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 To Virginia, Olivia,
Christopher and Annabelle Knutson
 TABLE OF CONTENTS

Introduction xi
About the Editor and Authors xxxv
Brazil
Flávio Gonzaga Bellegarde Nunes,
Maria Isabel de Almeida Alvarenga, Analucia Zuliani Réa,
Fabio Simões Castejón 1
Egypt
Borham Atallah 21
England
Robert Knutson 37
France
Marc Frilet 79
Germany
Wolfgang Rosener, Gerhard Dorner 87
India
Som Mandal, Pooja Dood 127
Japan
Kazuo Takayanagi 189
Malaysia
Wilfred Abraham, Rishwant Singh 229
Netherlands
Eric Eggink 251
Saudi Arabia
Charles G. Hammond 259
Sweden
Per Samuelsson, Lennart Iwar 277
Switzerland
Michael E Schneider, Matthias Scherer 313
United States of America
James J Myers, John P Giffune, Lisa K Miller 343
Index 385

ix
 INTRODUCTION

Many years ago now I was involved in negotiations with a German engineer
over the final construction cost of a hydroelectrical project in South Asia. The
contract used was a slightly modified version of FIDIC Red Book 3rd edition,
1977. We were discussing the fact that the total value of variations amounted
to about 10% of the original contract price. Our client had added a certain
percentage for overhead and profit to the ‘‘on-cost’’ of the variations, but the
Engineer refused to recognise what we said was our client’s entitlement to
overhead and profits. When the argument was explored during discussion the
Engineer finally pointed to clause 52(3) of the FIDIC third edition referring to
adjustments for the cost of overhead and profit and stated that this clause meant
that unless the contract price had changed by 15% or more no additional
variations were entitled to be valued or added to the original price.1 I found that
argument quite inexplicable and began to look for its source.
The German VOB contract did not to my knowledge exist in translated form
at that time so on a hunch I had some professional translators translate certain
provisions including the variations provisions. Then it all became clear: the
Engineer interpreted the FIDIC provisions found in clause 52(3) in the manner
he did, because that was the way the VOB worked, and works, as can be
seen from the analysis later in this book of FIDIC under German law by
Dr Wolfgang Rosener and Gerhard Dornher.
I had then one of those (in my case extremely) rare insights. If you could
understand the approach of other legal cultures and national construction com-
munities to their own contracts you could gain an important advantage under-
standing your opponents approach, and/or – when in international construction
contract negotiations you might gain an important advantage. If you view the
work/issue through the filter of the other parties own knowledge and experiences
and knew their approach at least on a basic level, you might be able to take
advantage of or use matters that they assumed to be axiomatic and/or make
arguments which would not work in your own culture but would work in theirs.
A simple example is bouleversement. The notion of ‘‘overthrowing the funda-
mental economic bases of the contract’’ is well embedded, at least as far as I
understand, in French construction culture, but does not exist in common law
systems. It would be so much easier to argue that there had been a bouleversement
than to attempt to show that the contract had been ‘‘frustrated’’ within the strict
terms of the English Common Law, especially if there is a civil law party on the
other side of the table.
The FIDIC suite of contracts, as is well known, was originally derived from
the English ICE fourth edition of engineering contract. That fourth edition was

1 We can see that in Egypt (and certain other countries) this type of misunderstanding could very
easily arise because of the operation of local laws relating to government contracts.

xi
xii FIDIC – AN ANALYSIS OF INTERNATIONAL CONSTRUCTION CONTRACTS

conceived of and developed for many years in the English Common Law context
of the early 20th century. Thus an obvious question naturally arises – what
happens when FIDIC is taken out of that English context and subjected to
examination under different national laws?
This is the question this book seeks partially to answer. I did not intend for
the book to be definitive with any particular answer – rather it is meant as a
guide for in-house counsel or junior lawyers who are asked during the hectic
pre-tender or initial argument period to give a thumb-nail sketch of the con-
sequences of having the contract subject to the law of country X. If country X
is found in this book it is hoped that our hypothetical lawyer will find some
indicators and even the name of an expert capable of expanding on particular
aspects of the law of that country. I would now like to turn to some of the
aspects of the reception of FIDIC in non-English law jurisdictions that I have
encountered over the years.

The English language v. English Law

Obviously the ICE 4th edition was intended by English engineers and lawyers
to be interpreted under English law. If the contract was used outside of England,
it would have been a natural product of the application of the principles of
conflict of laws ( private international law) to apply, in all likelihood, the law of
the place of performance. This would have different implications for different
parts of the contract. For example, recently while I was at the ICC in Paris, a
very eminent French lawyer arbitrator told me that he had been called upon to
interpret the concept ‘‘due diligence’’ as found in a construction contract under
the laws of a civil law jurisdiction, with civil law parties on both sides. He said
he had been greatly helped by an English QC serving on his panel, who had
provided him with various English reported judgments on the topic. My own
view was that this was not necessarily the best approach. ‘‘Due diligence’’ has
meaning in ordinary English usage, and one does not have to go beyond that –
it means ‘‘the proper amount of diligence’’, not too much and not too little. It
is not at all clear to me that English cases, putting a particular legalistic gloss
on that phrase, and embedded as they are in the English tradition of precedents
and the binding authority of judgments from higher courts, would assist in
understanding this issue. My acquaintance agreed.
What if my acquaintance had asked about the phrase ‘‘act of prevention’’? If
an educated native English speaking Londoner were asked what this means, he
or she would very likely say that it means something like – an act which has or
can prevent (something ). In fact, under English law (and probably the law of
New Zealand, Australia and Hong Kong, but not necessarily Canada) it has a
specific meaning – equating to an act or omission, or series of acts or omissions
by the Employer or attributable to him, which have the effect of preventing the
contractor from completing the project within the contractually specified time
for completion.2
This understanding cannot easily be arrived at by simply reading the words –

2 Peak Construction v Mckinney Foundations (1971) 69 L.G.R. 1 (English C.A.)

 INTRODUCTION xiii

English law has to be examined. It would be a question for argument, I assume,

in many jurisdictions as to whether or not arbitrators deciding under non-English
law, could simply import the English legal definition to arrive at the English
understanding.
One can readily appreciate that terms such as ‘‘Performance Security’’ (as
opposed to Guarantee or On Demand L/C) may have different nuances when
translated into another language. Certainly the FIDIC phrase ‘‘Defects Liability
Period’’ caused legal havoc for years in jurisdictions (again see Germany) which
allow parties to contract out of the legislated limitation period. This is apparently
not an isolated possibility in civil law systems, and may apply to all sorts of
areas, such as termination, force majeure and the obligation to complete with a
certain result. I hope that this book will clear up some of these areas for
our readers.

FIDIC in England

Not only was the FIDIC First Edition Red Book Contract for international
works of civil engineering derived from the English Institution of Civil Engineers
4th edition form, the ICE and FIDIC forms have tracked each other through
successive editions for a number of years.
The second FIDIC edition followed the first by only 3–4 years and was very
similar. The third edition (1977) benefited from the changes that had been
made to the ICE 5th edition, and it was only until the FIDIC 4th edition that
the International Contract began to look and feel like a contract unto itself, and
not an adaptation of the English form. Nonetheless, some of the key phrases in
FIDIC remain identical to the key phrases in the English forms, and parties
looking for informed interpretations of, for example, the adverse physical condi-
tions clause in FIDIC can look to the English cases on the ICE form for
precedents.

FIDIC in the Context of International Construction – The

Contract Rules – OK

It is important to bear in mind that while all systems of law emphasise the
principle of ‘‘pacta sunt servanda’’ (agreements must be observed), some systems
have different focuses. It is commonly said in summary that Common Law
systems will place greater relative importance on the literal written word and
civil law systems will place more emphasis on the parties underlying intentions
and less on the literal meaning of what was written. This is of course a gross
oversimplification and does damage to those systems in the common law that
look at the parties intentions (for example Ontario) and probably overemphasises
the degree to which civil lawyers are willing to bend the plain wording of
contracts, even when applying the notions/maxims associated with the doctrine
of good faith.
Lawyers sell ideas. Parties to international contracts work on (often different)
legal theories and fundamental/cultural notions. The fact is that the contract
xiv FIDIC – AN ANALYSIS OF INTERNATIONAL CONSTRUCTION CONTRACTS

language will solely govern the parties’ rights most of the time and any theories
more exotic than those relating to measurement of damages for contract breach
will not normally be needed. I do not wish to suggest that it is not useful to
know about the finer points of delictual theory, or for example, theories about
joining non-signatories to the contract to the arbitration, it is simply that most
of the time, those types of theories are not needed, and if they are the sole
foundation for a claim, caution should be exercised.

Contract Law Rules

All of the world’s legal systems focus on the sanctity of contracts, and damages
as the remedy for breach of contract. While it may seem like an impossible task
to understand or appreciate even a handful of different legal systems, the fact is
that it is not all that difficult. We have colonialism and imperialism to
(thank?/acknowledge) for this fact.

