The FIDIC suite of contracts is no exception to this rule and more specifically the FIDIC Red Book 2017 edition sets out explicitly in Clauses 1.9, 2.1, 4.7, 4.12, 4.23, 7.4, 8.5, 8.6 , 8.10 , 10.3, 13.6, 16.1, 16.2.2, 17.2, and 18.4, the particular grounds under which the contractor is entitled to an extension of time.

Notices

The FIDIC form is founded on the principle that, rather than waiting until the works are complete, disputes should be resolved during the course of the project whenever possible and therefore a contractor cannot submit its claims retrospectively post project completion. In practice though, we still see contractors attempt to make such claims, especially total loss claims. Within the Red Book, sub-clause 20.2 sets out both a procedure for the notification and substantiation of claims and details of the decision-making process to be adopted by the engineer for the approval or rejection of those claims.

Where the contractor considers it has a claim for an extension of time and/or any additional payment, sub-clause 20.2.1 requires that notice must be given to the engineer “as soon as practicable, and not later than 28 days after the event or circumstance giving rise to the claim”. For any claim for an extension of time to be successful, it is vital that this contract notification procedure is followed precisely, given that the FIDIC contracts incorporate a procedural mechanism that makes the serving of a notice, in a stipulated form within specific time scales, a condition precedent to the award of an extension of time. In clause 20.2.1 of the FIDIC Red Book, it requires the claimant to give notice to the engineer of any claim for time, not later than 28 days after the contractor/employer became aware and states “if the claiming party fails to give notice of a claim within such period of 28 days, the time for completion shall not be extended, the contractor shall not be entitled to additional payment and the employer shall be discharged from all liability in connection with the claim’’.

Furthermore, Clause 20.2.4(i) requires the claiming party to provide a fully detailed claim within 84 days (or, by 20.2.4(ii) another period agreed with the engineer) of becoming aware (or when they should have) of the event or circumstances giving rise to the claim. Failure to provide the claim details on time can invalidate the notice served under Clause 20.2.1 and the claimant’s entitlement for time (provided that the engineer has issued notice of the claiming party’s failure to provide the claim details within 14 days after the time limit has expired).

Condition precedent mechanisms such as this are supported by Bremer v. Handelsgesellschaft mbH v Vanden Avenne-Izegem PVBA [1] where the House of Lords stated that a notice provision is a condition precedent if it prescribes a specific time for delivery of the notice and clearly states that the associated rights will be lost in the event that the required notice is not given. It is clear, therefore, that the courts will uphold such provisions, provided they are clear and unequivocal, even in circumstances where they may enable the employer to escape liability for its acts of prevention.

An important consideration is, when does the 28-day notice period commence under Clause 20.2.1? This contract provision was considered recently by the TCC in Obrascon Huarte Lain SA v Her Majesty’s Attorney General for Gibraltar [2]; where the court held that it does not run from the actual occurrence of the event or circumstance giving rise to the claim but rather from the date when the contractor ‘became aware, or should have become aware, of the event or circumstance’ giving rise to the claim.

Within that case, Akenhead J stated that ‘’I see no reason why this clause should be construed strictly against the contractor and can see reason why it should be construed reasonably broadly, given its serious effect on what could otherwise be good claims for instance for breach of contract by the employer”. In his judgement, Akenhead J found that the clause 8.4 of the Red Book requiring the parties to “endeavour to” advise the other of any circumstances of which they are aware which may adversely affect the project. This enables the contractor to give notice either when it is clear that there will be delay (a prospective delay); or, alternatively when the delay has started (a retrospective delay). On the basis of this judgement, it is clear that the contractor is no longer prejudiced by a failure to give notice of prospective delays provided a valid notice is issued within 28 days of the date when the actual delay begins. This has great significance given that the prospective delay may have been foreseeable long before the actual delay occurs.

Claim Review

Upon receipt of the respective notices and claims details from the claimants, the engineer is required to respond with either formal approval, or disapproval, as outlined in Clause 20.2. If the claimant disagrees with the engineer’s decision, he is entitled to pursue the claim through the DAAB and Arbitration mechanisms outlined in Clause 21.

Conclusion

Under English law, a notice provision will be construed as a condition precedent to a claim provided it states the precise time within which the notice is to be served; and, it makes plain by express language that unless the notice is served within that time, the party making the claim will lose its rights under the clause. Therefore, contractors should take special care that they rigidly adhere to the specific notification procedures.

Nevertheless, the requirement included in clause 20.2.1 for a claimant to notify a delay no later than 28 days after the contractor/employer became aware, does not necessarily limit its ability to claim for retrospective delays.

References

1 [1978] 2 LLR 109.
2 [2014] EWHC 1028 (TCC)