FIDIC Contracts: Law and Practice

Ellis Baker, Ben Mellors, Scott Chalmers, Anthony Lavers

• Publisher: Informa Law from Routledge
• Year: 2013
• ISBN:
  9781317911890
• Edition: 1
• Topic: Law
• Subtopic: Construction Law
• Index: Law

FIDIC Contracts: Law and Practice is sure to become the leading industry standard guide to using the FIDIC forms, and is the only book to date which deals with the whole suites of contracts, including the new gold book for Design, Build and Operate projects. The White & Case work is outstanding in its detailed consideration and treatment of the legal aspects of the interpretation and application of the Conditions, touching on many points that most people would not have encountered.

Humphrey LLoyd, International Construction Law Review [2010] ICLR 386

CHAPTER ONE

FIDIC

FIDIC

The meaning of FIDIC

1.1 The success of the FIDIC forms of contract in achieving widespread global acceptance has had a curious consequence. ‘FIDIC’ has come to be used to mean ‘the FIDIC contract(s)’ and some users, at least, believe that FIDIC is a contract and do not know the meaning of the acronym or even that it is one.

1.2 It is unlikely that any engineers would make such an error. FIDIC is their international professional body or, to be more accurate, it is an international association of the professional engineering bodies of member countries.

1.3 The acronym FIDIC stands for Fédération Internationale Des Ingénieurs-Conseils, best translated from the French as The International Federation of Consulting Engineers. The fact that the organisation has a French title bears testimony to its foundation by three countries each wholly or partly francophone. The translations in the other official FIDIC languages are Internationale Vereinigung Beratender Ingenieure and Federación International de Ingenieros Consultores.

The history of FIDIC

1.4 The Organisation dates from before the First World War, when 59 participants met at the World Exhibition in Ghent in Belgium, agreeing a formal constitution on 22 July 1913. There were official delegates from Belgium, Denmark, France, Germany, the Netherlands, Switzerland and the United States, with participation also from Austria-Hungary, Canada, Russia and the United Kingdom. The actual founders of FIDIC were Belgium, France and Switzerland, but these were subsequently joined by a number of the other European countries who had participated in the initial meeting. FIDIC can, however, only be said to have become a truly international organisation in the late 1950s, when Australia, Canada, South Africa and the United States joined, changing the status and perception of a European ‘club’. The accession in the mid-1960s of developing countries such as Colombia, Malawi, Zambia and Zimbabwe was a further phase in evolution, from a more exclusive to a more inclusive organisation, so that today some 80 countries have Member Associations, spanning Africa, Asia-Pacific, Europe, the Americas and the Middle East. Table 1.1 setting out the countries with Member Associations can be found on the next page.

The FIDIC organisation and its activities

1.5 The overall mission of the Federation is ‘to improve the business climate and promote the interests of consulting engineering firms, globally and locally, consistent with the responsibility to provide quality services for the benefit of society and the environment’.

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Table 1.1: Countries of Member Associations September 2009
(Source: FIDIC website)

Note that membership changes periodically with occasional withdrawals and, more usually, additions to the list

Africa	Asia-Pacific	Europe	Netherlands
Botswana	Australia	Albania (Associate)	Norway
Egypt	Bangladesh	Austria	Poland
Ghana	China (PRC)	Azerbaijan	Portugal
Kenya	China, Hong Kong	Belarus	Romania
Malawi	China, Taipei	Belgium	Russia
Mali	India	Bosnia-Herzegovina	Slovakia
Morocco	Indonesia	Bulgaria	Slovenia
Namibia	Iran	Croatia	Spain
Nigeria	Japan	Czech Republic	Sweden
South Africa	Korea	Denmark	Switzerland
Tanzania	Malaysia	Estonia	Turkey
Tunisia	Nepal	Finland	UK
Uganda	New Zealand	France	Ukraine (Associate)
Zambia	Pakistan	Germany	Uzbekistan (Associate)
Zimbabwe	Philippines	Greece
	Singapore	Hungary	Middle East
Americas	Sri Lanka	Iceland	(Mid-East FIDIC
Canada	Vietnam	Ireland	Region)
Ecuador		Israel	Bahrain
Mexico		Italy	Jordan
Surinam		Kazakhstan	Saudi Arabia
USA		Latvia
		Lithuania
		Luxembourg

Note that Kuwait, Lebanon, Serbia and Sudan are scheduled to become members by the end of 2009.

