Since a very long time, FIDIC (The International Federation of Consulting Engineers) is commonly used a standard for international construction and engineering contracts and is very frequently used in UAE. It mainly governs the construction works within the country and in GCC.

FIDIC has a different

category known as Rainbow suite for varied projects or contracts. The

suite includes Res book for building and engineering works, a yellow book for design-build,

a silver book for EPC contracts and the

green book for short projects which was released

in 1999.

Almost post two decades, FIDIC

committee has released the second edition

of three principal contracts that are Red, Yellow and Silver book. The amendments

in these contracts are the recent topics of construction industry. The

Construction Lawyers in Dubai have written this article to enlighten the

readers about a few notable changes in

the FIDIC current edition. The rationale

behind the rigorous amendment in the rainbow suit is to meet the demands of the

users and the industry, considering the rapid change in the technology.

Significant Changes

One can witness considerable revisions in the yellow, silver

and red book. The extensive nature of these contracts is due to detailed provisions regarding contract administrations

rather than just superficial change. One should carefully read each clause of

the concerned book considering the length of the provision it may invite unnecessary misinterpretations. Some of the

notable changes in the FIDIC rules are outlined

below:

1.      Notice

A clear heading stating “Notice” and

the subject for issuing such notice shall

be highlighted, whenever a party issues a notice,

concerning the new amendment. The

intention behind this amendment is to reduce the disputes in relation to notices

issued by parties where parties argue about the recommendations

in the progress report is considered as notice of a claim.

2.      Disputes

In consonance with the predecessor of

the rainbow suite to appoint Dispute

Adjudication Board (DAB). The functions DAB starts from the beginning of the

contract until the completion of the project. The Board is required to visit

the site throughout the term of the agreement

to ensure smooth functioning of the project. As the name suggests, DAB is

appointed to resolve or avoid disputes between the parties. Even though appointment DAB can prevent parties from

strenuous disputes, it is still

considered as a costly affair to have DAB

on board. However, under the new amendment, appointing Dab is a preliminary

requirement for parties which earlier they were happy to disavow.

3.      Duties of

Engineers

A pivotal role was

played by engineers in

the old Rainbow suite, and the same

position has been maintained in the new

suite with some additional responsibilities.

FIDIC update is almost 50% more of its predecessor with one significant aim to

achieve more structured and clear

procedures to avoid uncertainty. Coming back to the duties of the engineer,

below are several new duties under the new Yellow book:

·

The engineer will continue to act as an employer,

and according to the new amendment,

Engineer is not required to permission from the employer prior to making a determination;

·

There is a new role of Engineer’s representative, who

must be present at the site throughout the project period;

·

Engineer under the term “Agreement” is obligated to

encourage the terms of the agreement. They may further, if required, provide

consultation to parties in this regards;

·

Should the engineer fails to make a determination in the relevant period, the matter will be referred

to DAB;

·

Engineer is a neutral party and should not be biased.

A great emphasis can be witnessed from the wordings of the new

contract on the duties of engineers that is to prevent the claims from becoming

disputes leading towards harmony between the parties.

Warnings

Another consequential feature of the rainbow suite is the authority given

to DAB to issue advance warnings or prior

notice of a potential issue. This feature is to with

a view to amicably settle the matters between the parties and with a

hope that parties will work in harmony to resolve the dispute rather than

escalating it to something serious.

The gold book allows the parties to

inform an other party in advance regarding

any unforeseen circumstances which can have an unpropitious

impact on the project.

5.      Force Majeure

Provisions

Gold Book manifests a collaborative

and risk-sharing approach and bearing the same approach

in mind; the new yellow book includes a

provision stating “exceptional risks” or “risk allocation”. The definition of

exceptional risks is similar to the definition of force majeure clause. However, it also sets out the risks the

contractor or the employer may have to bear in future. A detailed description

of such risks can be observed from the

new amendment.

6.      The procedure

for filing claim

Interestingly, a new step has been

taken by FIDIC to divide the claims procedure from that of disputes. The intention of the FIDIC committee was to

separate the contractual processes of

seeking a claim from the procedures

regarding filing a dispute. Through this, parties will be less ingrained

towards their position and will be more likely to resolve the dispute. However, we still have to see if the

concerned approach will practically fit in such conflict.

One more significant change can be seen in clause 20 where the claims procedure

s now applied to both the employer and

the contractor. It is clear that now a

similar procedure will be followed for

employer’s claims, leading towards a balanced

approach and mutually-benefitted relationship. It is further implied from Clause 20 that numerous additional

obligation regarding contract obligations have been imposed on the party filing

a claim.

Conclusion

It is indeed very early to have conclusive remarks on the FIDIC update as the

position of new amendments are yet to be

justified through a practical

approach. However, a significant emphasis on the dispute avoidance mechanism is

perhaps the most conspicuous change in the rainbow suite.

Introduction of friendly settlement procedure is clearly to safeguard the interest of parties

and offer them employer-friendly business relationship.