A Short History of World Law

Even then, people will look at the same contract language and actually under-
stand different things. This could be, and often is, because we all look at the
world through our specific cultural and historical perspectives.
Given that the same wording will be interpreted across systems and cultures,
the move in the 1999 Suite to uniform and relatively ‘‘international’’ language
has to be greeted favourably, but there are still linguistic issues which can
confidently be predicted to cause problems on many contracts, whichever version
of the Suite is used. One obvious example is the requirement to put disputes to
the Engineer/Employer under Clause 3.4/5. The strict ‘‘flow chart’’ system for
sending disputes first to the Engineer, who has to decide ‘‘fairly’’ and then on
to the DAB, then to arbitration, is bound to be misunderstood and misapplied
by parties, and will create even more problems than the previous requirements
to put disputes first to the Engineer.

Some of the (non-headline) elements of the allocation of risk in each and any
of the 1999 Suite contracts will conflict with either the practice or the law or
both in some legal systems. Obvious examples include legal systems where direct
payment to subcontractors will extinguish the Owner/Employer’s debt, and
systems dealing with the post completion responsibility of the parties, such as
those systems making the employer, contractor and architect all jointly and
severally liable for total or partial collapse of buildings for years after the comple-
tion took place.
In some jurisdictions the health and safety provisions of FIDIC are inadequate.
England is an example. The allocation of ground risk in FIDIC is not consistent
with some of the systems in which the contracts are going to be used. The
provisions relating to the payment of penalties are clearly liable to adjustment
in some jurisdictions.
The provisions relating to the extinguishing of the Employers’ liability will
 INTRODUCTION xv

not apply in jurisdictions which do not allow contractual waiver of liability in

cases of gross negligence or fraud (such as California).
In some systems, despite the careful use of the words ‘‘or otherwise’’ in the
disputes provisions, disputes relating to non-contractual claims will be held to
be not arbitrable. Pakistan and fraud are an obvious example.
Despite careful wording of the payment provisions, Employers around the
world will withhold payment claiming rights of ‘‘set-off ’’, ‘‘abatement’’ or sim-
ilar rights.
The FIDIC fraud provisions will mean that parties caught up in kick-backs
will face the prospect of termination of the contract even though they did not
particularly wish to be caught up in the situation in the first place. Solicitation
of bribes is not uncommon in this field.
In short, despite the standard form there are many potential traps for the
unwary.

Crossing Legal Systems for a Living

It is not particularly difficult learning about and arguing about different legal
principles in foreign legal systems. This is particularly so in the context say, of
an international commercial arbitration, where one is often paid to do just that.
Anyone reflecting on the process will realise that the argumentation is normally
quite structured, and once the dispute has arisen (normally about an alleged
underpayment), the scope for discussing and applying the relevant principles is
quite restricted in fact, to any pleaded and relevant principles of law which have
to be learned, construction of the contract, and the finer points of establishing
and proving the damages claimed.
What is difficult, indeed very difficult to do, is to know somehow magically
in advance about the principles of law, or the peculiarities, found in almost every
legal system, which can make a difference to the parties’ rights, and which not
everyone will know about. Examples might include the greater rights in Malaysia
in respect of misrepresentation, and the fact that under American law (see the
relevant chapters) when the responsibility has been impossible to determine in
cases of delay and disruption, the contractor will normally receive time, but not
money, for the extended period. In English law, the doctrines relating to acts of
prevention, frustration and particularising cause and effect are probably outside
the international norms for construction contracts. In many civil law jurisdic-
tions, an argument that the arbitration clause is invalid will often be defeated
simply by showing it is an international contract with a commercial purpose –
this is a relationship quite unknown in Common Law systems.

A Potted History of World Law

I commonly encounter lawyers of any given system who feel it is next to

impossible to contemplate dealing with disputes under any governing law other
than their own law. No doubt for all of us dealing with the familiar is easier
than attempting to learn the intricacies of a foreign law, but I would assert that
xvi FIDIC – AN ANALYSIS OF INTERNATIONAL CONSTRUCTION CONTRACTS

it is not as difficult as you might think. The reasons for this are many and varied,
but I will attempt in this section to indicate why this is the case.
First of all, the principle of pacta sunt servanda (already mentioned above) is
universal to all legal systems. In practice that means that the vast majority of
construction disputes are fought and won or lost primarily over the wording of
the contract (and alleged facts).
Secondly, the principles of law likely to be alluded to in construction cases
are often broadly similar across many legal systems. For example, the obligation
to mitigate ones loss/damage ( l’obligation de minimiser le dommage) is appar-
ently often found to exist in ICC construction arbitrations, including civil law
arbitrations.
Thirdly, in all non-common law countries, the law is found in the civil code
and tendering laws, and if you can find readable copies of these, you will often
have all that you need on a particular point. If you need more, you can go to
doctrine or local counsel/experts (which you should probably have engaged in
any event).
Finally, you can thank colonialism (a bit of a funny notion), and latterly the
United Nations for making most legal systems both accessible and relatively
easy to understand. All of the former English and French colonies have legal
systems. If you can develop a working knowledge of the most important construc-
tion related principles in French, English and German/Swiss law, you will have
a good entry into the legal systems of most of the rest of the world.
In particular, few English lawyers seem to be aware that virtually every
ex-British jurisdiction3 passed, around the time of the retreat of the British, an
Act variously called ‘‘the English law Act’’ or something like that, which incorp-
orates the then current state of English Common Law, and normally statutory
law, as at the date of the Act. Even the Hong Kong Basic Law of 1997 does
this. Of course English law continues to develop, and this leads to interesting
legal debates about whether there is one ‘‘Common Law’’ or many, but for
practitioners, the point to note is that if you know the law, say of arbitration, as
it stood in England in 1698, you will be able to navigate your way around
Sudanese arbitral law, which has not changed much since the adoption of the
English rules on the topic. Similarly, Company law in my home province of
British Columbia, Canada, is largely the English 1890 Act, with a few bolt-on
US style extras since then. It took me a period of residence in England to realise
that the English Law Act in British Columbia was not unique, but one of perhaps
dozens around the world.
Marc Frilet, the author of our French chapter, has told me that much the
same process took place in ex-French colonial possessions, and one might
reasonably look for similar examples in ex-Portuguese places, such as Brazil
(treated here in the Brazilian chapter) and Mozambique or Angola.
Naturally, you will have to add, at times, appreciation of local variations –
Shari’a, post colonial developments, and particular laws, so it is always best to
verify your observations with local counsel.

3 I think with the exception of America, although this makes little practical difference. As is
shown in our American chapter, America developed from English law while adding a few
enlightened improvements from civil law thought along the way.
 INTRODUCTION xvii

Specific Examples

The Indian Contract Act 1872, is in my opinion one of the better legacies of
the British in India, and applies in India, Pakistan, Sudan and Malaysia, and
could be used to inform the law in places such as the Maldives and Nepal. It is
a straightforward and easily readable codification of the Common Law of
Contracts with some enlightened improvements. The chapter from Fox Mandal
introduces how it works in relation to Indian law construction contracts. Note
that the law of misrepresentation under Indian law is more workable and useful
in some ways than its English counterpart.
Let us tackle a more difficult example, Middle Eastern law. Viewed geographi-
cally it is a hotchpotch of different colonial and local traditions and culture. It
seems different, however, if one knows that in the late 1920s or early 1930s, an
Egyptian jurist named Sanhouri took a doctorate in law in Lyons. I have been
told he went back to his native Egypt and (relatively speaking ) failed in politics.
His consolation prize was to rewrite the Egyptian Civil Code,4 which he did,
basing it on the French Civil Code of the time. It is also explained in great
length in his great works, including ‘‘Al Waseet’’. Sanhouri went on to rewrite,
I believe, the civil codes of Kuwait, Iraq and Syria. If you understand classical
French law principles therefore, you will have no problems with the commercial
law in those countries (or Cote D’Ivoire, Senegal, Togo etc).
What about Shari’a law? Here again, the Koran being the guide, you do not
have to look much beyond the Koran – al-Maidah: 1, ‘‘O ye who believe! Fulfil
your agreements’’. That having been indicated, the civil codes of the Middle
East, with the exceptions of Jordan and Pakistan, are transpositions of European
civil law.5 See also the learned description of the principles of Shari’a law in
Saudi Arabia, as the chapter by Charles Hammond sets them out in a remarkably
clear fashion. One must reflect on how different and refreshing the prohibition
on risk and uncertainty is in Saudi law. In the context of construction contracts,
this must give hope to contractors faced with unexpected costs.
The acts of historical borrowing go on around the world. Russian civil law
borrowed strongly from German law. Japan borrowed from either Switzerland
or Germany.
The approach does not always work perfectly, but if you know the origins of
legal systems, you can guess a lot about its laws. Check your guesses against a
good local lawyer, and you will soon know all you need to for your particular
dispute.
These great historical currents are reflected naturally in the descriptions of
the national systems found in this book. We have, as the main imperialistic
forbearers, chapters on English and French law. In the French law chapter,
Marc Frilet, who has done and is doing very valuable work in the countries of
Francophone Africa, sets out the broad outlines of the classical underlying
principles of French law; including the broad responsibility of the Contractor,
decennial liability, good faith and administrative law principles, as well as the

