By

Khawaja Hamid Mushtaq

Deputy Director,
B.E Civil, Mst Const. Law(Melb)
CIArb PGD in International Commercial Arbitration, Oxford UK,
PMP
 FIDIC Provides for a comprehensive
mechanism of Notices to inform the Engineer
or the Employer whenever the Contractor
commences, continues or completes his
obligations under the Contract.

 From the Employers perspective, it forewarns

and saves the Employer from the Ambush of
Contractual Claims by the Contractor at any
convenient time.
 Clause 6.3, Notify Engineer reasonably in
advance non-issuance of a drawing or Instruction
that will result in disruption or delay

 Clause 12.2, Notify Engineer reasonably in

advance on encountering on Site unforeseeable
physical Obstruction or Conditions

 Clause 27.1, Notify Engineer and seek

instructions of discovery of fossils, coins and
archaeological articles
 Clause 44.2, Notify Engineer reasonably in
advance of events giving rise to entitlement
of Extension of Time for Completion of Works

 Clause 65.5, Notify Engineer reasonably in

advance of the Cost incurred as a result of
Special Risk to works

 In some contracts, responsibility to Notify the

Engineer may cover other Express
circumstances.
 Clause 52.2, Notify Engineer of its intention to Claim
additional payment or a varied rate or price within 14
days of receiving an Engineers Variation Order. This
Notice can also be given by the Engineer.

 Clause 53.1, Notify Engineer reasonably in advance of

its intention to Claim Time or Cost or both within 28
days under relevant provisions.

 Failure to give Notice, however will not deprive but

restrict the entitlement of the Contractor under
Clause 53.4 to whatever he can prove on the basis of
contemporary records. Notice to claim is an express
requirement in FIDIC 1999 suite
 However under Clause 67.1, Notice of
intention to refer a dispute for Engineer’s
Decision is not required

 Any dispute can be referred any time to the

Engineer

 Notice of Intention to Arbitration be given

under Clause 67.1 when
◦ A) Engineer fails to give decision within 84 days Or
Other party is dissatisfied with Engineer’s Decision
 Broadly, two types of Claim exist in any
Construction Contract, a) Cost Claim b) time
Claims

 Clause 53 covers the Procedure of Cost

Claims
 Clause 44 covers the Procedure of Time
Claims
 Both start generally with a ‘Notice of
intention’.
 Broadly, two types of Claim exist in any
Construction Contract, a) Cost Claim b) time
Claims

 Clause 53 covers the Procedure of Cost

Claims
 Clause 44 covers the Procedure of Time
Claims
 Both start generally with a ‘Notice of
intention’.
 Under Clause 8.2, Contractor is responsible
for the following risks
◦ Method of Construction
◦ Site Operations
◦ Any part of Permanent works designed by
the Contractor
◦ Any part of the Temporary Works
designed by the Engineer but Contractor
undertakes to take responsibility
 Under Clause 8.2, Engineer is responsible for
the following risks
◦ Design of Permanent Works or Temporary
Works
◦ Specifications of Permanent Works or
Temporary Works

◦ Under Clause 20.4, The Risk of any loss or

damage by events as mentioned in this
Clause, are exclusively on the Employer
 Indemnity is considered to be a contractual
agreement between two parties whereby one
party agrees to pay for potential losses or
damages in certain circumstances
 Employer Indemnifies the Contractor
 Under clause 65.1, for any loss or damage to the
permanent works due to events such as war,
rebellion etc (special risks)
 Under clause 22.3, damage against any injury
to any person at project site where negligence
can be attributed to Employer’s personnel.
 Employer Indemnifies the Contractor
 Under clause 22.3, for any liability arising due
to non compliance with local laws,
permissions etc for which Contractor can not
be held responsible.
 Under clause 30.1, any claim made by local
road authority for damage to local roads
when Contractor is not responsible.
 Under Clause 71.1, any damage due to
restriction imposed by the State on transfer
of currency restrictions
 Contractor Indemnifies the Contractor
 Under clause 22.1, loss of life or any injury to any
person(third person) or property at project site where
negligence can be attributed to Contractor’s personnel.

 Under clause 24.1, claims, costs, charges,

compensation in case of death or injury to employees of
the Contractor or subcontractor

 Under clause 26.1, against all penalties and

liability of every kind imposed by local law
regulations etc.
 Contractor Indemnifies the Contractor
 Under clause 28.1, all claims and damages due to
infringement of Intellectual property or patent laws

 Under clause 29.1, claims, costs, charges,

compensation in case improper interference with
public convenience i.e blocking of roads etc

 Under clause 30.2, against all claims of

damage to local roads caused by
Contractor’s machinery
 Insurance:- A contract (an insurance
contract) whereby one person, the insurer,
promises and undertakes, in exchange for
consideration of a set or assessed amount of
money (called a "premium"), to make a
payment to either the insured or a third-party
if a specified event occurs, also known as
"occurrences".
 Contractor Insures
 Under Clause 21.1, in joint name of
Contractor & Employer against damage to
Works or Loss of materials brought to site
due to Special risks

 Under Clause 23.1, in joint name of

Contractor & Employer against liability for
death or injury to persons and damage to
property as a result to performance of
contract
 Contractor Insures
 Under Clause 24.2, Insurance against liability
for all damages or compensation payable to
any workman or other persons in the
employment of Contractor.

 In FIDIC Redbook 1987, Clause 24 & 25 relate

to insurances.
 Performance Security is the amount stated in
the Contract which serves as a guarantee for
Performance of the Contractor

 Should remain valid and enforceable till the

issuance of the Defects Liability Certificate or
as provided by the Contract
 Can be presented in the shape of guarantee
or bond as provided in the Contract.
 In FIDIC Red Book 1987, relevant Clause are
10.1,10.2 & 10.3
 Retention is a percentage (often 5%) of the
amount certified as due to the contractor on
an interim certificate, that is deducted from
the amount due and retained by the client.

 Under Clause 60.3, 50% of Retention Money is

released upon issue of TOC and remaining
50% on expiry of DLP
Thank You