FIDIC Contracts: Employer Termination and Dispute Procedures

This report provides a comprehensive analysis of FIDIC (Fédération Internationale Des Ingénieurs-Conseils) contracts, specifically focusing on the intricacies of contract termination within international construction projects. It delves into the employer's rights regarding termination, including termination for convenience, and the procedures that must be followed. The report highlights the significant legal and practical consequences of termination, emphasizing the importance of careful consideration before issuing a termination notice. It examines various clauses, such as Clause 15, which outlines situations leading to employer termination, and Clause 19.6, which addresses financial arrangements in cases of termination for convenience. Furthermore, the report explores dispute resolution mechanisms under FIDIC, including the role of the Dispute Adjudication Board (DAB). Practical considerations, such as demobilization, site access, and material storage, are also discussed. The report references relevant case law, including Dura (Aust) Constructions Pty Ltd v Hue Boutique Living Pty Ltd, and provides insights into how different jurisdictions, such as Germany and Poland, address contractual issues. It also briefly touches upon alternative contract frameworks, such as NEC3, for comparison.

International Construction
Contracts

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
QUESTION 1...................................................................................................................................3
QUESTION 2...................................................................................................................................9
REFERENCES .............................................................................................................................13

INTRODUCTION
FIDIC is considered as the global union of confer with Applied scientist. There is
presence of several countries across the world that are making use of the conditions of the
contract that are promulgated by FIDIC for the usage within the international construction
contracts1. When providing advise on the construction as well as engineering contracts related
with project overseas there is presence of various additional practical as well as commercial
factors that needs to be considered by lawyers and makes its customers alert. The report
Approach of FIDIC towards termination of the employer. Further it includes the procedure that
needs to be complied with when dispute arises under FIDIC.
QUESTION 1
Termination of contract is regarded as serious step which needs to be taken. Further it has
consequence both in practical and legal terms and has to be taken into account before the
notification is being granted to the constructor. There would be important fiscal effect for the
Leader in case the constructor aim at expiration and Conflict judgment Committee or Mediator
afterwards makes decision that leader has not entitlement to termination [Dura (Aust)
Constructions Pty Ltd v Hue Boutique Living Pty Ltd]. It can be stated that party's right at
terminating under the contract needs to the differentiated from the right associated with
termination of the law. The reasons upon which the party can end the declaration law are
dependent on the dominant contract legal document and are very constrictive. On the other hand
contractual termination provision offers greater or varied remedies in comparison to one that are
present under the governing law2. The right towards termination in the written agreement does
not except the right of termination the law. On the other hand the right towards terminating law
can exclude wherein express right for termination is negotiated through providing similar
grounds in relation with terminating of the law.
1 Chambers, Atkin. Hudson's building and engineering contracts. Sweet and Maxwell.
2010.
2 Omoto, T., 2011. Dispute Boards, Resolution and Avoidance of Disputes in Construction
Contracts.

Clause 15 presents the situation that can result in terminating the written agreement by
the Leader as result of the absence by the builder. It reflect the process which needs to be
complied with as well as the financial arrangement which would employ. In addition to this it
also offers employer's termination for convenience. Such is considered as one of the major
difference among the termination of employers as well as termination by contractor: A contractor
that is terminating possess no entitlement towards termination for convenience3. There is
existence of other sub section that yield the leader the right towards terminating in some
situations:
Sub clause 9.4(b): non accomplishment towards passing trial on accomplishment
Sub clause 11.4(c): non accomplishment towards redress fault
Sub clause 19.6: elective expiration cost as well as freeing
Sub clause 19.7: freeing through the execution in legal document
Termination of employer for convenience (without cause)
Sub section 15.5 offer leader correct towards terminating in the written agreement at any
case for comfortableness that is without any absence on the self-propelled vehicle portion or
other justifications as under:
15.5 Leader's title towards expiration
leader needs to eligible towards termination of written agreement at any point of time for
the convenience of the leader through offering then notification of expiration to the constructor.
The expiration needs to take outcome 28 days abaft the advanced dates on which the builder is
receiving the notification or the leader turning the safety performance4. Employer must not make
termination of the written agreement under such sub clause for the sake of executing the work
himself or arranging for the work implemented by some other constructor. After making
3 Kim, Soo-Yong, Nguyen Van Tuan, and Stephen O. Ogunlana. "Quantifying schedule
risk in construction projects using Bayesian belief networks." International Journal of Project
Management 27, no. 1 (2009): 39-50.
4 Enshassi, Adnan, Jomah Al-Najjar, and Mohan Kumaraswamy. "Delays and cost
overruns in the construction projects in the Gaza Strip." Journal of Financial Management of
Property and Construction 14, no. 2 (2009): 126-151.