4 In this book, see the review by Borham Atallah of Egyptian law.

5 Hilary Lewis Ruttley and Chibli Mallat, Commercial Law in the Middle East, Introduction, second
edition (from the SOAS website – soas.ac.uk)
xviii FIDIC – AN ANALYSIS OF INTERNATIONAL CONSTRUCTION CONTRACTS

limits to the validity of the FIDIC valuation of variations provisions. The need
for a clearly defined scope of the contract is touched upon, as well as the grand
theories of ‘‘sujetons imprevues’’, ‘‘imprevision’’, and ‘‘immixion’’.
Marc Frilet concludes with an important warning to those who think that
EPC contracts with too radical of a shifting of the risk (the FIDIC Silver
Book) can be running the risk that such contracts may be difficult to uphold in
countries with a French or French civil or administrative law tradition.
However, the chapter by Dr Wolfgang Rosener and Gerhard Dorner on
German law shows that this issue is not confined to countries of the French
tradition. In Germany, the law on the allocation of risk in construction contracts
directly calls into question certain of the more radical aspects of GC 17 and the
Silver Book allocation of risk.
Similarly, our Swedish authors show that the Silver Book, at least, departs
from the norms found in Swedish contracting, in an area of the World that has
never been too strongly affected by Imperialism (other than its own and Russian
expansionism at the gate).
Common law countries and traditions are reflected in the book in chapters
on India, America, England and Malaysia.
The United Nations contribution has helped in many different ways to assist
in international commerce, including construction. This is through the promo-
tion of uniform procurement laws, and treaties covering a lot of related areas,
including the sale of goods, limitation ( prescription) periods, carriage of goods
by sea and of course the enforcement of arbitral awards.
Various other ‘‘gaps’’ are provided for by NGOs, including standards for the
treatment of documentary credits and guarantees, the potential content of lex
mercatoria, and, of course, through the World Bank and other development
banks, guidance on the potential interpretations of the FIDIC and other standard
forms. The ICC itself publishes sanitised legal precedents in the form of awards
in real cases on numerous construction topics from jurisdictions around the
world. We have also seen important developments in the treatment of fraudulent
and criminal behaviour through the OECD. UNCITRAL and its guides are also
worth special mention. Perhaps a future edition of this book will deal with these
topics. Authors are always welcome! Despite all of this, the existence of a
‘‘Common Construction Law’’ remains speculative, as the differences outlined
here show.

Vive la difference

When it comes to arguing about specific local laws, the areas of local flavour
and difference are likely to include the following: limitations (three years in
India), proof of loss (the US and UK are among the most stringent), proving
entitlement to extension of time (many people, not yet converted, are sceptical
about the black box mysticality of the CPM).
Tortious/delictual responsibility (and criminal behaviour) are the areas of
greatest difference between jurisdictions, apart from different local customs
themselves. Cases are not often fought and won on the basis of alleged torts,
but they can make interesting differences to the way the case unfolds.
 INTRODUCTION xix

Examples here (from my Canadian point of view) might include the tort and
crime of business libel/defamation found in a number of civil law jurisdictions,
laws concerning the registration and effects of non-registration of local agents
(the penalty can be death) and companies, decennial liability, and liability
generally for the total or partial collapse of structures, the responsibility of
contractors to implement changes instructed by the Employer, and the corres-
ponding duty of Employers, past a certain point, to pay for changes.
While the principles relating to lump sum contracts6 and the obligation to
produce a result versus the obligation to apply the means sound as though they
would make great differences between civil and common law jurisdictions, not
to mention the obligation to act in good faith, I have not observed many
substantial differences in the final decisions of arbitral tribunals.
Finally, deep in the night, with no one else around, most lawyers in their
heart of hearts will admit – the Contract usually decides the issues, despite what
the law is. That is not to say there are not some pretty unusual interpretations
of FIDIC put forward from time to time!

The Interaction between the FIDIC Conditions and the

Governing Law/Law of the Arbitration

The 1999 FIDIC Suite simply requires the parties to state the governing law in
the Appendix. If it is not stated, then it ends up being argued on by the parties’
lawyers. If it is stated, the problems do not end there as the exact boundaries
of the governing law may not be clear. If the procedural law of any arbitration,
and the law of the site is the same, then you will have fewer problems. It may
be worthwhile to note at this point that I have never noticed any radically
different approaches to conflicts of law issues in non-European parts of the
world. There may be a tendency in some places to assert that the local law
governs for this or that reason,7 but once the scope of or application of any
particular is called into question the lawyers will normally call upon familiar
reasons to justify their arguments – the imperatives of local law, god, public
policy and so on. To the extent that more sophisticated conflicts theories are
used, they normally look like variations on the closest and most real connection
or place of performance tests.8
If the governing law of the contract is different from the law of the Site, a
whole host of complex issues could arise. Imagine a contract in India with
French governing law. Do the Indian contractors benefit from the French law
concerning direct payments? Do they have the right to plead l’exception de
l’inexecution (the right to stop work for non-payment) even if Clause 16 is not
adhered to?
Similarly, the standard FIDIC clauses all require compliance with the local
laws. What if those laws are in conflict both with the governing law, and the

6 See the Malaysian discussion of the meaning of ‘‘lump sum’’ in that jurisdiction.
7 See for example the Hub Arbitrations in Pakistan or National Power v Singer in India.
8 All international lawyers should know about the Rome Convention and its tests, but it is
debatable how often one needs to go beyond that. US methods, which de-emphasise ‘‘character-
istic performance’’ are easy to learn as needed.
xx FIDIC – AN ANALYSIS OF INTERNATIONAL CONSTRUCTION CONTRACTS

contractual obligations of the parties. An example might be various Treasury

regulations, which require Government parties/departments to follow certain
rules in relation to, for example, Variations, which directly contradict the contract
and the contractor’s rights. On the other hand differences in local laws may
appeal to contractors – see the Malaysian Chapter for an enlightened (in my
opinion in any event) approach towards liquidated damages/penalties. Many
jurisdictions have similar problems which can arise in relation to the mandatory
nature of local laws, although they may not be thought of as such, including
England (mandatory Health and Safety regulations).9
An interesting variation arises when arbitration (or DAB proceedings) take
place in a jurisdiction other than that of the Site. The procedure of that dispute,
and to be followed by the DAB, will be the law of the place where the dispute
resolution takes place. This rule was consecrated by the Geneva Protocol of
1923, and finds echos in the New York Convention of 1958. Summary deter-
minations such as those undertaken by the DAB could very well be open to
challenge. They will be attributed the legal aspects of an ‘‘expertise or expertise
legale’’ in civil law countries, and may or may not be assimilated to experts or
arbitrators in Common Law countries. They will probably be liable to challenge
in the place of the dispute resolution procedure, whatever other law governs the
other parts of the Contract.

The Interaction between the FIDIC Conditions and the

Mandatory Law of the Site

This is a problem that arises in those countries where there are mandatory
provisions of local law, for examples in relation to securing payments to
subcontractors/suppliers by the use of liens, local procurement or labour laws.
Unwary contractors sometimes find by way of illustration that their (foreign)
nationals cannot work in a given trade, because for example, they are not in the
appropriate local union. While professional bodies such as Architects
Associations may not think of themselves as trade unions, the same restrictions
often apply.10
Should a dispute arise, the Contractor may find that it has to go before some
local board, despite the clear DAB/Arbitration provisions in the contract, or that
the local party has gone to the local judiciary and obtained an order which is
intended by the local authorities to be binding. A good example of this is the
right to appoint a juge referee in France, despite the existence of the ICC
arbitration provision.11 These days in England foreign contractors may be equally
surprised by a Notice of Adjudication.
Further, in many countries, if parties apply to the local courts for some form
of interim or provisional relief, the local laws may dictate that they lose the right
to arbitrate altogether. This problem arises often in international arbitration.

9 See the English chapter.

10 See the Malaysian chapter for descriptions of the rules as they apply there.
11 This is a device that was used with good effect in both the Channel Tunnel and Euro Disney
cases.
 INTRODUCTION xxi

Although the problem is quite easily identified, it is difficult to deal with in

the abstract. ‘‘Early warning’’ provisions, such as ones which give a positive
duty to warn, may help avoid the impact of this type of problem, as may DABs,
but the simple FIDIC provisions requiring ‘‘point blank’’ compliance with local
laws, and no indication of what those laws are or how they are observed, leaves
the contractor in a weak position.
The next section of this Introduction seeks to identify some of the more
universal and commonly encountered problems one might experience when
contracting under the FIDIC 1999 conditions.

UNIVERSAL/COMMON PROBLEMS ARISING UNDER ANY

OF THE FIDIC CONDITIONS

There are aspects of these contracts that are going to give rise to potential
problems, almost regardless of the governing law. As most of these are not dealt
with globally by the individual authors in their national reports, I will deal shortly
below with some of the ones I am familiar with.

The Employer’s Claim Provisions

These provisions are new to the 1999 Suite and may add a new element to the
longstanding and world wide arguments about the scope of the arbitration clause
in the FIDIC Suite. There are Awards from all over the world deciding all sorts
of things about the scope of those provisions. For example, I have seen time bar
arguments defeated simply by the finding that they could not apply to legal as
opposed to technical arguments. The addition of a specific, and weak but
apparently all-embracing provision for Employer’s claims may take away one of
the arguments available to Employers lawyers who argue that their client is
entitled, despite the wide wording of arbitration clause, to ‘‘self help’’ remedies
such as withholding payments and calling bonds as a type of commercial
pressure.
FIDIC has, since the 4th edition Red Book in 1987, been expanding the use
of the phrase ‘‘or otherwise’’ in various places,12 and a word search will show
that it is used in the 1999 Suite to describe claims everywhere. It remains to be
seen if this will mean that claims under the contract or for breach of contract
are both susceptible to time bars, to the extent that they are allowed under the
governing law. Many civil law arbitrators will simply not allow them, as to do
so would violate the rules relating to good faith.

