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IntroductionPREFACE This book is intended for anybody having dealingswith FIDIC's "Red Book",the4 t h E d i t i o n o f t h e " C o n d i t i o n s o f C o n t r a c t f o r W o r k so f C i v i l E n g i n e e r i n g Construct ion" published in 1987. Employers,

engineers, contractors andtheir r e s p e c t i v e a d v i s o r s s h o u l d a l l f i n d s o m e t h i n g i n t h is w o r k t o h e l p t h e m t o understand and make best use of theseconditions of contract. For those not familiar with the cont ract, thecommentary to each clause starts with a "plain English" paraphrase toenable the reader to understand the gist of the clause as quickly aspossible. Except where the meaning of the clause is entirely obvious,each sub-clause is given a separate paragraph. T he vo lume a l soinc ludes a s e t o f s ome 94 " s ugges ted fo r ms " w h i c h maybefound useful by engineers, employers and contractors. These do not

at tempt to an t i c ipa t e par t i cu la r s i tua t ions b u t ra th e r to use th ewo rd in g of th e cl au se to produce a form of notice which would, i t ishoped, leave no room for doubt or debate as to whether a notice hadbeen given, under which clause it had been given or whether thenotice was in a form which complies with the terms of the c o n t r a c t .A t t h e v e r y l e a s t , t h e f o r m s s e c t i o n w i l l p r o v i d e t o t h ep a r t i e s a reference against which to check that the notice that theyare giving has beengiven and copied to the correct parties. There can be fewtypes of disputes whichare as fruitless and frustrating as disputes over whetherthe correct form of noticehas been given in particular circumstances. Whilst thereare often good reasonsfor requiring notice to be given, it is rare that justice isdone when an arbitrator isforced by the contract to rule out a claim on thegrounds that no or no adequate notice has been given. In short, it is ineverybody's interest that notices are given properly. If parties wished to doso, they could agree at the outset that not ices which conform to those setout in this volume would not be open to challenges asto form al though theycould of course be open to challenge in respect of their t im i ng , th ei rapp r op r i a tenes s o r i ndeed the manne r i n w h i c h the b lank shave been filled. Although the masculine pronouns "he" and "him" havebeen used from time totime as a shorthand for the Employer,the Contractor or the Engineer, this is for convenience and is not

based on any assumption that the parties involved withcivil engineeringcontracts are necessarily male. The author is well aware that the contrary isincreasingly true. The usage is also consistent with the language of theconditions. Readers may find it strange that references will be found in this workto boththeI C E ' s 5 t h a n d 6 t h E d i t i o n . T h e I C E 5 t h E d i t i o n i s r e f er r e d t o b e c a u s e t h e d r a f t sm a n o f F I D IC ' s 4 t h E di t i on wa spl ai nl y h ea vi l y in fl ue nc ed by I CE 's 5t h Edition and the points ofdeparture are interesting in themselves as well as beingPage 3 of 264


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useful to those readers familiar with the ICE Conditions. References toICE 6thEd i t ion a re inc lude d because o f th e h is to ry o f th eF ID IC fo r m fo l l ow ing i n

t he f o o t s t e p s o f I C E ' s d r a f t i n g : i t i s t h e r e f o r e i n t e r e s t i ng t o s e e w h i c h o f t h e innovat ions introduced by FIDIC in their 4thEdition have been adopted by theICE in their 6th. Knowledge of theICE cond it ions is by no means necessary for the user of this work,however.As a user o f c omm ent ar i es o f th i s sor t , I am w el l awar ethat all too often theparticular practical problem, which a readerexperiences is not, covered by the commentary. As a writer, it is impossibleto imagine all problems that might occur even if time and the patience of thepublisher would permit all problems to beaddressed. I should add that evenin cases where the problem experienced by areader appears to have been

addressed and an answer suggested, the reader sh ou ld t ak e gr ea tc a r e and s hou ld av o id any as s ump t i on tha t t he i rpa r t i cu la r circumstances were being addressed. Discussion and submissionin the absenceof parti cular facts is necessar ily l imited and the reader isurged to g ive carefu l considerat ion and i f necessary to takeindependent advice in relation to their particular circumstances.Asthis work is intended not only for lawyers but for the full dramatis personae of acivil engineering project, it was decided that footnotes would beavoided andreferences to legal cases given a firmly subordinate role. Given therange of legalsystems in which the FIDIC conditions are used, very o ftenwith the local law asthe law of the contract, an over-dependenceon Commonwealth case- law wouldnot necessari ly be helpful .Rec ent dec is io ns and dec i s ion s f ro m jur i sd ic t io ns other thanEngland have been given priority.It should be confessed at this early stage thatthe references to be found in PartII, the Conditions of Particular Application, todredging and reclamation have notbeen the subject of any comment. Part IIis however set out in full at the end of this work.Finally, the authorwishes to thank FIDIC for permitting the reproduction of theRed Book forthe purposes of this work.ECC - LONDON1: INTRODUCTIONOrigins of FIDIC4thEditionF I D I C i s t h e F e d e r a t i o n I n t e r n a t i o n a l D e s I n g e n i e u

r s - C o n s e i l s a n d i s a n association of national associations of ConsultingEngineers. They have been in

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existence since 1913 and have their headquarters and secretariat in LausanneinSwitzerland.FIDIC have produced standard forms of contract for civilengineering projectssince 1957. The 2nd Edition was published in1969 and the 3rd in 1977. As theob vio us com par iso n is bet wee nth es e co nd it io ns an d th os e pr od uc ed by th e Institute of Civil

Engineers in the UK, known throughout this work as "ICE", it maybe he lp ful torecord that the ICE 1st Edition was published in 1945 and the4thE d i t i on i n 1955 . The 5 th E d i t i on w as pub l i s hed i n 1973 andi t wa s up on t h is Edition that the FIDIC 3rd Edition was closelymodeled. FIDIC took the ini t iat ivewith their 4th Edit ion and i t maybe tho ught tha t I CE 6 th Ed i t ion pub l is hed in January 1991 showsthat FIDIC has repaid some part of its debt to the ICE. Inparticular,FIDIC's ideas in relation to an express obligation upon the Engineer tobeimpartial, the deemed obligation upon the Employer to disclose allinformationconcerning the ground conditions on site and the introduction of

conciliation intothe disputes procedure after the Engineer's decision and beforearbitration, maywell have influenced ICE's 6th Edition. To avoidconfusion with FIDIC edit ions, the ICE conditions are referred to in thecommentary as ICE 5th and ICE 6th.Nature of the ConditionsFor those whoare unfamiliar with FIDIC's Standard Form, it may assist if the basiccharacteristics are set out:- I t i s a f o r m v e r y m u c h i nt h e t r a d i t i o n a l E n g l i s h m o d e w i t h B i l l so f Quantities and a named Engineer whose functions include makingcertificationand other determinations independently of the Employerand indeed impartial lyas between the parties.- I t i s a r e -m e a s u r e m e n t c o n t r a c t w i t h t h e q u a n t i t i e s i nt h e b i l l t r e a t e d a s approximate and the Contract Price havingli tt le relevance save as a means bywhich the competing tenders might bejudged.- T h e E m p l o y e r m a y n o m i n a t es u b c o n t r a c t o r s a n d h a s t h e p o w e r t o m a k e directpayment in the event that the Contractor fails to do so. The Employer isnotm a d e l i a b l e , a s i n s o m e E n g l i s h f o r m s , f o r de l a y s b y t h e n o m i n a t e d subcontractors.- R i s k i s d i v i d e di n l i n e w i t h t h e p h i l o s o p h y t h a t t h e E m p l o y e r i sb e s t p l a c e d to take on those risks which experienced contractorscould not reasonably beexpected to foresee, which are outside the

control of the parties and whicha r e n o t r e a d i l y c a p a b l e o f b e i n g c o v e r e d b y i n s u r a n c e . Un p r e d i c t a b l e g r o u n d conditions are at the risk of the Employer.The earliereditions of the FIDIC Conditions have been extensively used and the4thE d i t i on i s r oo ted f i r m l y i n t he t r i ed and tes ted fo r mu la . Thec hange s a r e generally sensible and conservative and the 4th Editionwill no doubt do equallywell.

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The changes made from the 3rd Edition are referred to at thebeginning of thecommentary under each clause. The principal changes are asfollows:-- C l a u s e 2 . 6 ( E n g i n e e r t o A c ti m p a r t i a l l y ) : a n e x p r e s s o b l i g a t i o n u p o n t h eEngineer to act impartially as between the parties.-

T h e E n g i n e e r i s r e q u i r e d t o c o n s u l tw i t h t h e p a r t i e s u n d e r s o m e 2 5 clauses prior

to granting extensions of time, fi xing rates or making an award of costs.This consultation obligation is discussed further below.- D e s i g n b yt h e C o n t r a c t o r o r o n e o f h i ss u b c o n t r a c t o r s i s c a t e r e d f o r i n clause7.2 (Permanent works designed by Contractor), clause8.1 (Contractor'sgeneral responsibility) and clause 59.3 (Designrequirements to be express lystated).-C l a u s e 4 4 . 1 ( E x t e n s i o n o f t i m e f o r c o m

p l e t i o n ) n o w p r o v i d e s f o r a n extension for delaysand prevention by the Employer.-T h e a m o u n t o f v a r i a t i o n r e q u i r e d t o t r ig g e r a n a d j u s t m e n t h a s b e e n increased from 10%in clause 52.3 (Variations exceeding 15%).- A p r o c e d u r e f o rc l a i m s h a s b e e n s e t o u t i n n e w c l a u s e 5 3( P r o c e d u r e f o r claims).- C l a u s e 6 0 ( P a y m e n t )h a s n o w b e e n d r a f t e d i n f u l l w h e r e a s t h e 3 r dE d i t i o n left the matter entirely in the hands of the parties to deal with in PartII.-U n d e r c l a u s e 6 7 ( S e t t l e m e n t o f d i s p u t es ) a n " a m i c a b l e s e t t l e m e n t " procedure has beeninterposed between the Engineer's decision and arbitration.- I f t h eE m p l o y e r f a i l s t o p a y o n t i m e ,t h e C o n t r a c t o r i s n o w g i v e n t h eo p t i o n o f s u s p e n d i n g w o r k o r r e d u c i n g t h e r a t e o f w o r k a s a n a l t e r n a t i v e t o determination: clause 69.4(Contractor's entitlement to suspend work).In addition, there are numerousother material amendments and some changesof vocabulary. Only 4 out of185 sub-clauses escaped change altogether.Amendment of FIDIC's 4th EditionItis the author's experience and impression, quite unsupported by statistics,

thatthe F ID IC Co nd i t i ons a re used in an am ended f o rm,pe r haps i n a ma jo r i t y o f c as es . C e r ta i n l y , many o f t he ma jo rEm pl oy er s in t he Mi dd le Ea st ad op t an d refine their own standardsets of amendments. These amendments are generallyaimed at adjust ing thebalance of risk in favour of the Employer rather than toremedy anyambiguities, anomalies or discrepancies in the draft ing. Clauses, whichit is suggested require attention in order to remove ambiguities, anomaliesanddiscrepancies and thereby to reduce the scope for conflict, are as setoutPage 6 of 264


