May 2014

briefing

FIDIC: It’s just like Des Lynam

Think about engineering projects you have worked on that have ended badly. These may be projects that have
cost you money, projects that may have overrun or ended up in an old-fashioned school yard scrap. Why did they
end badly?

One reason may have been that the contract used the wrong words: words that were unclear; words that were
unfamiliar to the parties or words that were not relevant for your engineering project. This is where the FIDIC suite
of contracts beats the other standard forms of engineering contract hands down. FIDIC uses the right words for all
types of engineering projects. Because it’s just like Des Lynam.

It’s just like Des Lynam

FIDIC, like Des, enjoys a great heritage. FIDIC, like Des, is:

o Respected around the world

o Measured, clear, reasoned and logical

o Something that you can rely on in a crisis

o An excellent all-rounder

Other standard engineering forms of contract do not enjoy these qualities.

The NEC suite is an all-rounder, but it does not possess the clarity of FIDIC. MF/1 and IChemE are narrower in
scope than FIDIC. They do not possess the all-round abilities of FIDIC. They may be ideal for processessing plants
or the supply and installation of electrical, electronic or mechanical plant, but it’s arguable whether they can easily
turn their hand to other complex engineering projects.

It’s better than Des Lynam!

It is possible to argue that FIDIC is better than Des. Des’s presence on our screens has faded in recent years.
However, FIDIC’s popularity and prominence around the world remains as strong as ever. It’s endorsed by the
World Bank, the Islamic Development Bank and the European Commission. It has also been endorsed by more
governments than any other contract.

FIDIC’s use is not limited to international projects. FIDIC’s popularity in the UK continues to grow. The NBS
National Construction Contracts and Law Survey 2013 stated that FIDIC was the most common form for projects in
the UK with a capital value of £25 million plus.

One reason is that it has a logical and robust structure. Its structure is as follows:

1
The structure is common to all FIDIC contracts, with a few tweaks to reflect which party takes design risk.
Consequently, if you get to grips with one form of FIDIC you can apply that knowledge to the other forms in FIDIC’s
Rainbow Suite.

There are a few wrinkles

FIDIC, like Des, has a few wrinkles. It is not the intention of this article to highlight all the issues, but here are a
few:

1 Law: FIDIC is a standard form contract. Consequently the words in the General Conditions may not sit with
the laws of the relevant country where the engineering project takes place. For example, the payment
provisions do not comply with the Housing Grants, Construction and Regeneration Act 1996. It is also
doubtful whether the liquidated damages provisions comply with aspects of Shariah law.

2 Termination at will: the Employer can terminate the contract at will. That is not unusual. However, the
Employer does not have to pay the Contractor’s loss of profit. This could cause issues for contractors who
have spent a long time preparing for a large engineering project, only to see it be taken away from them
soon after the contract is signed. A Contractor who has turned away work may want to recover loss of
profit to compensate it for this.

3 It’s a naked contract: the Employer has to provide reasonable evidence to the Contractor to demonstrate
that financial arrangements have been made and will be maintained which will enable the Employer to pay
the Contractor. Most Employers are reluctant to provide such evidence.

Conclusion
The FIDIC suite of contracts offers a robust, structured and logical engineering contract. It is an all-rounder. It is
easy to work with. It is easy to understand. Therefore, if you are working on complex domestic or international
engineering projects, you should consider using the FIDIC suite. It’s just like Des Lynam.

2
 Stuart Thompson
Partner
T +44(0)1223 222354
Stuart.Thompson@mills-reeve.com

www.mills-reeve.com T +44(0)844 561 0011

Mills & Reeve LLP is a limited liability partnership authorised and regulated by the Solicitors Regulation Authority and registered in England and Wales with registered number OC326165. Its
registered office is at Fountain House, 130 Fenchurch Street, London, EC3M 5DJ, which is the London office of Mills & Reeve LLP. A list of members may be inspected at any of the LLP's
offices. The term "partner" is used to refer to a member of Mills & Reeve LLP.

The contents of this document are copyright © Mills & Reeve LLP. All rights reserved. This document contains general advice and comments only and therefore specific legal advice should be
taken before reliance is placed upon it in any particular circumstances. Where hyperlinks are provided to third party websites, Mills & Reeve LLP is not responsible for the content of such sites.

Mills & Reeve LLP will process your personal data for its business and marketing activities fairly and lawfully in accordance with professional standards and the Data Protection Act 1998 . If you
do not wish to receive any marketing communications from Mills & Reeve LLP, please contact Suzannah Armstrong on 01603 693459 or email suzannah.armstrong@mills -reeve.com