Quiz 3

Group 1:
1. Henok Tefera
2. Tinsae Mulatu
3. Feysel Abdu
4. Eden Abebe
5. Edris Abdella
6. Mekonen Demise
7. Fantayeneh Tilahun

The Road Project Case

 A Construction Contract has been signed between the Contractor & the
Employer for the construction of a 200km road project.
 The Contract Price was ETB 400, 000, 000. 00.
 The completion time for the project were 1000 calendar days excluding
mobilization.
 The extent of liquidated damages agreed was ETB 100, 000. 00 for each
day of delay up to the limit of 10 % of the final Contract Price.
 An international Consulting Engineer has been selected & appointed by the
Employer for the design & Supervision of the project.
 The final method of dispute resolution agreed in the Contract is arbitration.
 A dispute has been arisen between the Contractor & the Employer with
respect to:
 Delay claims (200 days of time extension & ETB 30,000,000.00
prolongation cost); and
 Disruption claims i.e. the cost of loss of productivity &
uneconomical use of resources, said to be caused by major &
repetitive design change & late issuance of the drawings by the
Engineer to the Contractor ETB 10, 000, 000. 00;
 The Contractor, after fulfilling the contractual requirements, directly
submitted its claims to the court.
 The Employer has received the Claims of the Contractor.
 The Employer in its Statement of Defense has presented the following
arguments to the court.
The Contractor is in breach of the Contract in bringing the claims
directly to the Court since we have an agreement to arbitrate our
disputes. The Court shall dismiss the case for lack of jurisdiction.
The Employer denies liability of the claims of the Contractor.
The Employer claimed, instead, the payment of liquidated damages
for the 400 days of delay i.e. ETB 40,000,000. 00.
 The Employer’s argument is that the delay caused to the
Contractor is due to design change & late issuance of drawings to
the Contractor by the Engineer.
The Employer is not responsible for the act or omission of the
Engineer towards the Contractor under the Contract.
 You have been approached by the Contractor, before the next court day, to
advise him with respect to issues raised by the Employer.
 You are instructed to analyze the Quiz. Question under the MDB
Harmonized FIDIC Conditions of Contract.
Questions

 What would be your advice to the Contractor with respect to the issues raised
by the Employer? Please, discuss.
a) With respect to the agreement to arbitrate?
b) With respect to the Contractor’s possible liability to the
Employer for liquidated damages & related issues?
c) Any other comments with respect to the claims of the
Employer?

Answers

A. We will advise the contractor to respect the contract agreement signed with respect to dispute
resolution mechanism which is arbitration because according to FIDIC 2010 MDB Harmonized
Edition sub-clause 20.4 Obtaining Dispute Board’s Decision states that:

“Within 84 days after receiving such reference, or within such other period as may
be proposed by the DB and approved by both Parties, the dispute board shall give
its decision, Unless the Contract has already been abandoned, repudiated or
terminated, the Contractor shall continue to proceed with the Works in accordance
with the Contract.”

B. Our professional advice to the contractor would be if the delay is caused by the engineer due
to failure to issue the drawing on time and design change FIDIC condition of contract 2010 states
on sub-clause 1.9 Delayed drawing or instruction:

“If the Contractor suffers delay and/or incurs Cost as a result of a failure of the Engineer
to issue the notified drawing or instruction within a time which is reasonable and is
specified in the notice with supporting details, the Contractor shall give a further notice to
the Engineer and shall be entitled subject to Sub-Clause 20.1 [Contractor’s Claims] to:

(a) an extension of time for any such delay, if completion is or will be delayed, under
Sub-Clause 8.4 [Extension of Time for Completion], and

(b) payment of any such Cost plus profit, which shall be included in the Contract
Price.”
C. The employer should know the consultant is acting as a representative of the employer.
According to FIDIC MDB Harmonized edition 2010 sub-clause 3.1 Engineer Duties and
Authority,

“(a) whenever carrying out duties or exercising authority, specified in or implied by the
Contract, the Engineer shall be deemed to act for the Employer;”