requirement for interim claims. The details are in the following sub- clauses. 2.6 Interim cl: (2) this fully detailed claim shall be considered as interim; [Any interim claims have to be fully detailed the same as final claims. Itis also arguable that when an event is continuing, the Contractor is required to give notice every 28 days or the second paragraph with the time bar provisions may apply. ** The FIDIC Contracts Guide, FIDIC, 1" Edition, 2000, page 302 ® [2005] VSC 237 (30 June 2005 * (1992) 58 BLR 1 Version 1 21 PaFIDIC ‘Redbook’ 1999 ~ Sub-Clause 20.1 Commentary This can have far reaching ramifications on a Contract especially where they give some notices but not others. 2.7_ Further Interim claims (b) the Contractor shall send further interim claims at monthly intervals, giving the accumulated delay and/or amount claimed, and such further particulars as the Engineer may reasonably require; and Should the event continue on for more than a month, monthly interim claims should be submitted. These would be fully detailed as (a) above denotes. 2.8 Final claim (c) the Contractor shall send a final c within 28 days after the end of the effects resulting from the event or circumstance, or within such other period as may be proposed by the Contractor and approved by the Engineer. After the event or circumstance has finished the Contractor has to submit his final claim within 28 days after the end of the effects of the event of circumstance. This claim has to be also fully detailed as per (a) above. The 28 day period Is not a condi precedent, however the use ofthe word “shall” makes the 28 day period mandatory although there is no actual sanction should the period not be adhered to except perhaps the last paragraph of 20.1 in that the failure to do so may be taken into account. 2.9. Engineer to respond Within 42 days after receiving a claim or any further particulars supporting a previous claim, {+ within such other period as may be proposed by the Engineer and approved by the ‘Contractor, the Engineer shall respond with approval, or with disapproval and detailed comments. He may also request any necessary further particulars, but shall nevertheless Bive his response on the principles ofthe claim within such time. The Engineer has his own timetable which he has to adhere to, The Engineer has 42 days after the receipt of a claim in which to respond. This response can be acceptance, Version 1 261°FIDIC ‘Redbook’ 1999 - Sub-Clause 20.1 Commentary rejections (in which case a detailed commentary is required), or request for further particulars. This requirement applies to interim claims in the same way, the Engineer has 42 days from the submission of an interim claim to make his assessment. Furthermore, itis clear that even if the Engineer does not consider the Contractor has provided a valid case or sufficient detail to permit an assessment, the Engineer is still under an obligation to respond. This is not @ condition precedent and there is not specific sanction should this time period not be adhered to except it would in theory be a breach of contract. ‘This period may be extended but only upon agreement between the Engineer and the Contractor. ‘This approach is supported by Sub-Clause 1.3 also which requires the Engineer make timely assessments and responses. There is no restriction on the number of times an Engineer may request further and. better particulars on a claim. However the Engineer is obliged to make a prompt payment on elements of a claim they can reasonably substantiate under paragraph eight of Sub-Clause 20.1 2.10 Payments to include substantiated claims Each Payment Certificate shall include such amounts for any claim as have been reasonably substantiated as due under the relevant provision ofthe Contract. Unless and until the particulars supplied are sufficient to substantiate the whole of the claim, the Contractor shall only be entitled to payment for such part ofthe claim as he has been able to substantiate, When part or the entire claim has been substantiated, prompt payment should be made. This provision does allow for part payment of a claim where only a portion of it has been substantiated, ® The FIDIC Contracts Guide, FIDIC, 1" Edition, 2000, page 303 Version 1 27 |PageFIDIC ‘Redbook’ 1999 ~ Sub-Clause 20.1 Commentary 2.11 Engineer shall determine The Engineer shall proceed in accordance with Sub-Clause 3.5 [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 8.4 [Extension of Time for Completion], and/or (I) the additional payment (if any) to which the Contractor is entitled under the Contract. 2.12 Determinations are to “take account of” failure, prevention or prejudice ‘The requirements of this Sub-Clause are in addition to those of any other Sub-Clause which may apply to a claim. If the Contractor fails to comply with this or another Sub-Clause in relation to any claim, any extension of time and/or additional payment shall take account of tthe extent (if any) to which the failure has prevented or prejudiced proper investigation of the claim, unless the claim is excluded under the second paragraph of this Sub-Clause, 2.12.11 "Shall take account of” The use of the word “shall” makes it mandatory for the Engineer to take into account the actions or inactions of the Contractor. If the Contractors actions or inactions leads to an inability of the Engineer to “properly investigate” a claim then the Engineer has been prevented or prejudiced, then the assessment by the Engineer will take this circumstance into account. This could also include a situation whereby a Contractor may receive an extension of time, but may have prejudiced the Employer in that the Employer was unable to take alternative actions. This may affect the Contractors ability to claim either/or time or additional payment. 2.12.1.2 “Unless the claim is excluded under the second paragraph” If anything this reinforced the notion that the second paragraph of Sub-Clause 20.1 is @ condition precident. The concept is that if claim fails because itis time-bared then there is no need to make any further assessment oft so the previsions of this paragraph become surpurflus. Version 1 2B | PagFIDIC ‘Redbook’ 1999 — Sub-Clause 20.1 Commentary This paragraph should not be read as allowing a penalty to be applied in some arbitory manner, but that the Contractor should have been able to comply with the provisions of this Sub-Clause™, © The FIDIC Contracts Guide, FIDIC, 1" Edition, 2000, page 303 Version 1 29|PageFIDIC ‘Redbook’ 1999 — sub-clause 20.1 Commentary 2.13 Sub-Clause 20.1 Flowchart: Event or teumstance in which the Contractor becomes aware of r should have become: anare of Version 1 30|Page