Payment Provisions

It can now clearly be argued, purely as a matter of contractual intention, that it

must have been intended by the Employer’s claims provisions and the addition

12 It was first found in the 1987 Red Book clause 53.1 ‘‘Procedure for Claims’’ although it does
not appear in the 1987 E&M form (the Yellow Book).
xxii FIDIC – AN ANALYSIS OF INTERNATIONAL CONSTRUCTION CONTRACTS

of clause 14.8, to put in place a regime which ensures that the contractor is paid
whatever is certified, when it is certified, with disputes to be considered later.
In Common Law jurisdictions this may be rather unpalatable, but as set-off
and abatement claims are, sometimes at least, a prevaricator’s charter, such an
approach may be considered to be reasonable in principle. FIDIC set up a full
regime to achieve this in the 1999 Suites. It had been foreshadowed in earlier
editions, but was not conceptually possible until they had full payment provisions
in their drafts (which started with the 1987 version of the 4th edition Red Book).
Careful readers will have noticed long ago that the contracts called for all
claims of whatever nature to be determined by the Engineer or later in arbitration.
While the arbitral references of all disputes was perhaps slightly less controversial,
it is not uncommon to see Engineers, if faced with them, to refuse to decide
claims for some breach of contract, or non-contractual claims.
Given the wording of these disputes provisions, for many years now it has not
been clear that Engineers were acting within their rights to refuse to entertain
certain sorts of claims. Yet almost 20 years on Engineers still fail to deal with
claims for breach of contract, tort or late payment, simply because they were
claims that the Engineers consider are not their responsibility. Certainly it may
suit their view of their role to leave legal claims to one side, but a clause that
calls for them to decide ‘‘all disputes’’ should on its face require them to decide
all disputes.
With the 1999 Suite, the drafters of FIDIC took a unified and comprehensive
approach to this issue. First, the payment provisions set out that all claims to
payment of whatever nature, are to be put forward in the applications for interim
payment. Thus GC 14.3(e) requires the Contractor to claim ‘‘any other additions
or deductions which may have become due under the Contract or otherwise’’
(emphasis added), and the certifier is expected to certify the same sums.
Similarly, under the claims provisions, if the Contractor considers himself
entitled to any additional payment, under any clause of the Conditions or otherwise,
he must make that claim first to the Employer or Engineer as a claim, then pass
it to the Engineer (if there is one) for a determination (read GC 20.1 and GC
3.5 together), and then send it to the DAB. New in the 1999 Suite, GC clause
2.5 universally requires the Employer to do the same thing.
In both the claims and the payment provisions, the drafters followed their
own logic to a logical conclusion by requiring that any claim that has not been
put forward for payment or as a claim in accordance with the claims or payment
provisions falls to the wayside and is not to be taken account of: see GC 14.12
for payments, and 20.1 for claims. The only flaw in the contractual provisions
(if you follow this particular argument) is that under GC 20.1 penultimate
paragraph, the Engineer is only required to certify additional payment to which
the contractor is entitled under the Contract (not under the Contract or otherwise).
Perhaps this was added to spare Engineers blushes, or perhaps it is an uninten-
tional omission.
So what do the lawyers make of all of this? First of all, it is noticeable that
not a lot of comments have been made about it. Secondly, so far at least as
English law is concerned, these sweeping provisions mean that everything has
been swept up – see the judgement of Lord Mustill in Channel Tunnel Group v
Balfour Beatty and others, 1993 61 BLR 1, House of Lords. In that case, Lord
 INTRODUCTION xxiii

Mustill made it perfectly clear that on a text undistinguishable from that found
in the FIDIC 1999 Suite the Lords considered the dispute provisions to be
comprehensive, and that if the DAB equivalent in that case ordered the
Contractors by way of mandatory injunction to continue working – they had to
continue working.
The form of contract in that case is set out and is a matter of public record
as the Contract had to be deposited as a part of the procedure. It is an amended
form of FIDIC Third Edition Civil Engineering contract, with what were then
new provisions for the substitution of decisions of the Engineer by decisions of
a ‘‘Panel’’, whose decisions were contractually stated to be binding until revised
in arbitration. The House of Lords was considering a dispute resolution proced-
ure in a contract which was very similar in this respect to the whole of the 1999
FIDIC Suite (the drafters of which no doubt had regard to the wording of the
Channel Tunnel contract). Readers might note the ‘‘give effect’’ wording in
Clause 67(2) and the ‘‘revised by arbitration’’ phrase, which clearly show the
genesis of the current FIDIC wording.
One should also note Lord Mustill’s statement ‘‘... I would endorse the
powerful warnings against encroachment on the parties’ agreement to have their
commercial differences decided by their chosen tribunals, and on the inter-
national policy exemplified in the English legislation that this consent should be
honoured by the courts ... . ’’ Lord Mustill thus by analogy ‘‘endorsed’’ the
view taken in this text, namely that the wording GC 20.1, should itself given
effect to in these similar contracts, and practically identical disputes clauses. In
other words, sums certified should be paid, and decisions (on anything ) taken
by the DAB are to be given effect to until (and if ) revised in arbitration.
There was much discussion in the House of Lords between their Lordships
and Counsel about the nature of this clause, and whether it was entirely an
arbitration clause or a two stage clause in which the second part only was
arbitration – what came clear from the discussion (and is recorded in the
Judgment) was that there was no doubt that their Lordships took the view that
the whole clause was binding on the parties ‘‘unless it broke down’’ – see page
287 H. See also the discussion at page 289 D-G, and Lord Mustill’s indication
at page 290 that a mandatory injunction for specific performance by the Panel
would have had to be complied with – a reasonably radical measure compared
to say, an order for payment.
Finally, we should all note the Learned Lord’s reference to ‘‘... the duty of
the court to respect the choice of tribunal which both parties have made, and
not take out of the hands of the arbitrators (or other decision-makers) a power
of decision which the parties have entrusted to them alone.’’ These are wise
words of general application.
Under English law at least, the lesson for Engineers and contract adminis-
trators dealing with FIDIC around the World is quite clear – unless the parties
agree you do not have to, DAB’s should be deciding claims for breach of contract
or tortuous interference with the contract ( perhaps described as disruption) or
face having their non-decision treated properly as a failure to decide under the
contract.
The lesson for lawyers is also important – if you do not submit claims for
breach of contract at the appropriate stages, they may be barred. Having written
xxiv FIDIC – AN ANALYSIS OF INTERNATIONAL CONSTRUCTION CONTRACTS

that however, in over 3 years on the ICC Court, I cannot indicate that apparently
good claims in international arbitration are often barred because of language
like this. Faced with hard choices, most arbitrators seem averse to disposing of
good cases for such technical reasons.

The Effect of Certificates

On the other hand, one does come across, from time to time, claims which have
been successfully defeated because of the allegedly final or conclusive effect of
certificates. This is quite natural, because if one thinks about it, especially with
perishable or fungible goods, there is often only a relatively short period within
which their quality may be properly tested. If certificates, especially ones called
for by a contract and designated as final, were not normally conclusive, inter-
national commerce would find itself awash with disputes. Accordingly, one
should not be surprised to know that the contractually intended effect of certific-
ates is frequently honoured by arbitrators.
If one examines the wording of Clause 14, particularly Sub-Clauses 14.6,
14.7 and 14.8 it can be seen that the draughtspersons intend certified payments
to be promptly honoured, otherwise ‘‘financing charges’’ would not be immedi-
ately payable under Sub-Clause 14.8. However, the contracts do not set out the
intended effect of certificates as clearly as they might. It would have been useful
perhaps for the contracts to state that the certificates create debts immediately
due from the Employer to the Contractor. The reason this should be stated ‘‘ex
abundanti cautela’’ is that the legal effect of certified sums varies widely from
country to country, and if, as is apparently the case, the sums certified are
intended to be paid (more or less immediately), it behoves the draughtspersons
to say so – clearly. The discussion below of the position relating to set-off
outlines one reason (only) why this should be the case. Generally, every DAB
and subsequent arbitral tribunal will have the right, in light of their own experi-
ence and legal knowledge, to decide whether these contracts are worded in such
a way as to give a right to immediate payment. The clearer the wording is, the
less doubt there should be in any individual case.
The certificate issued on completion described in GC 14.10 through to 14.14
is in a slightly different position. It is described as a ‘‘Final Payment Certificate’’
and is clearly intended, subject to the DAB/arbitration provisions, to bring to a
close any controversies about the sums finally due to the Contractor.