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below. For the detailed criticism, the reader is referred to the commentaryunder the particular clause referred to.- C l a u s e 2 . 1 ( E n g i n e e r ' sd u t i e s a n d a u t h o r i t y ) , i n a b i l i t y t o r e p l a c e E n g i n e e r . -C l a u s e 2 . 5 ( I n s t r u c t i o n s i n w r i t i n g ) , a n o m a l y a st o d a t e o f i n s t r u c t i o n . - C l a u s e 2 . 6

( E n g i n e e r t o a c t i m p a r t i a l l y ) , b r e a d t h o f i t e m ( d ) . -C l a u s e 7 . 1 ( S u p p l e m e n t a r y d r a w i n g s a n di n s t r u c t i o n s ) , c l a u s e 1 3 . 1 ( W o r k to be in accordance withContract) and clause 51.1 (Variations): clarify Engineer'spower to instruct.-C l a u s e 3 7 . 4 ( R e j e c t i o n ) , c l a u s e 3 9 .1 ( R e m o v a l o f i m p r o p e r w o r k , ma t e r i a l s o rp lan t ) and c l aus e 63 .1 ( D e fau l t o f C on t r ac to r ) i t em ( c ) :r e m o v e i n c o n s i s t e n c i e s . - C l a u s e 4 2 . 1 ( P o s s e s s i o n o f s i t ea n d a c c e s s t h e r e t o ) : c l a r i f y r e f e r e n c e t o the clause 14p r o g r a m m e . - C l a u s e 4 4 . 1 ( E x t e n s i o n o f t i m e f o r

c o m p l e t i o n ) : c l a r i f y i t e m ( b ) . - C l a u s e 4 6 . 1 ( R a t eo f p r o g r e s s ) a n d c l a u s e 6 3 . 1 ( D e f a u l t o fC o n t r a c t o r ) item (b) (ii): resolve discrepancy- C l a u s e 4 9 . 2( C o m p l e t i o n o f o u t s t a n d i n g w o r k a n dr e m e d y i n g d e f e c t s ) : clarify Engineer's apparent discretion toinstruct remedial works.- C l a u s e 5 1 . 2 ( I n s t r u c t i o n s f o rv a r i a t i o n s ) : r e s o l v e f i n a l l y t h a t a n i n c r e a s eo r decrease in quantities amounts to "varied work".- C l a u s e 5 2 . 3( V a r i a t i o n s e x c e e d i n g 1 5 % ) : p u t b e y o n d d o u b t t h ec a l c u l a t i o n of the 15%.-R e s o l v e r e l a t i o n s h i p b e t w e e nc l a u s e 5 3 . 1 ( N o t i c e o f C l a i m ) a n d o t h e r clauses with notice requirements.-C l a u s e 5 9 . 1 ( D e f i n i t i o n o f " n o m i n a t e d s u bc o n t r a c t o r " ) : t h i s d e f i n i t i o n appears to be excessivelywide.- C l a u s e 6 0 . 3 ( P a y m e n t o f r e t e n t i o nm o n e y ) : c l a r i f y p o s i t i o n a f t e r T a k i n g - OverCertificate.- S u b - c l a u s e s 6 0 . 5 t o 6 0 . 8 : e s t a b l i s hc o n s i s t e n t p o l i c y i n r e l a t i o n t o b r e a c h of contract.- S u b -c l a u s e s 6 0 . 7 a n d 6 0 . 9 a n d c l a u s e 6 2 . 2 ( U n f u l f i l l e do b l i g a t i o n s ) : c l a r i f y relationship between these clauses.Page 7 of 264


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- C l a u s e 6 3 . 1 ( D e f a u l t o fC o n t r a c t o r ) : r e s o l v ed o u b t a s t o t i m i n g o f t h e Engineer's certificate and theEmployer's notice and termination.- C l a u s e 6 5 . 3 ( D a m a g e t oW o r k s b y S p e c i a l R i s k s ) : c l a r i f y t h e

C o n t r a c t o r ' s apparent right to complete the works.- C l a u s e6 7 . 1 ( E n g i n e e r ' s d e c i s i o n ) : r e s o l v er e l a t i o n s h i p w i t h c l a u s e 6 3 . 1 (Default of Contractor) andclause 69.1 (Default of Employer).This list represents the headline itemsbut other amendments are suggested inthe text and either party to thecontract may wish to make further amendments intheir own interest. There isa further species of amendment, which might be of benefit to both theparties such as amending clause 44 (Extension of time) andclause 46(Rate of progress) to enable the Employer to order acceleration in lieuofextension of time or in circumstances where the Contractor's

enti tlement toextension of time is a matter of dispute.General ly, great careis needed when amending any standard form of contract.These FIDICconditions are generally well balanced and, as with any contract, thereare a great number of links and relationships between different clauses, notall ofwhich are express or otherwise obvious. With any amendment,therefore,t h e r e i s t h e d a n g e r o f u p s e t t i n g t h e b a l a n ce o r o f c r e a t i n g u n i n t e n d e d consequential changes to relatedprovisions. It is in the interests of all parties thatchanges should be kept to aminimum.2: THE ROLE OF THE ENGINEERClause 2.1 is entitled "Engineer'sduties and authority" but it is necessary to lookr i g h t t h r o u g h t h ec o n d i t i o n s t o u n d e r s t a n d t h e f u l l s c o p e o f h i s r o l e . I nt h e absence of clause 2.6 (Engineer to act impartially) it would beapparent that theEngineer has a number of different roles which may beenumerated as follows:-1 . D e s i g n e r : c l a u s e s6 , 7 a n d 5 1 2 . Q u a l i t y C o n t r o l l e r : c l a u s e s 7 . 2 ,3 6 - 3 9 , 4 9 a n d 5 0 3 . V a l u e a n d C e r t i f i e r :e s p e c i a l l y u n d e r c l a u s e s 4 8 , 5 2 , 6 0a n d 6 2 4 . A d j u d i c a t o r : c l a u s e 6 7 . From theabove it is reasonably clear that the Engineer is intended to act both asagent forthe Employer in the process of obtaining for the Employer theprojectrequired and as an independent person for the administration of the

contract andfor the settlement of disputes.Clause 2.6 (Engineer to actimpartially) creates doubt over this dichotomy. Theclause requires theEngineer when acting in an independent role to be impartial.This ra ises thedifficult question as to when the Engineer is engaged in whichrole. Thedraftsman has sought to address the question by the use of the generalPage 8 of 264


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concept "wherever...the Engineer is required to exercise his discretion... Thereisno other reference in the contract to the Engineer's discretion. There follows alistof actions, which the Engineer takes in his independent capacity.These actionswould not, it is submitted, always be undertaken in anindependent capacity:

for e x a m p l e , c o n s e n t i n g t o s u b c o n t r a c t o r s u n d e r c l a u s e4 . 1 o r a p p r o v i n g t h e C o n t r a c t o r ' s d e s i g n u n d e r c l a u s e 7 .2 w o u l d n o r m a l l y b e c o n s i d e r e d t o b e functions undertaken asthe Employer's agent.As suggested under clause 2.6 , the presumedintention of the draftsman has,very arguably, not been achieved. It isdifficult to find a function of the Engineer that does not involvediscretion or does not "affect the rights and obligations" of t h epa r t i es . The no t i c e to c ommenc e unde r c l aus e 41 .1( Co mm en ce me nt of Works) is to be given by the Engineer. Normallythere would be l it tle doubt that th e not ic e wou ld be g iv en whe n th e

E mp loy e r w i s hed w i th i n t he p r es c r i bedpe r i od and i s t hus ac lea r ex amp le o f an " agen t " f unc t i on . H ow ev e r , t he r eisdiscretion as to when to give the notice within the period and thepart ies' righ tsare affected. Accordingly, it is certainly arguable that clause 2.6applies unless itis made clear, "under the Contract" that the Engineer is not"required to exercisehis discretion". In order to avoid such anar gu m en t, a so lu t io n si mi la r to t ha t adopted by ICE 6th may berequired.Under ICE 6th the Engineer is required by clause 2(8) to act impartiallyin relationto all matters other than those "requiring the specific approvalof the Employer"under the equivalent clause to 2.1 (Engineer's dutyand authori ty) whereby anyact io ns re qui r i ng th e Emp lo yer 'sapprova l a re to be se t ou t in Par t I I . I t w i l l thereforebe necessary for the parties under ICE 6th to list all those functionsof t he E ng inee r w h i c h a r e to be unde r tak en as the E mp loy e r ' sag en t an d in th eEmployer's interest.Ex ac tl y th e sa me pr ov is io n isno t r ec ommended : i t w ou ld be unw ie ldy i f t heE ng inee r w e r eob l i ged to ob ta in app r ov a l f o r ev e r y agen t ac t i on . I t w ou ldbebe t te r t o l i s t i n P a r t I I t o c l aus e 2 .6 t hos e func t i ons i nr es pec t o f wh i ch t he Engineer is not to act impartially.Table 1 sets outthe functions of the Engineer and should assist the parties todecidewhich decisions are to be taken as agent and listed in Part II. The

tableadvance s a v iew on wh e ther any g i ven func t ion shou ld bec ons ide r ed fo r t heagenc y l i s t o r w he the r i t i s i n tended by thedraftsman to be an independentfunction. The column indicatingwhere consultation is called for demonstratesthat consultationforms part of the Engineer's independent function although not all thenormal independent functions involve consultation. ENGINEER'S ROLE - AGENTORINDEPENDENT?C l a u s e N o . D e s c r i p t i o n A g e n t I n d e p e nd e n t C o n s u l t a t i o n 2 . 2 ,. 4 Ap p oi n t me n t o f Representative,assistants

