The rainbow suite

The 1999 FIDIC suite part 5

This is the fifth in a series of articles being published in CES .
1

Following an introduction to FIDIC and its 1999 suite of contracts the joint authors, Paul
Battrick and Phil Duggan of Driver will discuss many practical issues of using FIDIC
2

contracts. Their thoughts and opinions are based upon actual working experiences of working
with many FIDIC contracts both past and present.
that

are

generally,

but

not

always,

Paul Battrick
Managing Director (International)
FRICS MCIArb CEDR Accredited
Mediator

insurable events; the likeness to clause 18

Phil Duggan
Director (International) BSc
MSc MCIArb

considered to be clear and not in need of

Insurance can be readily viewed.

The

wording within the three major forms is

great explanation saves for the overview
below.

Risk and Responsibility Clause 17 and

beyond

Sub-clause

17.1

provides

for

the

indemnities that the Employer and the

Contractor must provide to each other in

If the phrase risk and responsibility is

mentioned in respect of the FIDIC suite of
contracts many, possibly new to the FIDIC
forms,

would

consider

clause

17

and

possibly 18 and 19, of the major forms and

close out their thought processes.

case injury to people and/or property

occurs

as

result

of

the

actions

of

personnel or other for which they are

responsible during the design, execution
and completion of the Works.

Property

excludes the Works itself which is dealt

with separately at Sub-clause 17.2.

This article reflects upon the allocation of

risk and responsibilities within the major
forms introduced in 1999 (the Red, Yellow
and

Silver

Books)

beyond

the

words

contained within clause 17; but first a

Generally unless specifically allocated to

the Employer and those defined as being
under its responsibility, events are the risk
and responsibility of the Contractor.

consideration of clause 17 as contained

within the Red, Yellow and Silver Books.

Sub-clause

17.2

provides

for

the

Contractors care of the Works, for which it

Clause 17 Risk and Responsibility

is fully responsible until such time as the

Taking-Over

This

clause

is

typical

of

clauses

that

Certificates

Certificate
in

the

(or

case

Taking-Over
of

sectional

allocate risk and responsibility to events

Paul Battrick, Phil Duggan and Driver Consult Ltd. 2012

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The rainbow suite

The 1999 FIDIC suite part 5

completion) is issued or deemed to be

over to the Employer should termination

issued in accordance with Sub-clause 10.1,

take place.

save for those items listed within Subclause 17.3 which are Employers Risks.

Sub-clause

17.3

is

entitled

Employers

Risks which, in other words, are the risks

Whilst this Sub-clause specifically deals

that the Contractor has no control over.

with the care of the Works until a TakingOver Certificate has been issued it does not

The Red and Yellow Books have identical

mention

the

lists and it is suggested that these are

possibly

cross referenced with the list of typical

leading to termination. It is suggested that

events that may be classed as a Force

the obligations of the Contractor to care for

Majeure within clause 19.

the

suggested

suspension

Contractor

or

the

Works

by

either

Employer

remain

throughout

that

the

It is also

defined

term

suspension, irrespective of responsibility

Unforeseeable within Sub-clause 17.3(h) is

for the events leading to the suspension,

fully

until such time as work recommences and

difficulties in separating what is unforeseen

from what is unforeseeable when making

Taking-Over

Certificate

is

issued

or

Termination takes place and the Contractor

understood

as

so

many

have

claims.

is released from its obligations in this

respect.

The FIDIC guide confirms the definition of

unforeseeable

to

be

not

reasonably

This may be considered somewhat unjust if

foreseeable by an experienced contractor

the Contractor has not been paid, the

by the date for submission of the Tender.

Employer cannot demonstrate that it has

It goes on to suggest that the frequency of

the arrangements in place to pay and the

natural events relative to the duration of

suspension

the Time for Completion

leading

to

termination

is

may provide

lengthy thus resulting in a high cost burden

guidance as to what should be considered

for

as unforeseeable.

say

the

protection

of

the

Works

including materials stored on and off site.

perhaps

The

survey with your colleagues could take

Contractor

that

relies

upon

the

argument that it was not the cause of the

suspension

and

consequent

five

Taking this suggestion

minute

discussion

and

place noting the following:

termination

and therefore had no responsibility to care

Two projects adjacent to each other;

for the Works - may find itself unable to

same

Contractor,

justify its claims for the work completed or

Employer.

Engineer

and

partially completed and materials handed

Paul Battrick, Phil Duggan and Driver Consult Ltd. 2012

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The rainbow suite

The 1999 FIDIC suite part 5

Duration of project A is eight years

unless such events can be justified

and project B is two years with

as being a Force Majeure such

identical commencement dates.

events are deemed to be at the

Statistically

risk of the Contractor.

the

natural

event

occurs every ten years.