‘‘Performance Security’’ GC 4.2

The wording of these provisions is such that, while the notions underlying the
words feels quite familiar, they are not that specific, and probably intentionally
are capable of being understood in a number of ways. While this may be laudable
from some points of view, it is very unfortunate when one goes to consider that
the law of guarantees, indemnities, letters of credit and related topics is very
specific, and often very developed. This means, generally, that ‘‘woolly’’ language
may not accomplish that which the beneficiary hoped for.
Another random document with
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London threatened an attack upon the Jews, stood boldly forth in
their defence, and told the Mayor and burgesses that he held them
responsible for the safety of the Jews, vowing a bloody vengeance if
any harm befell them.
1216–1272 Henry III. was as exacting as his predecessors; but
he lacked the firmness by which some of them had
prevented their subjects from trespassing on the royal preserves.
Under his weak rule the nobles and the towns grew in importance.
The decline of the King’s prerogative and the increased power of the
subjects were alike fatal to the Jews. The burgesses hated them as
the instruments of royal avarice and as interlopers in a community
for the freedom of which they themselves had paid a heavy price to
King or lord paramount. Their exemption from municipal burdens,
and their independence of municipal authority irritated their fellow-
townsmen. The constant interference of the King’s officers on behalf
of the King’s serfs was resented as a violation of privilege. These
grievances, reasonable enough, were intensified by religious
rancour, and by that antipathy which the English, perhaps more than
any other, bourgeoisie has always displayed towards foreigners. The
Jew’s isolation also added to his unpopularity, and all these causes,
acting upon the minds of the townspeople, gave rise to frequent acts
of aggression. The Kings, as has been seen, had always found it
hard to curb popular license, each attempt at repression, each
measure of precaution, only serving to embitter the ill-feeling towards
those on whose behalf these efforts were made. Under
1234
Henry III. the wrath of the burgesses broke out again
and again in many towns, notably at Norwich, where the Jews’
quarter was sacked and burnt, and the inhabitants narrowly escaped
massacre, and at Oxford, where town and gown joined in the work of
devastation and pillage.
The animosity of the towns was shared by the smaller nobility
who lay under heavy obligations to the Jewish money-lenders, but,
unlike their betters, had not the means of making their tenants pay
their debts for them. The great barons played towards the Jews
within their domains the same rôle as the King, only on a smaller
scale. They lent them their protection, were sleeping partners in their
usurious transactions, and upon occasion made them disgorge their
ill-gotten gains. This rôle was beyond the ability of the smaller
nobility. So far from sharing in the spoils of usury, they themselves
were among its worst victims. The King’s Continental expeditions
forced them to mortgage their estates to the Jews, from whose
clutches none but the lands of tenants on the royal demesne were
safe; and, if the holders of the pledge were afraid to enforce their
claims in person, they passed the bonds to the more powerful
nobles, who seized the land of their inferiors and sometimes refused
to part with it, even when the debtors offered to redeem it by paying
off the debt with interest.
In addition to these private motives, there were political reasons
to foment the anti-Jewish movement; common interests which bound
all the hostile elements together. It was felt by both Lords and
Commons that, but for the Jews’ ready money, Henry would not
have been able to carry on his unpopular wars abroad, or his anti-
constitutional policy at home, and to indulge that preference for
Provençal and other foreign favourites which his English subjects
resented so strongly. That the source of the King’s power to defy
public opinion was rightly guessed is shown by the enormous sums
which Henry extorted from the Jews at various times; in 1230, under
the pretext that they clipped and adulterated the coin of the realm—a
66
very common offence in those days —they were made to pay into
the Royal Exchequer one-third of their moveable property. The
operation was repeated in 1239. In 1241, 20,000 marks were
exacted from them; and two years after 60,000 marks—a sum equal
to the whole yearly revenue of the crown—above 4000 marks being
wrung from Aaron of York alone. In 1250 new oppression, on a
charge of forgery, elicited 30,000 marks from the same wretched
millionaire, and from 1252 to 1255 Henry robbed the Jews three
times by such exquisite cruelty that the whole race, in despair, twice
begged for permission to depart from England. But the King replied,
“How can I remedy the oppressions you complain of? I am myself a
beggar. I am spoiled, I am stripped of all my revenues”—referring to
the attempt made by the Council to secure constitutional
Government by the refusal of supplies—“I must have money from
any hand, from any quarter, or by any means.” He then delivered
them over to Richard, Earl of Cornwall, that he might persuade them
to stay, or, in the words of Matthew Paris, “that those whom the one
brother had flayed, the other might embowel.” The same witty
chronicler informs us that these spoliations excited no pity for the
victims in Henry’s Christian subjects, “because it is proved and is
manifest, that they are continually convicted of forging charters,
seals and coins,” and elsewhere he describes the Jews as “a sign for
the nations, like Cain the accursed.”
The burgesses and the barons in their anti-Jewish campaign
found powerful allies among the high dignitaries of the Church, who
had a two-fold set of grievances against Israel: practical grievances,
and grievances begotten of religious bigotry. Pope Innocent III., in
pursuance of his aggressive autocratism, had claimed the right of
filling vacant benefices all over the Catholic world. In England the
election to the see of Canterbury gave rise to a long struggle
between Pope and King, which ended in John’s shameful and abject
surrender. Cardinal Langton, Innocent’s nominee and
1207
instrument, on being raised to the primacy, made
common cause with John’s disaffected nobility, and the two acting in
concert frustrated the unpopular prince’s projected invasion of
France in 1213. The same Archbishop passed at his provincial
synod a decree, forcing the Jews to wear the badge and forbidding
them to keep Christian servants or to build new synagogues. He also
issued orders to his flock, threatening to excommunicate anyone
who should have relations with the enemies of Christ, or sell to them
the necessaries of life. The Jews were to be treated as a race
outside the pale of humanity. Langton’s example was followed by the
Bishops, many of whom exerted themselves both officially and
unofficially to check intercourse between Jews and Christians. The
crusade was carried on after Langton’s death. At one time the
Archbishop of Canterbury demands the demolition of the Jewish
synagogues, at another he calls upon the temporal power to prevent
Jewish converts from relapsing into infidelity; on a third occasion he
writes to the Queen remonstrating with her on her business
transactions with the Jews, and threatening the royal lady with
everlasting damnation. Similarly, time and again bishops hold the
thunderbolt of excommunication over the heads of all true believers
who should assist at a Jewish wedding, or accept Jewish hospitality.
These attacks by the Church were prejudicial to the King’s
pecuniary interests, and during Henry III.’s minority met with
vigorous opposition on the part of his guardians. When the young
King assumed the responsibilities of Government, he found himself
placed in a difficult position: his interests compelled him to protect
the Jews, while his loyalty to the Church forbade him to ignore the
behests of her ministers. He compromised by
1222
sanctioning the use of the badge, and by
1233
building a house for the reception of
Jewish converts (Domus Conversorum) on one hand, while, on the
other, he shielded, to the best of his ability, the hunted people from
the effects of ecclesiastical and popular wrath.
The war declared by the Papacy against the Jews on religious
principle was continued on grounds of practical necessity. Owing to
the enormous expenditure of money, incurred partly by the
architectural extravagance of the age, partly by an almost equally
extravagant hospitality; partly by the exactions of Kings and Popes,
and partly by bad management, the estates of the Church in England
had begun to be encumbered with debt in the twelfth century, and
loans were frequently contracted at ruinous interest.
A typical case has been preserved for us in the contemporary
chronicle of Jocelin of Brakelond, a Norman-English monk of Bury
St. Edmunds. In his crabbed dog-Latin, the good brother tells the
story of his monastery’s distress: how under old Abbot Hugo’s feeble
rule the finances became entangled, how deficit followed in the
footsteps of deficit, and debt was added to debt, until there was no
ready money left to keep the rain out of the house. William the
sacristan was ordered by the old Abbot to repair a room which had
fallen into ruins; but as the order was not accompanied by the means
of carrying it out, Brother William would fain go to Benedict the Jew
for a loan of forty marks. The room was repaired, the rain was kept
out, but the creditor clamoured for his money. In the absence of
cash, the original loan grew rapidly at compound interest, and the
forty marks were swelled to a hundred pounds. Then the Jew came
to the Abbot with his bills and demanded to be repaid; not only these
hundred pounds, but also another hundred pounds, which the Abbot
owed him on his private account. Old Hugo, at his wits’ end, tries to
silence the Jew by granting him a bond for four hundred pounds to
be paid at the end of four years. The Jew goes away not displeased,
only to reappear at the expiration of the term. On his second visit he,
of course, found the Abbot as penniless as on the first, and extracted
from him a bond for eight hundred and eighty pounds, payable in
eleven years by annual instalments of eighty pounds. Furthermore,
he now produced other claims, sundry sums lent fourteen years
before, so that the whole debt amounted to twelve hundred pounds,
besides interest. The matter was left pending until old Hugo was
called to a world where there is neither borrowing nor lending at
compound interest; but only paying just debts.
Old Abbot Hugo is dead, and young Abbot Samson has
succeeded to his honours and to his deficits. Samson’s first anxiety
was to free the house from the claws of the insatiable Benedict and
other Hebrew and Christian harpies, and he did it in a manner
characteristic of the age. In some four years he paid off the debts of
the convent; but at the same time he obtained from the King
permission to revenge himself on the Jews. The royal abettor of what
followed was oblivious of the fact that he was himself more than an
accomplice in the usurer’s exactions. Huge sums were at that very
moment being extorted for royal purposes from the Jewish
communities which were in as constant a condition of indebtedness
to the Crown as others were to them. Nevertheless, the Jews were
driven out of the Liberties of Bury St. Edmunds by men-at-arms, and
