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CLAIMS & DISPUTES RESOLUTION UNDER FIDIC 99 REDBOOK
Senior Lecturer Department of Building Economic University of Moratuwa
... is all about Claims and Disputes Resolution
pages 58 to 62
Claim Event, Circumstance arisen Clause 20.1 Contractor gives notice to the Engineer describing the event or circumstance giving rise to the Claim, within 28 days Contractor becomes aware or should have become aware of the Claim
if failure has prevented or prejudice the proper investigation of Claim firstname.lastname@example.org Claim approved is limited.4 Contractor is satisfied with Engineer’s decision Yes Clause 20.1 Contractor gives notice to the Engineer describing the event or circumstance giving rise to the Claim.lk 3 .ac.1 Contractor provides Engineer with detailed particulars and within 42 days and final claim within 28 days after end of effect if continuing event and complies with other contractual requirements No Clause 20.mrt. if failure has prevented or prejudice the proper investigation of Claim Dispute No Clause 20.1 Contractor provides Engineer with detailed particulars and within 42 days and final claim within 28 days after end of effect if continuing event and complies with other contractual requirements No Clause 20.1 Claim approved may be limited. within 28 days Contractor becomes aware or should have become aware of the Claim No Yes Clause 20.12/11/2009 Clause 20.1 Claim Fails The Employer is discharged from all liability in connection with the Claim Clause 20.
or gives opinion on the Claim within 42 days Yes Clause 20. or gives opinion on the Claim within 42 days No Yes Clause 20.1 The Engineer (dis)approves.1 The Engineer (dis)approves.1 Contractor provides Engineer with detailed particulars and within 42 days and final claim within 28 days after end of effect if continuing event and complies with other contractual requirements Clause 20.lk 4 .mrt.4 Contractor is satisfied with Engineer’s decision No Contractor does not tolerate Engineer’s delay in decision No No Yes Dispute No Clause 20.12/11/2009 Clause 20.1 The Engineer (dis)approves. or gives opinion on the Claim Yes Clause 20.ac.4 Contractor is satisfied with Engineer’s decision suranga@becon.
lk 5 ... Typical sequence shown in beginning of the document is useful email@example.com. CLAUSE 20 .. is all about Claims and Disputes Resolution However .12/11/2009 20....4 Determination Certification Instructions Dispute Valuations Opinion Recall.
4 A Party issues a “notice of dissatisfaction” 20..mrt.2 Parties appoint the DAB 20.lk 6 . (28 days in example in sample forms) Guidance for Particular Conditions – “It is preferable.6 A Party initiate arbitration Parties present submissions to the DAB Amicable settlement <28d <84d <28d >56d DAB gives its decision Arbitrators appointed 20.4 A Party refers a dispute to the DAB 20. to agree before the Letter of Acceptance” A list of potential members may be included in tender firstname.lastname@example.org PARTIES APPOINT THE DAB Within 28 days of Date of Commencement? .ac. but not essential.12/11/2009 TYPICAL SEQUENCE OF DISPUTE EVENTS ENVISAGED IN CLAUSE 20 8..1 Commencement Date 20. by the date stated in Appendix to Tender.
each party nominate one member for approval of other party.2 PARTIES APPOINT THE DAB . only appointed if and when a particular dispute arises.mrt...ac..e.lk 7 . CONTINUED .. two members appoint chairman Each part pay one-half of DAB remuniration 20.12/11/2009 20..3 What if date of appointment not stated in Appendix? Might go for “ad-hoc” DAB > i. Parties jointly appoint a DAB DAB comprises one or three member stated in Appendix If not stated nor agreed. CONTINUED . What if parties fail to agree DAB? An appointing entity is named in Appendix to Tender 20.. it shall be three If three.. What if appointing entity not stated in Appendix? ? suranga@becon..2 PARTIES APPOINT THE DAB .
CONTINUED . CONTINUED .mrt. because Parties empowers the DAB to reach decisions with which they undertake to comply.2 PARTIES APPOINT THE DAB .. Parties may appoint members to be available to replace members resign or be terminated Otherwise.2 PARTIES APPOINT THE DAB ...12/11/2009 20.ac.. and A DAB member cannot normally be removed except with the agreement of both parties (20...2 last para) suranga@becon. DAB members must be selected carefully.. replacement be similar to new appointment Termination shall only be by mutual agreement of Parties usually DAB expires when discharge become effective 20.lk 8 ..
they may jointly refer a matter to DAB for it to give its opinion.2 Parties may decide on appropriate model by considering (among other things): Extent of Contractor’s Activities off-site – paying DAB may not economical Extent of uncertainties in scope of works – underground tunnelling – a full-term DAB most appropriate Extent of Variations expected – full-term Magnitude of the Contract – No. of DAB members 1 or 3 email@example.com/11/2009 A “FULL-TERM” DAB Appointed before Contractor commence Works Visit the Site on a regular basis Also available to assist in avoiding disputes during these visits 20.lk 9 . Neither party shall consult DAB on any matter without the agreement of the other party DAB: “FULL-TERM” OR “AD-HOC” Red Book General Conditions are for “full-term” – see 20.2 Para 7 – “if at any time the Parties so agree.mrt.