The

last

event

happened

nine

Sub-clause 17.4 allows the Contractor to

years ago and occurred one year

put forward its claims in respect of time

after

and

commencement

of

the

projects.

money

in

the

event

that

the

Employers Risks noted within Sub-clause

17.3 result in loss or damage to the Works,

Which event falls within the definition of

Goods or Contractors Documents.

unforeseeable?
As with all other claims submitted by the
The Silver Book has a shortened list losing

Contractor

in

respect

of

perceived

the following:

entitlement either under the Contract or by

law, the procedure within Sub-clause 20.1

Use or occupation by the Employer

must apply or the Contractor risks losing

of any part of the Permanent

any entitlement.

Works, except as may be specified

Employer in the case of the Silver Book)

in the Contract - should this occur

must then proceed in accordance with Sub-

it would be a breach by Employer

clauses 20.1 and 3.5 to determine any

of Sub-clause 10.2 and therefore

entitlement.

not a risk.

entitlement the Contractor is entitled to

Design of any part of the Works by

Cost or Cost plus a reasonable profit as

the Employers Personnel or by

detailed.

The Engineer (or the

In terms of any monetary

others for which the Employer is

responsible
foresees

the

the

Silver

Contractor

Book

Sub-clause 17.5 considers intellectual and

being

industrial

property

rights

and

provides

responsible for the total design of

protection to both the Contractor and the

the Works, however this may be

Employer

compromised by Sub-clause 5.1

parties

where the Employer retains some

designs, copyright and the like where the

responsibilities for information that

intellectual or industrial property rights

can affect design carried out by

have been allegedly infringed by either

the Contractor.

party.

Whilst it is suggested that the

Any operation of the forces of

claims

procedure

nature which is Unforeseeable

applies to claims made under this clause

Paul Battrick, Phil Duggan and Driver Consult Ltd. 2012

from

related

claims
to

issued

patents,

of

by

third

registered

Sub-clause

20.1

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The rainbow suite

The 1999 FIDIC suite part 5

(line two stating under any clause) the

relative

to

FIDIC drafters have seen fit to repeat,

performance

albeit in slightly different terms, the fatal

resulting in delay damages and, in respect

nature of a 28 day notice period should

of the Yellow and Silver Books, inadequate

either party wish to submit a claim.

design, workmanship and the failure of

materials

the
in

Contractors
respect

etc.,

of

failed
progress

resulting

in

non-

Sub-clause 17.6 deals with the limits of

performance damages and non-availability

certain

damages if noted within the Particular

liabilities

under

the

Contract.

However, it is perhaps the most important

Conditions.

clause that must be considered in the light

by either party, in respect of loss of use of

of the provision of the governing law

any Works, loss of profit, loss of any

prescribed within the Contract.

Contract

Various

It also excludes any liability,

or

for

any

indirect

or

jurisdictions, either common law or civil

consequential loss or damage other than in

law

respect of a termination or indemnities as

jurisdictions

may

affect

matters

concerning the length of any period in

respect

of

defects

liability,

per Sub-clause 17.1.

the

commencement date for such liabilities can

There is no limit of liability upon the

even negate the clause in its entirety in

liability

respect of the limit of financial liability in

Contractor

the event that gross negligence can be

Contractor towards the Employer excludes

established to have taken place.

the supply of utilities (Sub-clause 4.19),

This

of

the
and

Employer

towards

the

any limitations by the

latter point being reflected within the FIDIC

Employers

forms which confirms that there is no limit

material

of liability in any case of fraud, deliberate

Contractor (Sub-clause 4.20), indemnities

default

(Sub-Clause 17.1)

or reckless

defaulting Party.

misconduct

by the

This statement being

particularly relevant during the bid phase

industrial

equipment

whilst

in

property

and

the
and

free

care

issue

of

intellectual

rights

the
and

(Sub-clause

17.4).

and it is likely that the limit of liability to be

stated within the Particular Conditions will

Risk and Responsibilities elsewhere

be the subject of intense negotiations

between the Employer and Contractor prior

The

opening

paragraph

of

this

article

to the award of the Contract. If no sum is

suggested that many people, possibly new

agreed and stated the Accepted Contract

to the FIDIC forms, will limit their thoughts

Amount will be the limit.

in respect of risks and responsibilities to

clause 17 and possibly clauses 18 and 19.

The Sub-clause is intended to limit the

Those to whom that statement may apply

Contractors liability towards the Employer

are invited to consider that the contract,

Paul Battrick, Phil Duggan and Driver Consult Ltd. 2012

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The rainbow suite

The 1999 FIDIC suite part 5

whether Red, Yellow or Silver Book, is in its

cause the applicable rules to be consulted

entirety

fine

balance

responsibilities
Employer

of

risks

and

to establish which party is carrying the risk

between

the

of that event.

Engineer

or

allocated

(and

its

Representative) and the Contractor.

