Contribution by Peter M. Elliott
With reference to Hillig et al. (2010) I suggest that it would have been more appropriate to compare the Fidic ’99 suite of contracts with NEC3, rather than the Joint Contracts Tribunal (JCT) contracts, as NEC3 is designed for civil engineering works as is Fidic ’99. Furthermore, the suite should be considered as a whole, including the recent Gold Book, rather than concentrating on one form. Clauses from different documents in the suite can replace the standard clauses in another version without compromising the integrity of the contract. Thus the ad hoc dispute adjudication board (DAB) specified in the Yellow Book can be replaced by the full-time DAB in the Red Book, if appropriate.
It was disappointing that the paper did not discuss the reasons for the different philosophies with regard to the engineer and claims, which were introduced in Fidic ’99 compared with Fidic 4. The fallacy that the engineer was impartial and independent had been eroded towards the end of the twentieth century by employers, who restricted the engineer’s ability to act. Thus respect for the engineer had declined and Fidic ’99 merely acknowledges this fact. The engineer is no longer required to be impartial. However, clause 3.5 requires him or her to make a ‘fair determination’, whatever that is.
Under Fidic 4, there was no incentive for contractors to submit claims nor for the engineer to give a decision. Thus both the contractor and the engineer delayed action on claims, so that both the contractor and the employer were uncertain of the time for completion or the final sum to be paid. Fidic ’99 puts a time bar on the contractor, but it also puts one on the engineer. Thus both parties have a form of certainty. Following practical experience, the Gold Book has modified clause 20.1 to be more workable.
On the down side, there are still the problems identified by Bunni (2002, 2005) regarding insurance and the hole in clause 20.7, repeating the hole in clause 67.4 of Fidic 4. These matters were not raised during the discussions.
The World Bank and the European Commission have adopted the Fidic ’99 suite of contracts for many projects and thus international engineers have become accustomed to the requirements of Fidic ’99.
Author's reply
The suggestion to analyse the whole range of Fidic contracts rather than concentrating on one form, as well as the suggestion to discuss the reasons behind the changes from Fidic 4 to Fidic 1999, are rather impossible tasks for a short introductory text on Fidic contracts, as was attempted in the paper. In order to cover all these details, a more comprehensive publication would have to be referred to, for example the book The FIDIC Contracts: Law and Practice (Mellors et al., 2009), which comprises 583 pages.
Turning to the first paragraph of the contributor’s comments, I do not think it is any more appropriate to compare Fidic’s Red Book 1999 with the contract NEC 3 than to compare Fidic with the JCT Standard Building Contract (JCT, 2005). While it is true that the JCT Standard Building Contract 2005 is not designed for civil engineering contracts, there is a lot that can be learnt from the differences between these two standard forms. Moreover, it is suggested that there are no fundamental differences between contracts for building projects and civil engineering projects. In some jurisdictions, such as Germany, there is only one standard-form construction contract for both kinds of projects.
Furthermore, one has to be careful with the notion of the ‘integrity of the contract’ and one should always point out what is meant by that term. According to the contributor, it is possible to use clauses from one Fidic standard form to replace the standard clauses in another version ‘without compromising the integrity of the contract’. Yet what is meant by the notion of the ‘integrity of the contract’? Does it already compromise the contract’s integrity if the contract is amended? Is the integrity of a Fidic contract always compromised if a clause is replaced by a ‘non-Fidic clause’? And if so, what is the result? These are suitable questions for an exam paper in an MSc programme of Construction Law because they bring to light several important issues. First of all, it should be made clear that it is, of course, always possible to amend the clauses of a standard-form contract. This is the case because the principle of ‘freedom of contract’ applies. With this in mind, it is difficult to see why the integrity of the contract should be compromised by a change of the contract. At the same time, amending standard-form contracts can yield unwanted results because the amended clause may not sit well with the structure of the rest of the contract. It appears that this is what the contributor had in mind. On that point it is easy to agree with the contributor’s hypothesis: amending Fidic contracts by using the standard clauses of other Fidic contracts should generally lead to reasonable results because most Fidic contracts share the same structure. On the other hand, when speaking of the ‘integrity of the contract’ one has to bear in mind the general law applicable to the contract. A particular clause of a standard-form contract may simply be invalid (and the contract’s integrity therefore definitely ‘compromised’) if it does not comply with certain rules as laid out by the governing law. This is so because there are legislative controls of standard-form contracts that aim to protect that party to the contract who has less market power. While these legislative controls are rather weak in most common law countries (for example, in the UK the Unfair Contract Terms Act 1977 (1997) only applies to exclusion and limitation clauses), they are much stronger in most civil law countries, such as Germany. For a law comparison of the different legislative controls of standard-form contracts in Europe see Casebooks on the Common Law of Europe: Contract Law (Beale et al., 2002). Thus, users of Fidic contracts should not forget that the integrity of the contract can also be compromised by the legislative controls of the law that is applicable to the contract.