expiration the self-propelled vehicle would proceed as per the sub clause 16.3 and need to pay as
per sub clause 19.6.
The sub section 19.6 offers: 19.6 ex gratis expiration, cost and merchandise. In case the
implementation of considerably all the work in advancement is protected for constant time
period of 84 days by explanation of Power Mature to which the notice is being given under Sub
section 19.2 or for the doubled period of time that amount to greater than 140 days because of
the similar give notice Majesure, then either party can offer to different affair the notice of
contract expiration. In such circumstance expiration would effect 7 days after notification is
offered as well as the contractor will proceed as per the Sub clause 16.3.
On such kind of termination the engineer needs to make determination of the value of
work which is being carried out and the problem that certification would involve:
 Payment regarding the work in advance to the termination
 Payment for the plant and materials5
 Other reasonable cost which is gained by the constructor in anticipation towards
accomplishment of the work
 The cost of removing the impermanent work and instrumentality of the contractors from
the site and returning of such items to the work of contractors
 The cost related with return of the contractor's staff as well as labor
A termination related with convenience clause generally intends to cover the situations
wherein the projects is no longer needed or needs to be abandoned for certain reasons. For
instance, in case the leader is no y earner capable to arrange funds within the projection. The
thought is towards restoring self-propelled vehicle to the fiscal point it will have in the project
which is never get down [Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd7]. It complies
the employer is not entitled towards termination of the contract for the sake of completing on
own or through engagement of new contractor.
The sub clause that is 15.5 is of greater benefit to the employer. This is in terms that
whether the constructor is accepting its involvement within the written agreement that depends
5 Caldwell, Nigel D., Jens K. Roehrich, and Andrew C. Davies. "Procuring complex
performance in construction: London Heathrow Terminal 5 and a Private Finance Initiative
hospital." Journal of Purchasing and Supply Management 15, no. 3 (2009): 178-186.

on the relational power of bargaining in the parties6. The contractor can seek at inclusion of
allowance for profitability, but such is against the entire intention of the clause. In case of any
case the written agreement is ended due to the reason that leader has gone out of the budget then
at applicable level there is increase of difficulty for the contractor to get back to the cost, let
exclusive the earnings on top of such. In case the amount of case legal document is anything to
do then expiration related with comfortableness clause are being raise by the Employer
comparative on regular basis within US. However the similar cannot be stated in case of England
and Wales in which the termination for convenience clauses are not involved in the contract of
construction or fault on the basis of termination is being preferred. The English courts have made
sure the validity in relation to such clauses. Though there is presence of no case law at this point.
It is being suggested by commentators that employer can make termination of written agreement
under the sub clause 15.5 in which they themselves are make breach as pr-emotive stage towards
making prevention of the contractor in relation with claiming regarding the breach of the
contract. Such is not regarded as what FIDIC intends at. There is certain process that is being
complied with in case of termination for convenience7. It can be stated that expiration takes the
effect 28 days after the constructor is getting notification and once the leader had turning
security performance, any one that takes place later. Complying with the termination the
contractor needs to proceed as per the sub clause 16.3. This reflects that contractor needs to stop
further work, deliver the contractor written document, industrial plant and real and makes
removal of all the goods from the site.
Consequences of termination for convenience- In this there will be no provision for the
contract for loss on profit which he had completed in the works. In this, contractor can recover
the completed work's value or any kind of cost and liability that is reasonably receive from his
completed work, in combined with repatriating staff or cost together8.
Practical consideration on termination
6 Harper, Christofer M., and Keith R. Molenaar. "Association between construction
contracts and relational contract theory." In Construction Research Congress 2014: Construction
in a Global Network, pp. 1329-1338. 2014.
7 Hughes, Will, Ronan Champion, and John Murdoch. Construction contracts: law and
management. Routledge, 2015.