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A s t h e r e i s n o s c o p e f o r a n i n t e r m e d i a t e i n t e r p r e t a t i o n o ft h e p h r a s e , i t i s necessary to consider which of the two interpretations iscorrect. For the narrowinterpr etat ion, it might be argued that it was intendedas a cross-reference tothose clauses which refer to the clause 44 in t hesame manner as cl ause 52 .1(Valuation of variations) refers to matters "which are

required to be determined inaccordance wit h clause 5 2". If there had been nosuch item within clause 44.1,the Contractor might have been obliged bothto demonstrate entitlement under,for example, clause 12.2 which allowshim "any extension of time to which theContractor is entitled under clause44" and add it iona ll y to fi t the delaying event within one of the other groundsunder clause44.1.A n a r g u m e n t i n f a v o u r o f t h e b r o a d e r i n t e r p r e t a t i o n wo u l d n o t d i s p u t e t h e foregoing but would add tha t the need to caterfor clauses such as clause 17.1and other clauses shown by Table 4 not toprovide expressly for extensions of time means that 44.1(b) was intended tosweep up these causes of delay as well.Otherwise, it is necessary to force them,perhaps artificially, into one of the other grounds if an argument for time at largeis to be avoided. For example, unlessthere was express provision in thecondit ions, remedial works due to incorrectdata from the Engineer isp la in l y so me th in g fo r wh ich th e Co n t ra c to r sh o u ld re ce i ve a nextension of time as the Employer could not be entitled tol i q u id a te d d a ma g e s i n re sp e c t o f a d e la y ca u se d b y h i s E n g in e e r ,u n d e r E n g l i s h l a w a t least. Therefore, time would be set at large in the absence ofa right to extensiono f t i m e . A s n e i t h e r d e l a y n o r c l a u s e 4 4 a r er e f e r r e d t o i n c l a u s e 1 7 . 1 , t h e proponent of the narrow interpretation ofitem (b) would be obliged to bring suchdelay within one of the other grounds.I tem (a) "Extra or addi t iona l work" seemsin ap pr op r i a t e fo r wo rk th atwa s me r e l y e xe c u te d i n co r re c t l y a n d th e r e i s t h e ob je ct ion to i tem

(d) "any delay... by the Employer" that servants or agents arenoti n c l u d e d . T h i s l e a v e s t h e u n s a t i s f a c t or y " s p e c i a l c i r c u m s t a n c e s "an d t h eobjection that something catered for expressly by the contractsuch as incorrectdata supplied by the Engineer does not qualify as "special". It wouldtherefore beargued that a broad interpretation was intended.I t is subm itt ed that as amatter of pragmatism, the broad interpretation must beadoptedto prevent strained interpretations of the other grounds for extensionof time and to prevent technical and unmeritorious claims that time has been setatlarge.( i v ) H o w d o e s c l a u s e 5 3 . 1 ( N o t i c e o f c l a i ms ) r e l a t e t o n o t i c e p r o v i s i o n s contained in the clausest h e m s e l v e s ? T a b l e 4 s e t s o u t t h e n o t i c e r e q u i r e m e n t s t h a t a r e

c o n t a i n e d i n t h e v a r i o u s c l au se s. T hu s i n c la us e 1 2. 2(A d v e rse p h ys i ca l o b s t ru c t i o n s a n d co n d i t i o n s ) n ot ice i s r eq ui redforthwith and under clause 27.1 (Fossils) the Contractor is togive immediatenotice. Clause 53.1 requires notice within 28 days to be given toboth Engineer andEmployer if additional payment is to be claimed. It opens withthe words "notwithstandingany other provision of the Contract...". As mentionedin the commentary under clause53.1, this clause should probably be taken as anPage 22 of 264


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additional requirement but not a substitute for notice provisions given in aclause.Thus, a failure to give notice forthwith under clause 12.2 to theEnginee r andEmployer will not be repaired by giving notice within 28 days underclause 53.1.Notice under clause 12.2 would however satisfy the requirements ofclause 53.1.Clause 27.1 (Fossi ls) only requires notice to be gi ven t o the

Eng inee r so tha tfu r the r no t i ce unde r c laus e 53 .1 cop i ed t o th eE m p l o y e r w o u l d b e r e q u i r e d . C l a u s e 5 3 . 1 i s a l s o r e l e v a n t t o t h ec o n t e n t s o f t h e c l a u s e a s a n o t i c e m e r e l y i n d i c a t in g t h ep r e s e n c e o f a n o b s t r u c t i o n o r a n a r t i c l e o f i n t e r e s t w o u l dn o t necessarily satisfy the requirement of notice that the Contractor "intends toclaimany additional payment".W he re no t i ce o f in t en t io n t o cl a i m e xt r ap a ym e n t f o r va r i e d wo r k i s r e q u i r e d within 14 days under clause 52.2(Power of Engineer to fix rates), a notice under clause 53.1 within 28 days would notsuffice.The importance of complying with clause 53.1 i s considerablyreduced by theability of the Engineer or arbitrator to deal with the claim in theabsence of noticeunder clause 53.4 (Failure to comply).( v ) H o w d o e s t h e

C o n t r a c t o r r e c o v e r h i s p r o l o n g a t i o n c o s t s a n do t h e r l o s s and expense resul t ing f rom delays to the progress of theworks wh ich were no this responsibility?Unlike some standard forms of buildingcontract, there is no single clause whichaddresses the issue of theContractor's loss and expense. The right to recover additional sums isscattered through the contract as illustrated by Tables 4 and 5.Clause 44 .1(Extension of time complet ion) is not linked to any clause givingar i g h t t o p a y m e n t u n l i k e t h e r e l a t i o n s h i p b e t w e e n c l a u s e 5 1 ( Va r i a t i o n s ) a n d clause 52 (Valuation of variations). As can be seen from Table 4,all the clauses(other than clause 44) giving an entitlement to extension of time alsogive a rightto payment of additi onal costs. It has been submitted t hat inmost of the caseswhere the Engineer is obliged t o determine additionalcosts for the Contractor,extension of time is in fact available. (Thematters listed in Table 5 would notnormally be delaying events.)As to theevents set out in clause 44.1:-( a ) " t h e a m o u n t o r n a t u r e o f e xt r a o ra d d it i o n al wo r k " . I f th e e x t r a o r a d d i t io n a l w o r k h a s b e e no r d e r e d a s a v a r i a t i o n , t h e n t h e C o n t r a c t o r m a y b e a b l et o recover any resulting prolongation costs if he is able to demonstrate underclause52 (Valuation of variations), either that there is no applicable rate or that theratehas been rendered inappropriate by reason of the nature or amountof the ext raor additional work. It is arguable, however, as commented under clause

51.2 that"extra" in clause 44.1 (a) includes "automatic" changes in quantities whichresu l t f rom any inaccu racy in the b i l l s o f quan t i t i es . To ob ta inaddit ional costs theContractor must ei ther demonstrate underclause 52.3 (Var ia tions exceed ing15%) that the "Effective Contract Price" haschanged by 15%; or else must arguethat such changes in quant it ies fa llwithin the definition of "varied work" withinPage 23 of 264


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clause 52.2 (Power of Engineer to fix rates) with the result that the Engineermayadjust the rates to take into account any additional costs incurred.For more onthis see under clause 51.2.( b ) " a n y c a u s e o f d e l a yr e f e r r e d t o i n t h e s e c o n d i t i o n s " . A s d i s c u s s e d a b o v e , thiseffectively refers to events of delay for which provision is made so that

theContractor will recover his prolongation costs under the individual clauses.Thusfor example, under clause 40.2 (Engineer's determination followingsuspension)the Con t ra c t o r i s g ra n t ed an ex t en s io n o f t im e a nd" t h e a m o u n t . . . o f t h e c o s t incurred by the Contractor by reason of suchsuspension".( c ) " e x c e p t i o n a l l y a d v e r s e c l i m a t i c c o nd i t i o n s " . T h e r e i s n o p r o v i s i o n f o r p a ym e n t o fp r o l o n g a t i o n c o s t s i n t h e e v e n t o f e x t r e m e l y b a d w e a t h e r .T h es e condit ions, in common with most standard forms, cause the riskto be sharedbetween the parties so that t he Employer recovers noliquidated damages andthe Contractor recovers no prolongationcosts.( d ) " a n y d e l a y , i m p e d i m e n t

o r p r e v e n t i o n b y t h e E m p l o y e r " .T h e r e i s n o express provision in the contract for reimbursement ofprolongation costs flowingfrom the Employer's default. Various failures bythe Engineer are catered for inc lauses such as c lause 6.4 (Delaysa nd co st of d el a y o f d ra wi n gs ) an d 17 . 1 (Setting out). However as ismentioned in the commentary under clause 44.1 (d),it is arguable that the Engineer'sdefaults are not covered by the current grounds.To the extent that delays etcby the Employer are not covered by an expresst er m, th e Co nt ra ct ori s l e f t t o r e c o v e r h i s p r o l o n g a t i o n c o s t s a s d a m a g e s f o r b r e a c ho f c o n t r a c t . T h e a c t i o n o f t h e E m p l o y e r w h i c h i n v o k e s t h i sg ro un d f or extension need not be a breach. The ordering of asubstantial variation whichdelayed the works would be an example of a delay bythe Employer if not also animpediment and a prevention. The Contractor'sprolongation costs in this eventare plainly covered by the variationclause.( e ) " o t h e r s p e c i a l c i r c u m s t a n c e s " . G e n e r a l l y , i t i ss u b m i t t e d , t h i s g r o u n d w i l l not ref er to m at te rs dea lt wit h in t hecontract so that recovery of prolongationcosts will depend upon theContractor's ability to demonstrate breach of contractby the Employer.