forbidden to return thither under severe penalties; while sentence of
excommunication was pronounced against any one who should be
found sheltering them. Such was the condition of an English
monastery towards the end of the twelfth century.
Things went from bad to worse, until, in the thirteenth century,
we are told, “there was scarcely anyone in England, especially a
bishop, who was not caught in the meshes of the usurers.” We hear
of archiepiscopal buildings and priories falling into decay for want of
funds, and of churches that could not afford clergymen; of a bishop
seeking the intervention of the King in order to obtain respite of his
debts to the Jews, and of a prior asking for permission to let one of
his churches, as a common building, for five years, in order to pay off
part of the debt; of another bishop pledging the plate of his cathedral,
and of an abbot pledging the bones of the patron saint of his Abbey;
and we even read of an archbishop carrying his zeal for
retrenchment to the cruel length of imposing a limit to the number of
dishes with which the good Abbot of Glastonbury might be served in
his private room.
At the same time the ancient superstition regarding usury had
been invigorated in England, as on the Continent, by the diligent
preaching of Franciscan and Dominican friars, no less than by the
economic distress of debtors. It is true that the practice was not
confined to the Jews. Besides English usurers, the Italian bankers of
Milan, Florence, Lucca, Pisa, Rome, and other cities, had stretched
their tentacles over Europe. In France their position was confirmed
by a diplomatic agreement with Philip III. In England Italian usurers
scoured the country collecting taxes for the Pope and lending money
on their own account at exorbitant interest. As the Jews lent under
royal so did these Lombards lend under papal patronage. The
extortions of the former were not amenable to any tribunal; the latter
were in the habit of, in the words of the chronicler, “cloaking their
usury under the show of trade,” and thus carried on their business
under forms not forbidden by Canon law—even supposing that the
ecclesiastical courts would have cared or dared to condemn the
Pope’s agents. To the Italian usurers the great barons extended the
same protection as to the Jews, and for similar reasons; but the
smaller nobility and gentry, the clergy, and the lower orders of the
laity hated them intensely. One of these usurers, brother of the
Pope’s own Legate, was murdered at Oxford, while in London
Bishop Roger pronounced a solemn anathema against the whole
class. Henry III. was, after all, a Catholic and a King. The sufferings
of his subjects moved him to banish the Cahorsines from his
kingdom, and, were it not for his chronic impecuniosity, he might
have adopted similar measures against the Jews. As it was, in spite
of his religious scruples, he could ill afford to lose the rich income
which he still derived from them.
 While the clamour against the Jewish usurers was gathering
force from bigotry, penury, and policy, the Jews were fast losing the
means which had hitherto enabled them to procure an inadequate
protection at the hands of the King and his great barons. Early in the
thirteenth century the merchants of Lombardy and Southern France,
as has been shown, began to compete with the Jewish money-
lenders. But the loss of the monopoly which the Jews had long
enjoyed was, in England, followed by greater losses still. During the
Civil Wars the ranks of the malcontents were filled with
1257–1267
all sorts of ruffians, some driven to rebellion by
discontent, others drawn to it by the hope of booty; and it was the
policy of the rebel barons to let all these disorderly elements loose
upon the King’s friends and supporters. The royal demesnes were
ruthlessly ravaged, and then the fury of the revolutionists, who
numbered amongst their allies both the lay and the clerical mobs,
was directed against the King’s protégés. Every success of the
popular party over the King was duly celebrated by a slaughter of his
Jewish serfs and destruction of their quarters. The appetite for
plunder and havoc was further stimulated by superstition, and at
Easter, 1263, the Jews were stripped and butchered in the City of
London. This was the prologue to a long tragedy that continued
throughout that troublous period. The spoliation of the London Jews
was repeated, and the Jewries of Canterbury, Northampton,
Winchester, Worcester, Lincoln, and Cambridge were attacked,
looted, and destroyed. Many of the unfortunate race were
massacred, while some saved themselves by baptism and others by
exorbitant ransom. Deeds and bonds were burnt, and thus the Jews
were deprived of the one bulwark that had stood between them and
annihilation; so much so, that in the last year of Henry III.’s reign
their contribution to the revenue of the crown fell from £5000 to 2000
marks.
Henry III. died in 1272, and Edward I. was proclaimed King.
Edward as heir-apparent had distinguished himself by his piety, no
less than by his valour and public spirit, and at the time of his
accession he was actually fighting the infidels in the Holy Land. His
loyalty to the Church prejudiced him against the Jews both as
“enemies of Christ” and as usurers. His scrupulous regard for the
interests of his subjects was calculated to deepen the prejudice.
Edward’s political ideal was a harmonious co-operation and
contribution of all classes to the welfare of the State. The Jewry, as
constituted under his predecessors, formed an anomaly and a
scandal. Measures of restriction had already been taken against the
Jews, and supplied a precedent for further proceedings in the same
direction. One of these measures was the statute of 1270, which
forbade the Jews to acquire houses in London in addition to those
which they already possessed, to enjoy a freehold howsoever held,
to receive rent-charges as security, and obliged them to return to the
Christian debtors, or to other Christians, the lands which they had
already seized, on repayment of the principal without interest. A
petition, preferred by the victims of this Act, to be allowed the full
privileges which accompanied the tenure of land under the feudal
system—namely, the guardianship of minors, the right to give wards
in marriage, and the presentation to livings—had elicited an
indignant protest from the Bishops, who expressed their outraged
feelings in language that was wanting neither in clearness nor in
vigour. The “perfidious Jews” were reminded that their residence in
England was entirely due to the King’s grace—a sentiment with
which Prince Edward had fully concurred. On his return
1274
from Palestine, he resumed the work of administrative
reform which he had commenced as heir-apparent.
Despite the statute of 1270, he found the Jews still absorbed in
the one occupation which they had practised for ages under the
pressure of necessity and with the sanction of custom and royal
patronage. The religious sensitiveness of a pilgrim fresh from the
Holy Land, acting on the political anxiety of a statesman honestly
desirous to do his duty by his subjects, compelled him to new
measures of restriction. Moreover, the reasons of self-interest which
had influenced his predecessors had lost much of their force. John’s
and Henry III.’s merciless rapacity had sapped the foundations of
Jewish prosperity; the barons’ even more merciless cruelty had
accomplished their ruin; and while the fortunes of the Jews waned,
those of their Italian rivals waxed; so the Jews, an unholy and
unpopular class at the best of times, had now also become an
unnecessary one. About the same time the Church renewed the
 campaign against usurers. Pope Gregory X., by a
1274
decree passed at the Council of Lyons, requested the
princes of Christendom to double their efforts to suppress the
accursed trade. Edward hastened to obey the orders of the Church.
The transactions of the Florentine bankers in England were
subjected to enquiry and restriction by his order, and then he
proceeded against the Jews.
There were two ways open to him: either to withdraw his
countenance from the Jewish money-lenders, or to compel them to
give up the sinful practice. He was too humane to adopt the former
course; for the withdrawal of royal protection would have been the
signal for instant attack on the part of the people. How real this
danger was can be judged from the fact that in 1275 the Jews were
driven out of Cambridge at the instigation of Edward’s own mother.
He, therefore, chose the latter alternative, and issued a
1275
general and severe prohibition of usury, accompanied
with the permission that the Jews might engage in commercial and
industrial pursuits or in agriculture. The Jews were asked to change
at a moment’s notice a mode of life which had become a second
nature to them, and one which they had been encouraged—one may
almost say compelled—to pursue in England for two centuries. The
hardship of the prohibition was aggravated by the impossibility of
profiting by the permission. So long as the Jew was liable to violence
from his neighbours, he could hardly engage in any occupation
which involved the possession of bulky goods. Jewels and bonds
were the only kinds of moveable property that could easily be
secured against attack. As a writer who can scarcely be accused of
undue partiality to the Jews has observed: “The ancient house at
Lincoln seems to suggest by its plan and arrangements that the
inhabitants were prepared to stand a siege, and men who lived
under such conditions could hardly venture to pursue ordinary
67
avocations.” But there were more specific reasons explaining the
Jew’s inability to conform to Edward’s decree. A Jew could not
become a tradesman, because a tradesman ought to be a member
of a Guild; as a general rule, no one could join a Guild, who was not
a burgess; and the law forbade the Jews to become burgesses. But,
even if the law allowed it, the Jews could not, without violating their
religion, participate in the feasts and ceremonies of the Guilds. Nor
were the handicrafts more accessible to the Jews; for most of them
were in the hands of close corporations into which the despised Jew
could not easily gain admittance. Moreover, an apprenticeship of
many years was required, and apprenticeship necessitated
residence in the master’s house. Now the Church forbade the
Christians, on pain of excommunication, to receive Jews in their
houses, and, therefore, a Jewish boy, even if his own parents’
prejudices and the scruples of the Synagogue were overcome, could
not become a Christian’s apprentice. Agriculture was likewise out of
the question, because, even if the landlords would have them, the
Jews, being forbidden by their religion to take the oath of fealty,
could not become villeins. The popular hatred of the Jew rendered
the profession of peddler or carrier equally perilous. His Semitic face
and conspicuous yellow badge, which he was compelled to wear
from the age of seven, would have made him a target for insult and
assault on every road and at every fair in the country.
Thus the Jew, after two hundred years’ residence in England,
found himself labouring under all the disabilities of an alien, the only
occupation left open to him being that which foreign merchants were
allowed to pursue—namely, the export trade in wool and corn; but for
this occupation, limited at the best, a great capital was needed, and,
therefore, after the recent sufferings of the race, few could find profit
in it. For all these reasons, Edward’s alternative remained a dead