While complying and laying emphasis on the process and legal need parties are often
overlooking the essential issues as well as subsisting rights that are needed to be component as
portion of procedure of expiration and can onetime help the expiration procedure. The issues
involves:
 Demobilization from the site
 Removing discarded substantial as well as debris
 Assisting UN-mortgaged land site accession in relation with other contractors
 Assured of the margin related with site
 Making sure suitable storing of the material as well as equipment
 Handing over the labor accommodation as well as land site business office and associated
artifact
 Negotiation regarding the legal document of the written agreement form of the safety like
early underpayment bonds
Rights of expiration were considered as the essential and applicable means for application
of the pressure on the other party for the performance but such is exercising rights which needs
to be approached in extreme caution. The ordinary law rule action under the FIDIC based state of
contract and associated interplay in the civil codes is not straight in any ways. Copying of the
termination is not time consuming and expensive but it fails a commercial agreement, greater
attention is required to be paid regarding the manner the process need country laws as well as
contractual tights fits together towards best suiting the interest of party who is seeking towards
termination of both prior to as well as following the termination9. Though several times it has
altered in order to make the contract performance less profitable or uneconomic that in itself is
allowing the party towards termination. A party who is not terminating the contract in correct
manner or makes termination unlawfully would be within the breach of contract and will have
8 Chan, Daniel WM, Albert PC Chan, Patrick TI Lam, and James MW Wong. "Identifying
the critical success factors for target cost contracts in the construction industry." Journal of
Facilities Management 8, no. 3 (2010): 179-201.
9 Kent, David C., and Burcin Becerik-Gerber. "Understanding construction industry
experience and attitudes toward integrated project delivery." Journal of construction engineering
and management 136, no. 8 (2010): 815-825.

the liability of paying for the damages. In accordance with such each termination must be
considered in careful manner as well as professional advice needs to be gained in an effective
manner.
It has been noticed that there are number of policies which are being considered. In case
of St Petersburg flood protection barrier construction project the contractor has to look over court
with a claim in regard to extension and time caused10. Initially the issues were faced in regard to
tender documents which were provided by employer. Findings are covered under sub-clauses 8.4
and 20.1 of FICIC Cons/1999 red book. By having an understanding of such aspect the
Nathajack LLP can also have claim in the court.
Along with this, company can also take understanding from Germany courts in order to
deal with issues. In Germany the parties are allowed to claim express terms of construction
contract unless the explicit limit impact the outcome11. In addition to this, it can be stated that the
issues in regard to subject are also being classified in respect to boards in Middle East. By having
an effective consideration of FIDIC clause the issues are being overcome. Alo0ng with this,
cases in regard to the contractual work the polish government learning can also be considered as
critical aspect. Polish jurisdiction is referred as contract or resolution under Supreme Court.
Concern issues are being registered under article 353 of Polish Civil Code. In addition to this, it
can be said that Clause 13.1 is also being referred as key aspect which need to be consider so that
key aspects can be employed.
In order to deal with diverse issues the norms of NEC3 is also need to be consider
because it allows to have sustainable values in order to have better opportunities. NEC3
engineering and construction subcontract has been framed. Through effective application of key
measures the key aspects can be advanced. NEC3 term service short contract is an alternative
aspect so that services can be imposed in order to lowdown the risk. As same the professional
service contract need to be consider because it helps in meeting the standards. Proper provision
10 Rowlinson, Michael. Practical Guide to the NEC3 Engineering and Construction
Contract. John Wiley & Sons, 2015.
11 Hide, Glenn. "Managing a programme under the NEC3 ECC contract." Proceedings of
the Institution of Civil Engineers-Management, Procurement and Law 163, no. 3 (2010): 111-
119.