.4 OBTAINING ADB’S DECISION 20. instruction.. No matter can be referred to DAB unless it is in dispute but.5 suranga@becon. no formal notice of dispute required If matter is still in discussion or only interim determination given other party may assert that “no dispute” DAB to find if dispute has arisen – see if agreement achieved under sc 3....12/11/2009 20... opinion or valuation of the Engineer . may refer the dispute in writing to the DAB for decision” 20. in connection with or arising out of the Contract or the execution of the Works including any dispute as to any certificate. CONTINUED .ac.lk 10 .4 OBTAINING ADB’S DECISION .. determination..mrt.4 Reads “if a dispute (of any kind whatsoever) arises between the Parties .
12/11/2009 THE MATTER HAS DEVELOPED INTO A DISPUTE When .mrt..5 So little progress being achieved that it is clear that agreement is unlikely 20.ac. Final determination rejected Discussions discontinued without agreement Party decline to participate in discussion Party decline to reach agreement as per sc3.lk 11 ..4 WRITTEN REFERENCE TO DAB The Written Submission by Claimant For the decision of DAB Describes the situation Sets out the principles of the matter in dispute What Claimant wishes the DAB’s decision to be A copy must be passed to the other party (Respondent) and Engineer suranga@becon.
mrt.ac. Note that DAB decision shall be admissible in evidence in arbitration. or within such other period as may be proposed by the DAB and approved by both parties approvals must not be unreasonably withheld or delayed for complex matters DAB may propose to give decisions in stages shall be reasoned and stated that it given under sub-clause 20. The decision shall be binding on both parties suranga@becon..4 DAB’S DECISION within 84 days after receiving the original reference.4 20. sc 20.12/11/2009 20...4 DAB’S DECISION .lk 12 .. CONTINUED .6 Therefore well reasoned decision preferred The Contractor shall execute the Works while DAB proceeding.
decision become final and binding.4 DISSATISFACTION ON DAB’S DECISION The Party must give a formal “notice of dissatisfaction” within 28 days. If no amicable settlement (or attempt thereto).mrt. ..ac.lk 13 ..5 AMICABLE SETTLEMENT During first 56 days after notice Parties should attempt amicable settlement DAB should not get involve in amicable settlement procedure.6 suranga@becon.. It establishes the claimant the right to commence arbitration.. the dispute shall be finally settled by international arbitration sc 20.12/11/2009 20. Unless the notice given within 28 days. 20.
E.g. without having to refer again to DAB or try amicable settlement 20.6 However..lk 14 .12/11/2009 20. but no DAB is in place.. “the appointing entity is non-existent” the dispute may be referred directly to arbitration under sc 20. there is still room for amicable settlement firstname.lastname@example.org WHAT IF.mrt. Formal notice of dissatisfaction NOT given.8 WHAT IF.. either by expiry or otherwise the word ‘otherwise’ shall be used to cover failure of appointing DAB due to defect in document. a dispute occurs.ac.. DAB decision became final and binding a Party FAILS to comply with decision Other Party may refer THIS FAILURE directly to arbitration.
lk 15 .ac.12/11/2009 20.6 ARBITRATION Unless otherwise agreed by both parties Rules of International Chamber of Commerce Three arbitrators Language be language defined in 1.mrt.4 Shall commence before or after completion Shall not prevent executing obligation of contract during the proceedings ::: BREAK ::: We’ll try something practical now 1101001011010110101010101010100100010111010011001100110 0101010010100101010011110101011101010110110101000101001 0110010101001111010010011011010111010111100010110011101 1001010010101001010100101111101001101010100100101001111 1001110101001001011111100010101111111001101001010100101 011110100101010100101010110100 0 1 0 0 0 0 suranga@becon.
ac. Contractor asked for the same rate from the upper floor block work but the Engineer rejected it and approved rate of his own schedule of prices (used for Engineer’s Estimate) which is less than claimed rate.12/11/2009 CASE PROPOSED SCHOOL BUILDING FOR SEEVALI COLLEGE Variation Instructions were issued changing the Ground Floor walls to block work from brick work which was in original contract. No block work was found in ground floor level in the original contract but upper floor partition walls in the original contract was similar type. TASK 01 Write the cover letter for referring the matter to DAB You may make necessary assumptions email@example.com 16 .