letter, and, as the Jews could not suffer themselves to starve, usury
continued rampant, and the second error proved worse than the first.
The distemper was far too complex to be cured by Edward’s simple
remedy. It might have been encouraged by impunity; it certainly was
accentuated by severity. The money-lenders, no longer under official
supervision, exceeded all bounds of extortion: the peril of detection
had to be paid for. The demand for loans increased as the supply
diminished, the rate of interest rose, and, as the transactions had to
be kept secret, all sorts of subterfuges were resorted to: a bond was
given for a multiple of the sum actually received, and the interest
often figured under the euphemism of “gift” or “compensation for
delay,” or, if the money-lender combined traffic in goods with traffic in
money, the interest was paid in kind. It was contrary to common
sense and human experience to expect that a royal statute should
have prevailed over what really was an inevitable necessity, and the
abuses that followed were only such as might have been anticipated
in a society where the borrowers were many and needy, the lenders
few and greedy, and the two classes were impelled to deal with each
other by the strongest of motives—the motive of self-preservation.
But even clandestine usury required capital, and the poorer
Jews, devoid of industrial skill or legal standing, despised by the
people, denounced by the clergy, helpless, hopeless, and
unscrupulous, betook themselves to highway robbery, burglary, coin-
clipping, or baptism. The penultimate source of revenue, which, as
has been noted, supplied already one of the most common charges
brought against the Jews, forced Edward to strike hard and quickly.
His severity was proportionate to the magnitude of the evil. The
depreciation of the currency due to the prevalence of forgery had led
to an alarming rise in the price of commodities; foreign merchants
had left the country, and trade fallen into stagnation. The greater
share of the blame was generally, and not unjustly, attributed to the
Jews. In one night all the Jews in the country were thrown into
prison, their domiciles were searched, and their effects seized.
Edward, in his anxiety to punish none but the guilty, issued an edict,
in which he warned his Christian subjects against false accusations,
such as might easily have been concocted by people eager to gratify
their religious bigotry, private malice, or cupidity. The enquiry
resulted in the conviction of many Jews and Christians. Of the latter,
three were sentenced to death and the rest to fines. But no mercy
was shown to the Jews. Two hundred and eighty of them were
hanged, drawn, and quartered in London alone, and all the houses,
lands, and goods of a great number were confiscated. A very few
took refuge in conversion, and received a moiety of the money
realised by the confiscation of their brethren’s property.
This deplorable state of things convinced Edward of the futility of
his policy. Other causes intensified his anger against the Jews. In the
first year of his reign a Dominican friar embraced Judaism, a little
later a Jew was burnt for blasphemy at Norwich, and, in 1278, a
Jewess at Nottingham created great excitement by abusing in
virulent terms the Christians in the market place; all this despite the
King’s proclamation that blasphemy against Christ, the Virgin Mary,
or the Catholic faith should be visited with loss of life or limbs, and
the penalties, not less severe, which the Church reserved for
apostates. Parliament now urged the expulsion of the
1281
Jews. Edward, his native moderation notwithstanding,
could not defy public opinion. The precedent of his mentor, the brave
and wise baron Simon de Montfort, also pointed in the same
direction. The latter had expelled the Jews from
About 1253
Leicester and given to the burgesses a solemn
68
promise that they should never return. The example could not but
have its influence upon Edward, and his own mental attitude was too
orthodox to render him impervious to the overwhelming prejudices of
the age. He had endeavoured to reconcile duty with humanity, and
had failed. Neither did the Christians wish to receive the Jews
amongst themselves, nor would the Jews have embraced such an
invitation. So long as they remained in England, mutual antipathy
and mutual bigotry would bar amalgamation, and therefore, under
the feudal system, the only calling which the Jews could pursue, in a
Christian country, would be the sinful traffic in money. Since the Jews
could not be improved, they ought to be removed.
While Edward was slowly coming to the one inevitable
conclusion, there arrived in England, at the end of 1286, a Bull from
the Pope Honorius IV., addressed to the archbishops and bishops.
After a lengthy enumeration of the familiar charges brought against
the Jews—their obedience to “a wicked and deceitful book, called
Talmud, containing manifold abominations, falsehoods, heresies,
and abuses”; their seduction of brethren snatched from infidelity, and
their perversion of Christians; their immorality, their criminal
intercourse with Christians, and other “horrible deeds done to the
shame of our Creator and the detriment of the Catholic faith”—
Honorius bade the bishops increase their severity, and their “spiritual
and temporal penalties” against the “accursed and perfidious”
1287
people. In consequence of this mandate, we find a
synod at Exeter passing ordinances restricting still
further the Jew’s discretion in matters of dress and behaviour. The
apostolic epistle accelerated Edward’s decision. It is also probable
that the King, on the eve of his struggle with Scotland and France,
thought it prudent to conciliate his English subjects by yielding to
their demand for the expulsion of the hated people.
On the 18th of July, 1290, a decree was issued ordering that all
Jews should leave England before the Feast of All Saints, sentence
of death being pronounced against any who should be found
lingering in the country after the prescribed date.
The severity of the measure was somewhat mitigated by the
king’s sincere anxiety to spare the exiles gratuitous insult and injury.
The officers charged with the execution of the decree were ordered
to ensure the safe arrival of the Jews on the coast, and their
embarkation. They were permitted to carry away all the effects that
were in their possession at the time, together with any pledges that
were not redeemed by the Christian debtors before a certain day. As
a further inducement for the payment of debts, the latter were given
to understand that, if they did not pay a moiety to the Jews before
their departure, they would remain debtors to the Treasury for the full
amount. A few Jews, personally known and favoured at Court, were
even allowed to sell their real property to any Christian who would
buy it. In a word, everything that could be done to alleviate the
misery of the exiles, was suggested by Edward.
The autumn was spent in hurried preparations. Those who had
money out at interest hastened to collect it, and those who had
property too unwieldy for transport hastened to part with it for what it
would yield. It is easy to imagine the enormous loss which this
compulsory liquidation must have entailed on the wretched Jews.
Their goods were sold at such prices as might have been expected
from the urgency of the case, and the knowledge that all that could
not be disposed of would have to be left behind. Their houses, their
synagogues, and their cemeteries fell into the hands of the King,
who distributed them among his favourites. Their bonds and
mortgages were also appropriated by the Royal Exchequer; but the
debts were imperfectly collected, and the remainder, after many
years’ delay, were finally remitted by Edward III.
 As the fatal day drew near, the emigrants, sixteen thousand all
told, men, women, and children, might be seen hurrying from
different parts of England to the coast, some riding, the majority
trudging, sullen and weary, along the muddy roads, the men with
their scanty luggage slung over their shoulders, the women with their
babes in their arms. Thus they went their last journey on English soil,
under the bleak sky of an English October, objects of scorn rather
than of pity to the people among whom they had lived for more than
two hundred years. The King’s biographer relates with great
exultation how “the perfidious and unbelieving horde was driven forth
from England, in one day into exile,” and the English Parliament,
which nine years before had demanded the expulsion of the
unbelievers, now expressed the gratitude of the nation for the
fulfilment of their desire, by voting a tenth and a fifteenth to the King.
But if the English were glad to get rid of the Jews, the Jews were not
sorry to depart. It was only what they had already begged to be
allowed to do. Though born and bred among the English, they did
not even speak their language. They spoke the language of the
Normans who had brought them to England for their own purposes,
and ejected them when those purposes no longer held. They were
as foreign to the land on this day of their departure, as their fathers
had been on the day of their arrival, full two centuries earlier. Their
residence in England was a mere episode in their long career of
sorrow and trial, only a temporary halt on the weary pilgrimage which
began at Zion and would end in Zion.
Nor were their last experiences such as to sweeten their feelings
towards the land they were leaving. Despite the king’s merciful
provision, there was no lack of opportunities for expressing,
otherwise than by looks and words, the bitter hatred nourished
against the emigrants. The old chroniclers have handed down to us
an incident which may safely be regarded as only an extreme
specimen of the cruel memories which the children of Israel carried
away from England. On St. Denis’ Day the Jews of London set out
on their way to the sea-coast, and got on board a ship at the mouth
of the Thames. The captain had cast anchor during the ebb-tide, so
that his vessel grounded on the sands. Thereupon he requested the
passengers to land, till it was again afloat. They obeyed, and he led
them a long way off so that, when they returned to the river-side, the
tide was full. Then he ran into the water, hauled himself on board by
means of a rope, and referred the hapless Jews to Moses for help.
Many of them tried to follow him but perished in the attempt, and the
captain divided their property with his crew. The chroniclers add that
the ship-master and his sailors were afterwards indicted, convicted
of murder, and hanged. Similar crimes of robbery and murder were
brought home to the inhabitants of the Cinque Ports; but the
punishment of the offenders brought little consolation to the victims.
The sea proved as cruel to the Jews as the land had been.
Fierce storms swept the Channel, many of the ships were wrecked
and many of the exiles were robbed and drowned by the captains, or
were cast naked on the French coast. Those who escaped
shipwreck and murder reached the shore they sought only to find it
as inhospitable as the one from which they fled. A decree of the
Parliament de la Chandeleur, issued in obedience to the Pope’s
wishes, bade all Jewish refugees from England to quit the kingdom
by the middle of next Lent. Some of them, thanks to their French
tongue, may have escaped detection and remained in France,
sharing the treatment of their co-religionists already described;
another party, mostly poor, took refuge in Flanders; but the majority
joined their brethren in Spain, whither we shall follow them.
 CHAPTER X