of professional advice can assist in maintaining the asset. Moreover, the NEC is referred as
global application so that effective management of muti-disciplinary project can be taken into
account. In addition to this, it is being ensured under the act of NEC3 that cost of project is being
secured along with reference of fee. It helps in meeting the proper valuation of subject so that
long term opportunities can be attained12.
Both NEC as same as FIDIC contracts were considered as the modular form ofwritten
agreement that are part of the standard families in order to attain the works or consultancy
services and goods, works or services13. The features in relation with the time, cost as well as
quality are taken into account to assist the user to gain knowledge regarding certain principle
difference regarding the manner in which such are covering by these contracts. Both the
contracts offers person to act on sake of the leader. NEC and FIDIC are considered as the one
that are developed for international use along with choice of regulating the law as well as
language and both having the roots in common law jurisdictions and are successfully utilized
within the civil law jurisdiction.
QUESTION 2
The concept of dispute board is regarded as the person or panel of people who under the
terms of contract either have non binding recommendation to the issues arising of the contracting
parties. Further it can be binding decisions with respect to such matters14. In case the decisions
are not binding and are advisory then such is generally considered as the dispute review board.
On the other hand in case the decisions are agreed to possess the binding effects among the
parties then such is referred to as the dispute adjudication board or DAB15. Within the year 1999
rainbow suite of FIDIC contracts, FIDIC makes adoption towards usage of DAB Form
12 Ennis, Christopher. "Financial claims under NEC3 contracts: an overview." In Society of
Construction Law Annual Conference, Leeds Society of Construction Law, Leeds, March, pp. 1-
20.
13 Broome, Jon. NEC3: A User's Guide. 2012.
14 Fraser, Simon. "The adoption of BIM within the Public Works Contracts (PWC) suite of
construction contracts in Ireland." Proceedings of the CITA BIM Gathering (2013): 159-162.
15 Harris, Frank, and Ronald McCaffer. Modern construction management. John Wiley &
Sons, 2013.

accordingly because of the widespread usage of FIDIC forms at international level which has
become the important form.
In the pre 1999 documents the process towards handling of the claims as well as disputes
includes the Engineer who makes fair as well impartial assessment and decision which binds the
parties until either of party is not satisfied with the decision and chose at taking matter one stage
further which is referred to as arbitration. Such process has worked in better manner for several
years till certain people that is lawyers as well the World bank start questioning that whether the
Engineer can act in way that is need by Clause 67 which is impartially.
The Swiss court has made rejection of the arbitral tribunal expansive interpretation in
relation with expectation under the clause 20.8, that reflects that that DAB provisions as well as
settlement provision needs to be applied as well as the dispute is not directly referred to the
arbitration. In case the disputes takes place among the parties or arising out of contract or
execution of the work and there is no DAB in the place. This can be due to expiry of DAB'S
appointment or otherwise. It has been determined by the arbitral tribunal that dispute can be
referred directly to the arbitration at any point of time when DAB is not at place when the
dispute takes place. This has been determined by the court that such interpretation was not
consistent with the FIDIC resolution mechanisms specifically in instances the contract offered
for appointing of an ad hoc DAB that by definition can be hired only after the dispute emerges.
It has been felt by FIDIC that the process needs to be made effectual. The determination
of the difference board needs to be valid instead of just the advice and therefore make
introduction of the Dispute Adjudication Board. The purpose of such was covered within 1996
supplement as well as made based upon theo be followed when procedure that is stated within
the clause 20 of the document 199916. A claim is regarded as the request from one party
regarding something that is regarded due by him within the terms of the contract. On the other
hand dispute takes place when the other party is disagreeing with the claimant either over the fact
and the parties are not able to reach at an amicable solution17. Thus clause 20 exists which is
allowing the contractors the basic right for claiming additional compensation within the event
16 Wilsoncroft, Charles. "NEC3: Managing Change." In ASME 2009 12th International
Conference on Environmental Remediation and Radioactive Waste Management, pp. 25-30.
American Society of Mechanical Engineers, 2009.

