FIDIC Overview Risk, Liability & Force

Majeure including Claims, Disputes &

Arbitration

GENERAL CONDITIONS
FIDIC 1999 RED BOOK

By M. Edwin Wiranegara
Jakarta 09 April 2022 (Session 5)
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General Conditions – Structure of the documents

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 RISKS – INSURABLE V NON INSURABLE
INSURABLE NON INSURABLE
Clause 1.9, 2.1, 4.7, 4.12,
4.15, 4.24, 7.4, 8.4, 9, 14.8 √

VARIATIONS &
ADJUSTMENTS √
(Clause 13)
RISK & 17.1 - √ *
RESPONSIBILITY 17.3 - √
(Clause 17.1 & 17.3)
INSURANCE (Clause √
18)
FORCE MAJEURE
(Clause 19) √* √ **
© M. Edwin Wiranegara

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 Typical Insurance type in Projects
Employer Contractor
CAR (Contractor’s All
Risk) – S.C 18.2 √

TPL (Third Party

Liability) - S.C 18.3 √

JAMSOSTEK (Asuransi
Tenaga Kerja / Jaminan √
Sosial Tenaga Kerja) -
S.C 18.4
Asuransi Peralatan milik √
Kontraktor - S.C 18.2

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 Queries /Cases

• Employer’s Personnel covers under which Insurance?

• why are many high-rise building projects here for CAR/TPL
covered by Employers, not Contractors?
• Apakah COVID-19 di-cover oleh typical CAR/TPL?

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 INSURANCE
CLAUSE 18.1 – General Req.
C is the insuring party:
• Each insurance shall be effected with insurers (perusahaan
asuransi) & in terms approved by Emp.
• terms shall be consistent w/ any terms agreed by both
Parties before the date of LoA.
Emp. is the insuring party:
• Each insurance shall be effected with insurers (perusahaan
asuransi) & in terms consistent w/ the details annexed to
the Particular Conditions (PC).

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 INSURANCE
CLAUSE 18.1 – General Req.
Joint insured:
• Cover shall apply separately to each insured, as though
(seolah-olah) a separate policy had been insured for each
(C & Emp.)
• If a policy indemnifies (menjamin) additional joint insured
(yaitu selain C & Emp.) maka:
• C shall act (harus bertindak) under the policy on behalf of
these additional joint insured except – Emp. Shall act for
Emp’s Personnel,
• Additional joint insured shall not be entitled to receive
payments directly from the insurer or to have any other direct
dealings with the insurer, and
• The insuring party shall require all additional joint insured to
comply with the conditions stipulated in the policy (Polis).

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 INSURANCE
CLAUSE 18.1 – General Req.
• The insuring party shall, (as stated in Appendix to
Tender for the whole duration calculated from
Commencement Date), submit to the other Party:
• Evidence that the insurance has been effected, &
• Copies of policies (Polis) as in S.C 18.2 & 18.3
• Payments by one Party to the other Party shall be
subject to S.C 2.5 (Emp.’s Claims) or S.C 20.1 (C’s
Claims)

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 CLAUSE 18.2 – Insurance for
Works & C’s Eqpt
• Insuring Party shall insure the Works (e.g CAR) & C’s Eqpt (usually
insured by C)
• Coverage as stated in 18.2 till TOC / BAST1
• However, shall maintain this insurance to provide cover until the date
of issue of Performance Cert (BAST2) for loss or damage (kerugian atau
kerusakan) for which the C is liable arising from a cause occurring prior to the
issue of TOC, & for loss or damage caused by C in the course of any other
operations (including those under Clause 11 – Defects Liability / Kewajiban
Cacat Mutu)
• The insuring Party shall insure the Contractor's Equipment for not
less than replacement value, including delivery to Site.
• For each item of Contractor's Equipment, the insurance shall be
effective while it is being transported to the Site and until it is no
longer required as Contractor's Equipment.
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CAR & TPL Policy example

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CAR & TPL Policy example

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CLAUSE 18.2 – Insurance for Works & C’s Eqpt
CAR coverage:
• Loss & Damage oleh sebab selain Emp. Risks (17.3)*
• Loss & Damage akibat partial occupancy by Emp.
• Loss & Damage oleh sebab Emp. Risks 17.3 c, g, h (riot & sejenisnya
– diluar personil Kontraktor dlsb; design yg mrpk tg jwb Emp.; setiap
operasi atas kejadian kekuatan alam – exc. risiko yg tdk dpt
diasuransikan dg ketentuan yg wajar secara komersial (misal Covid).
(dg deductible per kejadian sesuai yang tertera pada Lampiran
Penawaran - & jika tidak tertera maka Loss & Damage pada bagian
ini tidak berlaku).
Note:
* = krn 17.3 pada intinya Emp. Bisa jadi tidak mengasuransikannya krn
preminya sgt tinggi (contoh Covid, bisa s.d 1% dari NK, 20x dari yg
normal – 0.05% dari NK)
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CLAUSE 18.3 – Insurance against Injury to
Persons & Damage to Property (e.g: TPL)