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CLAUSE 1 : Definition and InterpretationThis clause sets out the meanings of almost all the terms in thecon trac t wh icha r e g i v e nc a p i t a l l e t t e r s . T h e d e f i n i t i o n s o f " D e f e c t s L i a b i l i t y P er i o d " a n d " n om in at ed

S u b c o n t r a c t o r" a r e t o b e f o u n d i n c l a u s e 4 9 . 1 a n d c l a u s e 5 9 .1 respectively. In addition, four terms which have not been given capital lettersarealsod e f i n e d . T h e h e a d i n g s a n d m a r g i n a l n o t e s a r e t o b e i g n o r e d w h e n i n t e r p r e t i n g t h e C o n t r a c t . T h e r e f e r e n c e s t o i n d i v id u a l s i n c l u d e f i r m s , c o r p o r a t i o n s a n d o t h e r l e g a l organizations.Singular words and plural words may be interchangeable wherethe context sorequires.Notices, consents, approvals , cert ificates anddete rminat ions must be given inwriting and, with the exception of notices,must not be unreasonably withheld

or delayed.T h e f o l l o w i n g d e f i n i t i o n s a r e n e w t o t h e 4 t h E di t i o n : S u b c o n t r a c t o r , B i l l o f Q ua nt i t i es , T en de r , L et te r o fAc c e p t a nc e , Co n t r a c t A g r ee m en t , Ap p en d i x t oT e n de r , C om m enc emen t D a te , T im e fo r C o mp le t i o n , Tes ts on C omp le t i on ,Retention Money, Plant, Section, day, foreign currency and writing. What in the3rdEdition was referred to (but not defined as) "Certificate of Completion", isnowdefined as the Taking-Over Certificate. "Constructional Plant" has nowbecomeContractor's Equipment. The only definition that has not been repeated inthe 4thEdition is "Approved". This definition has essentially beenover taken by clause1.5 (Notices, Consents etc) which requires approvals tobe in writing. It should benoted that all the definitions are subject to the openingwords "except where thecontext otherwise requires".Sub-clauses 1.2 and 1.4 aretaken from the 3rd Edition; sub-clauses 1.3 and 1.5are new.1.1(a)( i)"Employer"and "Contractor" - If t he Contract Agreement has(a)(ii)Been enteredinto, "Employer " and "Contractor" are already def ined in that Agreementand thus in these conditions. Naturally, the parties must ensure thatthe entries inPart II and the Agreement are identical.Th e C o n t r ac t o r ' s a b i l i t y t oa s s i g n i s r e s t r i c t e d b y c l a u s e 3 . 1 ( A s s i g n m e n t o f c o n t r a c t )w h e r e b y n o p a r t o f t h e c o n t r a c t m a y b e a s s i g n e d w i t h o u t t h epr io r consent of the Employer. Under that clause, the consent "shallbe at the sole Page 33 of 264


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d i s c r e t i o n o f t h e E m p l o y e r " . T h u s , t h e E m p l o y e r h a s t h e r i g h tt o r e f u s e a n a s s i g n m e n t o n a n y g r o u n d s . T h e C o n t r a c t o r ' sc o n s e n t t o a n a s s i g n m e n ti s h o w e v e r s u b j e c t t o c l a u s e 1 . 5 ( N o t i c e s , c o n s e n t s e t c ) wh e r e b y " a n y s u c h consent ... shall not be unreasonably withheld

or delayed". Thus, the Employer'sability to assign is greater than that of a Contractor. Itis submitted that bona fideconcer n over the financial stand ing of theEmployer's proposed assignee wouldbe reasonable grounds for refusingcon sen t. It is undoubtedl y right that hav ingcarefully selected a Contractor toexecute the works, the Employer should have aright of veto over any proposedassignment.An attempted assignment without the requisi te consent would, inEnglish law atleast, be ineffective. Again under English law,an assignment by an Employer with consent would not relieve thatEmployer of a primary obligation to pay theContractor. The Engineer'scontract of engagement would also normally need tobe assigned or novated to the newEmployer.(a)(iii)"S ubcontractor" - Under clause 4.1 (Su bcontrac ting), itshould be notedthat the Contractor is not required to obtain consent forthe prov is ion of labour .Thus, a labour-only subcontractor does not fall within thedefinition.(a)(iv)"Engineer" - By clause 1.3 ( Interpretat ion), the Engineermay be a firm, acorporation or other organisation having legalcapaci ty . The Engineer mu st be named in Part II. It is a new feature of the 4thEdition that there is no ability in theEmployer to replace the Engineer. In the 3rd Editionand ICE 5th and 6th, therei s d ef i ne d t h e " En gi n ee r ap p oi nt ed f r omt i m e t o t i m e b y t h e E m p l o y e r " . T h e p r e s e n t d e f i n i t i o n w i l l n o t b e apr ob l em i f t he E n gi ne er i s n am ed as a f ir m ; however, the Engineer willoften be a named individual. According to the Guideis s u e d b y F I D I C o n t h e 4 t hE d i t i o n , t h e re a s o n f o r t h i s c h a n g e f r o m th e 3 rd Edi ti on i s t ha t t heidentity of the Engineer (and his reputation) has been a factor in the

calculation of the Contractor's tender. This, it is submitted, is amistake.Whilst it is certainly true that a Contractor might well price workdifferently if theEngineer is a respected independent professional on the one handrather than agov ern me nt dep ar t me n t ' s Ch i e f Eng ine er o n th e o t he r ,t h e f u n c t i o n i n g o f t h e c o n t r a c t i s s o d e p e n d e n t u p o n t h eex i s t enc e o f an Eng in eer th e re mu s t be a substan tial r isk of theproject fa l ling apart i f i ts survival is dependent upon thep ar t i es ' ab i l i t yt o a g r e e a r e p l a c e m e n t E n g i n e e r i n t h e e v e n t t h a t t h enamedEngineer died or otherwise ceased to act. If the parties were indispute at thetime, the prospects for agreement must be limited.I n t h e o r y , ad i s p u t e o v e r t h e r e p l a c e m e n t E n g i n e e r w o u l d b e o n e c a p a b l e

o f resolution under the arbitration clause. However, in the absence of an Engineer,i ti s d i f f i c u l t t o s e e h o w t h e d i s p u t e s p r o c e d u r e c a n c o m m e n ce . I tmay bepossible to draw a distinction between situations where theEngineer has diedand other circumstances where he is simply failing or refusing toact. In the latter circumstances, the Engineer is still in existence and the disputesprocedure canadvance by default. If he is dead, there does not seem to bean y wa y for wardwithout agreement between the parties. The Employer is obliged totry to replacehim and obt ain the Contrac tor's agreement, it is submitt ed. Fora case on thePage 34 of 264


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more traditional position, see Croudace v Lambeth (1986) 33 BLR 20, wheretheCourt of Appeal held t he Employer liable in damages for failing toreplace thecertifier after the retirement of the named person.A simi la rdistinction may be made with re gard to the powers delegated totheEngineer's Representative under clause 2.3 (Engineer's authority

to delegate). If the Engineer is alive, it is arguable that the Engineer'sRepresen ta tive' s powersare unimpaired. However, the Contractor's ability toquestion any communicationof t h e E ng in ee r' s Re p re se nt a t i ve b yr e f e re n c e t o t h e E n g i n e e r u n d e r c l a u s e 2.3(b) could effectively bring theEngineer's Representative's powers to an end.If the Engineer died oro the rw is e ceas ed to ac t and the pa r t i es a re unab le to agree to areplacement, the effects, it is submitted, would be as follows:-( 1 ) T h eE m p l o y e r w o u l d n o t b e i n b r e a c h o f h i s o b l i g a t i o n t oe n s u r e t h a t t h e Engineer exercises his functions provided that he has takenreasonable steps topropose an alternative Engineer and has not beenunreasonable in refusing anynominee of the Contractor. Compare

clause 69.1 (Default of Employer ) item (b ) "interfering with or obstructing...any such certificate".( 2 ) N o r w o u l d t h e E m p l o y e r b e i nb r e a c h f o r f a i l i n g t o p a y t h e C o n t r a c t o r i n the absenceof interim certificates. The obligation would probably be to pay whenthe works werecomplete.( 3 ) C l a u s e 6 6 . 1 ( R e l e a s e f r o mP e r f o r m a n c e ) i s n o t a p p r o p r i a t e a s a n y impossibilityis not "outside the control of both parties". Thus, it may be arguablethat thefundamental obligations of the parties remain intact:-( i ) t h e C o n t r a c t o r ' s o b l i g a t i o n u n d e r c l a u se 8 . 1 ( C o n t r a c t o r ' s g e n e r a l responsibilities) to executeand complete the works survives; and( i i ) t h e o b l i g a t i o n o ft h e E m p l o y e r t o p a y f o r t h o s e w o r k s a se x p r e s s e d i n Article 4 of the Contract Agreement or as stated in the Letterof Acceptance or byimplication wil l also surv ive . The Employermay, however, have no obligation tomake any payment until the works arecomplete.( 4 ) I n t h e e v e n t o f a n y d e l a y w h i c h i s n o t t h er e s p o n s i b i l i t y o f t h eC o n t r a c t o r , t i m e w o u l d b e a t l a r g e b e c a u s e o f t h e ab s e n c e o f t h e E n g i n e e r t o g r a n t extensions of t ime. Ifall the delay was the Contractor's responsibility, itm ay bea rg u a b l e t h a t c l a u s e 4 7 (L i q u i d a te d d a m a g e s f o r d e l a y )

wo ul d co nt in ue t ooperate as it is not dependent upon the existence ofthe Eng ineer, who is notmen t i one d in the c l aus e . Ho wev er ,su bs ta nt ia l co mp le t io n i s ce rt i f ie d by th e Engineer. The Contractorcould be liable for breach of an obligation to completewithin a reasonable time, oncetime was set at large.Thus it is just conceivable that a project could limp onwardswithout an Engineer.Pla inly, it is most unsa tis fac tory and an Employermight be well advised,havinge x h a u s t e d a t t e m p t s t o a g r e e a n e w E n g i n e e rs i m p l y t o a p p o i n t o n e a n dPage 35 of 264


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Letter of Acceptance". Thus, it is not necessarily the tender assubmittedby the Contractor but the result of any negotiation prior to the placingoft h e o r d e r . A n y p r o g r a m m e i n c l u d e d i n t h e t e n d e r w i l l b e c o m ep ar t of t he contract as the tender is a contract document: fordiccussion of this see under clause 14.1 (Programme to be

s u b m i t t e d ) . ( b ) ( v i ) " L e t t e r o f A c c e p t a n c e " - T h e r e i s n o s p e c i f i e d f o r m f o r t h e L e t t e r o f Acceptance andcareful attention must be paid to its contents, particularly in viewof the priority givento the Letter of Acceptance by clause 5.2 (Priority of contractdocuments). It issecond only to the Contract Agreement which is an optionaldocument. Itis important to ensure that the Letter of Acceptance matches thetenderor, if there have been subsequent negotiations, an amended versionof t h a t t e n d e r . O t h e r w i s e , t h e L e t t e r o f A c c e p t a n c ew o u l d b e n o m o r e t h a n a c o u n te r -o f f e r w h i c h w o u l d r e q u i r e a f u r t h e r a c c e p t a n c e f r o m t h e C o n t r actor before a contract was formed. As "the Tender" is a contract

document , conf li ctwould result if the tender was not amended. It is also importantto ensure that, if a Contract Agreement is used, the Letter of Acceptance andContract Agreementa l s o m a t c h . T h e r e a r e n o t e r m s i n t h ec o n t r a c t w h i c h g o v e r n t h e L e t t e r o f Acceptance but it is usedextensi vely as a trigger fo r per iods o f time by whichcertain activities have tobe performed. These are as follows:-Clause 10.1 (Performance security) - 28daysClause 14.1 (Programme to be submitted) - period prescribed in Part IIClause14.3 (Cashflow estimate to be submitted) - period prescibed in Part IICl a u s e 4 1 . 1( C o m m e n c e m e nt o f W o r k s ) - p e r i o d s t a t e d i n t h e A p p e n d i xt o Tender Clause 57.2 (Breakdown of lump sum item) - 28 daysThe importance of theLetter of Acceptance as a starting point in the conditions of contract reinforces theimportance of ensuring that the Letter of Acceptance is anacceptance and no t acounter-o ffe r. It would make a nonsense of the various time periods if theywere running before a contract had been entered into.(b)(vii)"Contract Agreement" -A form of Agreement is provided and referred to atc l a u s e 9 . 1 ( C o n t r a c tA g r e e m e n t ) . B o t h t h e d e f i n i t i o n o f C o n t r a c t a tc l a u se 1 . 1 ( b ) ( i ) a n d c l a u s e 5 . 2 ( P r i o r i t y o f c o n t r a c t d o c um e n t s ) a l l o w f o r f u r t h e r documents to be incorporated ascontract documents. The Contract Agreementshould be amended to record suchfurtherdocuments.( b ) ( v i i i ) " A p p e n d i x t o T e n d e r " -