that they feel they possess entitlement in the contract towards compensation. This is going on
towards offering a mechanism in relation to handling the claims and disputes that arises as a
result.
The provisions that are concerned with claims disputes as well as arbitration are set firth
within the section 20 of the Reddish book as well as yellowish book. In this subdivision the affair
in the conflict can desire towards declaration from the written agreement engineer, the Dispute
Adjudication board or as last repair, arbitrament within the international rules18. Further the
process of dispute resolution is in the control of parties who can make adoption of the process for
suiting to their requirements under the specific conditions related with the contract.
In the clause 20.1 of the generic status, submission of the claims is done to initially the
written agreement applied scientist as kind of first case and posses 42 days for upholding or
make rejection of claim offering in-depth consideration regarding the decision. In practice while
written agreement applied scientist is experient and is being sure by the political party, a dispute
can be single-minded on immediate basis that is on site19. In case the resolution of the dispute is
not being done by the contract engineer then it is passed to the Dispute Adjudication board that is
jointly appointed by the investor as well as contractor. Further it has one or three members. In
case the parties are deciding on the three member panel, then every party makes assignment of
one member who needs to be accepted by other party20. Then by consulting with initial two
members the parties makes appointment of the third member who chairs the Dispute
Adjudication Board. There is possibility for limiting the panel to the individual involved in the
list of possible associate that are being drawn up as appendix to the contract while it is being
17 Fick, Gary J. Time-related incentive and disincentive provisions in highway construction
contracts. Vol. 652. Transportation Research Board, 2010.
18 Gibbs, David John, Stephen Emmitt, Wayne Lord, and Kirti Ruikar. "BIM and
construction contracts: CPC 2013's approach." Proceedings of the ICE-Management,
Procurement & Law 168, no. 6 (2015): 285-293.
19 QC, Richard Wilmot-Smith. Construction Contracts: law and practice. Oxford
University Press, New York, 2010.
20 Halpin, Daniel W. Construction management. John Wiley & Sons, 2010.

signed. The investor and contractor make decision regarding whether the dispute Adjudication
board needs to act as standing panel at the time of duration of the contract.
The Dispute Adjudication board offers kind of appellant position regarding the decisions
by the written agreement engineer can suffice as sheet towards which the parties can posit
disputes in direct manner through passing the contract engineer21. In the clause 20.4 the board
generally possess 84 days to rule over the conflict but it can make proposal of varied deadlines
for the approval of the parties22. The decisions of the Dispute Adjudication board is binding as
well as parties are needed to follow it in effective manner until it is modified by means of
conciliation process or through arbitration award. A party possess 28 days for rejection of the
decision through notification to other party. In situation the decision is accepted then it is then
finalized23.
In situation the party is not satisfied with the decision, then it needs to make an attempt
towards resolving the issues. In case such fails then dispute has to be addressed by arbitration
that under 20.6 clause is carried under the rules of Arbitration of the international Chamber of
Commerce through sheet of three mediator within the language that is gained by the parties.
However the parties are being free towards offering within particular situation that disputes
needs to be decided by the state court rather than arbitration. Of all the provisions to be
determined within FIDIC form the provisions relating with the clause 20 are being attracted. This
is surprising that in case the dispute emerges then it become costly to a greater extent. The
contractors who are performing within the international market have determined the Dispute
Adjudication Board contained within every FIDIC red, yellow, silver as well as Gold books.
CONCLUSION
21 Aspinall, Edward. "The irony of success." Journal of Democracy 21, no. 2 (2010): 20-34.
22 Varnäs, Annika, Berit Balfors, and Charlotta Faith-Ell. "Environmental consideration in
procurement of construction contracts: current practice, problems and opportunities in green
procurement in the Swedish construction industry." Journal of Cleaner Production 17. no. 13
(2009): 1214-1222.
23 Hughes, Kelvin. Understanding the NEC3 ECC contract: A practical handbook.
Routledge, 2012.

It can be concluded from the present study that termination of contract is regarded as
serious step which needs to be taken. Along with this consequence of this is both in practical and
legal terms and has to be taken into account before the notice is being given to the contractor. It
has been inferred that there is existence of important fiscal effect for the Leader in case the self-
propelled vehicle aim at expiration and Dispute Adjudication Board or Arbitrator afterwards
makes decision that employer has not entitlement to termination. Moreover it can be concluded
that the provisions that are concerned with claims disputes as well as arbitration are set firth
within the section 20 of the Red book as well as yellow book. In this subdivision the parties in
the conflict can movement towards resolving power from the written agreement applied scientist,
the Dispute Adjudication board or as last resort, arbitration within the international rules.