• Insuring Party shall insure: each Party's liability for any loss,
damage, death or bodily injury which may occur to any
physical property or to any person except things insured under:
• S.c 18.2 (Insurance for Works (e.g: CAR) and Contractor’s
Equipment),
• S.C 18.4 (Insurance for Contractor’s Personnel, e.g.:
JAMSOSTEK)

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 Further Insurance Cases
• you are the Engineer. A subcon calls you to say that the
Maincon has gone bust and trades are leaving the Site. What
is the first thing you should do concerning Insurance?
• As a Maincon, you work the concrete on the roof, then the
formwork breaks, and the concrete spills over to the facade
that DC had installed. What insurance covers something like
this?

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17
FORCE MAJEURE

19 Force Majeure
19.1 Definition of Force Majeure
In this Clause, "Force Majeure" means an exceptional event or
circumstance:
(a) which is beyond a Party's control,
(b) which such Party could not reasonably have provided against before
entering into the Contract,
(c) which, having arisen, such Party could not reasonably have avoided or
overcome, and
(d) which is not substantially attributable to the other Party
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19.1 Force Majeure (cont'd)
Force Majeure may include but is not limited to exceptional events or
circumstances of the kind listed below, so long as conditions (a) to (d) above
are satisfied:
(i) war, hostilities (whether war be declared or not), invasion, act of foreign
enemies,
(ii) rebellion, terrorism, revolution, insurrection, military or usurped power, or
civil war,
(iii)riot, commotion, disorder, strike or lockout by persons other than the
Contractor's Personnel and other employees of the Contractor and
Subcontractors,
(iv)munitions of war, explosive materials, ionising radiation or contamination
by radio-activity, except as may be attributable to the Contractor's use of
such munitions, explosives, radiation or radio-activity, and
(v) natural catastrophes such as earthquake, hurricane, typhoon or volcanic
activity. 19
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 Further CASES
• Apakah perlu Govt men-declare bhw COVID-19 adalah PANDEMIC? Ya, makanya waktu itu Govt.
ragu & akhirnya timbul beda pendapat krn utk mengakomodir suatu kepentingan (yang kalau dilihat dari
sisi positif maka sama2 ada maksud baiknya)
• Apakah Pandemic (Covid-19) specifically stated & included in FM clause (19.1)? Not specifically but can
bring to Natural Catastrophes krn itu mrpk bagian dari definisi Act of God, yaitu see # below  shg
kecenderungan nya lebih kuat ke 17.3
• Namun either 19.1 – FM or 17.3 – ER, Ketika masuk kategori tsb maka sama sama bisa claim EOT &
Addi. Cost (tanpa manut atas perintah (EI) stop by Emp di s.c 8.8) yaitu 19.4 utk FM & 17.4 utk ER
(jadi tidak ada istilah bhw krn FM lalu beban dibagi imbang tanpa ada kompensasi Cost, krn
sesuai 19.4 Ketika syarat 19.1 ter-categorized & syarat 19.2 & 19.3 terpenuhi, maka 19.4
berfungsi)
• apakah Pandemic (Covid-19) termasuk Natural Catastrophes (Bencana Alam)? Bisa ya , bisa tidak
• Kenapa ya krn termasuk kategori Act of God, kenapa tidak karena itu konspirasi manusia
• # Shg Act of God itu = forces of nature which could not have been foreseen & the effect thereof
avoided by the exercise of reasonable prudence, diligence & care, or by the use of those means
which the situation renders reasonable to employ  shg COVID-19 masuk kategori ini
CASE LAIN:
Ketika nyata bahwa “exceptionally Adverse climatic conditions” exclude dari 4.12, & pada 8.4 c hanya
mengcover EOT nya saja, lalu apakah kerugian biayanya bisa diganti? Merujuk kepada klausul mana?

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INTRO re CLAIM
Didalam FIDIC 99 – Red Book tidak
didefinisikan untuk kata ‘Claim’ seperti
pada kata ‘Variation’.
• FIDIC Contracts include numerous
and very detailed provisions dealing
with the submission and processing
of claims and the handling and
resolution of disputes should they
arise.
• Claims can be made by the
Contractor but can also be made by
the Employer.