A s c o m m e n t e d u n d e r t h e d e f i n i t i o n o f Tender above, there may be negotiations which alter the contents of theTender and the Appendix to Tender before the contract is enteredin to . Th is de fini tion therefore refers to the Appendix asamended.(c ) ( i ) " Com mence men t Da te " - Th is d e f in i t i on d e te r m ine sth e da te up on wh ic h t ime begins to run on the project. The not ice tocommence is no t in a spec if iedform. See generally the commentary to clause41 (Commencement of Works).Page 37 of 264


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(c)(ii)"Time for Completion" - This is the contractual completion date asset outin the contract subject to any extensions under clause 44. Substantialcompletionmust be achieved under clause 48.1 (Taking-over certificate) by this date,failingw h i c h l i q u i d a t e d d a m a g e s w i l l b e p a y a b l e u n d e r c l au s e 4 7 . 1 ( L i q u i d a t e d damages for delay).(d)(i )"Tests on Complet ion" -

These tests will often include commissioning andare referred to inclause 48 (Tak ing-Over) as being a prerequ isite to substantia l completionand the issue of a Taking-over certificate for the whole or any part of the works forwhich such a test is prescribed.(d) (i i) "Taki ng-Over Cert if ica te" - No fo rm isprescribed for this cer ti f icate: c lause48. 1 (T ak in g- Ov er Ce rt i f ic at e)on l y sp ec if ie s th at i t sh ou ld st at e th e da te on which, in the Engineer'sopinion, the works were substantially completed.(e ) ( i ) " C o n t r a c t P r i c e " - I ti s i m p o r t a n t t o a p p re c i a te t h a t t h e C o n t r a c t P r i c e i s a f ixe d sumas stated in the Letter of Acceptance and the term does not includeanyadjustments to the contract price for variations etc. For more on thispoi nt, s e e t h e c o m m e n ta ry u n d e r c l a u s e 6 9 . 4 (C o n t ra c to r ' s

en t i t l emen t to suspendwork ) . (e ) ( i i ) "Re ten t ion Money " - Fo rco mm en ta ry on t he un ce rt ai nt y o f th e re te nt io nprovisions, see underclause 60.3 (Payment of Retention money).( f ) ( i ) " W o r k s " - T h i st e r m i s g i v e n a na d j u s t e d m e a n i n g u n d e r c l a u s e 4 9 . 1 ( De f e c t s L i a b i l i t yP e r i od ) . T h e d e f i ni t i o n o f T e m p or a r y W o r ks i s n o t w i t h o u t d i f f i cu l t y a s s e t o u t u n d e r ( f ) ( i i i ) b e l o w . A s t h e r e a r e d a n g e r s i n i n c l u d i n g T e m p o r a r y W o r k s i n t h e d e f i n i t i o n o f W o r ks , t h e d r a f t s m a n h a s t a k e n t h e precaution of putting flexibility aheadof certainty with the words "or either of themas appropriate" . Th is re in fo rcesthe opening words of the sub-clause "exceptwhere the context otherwiserequ i res" . ( f ) ( i i ) "Permanent Works" - Th is de f in i t ion now inc ludese x p r e s s r e f e r e n c e t o P l a n t , a r e c o g n i t i o n o f t h e g r o w i n g a m o u n tof machinery etc . inc luded in c iv i lengineer ingp r o j e c t s . ( f ) ( i i i ) " T e m p o r a r y W o r k s " - T h i s d e f i n i t i o n i s c i r c u l a r w i t h t h e d e f i n i t i o n o f C o n t r a c t o r ' s E q u i p m e n t . A s n o t e d i n t h e c o m m e n t ar y t o c l a u s e 4 1 (Commencement of W orks), this is unfortunateas the failure to commence theWorks is a ground for determinationunder clause 63.1 (Default of Contractor).See clause 31.2 (Facilities forother contractors) for the obl igation to make thetemporary works

available to other contractors and clause 32.1 (Contractor t okeep siteclear) and 33.1 (Clearance of site on completion) for the obligationtoremove temporary work. It should be borne in mind that temporary worksare notalways removed, for example temporary linings to tunnels ortemporary roads.By clause 54 (Contractor's Equipment, Temporary Works andmaterials) there isPage 38 of 264


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an obligation upon the Contractor to provide temporary works exclusively fortheproject.(f)(i v)"Plan t" - This is a new def initi on not found in the 3rdEd iti on or ICE 5th or 6th. It might be confusing as plant is normally regarded asmeaning Contractor'smachinery. Instead, this means the plant to be installed as partof the permanentworks. The Contractor's machinery is now defined as

Contractor's Equipment.(f) (v)"Contractor 's Equ ipment" - In the 3rd Edi tionand ICE 5th, the Cont ractor 'smachinery is called "Constructional Plant". Thecurrent definition is circular withthe def ini tion of Temporary Works. As notedin the commentary to clause 41(Commencement of Works), t his isunfortunate as the failure to commence theWorks is a ground fordeterm ination under clause 63.1 (Defaul t of Contractor). ICE 6th hasadopted the term Contractor's Equipment.(f)(vi)"Section" - The Works may bebroken down in to Sec tions and parts . The difference is that a Sectionis specifically identified in the contract whereas a part,which is not defined, seems tobe any other sub-division including a sub-divisionof a S e c t i o n . S e e t h i sd i s t i n c t i o n i n o p e ra t i o n i n c l a u s e 4 7 .2 ( R e d u c t i o n o f l iquidated

damages), clause 48.2 (Taking over of sections or parts) and clause48.3(Substantial completion of parts).( f ) ( vi i ) " S i t e " - T h i s d e f i n i t i o n i sa var ia nt up on th e fo rm us ed in th e 3r d Ed i t io nand ICE 5th. Thisdefinition falls into two parts:-( a ) P l a c e s p r o v i d e d b y t h eE m p l o y e r w h e r e t h e W o r k s a r e t o b ee x e c u t e d ; and( b ) O t h e r p l a c e s w h i c h a r e s p e c i f i c a l l yd e s i g n a t e d i n t h e c o n t r a c t a s f o r m i n g part of the site.Compare 3rdEdition and ICE 5th which break down as follows:-( a ) p l a c e s o n , u n d e ri n o r t h r o u g h w h i c h w o r k s a r e t o b e e x e c u t e d ;a n d ( b ) p l a c e s p r o v i d e d b y t h e E m p l o y e r o r s p e c i f i c a l l yd e s i g n a t e d i n t h e c o n t r a c t as forming part of the site.The essent ia ldifference is that (a) is qualified by the words "provided by theEmployer"in this Edition but (b) contains those words in the 3rd Edition and ICE5th . Onesignificance of this is that the Employer cannot be in breach ofclause42.1 (Possession of site and access thereto) by failing to give possession ofthesite if the site is itself defined as places provided by theEmp loye r. As the S itew i l l no r ma l l y be de f ined in the con t rac t , t h i ss h o u l d n o t n o r m a l l y g i ve r i s e t o problems. Nor, it is submitted, should theomission of the words "on, under, in or through" create difficulties. If thefai lure to give possessi on is the fai lure of the Employer to organise theremoval, for example, of an underground pipe or cablec o n d u i t , e v e n

t h o u g h t h e p o s s e s s i o n o f t h e s u r f a c e h a s b e e n g i v e n t ot h ePage 39 of 264


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Contractor, the Contractor's claim under clause 42.2 (Failure to givepossession)s h o u l d n o t b e h a m p e r e d b y t h e a b s e n c e o f th e s e w o r d s . S e e a l s o t h e commentary under clause 42.1 (Possessionof Site and access thereto). See thecomments under clause 42.1 for furtherdiscussion of the term "Site". ICE 6th hasadded the "other places...designated"

formula to the ICE 5th definition.(g)(i)"cost" - This definition for thefirst t ime expressly excludes profit. Thus, theonly occasion on whichth e C o n t ra c to r i s a l l o w e d h i s p ro f i t b y t h e c o n t ra c t i s u n d e rc l a u s e 6 9 .3 (P a y m e n t o n t e rm i n a t i o n ) w h e re , u p o n t h e d e fa u l to f t h e E m p l o y e r , h e i s e n t i t l e d t o c l a i m " t h e a m o u n t o f a n y l o s so r da ma ge " . Th is definit ion has been adopted with minor amendmentsby ICE 6th. However ICE6th expressly permits profit on three occasionsin the contract in relation to anyadditional temporary or permanentworks.( g ) ( i i ) " d a y " - T h i s e d i t i o n h a s a d o p t e d a p o l i c y o fg i v i n g p e r i o d s o f t i m e i n multiples of seven days whereas the 3rd Editionused units of 30 days for longer periods. Compare, for example, clause 67

(Settlement of disputes) in the twoeditions.(g)(iii)"foreign currency" - I tis important to note that foreign currency doesnotm e a n a c u r r e n c y o t h e r t h a n t h e c u r r e n c y i n w h i c h t h e C o n t r a c t P r i c e i s expressed but any other currency than thelocal currency. Thus, the ContractPrice could itself be expressed in aforeign currency. Part II provides variousamendments to clause 60 and clause72.2 in relation to currencies.(g)( iv) "wr it ing" - This definit ion is of par ticula rrelevance to clause 1.5 (Notices,consents etc) which must be inwriting.CLAUSE 1.1 (Definitions)The following definitions are new to the 1992 re-print:-(e)(iii)"Inte rim Payment Certificate" means any certificate ofpayment issued bythe Engineer other than the Final Payment Certificate.(iv)"FinalPayment Certificate" means the certificate of payment issued by theEngineerpursuant to Sub-Clause 60.8.Whilst it is no doubt a good idea to haved e f i ne d t e rm s f o r i n t e r i m an d f i n a l certificates, the definition of InterimPayment Certificate raises the question as towhich clauses other than clause 60.2(Monthly payments) will give rise to interimpayment cert if icates. The def in it ioncould and, it is submitted, should simplyhave referred to certificates issuedunder sub-clause60.2.O t h e r c e r t i f i c a t e s t o b e i s s u e d b y t h e E n g i n e e r i n c l u de t h e T a k i n g - O v e r Certificate under clause 48 for the whole or part of theworks, a certificate of theContractor 's defaul t under c lause 63.1 (Defaul t o f