ac. REFERENCE TO ADJUDICATION .12/11/2009 << Date >> << Adjudicator1 >> .chairman (member) << Adjudicator2 >> ..member << Adjudicator3 >> .... The detail claim is attached herewith..... << Contractor >> cc: << Employer >> << Engineer >> suranga@becon..member Dispute Adjudication Board Proposed School Building for Seevali College << Address >> Dear Sirs. Yours faithfully...lk 17 ... .mrt. We are not in agreement with the rates determined by the Engineer for Block work (varied item) at Ground Floor Level we carried out under the above contract.4 we refer the dispute to DAB for its decision..... Therefore a dispute has arisen between the parties to the above Contract and pursuant to Sub-clause 20.. Thank you.
Contractual provision 2.TIPS How much to write . Dispute Your claim for decision by DAB suranga@becon... your statement .mrt.ac...lk 18 ..12/11/2009 TASK 02 Write the Adjudication Submission You may make necessary assumptions TASK 02 . Occurance.Keep it short but clear Format – Not strict... but you may use something similar to arbitration submissions Order – Introduce parties and contract DAB appointed Contractual provision 1.
12/11/2009 In the matter of Adjudication Dispute Between ABC Construction. Lane Road Colombo 19.. By a contract dated 09th October 2009 (‘the Contract’). suranga@becon.. No 9.lk 19 .ac..mrt. The Employer is a public school in Colombo. Road Lane Colombo 20 Contractor/Claimant and Seevali College. at the time and in the manner prescribed by the contract... 111/1. Employer/Respondent STATEMENT OF CLAIM . 1.. 2.. The Contractor is a civil engineering contractor registered under ICTAD as a Grade C-5. namely “the Construction of Proposed School Building for Seevali College” (‘the Works’) in consideration for payment by the Employer on measure and pay basis without price fluctuation adjustment for the priced bills of quantities bid by the contractor. The Contractor undertook to construct and complete certain building works.
12/11/2009 3. firstname.lastname@example.org of the FIDIC Conditions provides that Variations may be initiated by the Engineer and the Contractor shall execute and be bound by each Variation. 4. 6. 5.mrt. On 28th October during a site visit. Sub-clause 13.ac. the Engineer instructed a Variation changing all ground floor walls to block work from brick work specified in the Contract.lk 20 . The Dispute Adjudication Board (‘the DAB’) was appointed by a tripartite agreement signed on 15th October 2009. First Edition 1999 (‘the FIDIC Conditions’). The Contract Incorporates the FIDIC Conditions of Contract for Construction.
8. The Contractor confirmed the Variation instructions and notified the applicable rate to be the rate of similar work in the Contract – BOQ Item 2.ac. 10.mrt.lk 21 . Sub-clause 12.3 of the FIDIC Conditions provides that in the event Engineer gives oral instructions the Contractor shall confirm the said instruction by writing. by his letter to the Engineer dated 01st November 2009. email@example.com of the FIDIC Conditions provides that each Variation shall be evaluated in accordance with Clause 12 [Measurement and Evaluation]. Sub-clause 3.12/11/2009 7. 9. Sub-clause 13.3 of the FIDIC Conditions provides that the appropriate rate for an item shall be the rate specified for similar work.34: Block Work Walls at Second Floor level.
PARTICULARS <<< Include a brief calculation here. the Contractor claims Rs.000. annex if there are detailed calculations>> 15. 13.mrt. pursuant to Sub-clause 14.3 of the Contract. Accordingly.3. Sub-clause 14. The Engineer.ac.6 of the FIDIC Conditions provides that the Engineer shall issue an Interim Payment Certificate which shall state the amount which the Engineer fairly determines to be due.00. 115.lk 22 . 12. The Contractor included the block work quantity with applicable rate to its Interim Statement dated 31st December 2009. The Engineer failed to certify payment to the Contractor of sums to which it is entitled pursuant to the said Sub-clause 12. compounded monthly. in the Interim Payment Certificate. suranga@becon. which sums amount to Rs. had not certified the rate applied for Variation and had determined a lower rate.12/11/2009 11. plus interest thereon at the rate of three percentage points above the discount rate of the Central Bank of Sri Lanka. 115. 14.00 under Sub-clause 12.000.8 of the Contract.
I certify on behalf of the Contractor that the facts stated in this Statement of Claim are true to the best of my knowledge and belief... Project Coordinator ABC Construction No 9... .... M.......ac.mrt.12/11/2009 16...............................lk 23 ...... Muralitharan. Road Lane Colombo 20 WELLWELL-DONE suranga@becon..........
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