We hope this edition of Law Update provides some valuable food for thought — enjoy the read! In light of such diversity, parties may have different expectations regarding the effect of their substantive rights under the contract, or the process and treatment of disputes, when these arise. Among other things, the different forms of FIDIC Contracts reflect different procurement approaches particularly regarding design responsibility.
Sub-Clause 3. Under sub-clause 3. To the detriment of the Contractor however, the MDB Conditions change this stance, as they allow the Employer to unilaterally change the authority of the Engineer with only an obligation to notify the Contractor of such a change.
An additional important difference to clause 3. Finally, under clause 4. Sub-clause 3. The MDB Conditions however introduce a 28 day time limit from receipt of the request for the Engineer to make such a determination. The intent behind the amendment is clearly to encourage the Engineer to make prompt determinations, which is in the interest of all parties. The MDB Conditions amend this sub-clause to allow for the Performance Security to be denominated in a freely convertible currency acceptable to the Employer, rather than restricting the same to the currency of the contract.
Whilst this does grant more flexibility to both parties, it may be a potential trap for the Contractor. This is because the sub-clause is silent with regard to the effect of currency fluctuation on the performance security.
For instance, a currency devaluation may render the value of the performance security less than what is required under the Contract. This in turn may be considered a breach of sub-clause 4. Consequently extra vigilance must be exercised with regard to the provision relating to performance security. In order to mitigate this risk, the exchange rate should be agreed upon in the contract. Another notable change relates to the conditions under which the Employer can claim the Performance Security.
However sub-clause 4. This is clearly advantageous for the Employer. The grounds upon which the Contractor can terminate have been broadened and clarified under the MDB Conditions.
In respect of sub-clause This amendment may prove useful where the dispute relates to a time sensitive matter, and as such is an amendment that benefits both Contractor and Employer. Pursuant to Sub-clause 20, DB decisions are immediately binding on both parties, who shall promptly give effect to it unless and until it shall be revised in an amicable settlement or an arbitral award, and in that regard is equivalent to the DAB.
The DB is available throughout the duration of the contract, which if tactfully utilized may be a useful and time efficient manner through which to resolve disputes and minimize any delays to the progress of the works. So in May , FIDIC published the first edition of Conditions of Contract prepared exclusively for projects involving the supply and erection of electrical and mechanical plant the Yellow Book. The Yellow Book is now in its third edition, published in , and this third edition is currently under review for revision and possible preparation of a fourth edition.
The author discusses why the yellow book is needed and its content. Article :. DOI:
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