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Overall understanding shall be understood
Variation Claim
Initiated by Engineer / Employer Contractor
Engineer’s Instruction √
(EI)
Procedure / Sub-Clause 13.3 Sub-Clause 20.1
Mechanism [Variation Procedure] [Contractor’s Claim]
Payment Procedure for
Variation & Claim are √ √
same?
Relevant Clauses of Sub-Clause 14.3 Sub-Clause 14.3
above Row (a) Row (f)
© M. Edwin Wiranegara

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CLAIM PROCEDURE
Fidic 99 General Condition Sub-Clause 20.1 [Contractor’s Claims] - Mechanism

42 d

Event/
C submit
circumstance that Notice of
28 d detail 42 d Eng to
entitle EOT and/or Claim by C
Claim to respond *
additional $
Eng
payment

no
C = Contractor
Eng = Engineer
Emp = Employer Event has
continuing effect
?

yes

C submit further
detail Claims to Eng
in monthly intervals,
giving accumulated
© M. Edwin Wiranegara
delay and/or amount
claimed
#
42 d
C send a Final Claim
w/in 28 d after effects
end or other period
as may be proposed
by C and Eng agreed

Notes:
$
- if C fails to give Notice of Claim witihin 28 days, Time for Completion shall not be extended, C shall not be entitled to additional payment.
- Emp shall be discharged from all liability in connection with the claim.
- C under any Clause of these Conditions or otherwise in connection with the Contract shall give relevant Notice in regard to the particular Event of Circumstance

# fully detailed claim considered as Interim

*
- Eng respond with approval or with disapproval and detailed comments. Or request further particulars with response of claim in principal.
- Eng shall proceed in accordance with S.C 3.5 [Determinations] to agree or determine
~ if any EOT (before or after Time of Completion expiry) in accordance with S.C 8.4 [Extension of Time for Completion], and/or
~ if any additional payment to which C entitled under the Contract

General Notes:
 Such Claim already reasonably substantiated and due shall include in each Payment Cert

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 Insights & Cases

• SUB CLAUSE 2.1

• SUB CLAUSE 4.7
• SUB CLAUSE 8.4

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 SUB CLAUSE 2.1
Right of Access to the Site (S.C 2.1)
• Give access to enable execution of Works
• Any failure – could result in EOT + C + reasonable P
(provision 2-2.5% u/ OH+profit or kadang2 10% kalo
memungkinkan) – Fidic 2017 – 5%

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 SUB CLAUSE 4.7
Setting Out (S.C 4.7)
• C is entitled to EOT & C + P due to errors in Setting Out
information provided by Emp.
• However, subject to test of whether an experienced C would
spot the error & Eng will be the judge of this matter.
•  not only does the Eng act for Emp (s.c 3.1 a), but he is
also required to make decisions as if he were an experienced
contractor!

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 SUB CLAUSE 8.4
Claims for EOT (S.C 8.4.c)
Grounds for EOT:
Exceptionally adverse climatic conditions
• Is there a possibility to claim additional costs?
• Which clause does it cover?
• How to convince?

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 Procedures
for
Claims by the
Contractor

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 Procedures
for
Claims by the
Contractor
(cont’d)
Continue as Procedures for Disputes (at the next 2 page)

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 Procedures
for
Claims by the
Employer

Continue as Procedures for Disputes (on the following page)

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Procedures
for
Disputes

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STEP-STEP
TERKAIT
MENUJU &
PROSES
BANI

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 Dispute Adjudication Board
• Members of the DAB appointed at the start of the project regularly visit
the Site and keep up to date with progress
• 1 or 3 person DAB – if 3, the Client and Contractor appoint a
Member each and jointly agree on the third
• Role of the DAB is to work with the Parties to anticipate and resolve
potential disputes
• Provide recommendations for resolving disputes if required
• Recommendations are not binding
• Parties refer any dispute to the tribunal for a binding and final decision
 Another CASE
• where the competing events occur at different times but their
delaying effects on the work are felt at the same time

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Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) ltd (2000)

• The Judge ruled that Henry Boot was entitled to an EOT for the period of
delay caused by the Relevant Event, even though HB had a concurrent delay
with an event they were responsible for.

• The judge outlined the following hypothetical situation as an example:

• If no work could be completed on site for one week due to exceptionally

inclement weather (a Relevant Event), but in that week the contractor could
not have completed any work anyway due to a labour shortage (not a Relevant
Event) – An EOT should still be granted.

• If one of the causes of concurrent delay was the Employers risk, the
contractor should receive an EOT for the full period of delay.