The FIDIC drafters have taken great care

when dealing with the allocation risk such

Whilst

opinions

may

differ

as

to

the

that

internationally

and

less

likely

fairness, and validity in law, of conditions

nationally Employers and Contractors can

such as the fatal 28 day notice with Sub-

establish working relationships for the first

clause 20.1, the FIDIC drafters will have

and perhaps the only time based upon a

considered such a period in the light of

considered set of rules.

other

obligations

placed

upon

the

Contractor within the Contract; such as the

Those rules provide some certainty at the

required monitoring of the programme and

outset to both parties and, if triggered and

related matters (as discussed in the third

operated well, can restore certainty in

article of this series).

respect of the various risks and allocation

of those risks following any necessary

A viewpoint being that any Contractor who

adjustments to all or any of the key factors

is not aware within 28 days that an event,

of scope, time and price.

for which the Employer is culpable, has a

time or money impact does not deserve to

The

most

obvious

differences

in

risk

receive any entitlement!

allocation between Red, Yellow and Silver

Books is in respect of design responsibility

The FIDIC suite of contracts, as with any

and the consequent risks of time and

other contract, can be considered to be no

money

more

therefore scope be amended at some point

than

rule

book

detailing

the

potential consequences should a defined

impacts

should

design

and

in time after the contract award.

event take place.

Design can be translated to mean choice;
If in a game of soccer someone is caught

those with design responsibility have the

handling the ball the referee will give a free

ability to choose, affect the scope and

kick or penalty to the other side. If at the

potentially the time required to complete

outset of a contract it is considered that all

the project and the price for the project.

of

the

risks

and

responsibilities

are

allocated and the key elements of scope,

Accordingly, and in overall terms, the risks

time and price are defined then any event

associated with design responsibility under

that may affect those key elements will

the Red Book rests with the Employer,

Paul Battrick, Phil Duggan and Driver Consult Ltd. 2012

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The rainbow suite

The 1999 FIDIC suite part 5

whilst the Contractor carries the risks

of

under the Yellow and Silver Books.

Advance Payment Guarantee.

In all

an

advance

to

an

However,

regular

entitlement it has to comply with at least

Contractor remain its lifeblood; should the

the

in

Engineer fail to certify a payment (if

respect of the issue of notices and the

appropriate) and/or the Employer fail to

subsequent provision of a detailed claim.

make payments at the prescribed time as

The risk of failing to establish contractual

per Sub-clause 14.7 the Contractor can

relationships

and

either reduce the rate of work or suspend

others to allow compliance with these

work provided not less than 21 days notice

periods rests with the Contractor.

has been given. This being in accordance

of

with

Sub-clause

20.1

Sub-Contractors

In this

timely

linked

contracts for the Contractor to gain any

provisions

and

payment

Sub-clause

payments

Should

the

respect the periods stated within Sub-

with

clause 20.1 may be considered short or the

situation not change within the timescales

minimum required to gain adequate data

prescribed

and input from others.

Contractor can terminate the Contract.

There are many areas that are common to

The option of suspension or reducing the

the Red, Yellow and Silver Books that

rate of progress followed by termination

provide protection and therefore less risk

also applies if the Employer cannot provide

to the Contractor.

reasonable

within

16.1.

to

Sub-clause

evidence

16.2

that

the
the

financial

arrangements have been made and are

In the context of perhaps the Contractor

being maintained which will enable the

making a bid to perhaps a special purpose

Employer to pay the Contract Price (as

vehicle it is important to know that that

estimated at the time) as stated with

entity cannot change overnight once the

Sub-clause 2.4. It is not confirmed whose

Contract Agreement has been signed.

estimated Contract Price should be used as

At

Sub-clause 1.7 Assignment it is stated that

neither party shall assign the Contract or

Contractor and the Employer may differ

any part of the Contract without the prior

greatly in this respect especially if the

agreement of the other Party; accordingly

Contractor has the tendency to inflate its

the Contractor (perhaps with the most to

claims to unrealistic values.

lose) is protected from the Employer being

the FIDIC drafters have made provisions to

changed to some party it would never have

reduce the risk of a Contractor suffering

contemplated to be its contracting partner.

from an uncertain payment regime.

The

be

For the purpose of this article there is one

protected to some degree by the provision

more major factor to be considered in

Contractors

cash

flow

may

Paul Battrick, Phil Duggan and Driver Consult Ltd. 2012

reference

point;

the

views

of

the

Nevertheless

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The rainbow suite

The 1999 FIDIC suite part 5

terms of risk allocation; that being the

Should

ability

appropriate) fail to either issue the Taking-

of

the

completion.

It

Contractor

achieve

uncommon

Engineer

(or

Employer

as

for

Over Certificate or give reasons for not

Employers to take occupation of a project

issuing the Certificate within the period of

and subsequently receive income but find

28 days, the Taking-Over Certificate shall

reasons not to accept that the Contractor

be deemed to have been issued on the

has

twenty eighth day.

achieved

is not

to

the

completion

as

defined.