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1.6 The general objectives of the Federation are set out in Article 2 of the Statutes:

1. Represent the consulting engineering industry globally;

2. Enhance the image of consulting engineers;

3. Be the authority on issues relating to business practice;

4. Promote the development of a global and viable consulting engineering industry;

5. Promote quality;

6. Actively promote conformance to a code of ethics and to business integrity; and

7. Promote commitment to sustainable development.

1.7 The Federation itself comprises different types of member. The most important category is that of Member Association; each country is limited to one Member Association, which is intended to be the principal engineering organisation in the country. In the UK, for example, this is the Association for Consultancy and Engineering, which represents 800 firms, and in the US it is the American Council of Engineering Companies. Where a country does not have a Member Association, any individual, organisation, association, firm or group of firms with engineering consulting as a major part of its activity can apply for Associate Membership. This membership category is for organisations aiming to become full Member Associations in due course. Alternatively, where a country does not have a Member Association, an association, organisation, firm or group of firms supporting the objectives of FIDIC can apply for Affiliate Membership. This membership category is for commercial organisations whose aim is to maintain close contact with FIDIC and support of its activities.

1.8 The organisation has headquarters at the World Trade Centre II at Geneva Airport, where its Secretariat is now located, after previously being based in Lausanne and in The Hague. The Secretariat is responsible for the operation of the organisation and comprises a Managing Director, a General Manager, a Publications Manager, an Events Manager, an Accountant and an Administrative Assistant. Decision-making responsibility is vested with the Executive Committee, which comprises representatives from nine Member Associations.

1.9 The FIDIC Secretariat's current contact details are as follows:

Location:	Postal address:
World Trade Centre II	Box 311
Geneva Airport	Ch-1215
29 Route de Pré-Bois	Geneva 15
Cointrin	Switzerland
CH-1215 Geneva 15
Switzerland

Telephone:	[phone]
Fax:	[phone]
E-mail:	[email protected]

This and other information can be obtained from the FIDIC website at www.fidic.org

1.10 Specific activities are the responsibility of committees, such as the Finance Committee, the Membership Committee, the Conference Committee, and the Contracts Committee.

The FIDIC Contracts Committee

1.11 The FIDIC Contracts Committee operates with the following terms of reference:

1. To recommend to the Executive Committee (EC) which Conditions of Contract and related documents should be prepared or updated by FIDIC;

2. To assist the Secretariat in establishing task groups as required, to monitor their work at agreed intervals and to carry out a final review of the documents for submission to the EC;

3. To assist the Secretariat in handling queries on the interpretation of documents;

4. To liaise, in conjunction with the Secretariat, with organisations interested in FIDIC Conditions of Contract; and

5. To suggest topics and speakers as appropriate for seminars and workshops.

1.12 At the time of writing, the Contracts Committee has six members, being the Chair (Philip Jenkinson), the Legal Adviser (Christopher Seppälä), Special Advisers from the UK and Ireland and further members from Germany, Sweden and the UK.

1.13 Within the overall jurisdiction of the Contracts Committee, there are specific Task Groups, which are currently:

the Design Build Operate Task Group

the Consultancy Agreements Task Group

the Procurement Procedure Task Group

the Subcontracts Task Group

the Updates Task Group

1.14 It was principally the responsibility of a former Task Group, namely the Task Group for the Updating of the existing Red and Yellow Books, to embark upon the process which led to the production of the ‘Rainbow Suite’. This work began in 1994 but, following the publication of the Orange Book in 1995, doubts were expressed as to whether the scope of the review was wide enough, and in 1996 the concept of the Silver Book was proposed and the Task Group's burden enlarged. But before exploring how the ‘Rainbow Suite’ was developed, it is necessary to consider the background created by earlier forms against which the exercise was to be undertaken.

The background to FIDIC's contracts

1.15 It has already been observed that the Task Group set up to produce a new set of forms of contract was to update “the existing Red and Yellow Books”.

1.16 The original FIDIC forms were:

• Conditions of Contract for Works of Civil Engineering Construction—the Red Book

• Conditions of Cont...