Contractor) and the DefectsLiability Certificate under clause 62.1. Theseall lead to payments being madePage 40 of 264


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b u t a r e n o t t h e c e r t i f i c a t e s f o r p a y m e n tt h e m s e l v e s . U n d e r c l a u s e 5 9 . 5 (Certification of payments tonominated Subcontractors), the Engineer certifiespayment to nominatedsubcontractors where the Contractor fails to supply proof that previous sumscertified in relation to nominated subcontractors' work havebeen passed

on. Such certificates fall within the definition of InterimPaymentCertificates. The certificate under 63.2 (Valuation at dateo f termina tion) is acer t i f i ca te o f va lu e o n ly and no t a c er t i f i ca t efor payment. In contrast, thecert i f icate under sub-clause 63.3(Payment after termination) is a certi f icate of p ay me nt an d fa l l s wi th inth e d ef in i t ion of In te r im Pa yme nt Ce rt i f ica te de spi te being final innature. Curiously, a certificate under Sub-Clause 63.3 could showa balance in favourof the Employer. However, such a certificate is deemed to bea debt and is not strictlytherefore a certificate for payment.Within clause 60 (Certi ficates andpayment) there are certificates under sub-c l a u s e 6 0 . 3 ( P a y m e n t o f r e t e n t i o n m o n e y ) , s u b -

c l a u s e 6 0 . 5 ( S t a t e m e n t a t complet ion) and under sub -clause 60 .6(Final statement ) where part only of theContractor's draft final statement is notin dispute.Clause 60.3(a) has always raised the question whether therelease of the f irstha l f o f the Rete n t i on Mone y f o l l ow in g t he issu eo f t h e t a k i n g -o v e r c e r t i f i c a te s h o u l d b e t h e s u b j e c t o f a s p e c i a lp a y m e n t c e r t i f i c a te o r i n c l u d e d i n t h e n e x tm o n th l yi n t e r i m c e r t i f i c a te . P ra c t i c e v a r i e s b u t m o re o f t e n t h a n n o t , t h ef i r st moiety of retention is released in the next interim certificate. Thefact that thecertification falls within the definition of Interim PaymentCertificate, does notresolve thei s s u e . I n o n e r e s p e c t , C o n t r a c t o r s a r e i l l -s e r v e d b y t h i s a m e n d m e n t . W h e r e t h e practice would otherwisehave been to issue a special certificate for the releaseof retention, theContractor was able to argue that he was entit led to immediatep a y m e n tb y t h e E m p l o y e r . N o w , s u c h a c e r t i f i c a t e i s a n I n t e r i m P ay m e n t C e r t i f i c a t e a n d t he E m p l o y er i s g i v e n 2 8 d a ys u n d e rC l a u s e 6 0 .1 0 (T i m ef o r payment).T h e e n t r y i n t h e A p p e n d i x f o r t h e " m i n i m um a m o u n t o f i n t e r i m p a y m e n t c e r t if ica te s " ap p l ie s o nl y t oc l aus e 6 0. 2 a nd do es no t the re fo re re st r i c t sma l l payments underother payment clauses despite the application of the definition.As is plain from the

list of the amendments contained in the 1992 re-print, andthe extracts setout later in this supplement, the definition has not been usedw h e re ve r i ti s a p p l i c a b l e . T h e t e rm i s n o w u s e d i n s u b - c l a u s e s 6 0 .2 ,6 0 .4 (Correction of certificates) and 60.10 (Time for payment).Perhaps surprisingly,the result is that three interim payment certificates could beis s ue d i n t h e s am emon th unde r c lau ses 60 . 2 , 60 .3 (Pa ymen t o f Rete n t i on Money) and59.5 (Certification of payments to nominated Subcontractors).Under clause 69.1(Default of Employer), interference with the issuing of certaincertificatesi s a g ro u n d f o r t h e C o n t ra c to r t o t e rm i n a te h i s e m p l o y m e n t . T h ePage 41 of 264


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relevant certificates are those for which time-limits for payment aregiven under clause 60.10 (Time for payment). The effect of the definition of InterimPaymentCertificate and the application of that defini tion to a number ofcertificates other than monthly certificates under clause 60.2 (Monthlypayments) has been theextention of the scope of the interfe rence ground

for termination. For example,in te r f er en ce wi th a c er t i f i cat e und erc l a u s e 5 9 .5 (C e r t i f i c a t i o n o f p a y m e n t t o n o m i n a te dS u b c o n t ra c to r s ) w o u l d n o t h a v e b e e n a g ro u n d f o rd e te rm i na t i o n hitherto. Whilst interference with any form of certification is plainlycontrary to thespi r i t o f t he con tr act , i t is un l i ke ly th at the dr af ts ma ni nt e nd ed t o en la rg e t h e ground for termination to such an extent.1 . 2 : T h i sr u l e o f i n t e r p r e t a t i o n w i l l o n o c c a s i o n b e s i g n f i c a n t . F o re x a m p l e , clause 12.2 is entitled "Adverse physical obstructions or conditions" butthe word"adverse" does not feature in the clause. Similarly, the titles of clause 63( D e f a u l t o f C o n t r a c t o r ) a n d c l a u s e 6 9 ( D e f a u l t o f E m p l o y e r )b o t h i n c l u d e t h e w o r d "defaul t" which is not found in e ither c lause.

This may be just as well given thefact that "default" is used as analternative to breach of cont ract in clause 40.1(Suspension of work), clause44.1 (Extension of time for completion) and clause51.1 (Variations). It is alwaysquestionable whether any tribunal is capable of entirely ignoring such clearevidence of the intentions of the draftsman.1. 3 : C la u se 1 .1 (a ) ( i v ) d e f i n esth e En gin ee r as " t he pe rso n app oin ted . . . " . Th is sub-clause is areminder in relation to the Engineer that the Employer may namea f i rm o fE n g i n e e rs a s d i s t i n c t f r o m a n i n d i v i d u a l . I n v i e w o f t h e l a c ko f a n yprovision for the replacement of an Engineer who dies or retires, this coursemaybe adopted more often.1 . 4 : T h i s i s a s t a n d a r d c l a u s e a n d w a sc o n t a i n e d i n t h e 3 r d E d i t i o n a n d I C E 5th.1 . 5 : T h i s c l a u s e i sn e w a n d p u t s b e y o n d d o u b t w h a t m a y h a v e b e e ni m p l i c i t from clause 68 (Notices) that notices, consents etc must be inwriting. Writing isalso required by the following clauses:-clause 2.3 Engineer's delegation to Engineer's Representativeclause 2.5 Engineer's instructionsclause 6.1 Engineer's requests for further drawingsclause 6.2 Authorisation of persons to inspect drawingsclause 14.1 Contractor's general description of methods etcclause 17.1 Setting outclause 31.2 Engineer's request for facilities for otherContractors.Page 42 of 264


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clause 48.1 Undertaking to finish outstanding workclause 54.5 Requests regarding hire of Contractor's Equipmentclause 56.1 Request for Contractor to attendclaus e 59 .5 C on t r ac to r ' s s ta temen t o f c aus e fo r w i thho ld i ng paym en t f r om n o m i n a t e d S u b c o n t r a c t o r a n d n o t i f i c a t i o nb y C o n t r a c t o r t o n o m i n a t e d Subcontractor.clause 60.7 Contractor'

s discharge.clause 63.1 Warning to Contractor.clause 67.1 Reference of dispute to Engineer.There are additional references to written instructions but clause 2.5(Instructionsin writing) makes this plain.A comparison of this clausewith clause 2.6 (Engineer to act impartial ly), clause6 7. 1 (E ng i ne er ' sdec i s i on ) , c l aus e 67 .3 ( A r b i t r a t i on ) and c l aus e 68( N o t i c es ) r ev ea l s an i nc ons i s tenc y i n t he us e o f t e r ms s uc has no t i ce s , co nsen ts e t c . Table 6 indicates the clauses in whichthe various terms appear."Any such consent, approval, certificate ordetermination shall not unreasonablybe withheld or delayed." Notices areexcluded f rom this lis t. Not ices are givenunder some 37 clauses by

the Employer, the Engineer and the Contractor. Mostcommonly, it is the Engineernotifying the Contractor of a determination of costsand/or extension oftime. A determination is covered by this clause and thusmayn o t u n r e a s o n a b l y b e w i t h h e l d o r d e l a y e d . N e i t he r t h e n o t i c e s n o r t h e determinations are directly covered by clause2.6 (Engineer to act impartially) butthey are plainly actions affecting the rights ofthe parties and are thus covered byclause 2.6(d). Notices by the Contractoror the Employer are normally g iven in t h e i r o w n b e s t i n t e r e s t ,a n d i f n o t i m e f r a m e i s s p e c i f i e d , n o n e i sn o r m a l l y necessary. As this part of the clause refers as much to theEmployer and theCont rac t or a s to the Engi neer , i t i s s ign i f ic antin re la t i on to c l au se s su ch as clause 10.1 (Performance securi ty)as the right of the Employer to withhold hisapproval is subject to the test ofreasonableness.Under clause 3.1 (Assignment of contract), theEmployer is given an absolutediscretion to withhold his consent"notwithstanding the provisions of sub-clause1.5".Page 43 of 264