Accordingly the Employer gains income and

is possibly continuing to deduct delay

Sub-clause

damages

further

whilst

the

Contractor

cannot

10.2

support

in
for

all

forms

the

provides

Contractor

by

obtain any of the financial benefits of

confirming that the Employer shall not use

attaining completion, the responsibility for

any part of the Works prior to Completion.

maintenance, wear and tear and the like

remain with the Contractor whilst any

Sub-clause 10.3 within the Red and Yellow

defects liability period cannot commence.

Books

gives

Contractor.

further
In

the

protection
event

to

the

that

the

The FIDIC drafters have considered such

Contractor is prevented from carrying out

circumstances and provided, within Sub-

any tests necessary to attain Completion

clause 10.1, the ability for the Contractor

by a cause for which the Employer is

to attain Completion.

Sub-clause 10.1,

responsible for a period of 14 days the

states in general terms, that when the

Employer will be deemed to have taken

Contractor has completed the Works (or

over the Works and the Engineer must

Sections) in accordance with the Contract

issue

such that no minor outstanding work or

relevant date being that on which the tests

defects prevent the use of the Works for

would have been completed.

Taking-Over

Certificate;

the

what they were intended, the Contractor

may apply by notice to the Employer for a

The defined timescales of every phase of

Taking-Over Certificate.

the dispute resolution procedure within

Employer
within

28

as

The Engineer (or

appropriate)

days

either

will

by

respond

issuing

Clause 20 seek to offer the Contractor

the

some certainty and lessen risk in the event

Taking-Over Certificate or confirming why

that a DAB and Arbitration are necessary,

no certificate can be issued.

The latter

but they are the subject of a different

providing the criteria for the Contractor to

article as is the abuses to the allocation of

fulfil prior to issuing a further notice for a

risk

Taking-Over Certificate.

considered by the FIDIC drafters.

Paul Battrick, Phil Duggan and Driver Consult Ltd. 2012

and

responsibility

so

carefully

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The rainbow suite

The 1999 FIDIC suite part 5

Driver is the trading name of Driver Consult

Ltd, a member of Driver Group plc (AIM:
DRV). Driver Consult is the principle trading
subsidiary of the Group and has been
providing the construction and engineering
industries with commercial and dispute
resolution services since 1978.
During the last year over 2000 engineers,
surveyors and commercial managers have
attended Driver breakfast seminars in the
UK alone. In response to demand Driver has
developed a range of high quality FIDIC
training courses, workshops and services.
For details please contact us at
[email protected]
or call +44 (0) 20 7247 4989
This article was first published in Civil
Engineering Surveyor (CES) Sept 2011. The
title is the journal of the Chartered
Institution of Civil Engineering Surveyors.
Permitted reproduction
quotations, citations and references

Permission is granted for short quotations or

reproduction in full provided the authors,
company and link to the source are properly
noted.

Paul Battrick, Phil Duggan and Driver Consult Ltd. 2012

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The rainbow suite

The 1999 FIDIC suite part 5

Endnotes
1.

CES is an abbreviation of the title Civil Engineering Surveyor which is the journal of
the Chartered Institution of Civil Engineering Surveyors.

2.

Paul Battrick
Managing Director (International)
FRICS MCIArb CEDR Accredited Mediator
A chartered quantity surveyor, Paul heads Driver Groups London based international
business, with the exception of the Middle East and Africa.
He supports international clients by acting as either a Mediator or Expert Witness in the
event of Litigation and/or Arbitration. He has extensive experience in the Energy sector
advising clients in respect of EPC power plants, constituent parts such as boilers,
turbines, generators and also ancillaries such as flue gas desulphurisation plants. Paul is
a practising CEDR Mediator.

3.

Phil Duggan
Director (International)
BSc MSc MCIArb
A director of Drivers international business, Phil has over twenty years industry
experience providing quantum, contractual and commercial advise to clients on major
projects.
His experience includes over twelve years in the water & waste water, power generation
and oil, gas and petrochemical sectors with clients depending on his high level of
technical understanding of the mechanical, electrical and process elements.

4.

Driver
Driver have excelled at providing construction and engineering focused services since
1978.Our Project Management, Programming, Commercial Management, Quantity
Surveying, Contracts and Dispute expertise supports the delivery of major projects
worldwide and bridges the gaps between the construction, legal and financial sectors.
For more information please visit www.driver-group.com
The companys international business is administered from Drivers London office.
1 Norton Folgate
London
E1 6DB
[email protected]
Telephone +44 (0) 20 7247 4989 Facsimile +44 (0) 20 7247 4959

Paul Battrick, Phil Duggan and Driver Consult Ltd. 2012

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