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DISPUTE CASE

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Dispute Resolution

The National Construction Contracts and Law Survey

2018 was published by the NBS (National Building
Specification).
 HOW TO ACCOMMODATE
RISK OF DISPUTE ?
• AVOID  how?
• i.e: proper tender (including Pre Q – comprehensive
clarification – tender ethics), standardize CoC, SMM, contract
consultation, risk sharing
• ALTERNATIVE RESOLUTION (Compromise path)
• Negotiation – Conciliation – Mediation - Dispute
Adjudication Board (FIDIC clause 20)
• RESOLUTION (Firm path)
• Arbitration; Litigation
 Dispute Resolution
Mediation
• Held at any time
• A third party is appointed to act as a ‘go between’ those in the contract
• Aims to satisfy all parties and can help maintain relationships
• The mediator has no formal power and the process largely relied on the willingness of the parties involved

Conciliation
• A conciliator may have more technical experience than a mediator
• But is still impartial in taking sides
• Tries to identify the issue of the dispute and help reach resolutions

Adjudication
• Usually named in the contract
• Makes a decision based on the facts of the specific case
• The Adjudicator can investigate
• Binding decisions
• Short timescale
• Can indicate a likely court outcome
Dispute Resolution

Arbitration
• The Arbitrator can have technical and/or legal experience
• More private than courts
• A more formal approach to ADR
• Higher degree of facts and not necessarily intentions
• Can be binding

Litigation
• Taking legal action
• High cost
• Lengthy process
• Suitable if ADR has failed
• Binding
• Hierarchal court system
 Cause of dispute
(Before contract signing)

• INCOMPLETE TENDER DOCUMENTS

• POOR MINUTES OF MEETING DURING
TENDER CLARIFICATION
• AMBIGUITY DOCUMENTS
• NOT EXPLICITLY BROUGHT UP NECESSARY
ITEM DURING CLARIFICATION – prepare
check list & discuss with all stakeholder
Action plan to minimize/RESOLVE
dispute
• PREVENTIVE ACTION - SOONEST
• i.e: refer to Lesson Learned from previous project ; detail
during clarification (i.e: prepare check list as shown before)
• ANTICIPATE ALL THE THREATS
• APPLY & ACTIVATE DISPUTE ADJUDICATION
BOARD (DAB) IN CONTRACT AS ADVISED IN
FIDIC RED BOOK CLAUSE 20 – 28 DAYS AFTER
COMMENCEMENT DATE
DISCLAIMER • The content of these SLIDES ARE not legal advice,
and is intended for educational purposes only.
You should always consult a suitably qualified
professional regarding a particular legal issue.
FURTHERMORE THE CONTENT ARE CONSIDER AS
DYNAMIC SLIDES AND SUBJECT TO CONTINOUS
IMPROVEMENT IN FUTURE
• The content of these SLIDES contains general
information and may not reflect current legal
developments or information. The information is
not guaranteed to be correct, complete or
current. We make no warranty, expressed or
implied, about the accuracy or reliability of the
information at these SLIDES or at any other
SLIDES/NOTES to which it is linked.
• The content is used for education purposes only
• The Cases example will be shared in a very
limited exposure due to confidentiality on each
individual Project

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References:
• FIDIC Red Book – 1st Edition 1999
• FIDIC user’s guide – a practical guide to the 1999 Red Book by Brian W Totterdill
• Contract Administration Handbook (for use w/ FIDIC CoC for Construction) by Euginie Lip,
2009
• FIDIC Red Book – A companion to the 2017 Construction Contract by Jakob B Sorensen
• Michael D. Robinson – An Employer’s & Engineer’s Guide to the FIDIC CoC – Blackwell -
Wiley (2013)
• Michael D. Robinson – A Contractor’s Guide to the FIDIC CoC – Wiley (2011)
• Mr. Mirza Zulfi BSc, MRICS – personal notes and some references
• Mr. Peter Robinson MRICS – intense discussion regarding FIDIC 1999
• From Youtube – 2nd Edition Fidic 2017 Overview Comparison to 1st Edition 1999
• https://fidic.org
• https://www.charlesrussellspeechlys.com
• https://www.thenbs.com/knowledge/a-brief-introduction-to-fidic-contracts
• https://www.pinsentmasons.com/out-law/guides/standard-form-contracts-fidic
• possible other resources not mentioned
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 THANK YOU 🙏
M. Edwin Wiranegara
Ir (Civ/Str) MM (Stra. Mgmt) MSc/LLM candidate (Cons. Law) CPPM FRICS
Email: edwinwiranegara@gmail.com, mobile: +62 815 13045431

SENIOR LEGAL MANAGER – TOTAL BANGUN PERSADA Tbk

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