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CLAUSE 2 : Obligations of the EngineerThis clause sets out the powers and obl igations of the Engineer andhis team.The Engineer will carry out his duties and exercisethe authority given to him bythe contract but is to obtain the prior approval of

the Employer before exercisinghis authority in relation to the list of itemsin Part II. The Contractor does nothave to check that the necessaryapproval has been given. The Engineer has nogeneral authority to relieve theContractor of any of his obligations.The Engineer may appoint and delegateduties and/or authority to the Engineer'sRepresentative.De le ga t i on t o t h eE ng inee r ' s R ep r es en ta t i v e mus t be i n w r i t i ng and mus tbe copied to the Employer and the Contractor before it takes effect. Instructions,etcgiven by the Engineer's Representative after powers have beendelegated willhave the same effect as if given by theEngineer. However, the Engineer mayreject work despite the failure of

the Engineer's Representative to doso. TheCont ra c to r m ay quer y any ac t ion o f the Eng ineer ' s Repr es en ta t i ve w i t h t he Engineer who may vary or overrule it.Th e E ng inee rand h i s r ep r es en ta t i v e may appo in t as s i s tan ts and i n fo r mt heC o n t r a c t o r o f t h e i r d u t i e s a n d a u t h o r i t i e s . T h e a s s i s ta n t s m a y o n l yg i v e ins t r uc t i ons nec es s a r i l y w i t h i n t he s c ope o f t he i r du t i es and to record their acceptance of work, material etc. Suchinstructions are treated as having beengiven by the Engineer'sRepresentative.Instructions must be in writing unless the Engineer f indsit necessary to give an instruction orally. Such an oral instruction will only betreated as an instruction if either the Engineer conf irms it in writ ing or theContractor confirms it in wri tingwithin 7 days and the Engineer does notobject within a further 7 days.The Engineer must act impartially in exercisinghis discretion. His decisions maybe reviewed by an arbitrator.This clause hasbeen substantially re-cast and reorganised. Sub-clauses 2.4 and2.6 are whollynew to the 4th Edition.2 . 1 : I t i s a n o v e l f e a t u r e o f t h e4 t h E d i t i o n t h a t t h e E m p l o y e r i s u n a b l e t o replace theEngineer should he die or for any other reason cease to carry out hisduties. For adiscussion of this, see the commentary to clause 1.1(a)(iv).( a ) A s t h eE n g i n e e r i s n o t a p a r t y t o t h e c o n t r a c t , t h i s

c l a u s e m u s t i m p o s e up on th e Em pl oye r an o bl i ga ti on t oensure that the Engineer duly per forms.Under Engl ish law, th isduty is taken to be to ensure that the Engineer certifieswhere thecontract requires a certificate or makes decisions where thecontractg ives the Eng ineer a cho ice wh e ther t o ac t o r no t . T heEm pl oy er is no t he ld responsible for the contents of the decision i.e.he has no obligation to ensure Page 44 of 264


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that the Engineer acts correctly. He must, however, ensure that the Engineer isfree toact fairly and correctly. Thus there will not be a breach of contract on thepart of theEmployer on every occasion where an arbitrator reverses a d ecisionof theEngineer. For a discussion of one practi cal consequence of this, seeth e co mme n ta ry u n d e r c la u se 6 3 .1 co n ce rn in g th e co n se q u e n ce s i f

a n Em pl o ye r terminates on the strength of a certif icate of default by theContractor given bythe Engineer where that certificate is found to be incorrect by anarbitrator.The express requirement in sub-clause 2.6 that the Engineer act impartiallyaddst o t h e E m p l o y e r ' s d u t y i n r e l a t i o n t o p r o c u r i n g p r o p e r ce r t i f i c a t i o n . A s t h e E n gi n ee r i s n o t a pa r ty t o t h e c o nt r a ct , th ec l a u s e m u s t im p o s e a n o b l i g a t i o n upon the Engineer's employer. It istherefore submitted that the Employer is giventhe additional responsibility ofensuring that the Engineer is not only free to act impartially but that he does so.A distinction has to be drawn between fairness or correctness and impar tial ity.Because so many of the Engineer's decisionsared i s c r e t i o n a r y , t h e r e i s o f t e n n o o b j e c t i v e l y c o r r e c t d e c i s i o n .A d e c i s i o n w i l l u l t i m a t e l y b e c o r r e c t i f i t g o e s u n c h a l l e n g e d o r i fa n a r b i t r a t o r d o e s n o t f e e l i t n e c e s s a r y t o o v e r t u r n t h a t d e c i s i o n .Im par t i a l i t y i s m ore co nce rn ed wi t h t he means by which the Eng ineerarrives at his decision. He is obliged to approachthe matter in an even-handed way, an obligation reinforced by ther e q u i r e m e n t f o r d u e c o n s u l t a t i o n . H e m u s t w e i g h i n h i s m i n d th e i n t e r e s t s b o t h o f t h e Cont ractor and the Employer w ithou t regardto the fact of engagement by theEmployer and leaving out of account anypressure brought to bear ei ther by theEmployer directly or by the potentialconsequences of a particular decision under his terms of engagement. It is submittedthat the Employer will be in breach of hisobligation not only if he endeavours to causethe Engineer to favour his interestsover those of the Contractor but also if the

Engineer is obviously doing so andthe Employer fails to take steps to remedy theposition. Technically, the Employer would also be in breach if he failed to takesteps if the Engineer was favouringthe Contractor. Such a state of affairswould be very unlikely to last long and isequally unlikely to be the subject ofcomplaint by the Contractor.The liability of a certifier such as the Engineer directly to theContractor has beenthe subject of consideration by the Courts over the years. TheHouse of Lords inSutcl iffe v Thackrah (1974) AC 727 he ld that a cer tify ingArchi tec t did no t havethe sor t of immuni ty against a disgrun tled contrac torthat a judge or arbi tr ator would enjoy. More recently, the Court of Appeal in PacificAssociates Inc v Baxter (1989) 3 WLR 1150 held that the Engineer under a much-amended form of FIDICdid not owe a duty of care to the contractor. Although

that decision may havebeen influenced by the particular wording of thecontract under considerat ion, aHong Kong court in Leon Engineering andConstruction v Ka Duk Investment Co.Ltd (1989) 47 BLR 139 came to the sameconclusion on a standard form with nounusual wording. In both cases, the courtwas influenced by the existence of anarbitration procedure, the purpose of whichwas to enable the contractor to obtainredress in the event that the certifier made amistake.Leading cases relevant to the Employer's duty in relation to the Engineerinc ludePer in i Corpora t ion v Commonwea l th o f Aus t ra l ia (1969) 12B L R 8 2 w h e n t h e Page 45 of 264


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Supreme Court of New South Wales found implied terms that the Employer mustnotinterfere with the proper performance by the certifier of the dutiesimposedu p o n h i m b y th e co n t ra c t a n d th a t t h e E m p lo ye r i s b o u n dt o e n s u r e t h a t t h e c e r t i f i e r p e r f o r m s t h o s e d u t i e s . T h e E n g l i s hCourt of Appeal came to s imi lar decis ions in Croudace v Lambeth

(1986) 33 BLR 20 and Lubenham Fidelities vSouth Pembrokeshire DistrictCouncil (1986) 33 BLR 39. In the latt er case, theCourt of Appeal expressedthe opinion that a certifier acting in bad faith wouldprobably make himselfdirectly liable to the contractor. The Perini and Lubenhamc a s es a r e a l s oa u t h o r i t y f o r t h e v i e w t h a t t h e E m p l o y e r d o e s n o t w a r r a n tt h e correctness of the certifier's decisions.( b ) I t i sr i g h t f o r t h e E m p l o y e r t o m a k e k n o w n t ot h e C o n t r a c t o r f r o m t h e o u t s e t a n y t e r m s i n t h eE n g in e e r ' s t e rm s o f e n g a g e me n t wh ich co u ld imp a c t upon theContractor. Thus, this clause provides for disclosure in Part II of anypriorapprovals that the Engineer needs in order to act. This clause shouldnothowever be treated as an encouragement for such obstacles to bep laced in theEng ineer ' s way . These cond i t ions do no t encouraget he r eq ui rem en t o f p r i or a p p r o v a l a s c l a u s e 6 9 . 1 ( D e f a u l t o fE m p l o y e r ) m a k e s a r e f u s a l o f s u c h a n approval in relation to acertificate, a ground for termination by theContractor. Iti s a l s o s e n s i b l e t h a t t h e C o n t r a c t o r i s n o t o b l i g e d t o c h e c k t h a t n e c e s s a r y a p p r o va l s h a ve b e en o b ta i ne d f o r a n yg i v e n a c t i o n b y t h e E n g i n e e r . I f t h e E n g i n e e r a c t s w i t h o u t s u c hpr i o r a ppr ova l , t ha t w i l l be a mat te r be tw een the Engineer and theEmployer and may well amount to a breach of the Engineer'sterms ofengagement.It is an innovation of these conditions that the Engineer is obliged to consultwiththe Employer and the Contractor under some 21 clauses: such consultation

doesn o t i n a n y wa y r e l i e ve th e E n g in e e r o f h i s o b l i g a t i o n to a c ti m p a r t i a l l y u n d e r clause 2.6 (Engineer to act impartially). Part II providesan optional clause to dealwith emergency situations allowing the Engineer to instructwithout obtaining theprior approval of the Employer. This clause is not, it is submitted,necessary andin dee d r uns cou nt er t o t he im por ta nt pr i nc i p l e t hat th eC o n t r a c t o r n e e d n o t concern himself with whether the Engineer has in factobtained approval. In thiscontext, see clause 64.1 (Urgent remedial work).A q u e s t i o nr a i s e d b y t h i s a p p r o v a l s p r o c e d u r e i s w h e t h e r t h e a b s e n c e o fa r e q u i r e m e n t f o r a p p r o v a l m a y b e t a k e n a s e v i d e n c e t h a t th e E n g i n e e r i s authorised to act as agent for the Employer in all other respects.The answer, it issu bm it te d, is in th e ne ga t i ve . Th e p ur po se of th e

i nc lu si on i n P ar t I I o f a ny r e s t r a i n t s u p o n t h e E n g i n e e r i s b yw a y o f w a r n i n g t o t h e C o n t r a c t o r a n d i s confined to limits upon"the authority specified in or necessarily to be impliedfrom the Contract". Thelack of any general agency is emphasised by item (c) of this sub-clause. So, forexample, the Engineer would not have authority to order acceleration by the Contractorother than in accordance with clause 46.1 (Rate of Progress). Accordingly, theContractor must be careful to ensure that any actionb y t h e E n g i n e e r i s e i t h e rwi th in th e aut hor i t y s pe c i f i ed in or ne ces sa r i ly to be implied from thecontract or expressly authorised by the Employer.Page 46 of 264