REFERENCES
Journals and Books
Aspinall, Edward. "The irony of success." Journal of Democracy 21, no. 2 (2010): 20-34.
Broome, Jon. NEC3: A User's Guide. 2012.
Caldwell, Nigel D., Jens K. Roehrich, and Andrew C. Davies. "Procuring complex performance
in construction: London Heathrow Terminal 5 and a Private Finance Initiative
hospital." Journal of Purchasing and Supply Management 15, no. 3 (2009): 178-186.
Chambers, Atkin. Hudson's building and engineering contracts. Sweet and Maxwell. 2010.
Chan, Daniel WM, Albert PC Chan, Patrick TI Lam, and James MW Wong. "Identifying the
critical success factors for target cost contracts in the construction industry." Journal of
Facilities Management 8, no. 3 (2010): 179-201.
Ennis, Christopher. "Financial claims under NEC3 contracts: an overview." In Society of
Construction Law Annual Conference, Leeds Society of Construction Law, Leeds, March, pp.
1-20. 2010.
Enshassi, Adnan, Jomah Al-Najjar, and Mohan Kumaraswamy. "Delays and cost overruns in the
construction projects in the Gaza Strip." Journal of Financial Management of Property and
Construction 14, no. 2 (2009): 126-151.
Fick, Gary J. Time-related incentive and disincentive provisions in highway construction
contracts. Vol. 652. Transportation Research Board, 2010.
Fraser, Simon. "The adoption of BIM within the Public Works Contracts (PWC) suite of
construction contracts in Ireland." Proceedings of the CITA BIM Gathering (2013): 159-162.
Gibbs, David John, Stephen Emmitt, Wayne Lord, and Kirti Ruikar. "BIM and construction
contracts: CPC 2013's approach." Proceedings of the ICE-Management, Procurement &
Law 168, no. 6 (2015): 285-293.
Halpin, Daniel W. Construction management. John Wiley & Sons, 2010.
Harper, Christofer M., and Keith R. Molenaar. "Association between construction contracts and
relational contract theory." In Construction Research Congress 2014: Construction in a
Global Network, pp. 1329-1338. 2014.
Harris, Frank, and Ronald McCaffer. Modern construction management. John Wiley & Sons,
2013.

Hide, Glenn. "Managing a programme under the NEC3 ECC contract." Proceedings of the
Institution of Civil Engineers-Management, Procurement and Law 163, no. 3 (2010): 111-
119.
Hughes, Kelvin. Understanding the NEC3 ECC contract: A practical handbook. Routledge,
2012.
Hughes, Will, Ronan Champion, and John Murdoch. Construction contracts: law and
management. Routledge, 2015.
Kent, David C., and Burcin Becerik-Gerber. "Understanding construction industry experience
and attitudes toward integrated project delivery." Journal of construction engineering and
management 136, no. 8 (2010): 815-825.
Kim, Soo-Yong, Nguyen Van Tuan, and Stephen O. Ogunlana. "Quantifying schedule risk in
construction projects using Bayesian belief networks." International Journal of Project
Management 27, no. 1 (2009): 39-50.
Omoto, T., 2011. Dispute Boards, Resolution and Avoidance of Disputes in Construction
Contracts.
QC, Richard Wilmot-Smith. Construction Contracts: law and practice. Oxford University Press,
New York, 2010.
Rowlinson, Michael. Practical Guide to the NEC3 Engineering and Construction Contract. John
Wiley & Sons, 2015.
Varnäs, Annika, Berit Balfors, and Charlotta Faith-Ell. "Environmental consideration in
procurement of construction contracts: current practice, problems and opportunities in green
procurement in the Swedish construction industry." Journal of Cleaner Production 17. no. 13
(2009): 1214-1222.
Wilsoncroft, Charles. "NEC3: Managing Change." In ASME 2009 12th International Conference
on Environmental Remediation and Radioactive Waste Management, pp. 25-30. American
Society of Mechanical Engineers, 2009.