FIDIC 2022 Reprints: do they achieve FIDIC’s aim?

In November 2022, the International Federation of Consulting Engineers (FIDIC) published reprints of its 2017 editions of the Yellow, Red and Silver Books (the Books) incorporating all previous changes to the 2017 editions and including additional amendments required to add further clarity (the 2022 Reprints).

One of FIDIC’s key aims in publishing the 2017 Books was ‘to increase clarity, transparency, and certainty’ (undoubtedly one of the most important qualities of a good contract) and it makes sense that FIDIC would be focused on continued improvement. But do the 2022 Reprints achieve FIDIC’s aim? We consider this question below by looking at three changes (picked at random).

1. Definitions of Claim and Dispute

The 2022 Reprints have introduced a distinction between a ‘matter to be agreed and determined’ and a ‘Claim’. This has been done by excluding a ‘matter to be agreed or determined’ from the definition of a ‘Claim’ and instead listing specific sub-clauses that refer to a ‘matter to be agreed or determined’ at Sub-Clause 3.7(a) of the Red and Yellow Books and 3.5(a) of the Silver Book. 

For example, these capture matters such as: (i) the Contractor’s entitlement to an EOT and adjustment to the Contract Price resulting from a Variation instructed by the Engineer; (ii) disagreement as to the instalments in which the Contract Price is to be paid to the Contractor; (iii) amounts to be included in the Payment Certificate; (iv) valuation after Termination for the Contractor’s Default or for the Employer's Convenience; (v) determination of the value of the works done by the Contractor in the case of termination due to an Exceptional Event. 

Specifically referring to these sub-clauses in one place is, perhaps, a welcome clarification for both parties (though more so Contractors) as a less burdensome procedure applies to a ‘matter to be agreed or determined’ compared to a ’Claim’ - so a clear distinction is important. When it comes to the procedure for a ‘Claim’, the claiming Party is required to issue a Notice of Claim no later than 28 days after it becomes aware or should have become aware of the relevant event, failure of which will deprive it of its entitlement to money or time. A Claim further needs to be ‘fully detailed’ which also requires the claiming Party to keep contemporary records to comply with this requirement. None of these requirements apply to a ‘matter to be agreed or determined’.

A consequential amendment to the definition of a ‘Dispute’ has also been made. The 2017 Books defined a ’Dispute’ as a situation where: (i) a Party made a claim against the other Party; (ii) which was rejected by the other Party (or the Engineer/Employer's Representative); and (iii) to which rejection the first Party did not acquiesce, either by:

1. giving a Notice of Dissatisfaction (a NOD) under Sub-Clause 3.7.5 of the Red and Yellow Books or Sub-Clause 3.5.5 of the Silver Book; or
2. ‘otherwise’.

In the latter case, one may have previously assumed that this would be by referral of a dispute directly to the DAAB without reference to the Engineer/Employer’s Representative or the issue of an NOD (where this was permitted under the conditions) – though the drafting did not expressly say this and use of the term ‘otherwise’ arguably could have captured any other way that the relevant party may have chosen to not acquiesce to the rejection. 

With the introduction of a distinction between Claim and a ‘matter to be agreed or determined’, the new definition of Dispute now includes a claim with a capital C and ‘other matters to be agreed and determined’. While this is a minor amendment to ensure consistency, the new definition now also requires a party to give a NOD with respect to an Engineer/Employer's Representative's determination for it to constitute a Dispute.  The reference to ‘otherwise’ has been removed. This means that, unless an express exception applies (discussed further below), an aggrieved party can no longer refer a Dispute directly to the DAAB without first issuing an NOD.  

The exceptions to this are found at Sub-Clause 21.4 of the 2022 Reprints, which sets out an exhaustive list of situations where a Dispute is ‘deemed’ to have arisen and may therefore be referred directly to the DAAB without the need for a NOD (for example, where the Contractor does not receive the amounts due under a Payment Certificate within 42 days from the date stated in Sub-Clause 14.7). 

We expect this to be a welcomed change as it provides clarity as to when a NOD is / is not required before a Dispute can be referred to the DAAB. 

2. Exceptional Event
The definition of ‘Exceptional Event’ (which replaced ‘Force Majeure’ in the 1999 Books) has been amended in the 2022 Reprints.  In the 2017 Books, it was defined as ‘an event or circumstance as defined in Sub-Clause 18.1 [Exceptional Events]’. It is now defined as ‘an exceptional event or circumstance as defined in Sub-Clause 18.1 [Exceptional Events]…’.  

By itself, this change may not make any material difference to the definition, but Sub-Clause 18.1 has also been amended. Previously, in the 2017 Books, it defined an Exceptional Event simply as an event or circumstance which satisfied the conditions in subparagraphs (i)-(iv) of the sub-clause. (i.e. beyond a Party’s control etc).    But now the event or circumstance must also be “exceptional”.

Interestingly, the 1999 Books contained the same reference.  Its removal from the 2017 Books appeared a welcome clarification at the time.  The reason for its re-insertion is unclear.

The term ‘exceptional’ is undefined in the 2022 Reprints (as it was in the 1999 Books) and it has no accepted definition at law.  Rather than providing clarity, this amendment creates more uncertainty for parties seeking to rely on Sub-Clause 18.1, potentially raising the bar for an event to qualify as an ‘Exceptional Event’…assuming one can determine what that means in the first place.

It may be that the re-insertion was simply intended to emphasise that an event or circumstance that satisfies the conditions set out in Sub-Clause 18.1 is by its nature “exceptional”.  If so, was it really necessary or wise to make such a change, which – at the very least - creates the potential for ambiguity?

3. Care of the Works

Under Sub-Clause 17.1 of the 2017 Books, the Contractor was responsible for the care of the Works, Goods and Contractor’s Documents from the Commencement Date until the Date of Completion of the Works. The 2022 Reprints have replaced ‘the Date of Completion’ with ‘the issue (or deemed issue) of the Taking-Over Certificate for the Works’.  

While at first glance this change may appear unnecessary, we expect this to be a welcomed clarification for Employers, as the previous reference to Date of Completion may have resulted in responsibility for the care of the Works transferring from the Contractor to the Employer at an earlier date than the issue (or deemed issue) of the Taking-Over Certificate (i.e. on the date stated in the Taking-Over Certificate to be the date on which completion of the Works occurred).  Employers would not be aware of this date until the Taking-Over Certificate was issued and may have inadvertently found themselves responsible for something that occurred in the period between the Date of Completion and the issue of the Taking-Over Certificate.

Conclusion

Overall, one can see that FIDIC’s goal was to clarify certain positions under the 2017 Books. However, while it has done so in some respects, it appears to have created some uncertainty in others.  Users should consider the 2022 Reprints carefully to determine if any further amendments are required as a result and not simply take it on face value that the changes arising from the 2022 Reprints are simple clarifications without any material impact.