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T h i s c l a u s e h a s b e e n a d a p t e d b y I C E 6 t h w h i c h h a s m a d e t h el i s t o f m a t t e r s requiring approval determinative of the matters in respect of whichtheEngineer m u s t a c t i m p a r t i a l l y . C l a u s e 2 ( 8 ) o f I C E 6 t h r e q u i r e s t h e E n g i n e e r t o a c t impartially in respect of all matters which are not so

listed.( c ) A s t h e E n g i n e e r i s n o r m a l l y c o n s i d e r e d t o h a v e ad u a l f u n c t i o n u n d e r t h e cont rac t, t o ac t as t he Employer 's age nt i ncertain respects as well as certif ier,potential problems may alwaysarise as to the extent of the Engineer's authorityas agent. For example, ifthe Engineer were to ask or order the Contractor toac ce le r at e ot he rt h a n i n a c c o r d a n c e w i t h c l a u s e 4 6 . 1 ( R a t e o f p r o g r e s s ) ,t h e C o n t r a c t o r w o u l d b e u n w i s e t o c o m p l y w i t h s u c h o r d e ro r r e q u e s t w i t h o u t checking with the Employer that the Engineer was dulyauthorised to make suchrequest on the Employer's behalf. Thus, in thisclause, it is made clear that theEngineer has no authority to waive anyobligation of the Contractor. See alsoclause 7.3 (Responsibility unaffectedby approval), clause 14.4 (Contractor notrelieved of duties orresponsibilit ies), clause 17.1 (Setting-out) and clause 54.8(Approval ofmater ials no t impl ied) for other exam ples. See also clause 61.1 (Approvalonly by Defects Liability Certificate)."Except as expressly stated in the Contract...". If theEngineer purports to waivestr ict comp lian ce with the let ter of the spec ifi cat ion,for example under clause17.1 (Setting-out) or clause 49.2 (Completion ofoutstanding work andremedy ingde fec ts ) , the Con t rac to r has to dec ide whe ther , by g ra te f u l l y ac ce pt i ng th eoffered short-cut, he remains exposed to a cla im forbreach of contract by theEmployer, due to a lack of authority in theEngineer. The question is, therefore,whether any express right to waive isgranted. Under clause 7.1 (SupplementaryDrawings and Instructions) , the Engineer is

given authority to issue instructionsas n e c e s s a r y f o r t h e " p r o p e r a n dade qua te exe cu t io n a nd com p le t i on o f th eWorks" . Whi ls t the use ofthe word "adequate" may lend some support to anar gu m en t th at anE n g i n e e r i s i n t e n d e d to h a ve a d i sc re t i o n to a p p r o ve wo rk swhich donot comply strictly with the specification, it is doubtful that a Contractor coulddemonstrate that any proposed short-cut was "necessary". The Contractor would, it issubmitted, require a variation to be certain that the acceptance of sub-standard workcould no t be challeng ed late r. Th e power to omit work is a clear example ofan express exception: the Engineer is empowered to vary the work toset a lowerstandard than that set out in the specification and it is submitted thatthe Contractor maygenerally rely on such an instruction. See under clause 51.1(Var ia t ions) , however,

for comment on the abil ity of the Employer to chal lenge variations. For furtherdiscussion on this subject, see under clause 13.1 (Worktob e i n a c c o r d a n c e w i t h C o n t r a c t ) . S e e a l s o t h e c l au s e s d e a l i n g w i t h t h e rectif ication of def ects and dam age such asclause 17.1 (Setting-out), clause20.3 (Loss or damage due to Employer'srisks) and clause 49.2 (Completion of outstanding work and remedyingdefects).Under English l aw, t here is a distinc tion t o be drawn betweenobligations andliabilit ies. There comes a point in the degree ofperformance by theContractor w h e n h e h a s s u f f i c i e n t l y f u l f i l l e d t h e r e q u i r e m e nt s o f t h e c o n t r a c t t h a t t h e "obligation" is replaced, in the event that 100%

compliance does not occur, with aPage 47 of 264


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secondary "liability" to pay damages for the shortfall. It may therefore be arguedby aContractor accused of breach of contract in respect of work approved bytheE n g i n e e r t h a t , i n a l l o w i n g a s h o r t -c u t , t h e E n g i n e e r w a s n o t r e l i e v i n g t h e Contractor of any

obligat ion. It must be recog nised that this is a lawyer's point and one thatwould not necessarily find favour with arbitrators, even in England.Under all the standardforms of construction contract, it is difficult to determine atwhat po in t the Engineeror equivalent becomes "functus off ic io" or redundant.The answers mayw e l l b e d i f f e r e n t f o r e a c h o f t h e E n g i n e e r ' s r o l e s . A stheEmployer's agent, his power to issue instructions ceases at the latestwhen theDefects Liability Certif icate i s issued pursuant to clause 62.1(Defect's liabilitycertif icate). It is argued in the commentary under clause13 .1 (Work to be inaccordance w i th the con t rac t ) tha t theE n gi n e e r ' s p o we r t o o r d e r v ar i a t i o n s should come to an end at substantialcompletion.As certif ier, the Engineer's obligat ions continue through to theFinal Certif icateunder clause 60.8 (Final certif icate) which may not beissued for three months after the Defects Liability Certificate.As adjudicator, givingdecisions under clause 67.1 (Engineer's decision), it seemsthat the Engineer has a rolefor as long as disputes may arise under the contract.This could mean for as long as anyapplicable law permits disputes to arise to thefull extent of the relevant limitationperiods. Thus, for example, a defect arising inthe works 5 years af ter complet ioncould cause the Employer to seek to recover dam ag es f or br ea cho f c o n t r a c t f r o m t h e C o n t r a c t o r . T h e C o n t r a c t o r c o u l d d ef endhimself on the grounds that the defect arose f rom an error in designandthe dispute should, according to clause 67.1, be referred to theEngineer for hisdecision. If t he Engineer refuses to become involved, themechanism of cl ause 67 allows the dispute to go forward to arbitration by default.I t

i s t h e r e f o r e s u b m i t t e d t h a t t h e r e i s n o o n e m o m e n t i nt i m e a t w h i c h t h e Engineer becomes functus but three or more. Eachfunct ion of the Eng ineer must be consideredindividually.2 . 2 : O n m a n y p r o j e c t s , p a r t i c u l a r l y w h e r e t h e E m p l o y e r i s a g o v e r n m e n t department, it is the Engineer'sRep resent at ive who is the real dec is ion -maker and the effective Engineer underthe project although he will report to and obtainsignatures from the Engineer named inthe contract, who may be a Governmentofficial or employee. The delegationmust be in writing. Apart from clause1 . 1 ( D e f i n i t i o n s ) , t h e E n g i n e e r ' s R e p r e s e n t a t i v e i s r e f e r r e d t o i n on l y t wo o t he r c l a u s e s : c l a u s e 1 3 ( W o r k t o b e i n a c c o r d a n c e

w i t h c o n t r a c t ) w h e r e b y t h e Contractor is obliged to take instructions fromthe Engineer's Representativeandc l a u s e 1 5 ( C o n t r a c t o r ' s s u p e r i n t e n d a n c e ) o n t h e s a m es u b j e c t . T h e s e references appear to be super f luous as the Engineer 'sRepresen tat ive has no power without delegated authority under clause 2.3 andpower thus delegated isnot dependent upon an express mention in the relevant clause.Page 48 of 264


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I t i s i m p l i c i t t h a t t h e d u t y o f i m p a r t i a l i t y u n d e r s u b - c l a u s e 2 . 6a p p l i e s t o t h e Engineer's Representative and that the powers to open up decisionscontained inclause 67 ( Disputes ) ap ply t o hi s dec isio ns. These conclusions,it is submitted,follow from the nature of delegation: the actions of the Engineer'sRepresentativeare treated as being the actions of the Engineer. See also the

right to query theEngineer's Representative's decisions under sub-clause2.3.2 . 3 : N o r m a l l y , t h e E n g i n e e r r e t a i n s p o w e r s t o g r a n t e x t e n s i o n sof t i m e, or de r acceleration, value variat ions over a part icular f igure andissue certif icates of default. He will also retain the power to makedecisions normally under clause67.1 (Engineer's decision). Other items not usuallydelegated include the noticeto commence, substantial completion, the Defects LiabilityCertificate, clause 60(Payment) and clause 65 (Special Risks). A Cont rac tormay be well advised torequire a list of non-delegable powers to beincluded in Part II if he wishes to know that the crucial decisions will remain withthe Engineer named in the tender.FIDIC's Guide suggests that any restriction ondelegation in the Engineer's termsof en g ag e m en t s h o u l d b e d i s c l o s e d. I ti s s u bm i t t e d t h a t t h e C o n t r a c t o r i s no t entitled to assume that authority hasbeen delegated as notice to the Contractor is essential before a delegation takes effect.Contractors are therefore obliged tosatisfy themselves on this point before acting oninstructions from theEngineer'sRepresentative.I f t h e E n g i n e e r d i s a g r e e s w i t h a d ec i s i o n d e l e g a t e d t o t h e E n g i n e e r ' s R e p r e s e n t a t i v e , t he r e i s n o p o w e r u n d e r t h e c o n t r a c t f o r t h e E n g i n e e r t o countermand the decision unless the decision is questioned by theCon trac tor under item (b) of this sub-clause or either the Employer or Contractorrequests adec is io n un der c l aus e 67 .1 in wh i ch c as e th e m at t e r m aybe reviewed. TheEngineer may, however, disapprove work etc which hisrepresentative did notdisapprove. The draftsman is at pains not to use the

term "approve" in clause2.3(a) and t hereby raises the question of whetheran approval or expression of satisfaction by the Employer's Representative woulddisentitle the Engineer frominstructing the Contractor to rectify work.I n i t e m ( b ) , i ti s n o t c l e a r t o w h o m t h e w o r d " h e " r e f e r s i . e . w h e t h e r i t i st h e C o n t r a c t o r o r t h e E n g i n e e r ' s R e p r e s e n t a t i v e w h o h a s the power to re fer adec is ion o f the Eng ineer 's Representa t ive to theEng ineer for reconside ra tion .Th is i s un f o r t una te as i t i s on l y th i ssub-clause and clause 67 (Settlement of disputes) which allow decisionsto be altered, other perhaps than by variations or with the agreement of theContractor. The Engineer is obliged to respond but not i m e l i m i t i s g i v e n n o r i ss u c h c o n f i r m a t i o n e t c w i t h i n t h e t e r m s o f c l a u s e

1 . 5 ( N o t i c e s , C o n s e n t s e t c ) w h i c h p r o h i b i t u n r e a s o n a b l e d e l a y . A sd i s c u s s e d i n c l a u s e 2 . 4 b e l o w , t h i s c o u l d c a u s e d e l a y t o t h epr o j ec t fo r wh ic h th er e is no obv ious category of ex tens ion o f t imeunder clause 44.1 (Extension of time for completion). Reference to the Engineerunder this sub-clause will not amount toa request for a decision under clause 67.1(Engineer's Decision) because a partyrequiring such a decision must make expressreference to clause 67.1.Page 49 of 264


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Clause 61.1 (Approval only by Defects Liability Certif icate) indicates that

anyapproval by the Employer's Representative is not in any event effective. Clause13.1(Work to be in accordance with contract) requires the Contractor toexecutet h e w o r k s i n s t r i c t a c c o r d a n c e w i t h t h e c o n t r a c t t o th e s a t i s f a c t i o n o f t h e E n g i n e e r . I f c l a u s e 1 3 . 1 h a sn o t b e e n d e l e g a t e d t o t h e E n g i n e e r ' s Representative,again his expression of satisfaction will n

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