THE JEWS IN SPAIN

As we have seen in a previous chapter, the lot of the Spanish Jews

under Mohammedan rule was supremely enviable. Their condition in
the Christian parts of the Iberian Peninsula was less uniformly
prosperous. We there find two forces at work, one favourable to the
children of Israel and the other the exact opposite. The people and
the Church were ill-disposed towards them; the princes and the
nobles protected them. Their history is therefore marked by the
vicissitudes of the conflict between those two forces, and their
ultimate fate was to be determined by the result of that conflict. That
they should be mulcted by the Christian princes was only what might
have been expected. In Spain they were subjected, among other
burdens, to a hearth tax, a coronation tax, a tax on various kinds of
their own food, and a tax for the King’s dinner. In Portugal, under
Sancho II., they had to pay, besides other things, a fleet tax, and
were obliged to supply a new anchor and cable to every vessel built
for the royal marine. On the other hand, they enjoyed a large
measure of communal autonomy, settled their disputes in their own
Beth-Din, or religious tribunal, and even passed capital sentence on
culprits of their own persuasion. Despite manifold restrictions in the
exercise of certain trades and handicrafts, they often succeeded in
eluding the law, which in the earlier days was not rigorously
enforced, and in pursuing a variety of occupations. They dealt in
corn, cattle, silk, spices, timber, and slaves. They were goldsmiths,
mechanics, peddlers, and pawnbrokers. The trade in cloth and wool,
both domestic and foreign, was largely in their hands; but they
abstained from the manufacture of cloth, partly owing to prohibitive
legislation by the State, as was the case in Majorca during the
fourteenth century, and partly in obedience to the Talmud, which
denounced weaving as an immoral occupation, inasmuch as it
tended to facilitate undesirable propinquity between the sexes. Many
of the upper classes found equally, or more, lucrative employment as
physicians, clerks of the Treasury, and public officials.
Then was formed in Spain that higher type of Jew which
compelled even the Christians to forget their contempt for the race.
Visigothic legislation was ignored in practice, and the Jews ceased
to be systematically trampled upon. Pope Alexander
1061–1073
II., the coadjutor and immediate predecessor of
Gregory Hildebrand, in a decree issued to all the bishops of Spain,
draws a distinction between the Saracens and the Jews, the latter
being described as worthy of toleration on account of “their
readiness to serve.” Some of the municipalities treated them on
equal terms with the Christians, and in both Aragon and Castile the
Jews were allowed to act as judges. The Christian princes found in
them some of the qualities which commanded their respect towards
the Arabs, and they would fain avail themselves of their lights. They
employed Jewish physicians, Jewish financiers, and Jewish tutors.
Alfonso VI. of Castile began by diplomacy the
1085
liberation of Spain, which was to be accomplished by
the military prowess of his successors. In this initial stage of the
movement, despite the persecution proclaimed against the “enemies
of Christ” by Pope Gregory VII., the Castilian King employed the
astute and polyglot Jews, notably his private physician, Isaac Ibn
Shalbib, and after the conquest of Toledo he confirmed to the Jews
of that town all the liberties which they had enjoyed under the
Mohammedan rulers. Then Alfonso, resolved to attack the Saracen
King of Seville, whom he had used as a tool in taking Toledo, thought
it necessary to apprise his former ally of his change of policy and bid
him defiance. The delicate task was entrusted to Ibn Shalbib,
attended by five hundred Christian knights. The Jewish diplomatist
carried out his master’s instructions so thoroughly and so boldly that
the Mohammedan prince, in his fury, forgot the inviolability of the
ambassadorial character, and nailed the unfortunate envoy to a
gibbet.
 The comparative liberty enjoyed by the Spanish Jews, under the
aegis of the Kings, brought with it opulence and luxury. The Spanish
synagogues were renowned throughout Europe for their beauty, and
the private dwellings of the Spanish Jews were not less noted for
their magnificence. The Spanish Jews, as their brethren elsewhere,
set much store by social distinction, and knew how to combine
extravagance with economy. The stately names and expensive
equipages of the Christian nobility were copied by them, not wisely
but too well. Their profuse ostentation of wealth in domestic
decoration and personal apparel excited the envy, and royal
patronage the jealousy of their neighbours. These feelings,
intensified by religious antipathy, laid up a fund of prejudice which
only awaited a suitable opportunity for converting itself into active
hostility. The same causes which brought about the eruption of anti-
Judaism in other countries operated in Spain also. First, the
Crusading spirit which, though it produced no immediate massacres
in Spain, as it did in Central Europe, remained longer alive by the
Spaniard’s undying enmity to the Jew’s cousin, the Saracen invader,
whose invasion, it must be remembered, the Jews had facilitated, or,
at all events, welcomed. Secondly, the hatred of heresy which,
fostered by the monastic orders, found in Spain a more fertile soil
than in any other Christian country. So strong and so pertinacious
were these influences in the Iberian Peninsula that the Kings who
favoured the Jews were often obliged to assuage public irritation,
and to save their protégés from the ebullitions of popular fanaticism
by separating them from the Christians. Already in the eleventh
century we hear of a “Jewish barrier” erected in Tudela. This
separation was also countenanced by the Church, though from
widely different motives. In Coyaca, in the Asturias, a
1079
Council decreed that no Christian should reside in the
same house with Jews, or partake of their food. Persons caught
transgressing this canon were sentenced, if noblemen, to one year’s
excommunication, if of lower degree to one hundred lashes. Thus
the normal isolation of Israel was encouraged by two powers which,
acting with opposite intent, converged to the same dangerous result.
But it was not until late in the thirteenth century that the gathering
animosity came to a head, and declared itself in more methodical
efforts at segregation and humiliation, conversion or extirpation.
1212 Meanwhile the undercurrent of prejudice was
checked by the action of the Kings. When, for instance,
the Crusaders from across the Pyrenees, red-handed from the
massacre of the Albigenses, came to Spain as allies in the war
against the Mohammedans, and began the work of exterminating the
infidels by attacking the Jews of Toledo, King Alfonso IX. warded off
the blows, and the misdirected zeal of the foreign fanatics was
condemned even by the populace of Castile. When,
1215
again, Innocent III. at the Fourth Lateran Council
ordered the Jews to be marked off by a special badge, the Jews of
Spain, through their influence at Court, succeeded in avoiding the
effects of the decree. King Alfonso connived at their disobedience,
and vain were the unwearied efforts of Innocent’s successor,
Honorius III., to enforce the Jewish disabilities. Similar
1220
immunity from the ignominious ordinances of St.
Peter’s See was secured by the Jews of Aragon through the
exertions of the physician of King Jayme I. Several
1248
years after King Ferdinand allotted three parishes to
the Jewish community of Seville, and surrounded them with a wall
for their defence. Within this enclosure were the exchanges,
markets, slaughter-houses, synagogues and tribunals of the Jews,
while their cemetery spread over an adjacent field.
1252–84 But how long could the Court maintain its
Judaeophile attitude in the teeth of the growing
animosity against the race? Alfonso X., surnamed the Wise,
employed Jews as Chamberlains and Chancellors of the Exchequer,
as well as in the construction of his famous Astronomical Tables. But
the same King was forced to throw a sop to Cerberus
1261
by enacting that “the Jews may not enlarge, elevate, or
beautify their synagogues.” Another law of Alfonso’s contained the
following ominous statement: “Although the Jews deny Christ, they
are still suffered in all Christian countries, so that they should remind
everybody that they belong to that race which crucified Jesus.”
During this reign conversion of a Christian to Judaism was punished
with death. No Jew was to be elevated to any public office. The
wearing of the badge was made compulsory, and anyone seen
without it was, if rich, fined; if poor, scourged. Social intercourse
between Jews and Christians was made a punishable offence. The
Jews should not appear abroad on Good Friday. Though himself in
the hands of a Jewish physician, Alfonso decreed that no Christian
should take medicine prepared by a Jew. These restrictions,
however, were tempered by measures protective of the religion, the
persons and the property of the Jews; and they did not really
become active until a much later period.
1263 Two years later there occurred in Barcelona, under
the auspices of Jayme I., the famous disputation
between the Dominican Pablo Christiani and the Rabbi
Nachmanides, which led to the latter’s exile, and to the expurgation
69
of the Talmud.
In the meantime the silly and sinister fables which caused the
persecution of the Jews in England and elsewhere met with
credence in Spain also. But, if the pious were exasperated by these
stories, less foolish persons found a sufficient food for their spleen in
the better founded charges of rapacity constantly brought against the
Jewish money-lenders; while the holy indignation of others was
aroused by the occasional sight of Christian proselytes seeking in
the arms of the Synagogue a spiritual rest which they could not find
in the Church; or by the spectacle, even less edifying, of Christian
noblemen seeking in the arms of a Jewish bride the wherewithal to
regild their tarnished escutcheons. All these grievances, assiduously
nursed by fanatical clerics and loudly voiced by insolvent debtors,
culminated in violent attacks upon the “accursed people” during the
fourteenth century. The Jewish colonies were repeatedly looted and
burnt and the inmates slaughtered without mercy and without regard
About 1330
to sex or age. In one attack of this kind in the kingdom
of Navarre no fewer than ten thousand Israelites
perished.
But the time had not yet come for a general persecution of Israel
in Spain. The demon of Jew-hatred, if irritated, was also curbed by