The 2017 FIDIC Contracts. William Godwin
to have been asked.
I could not have been in better company. My colleagues on the task group were all highly experienced engineers and FIDIC experts: they were Simon Worley, who became our group leader, Siobhan Fahey, Contracts Committee liaison, John Greenhalgh, Leo Grutters, Aisha Nadar and, assisting throughout as secretary to the group, Shelley Adams. I would like to pay tribute to them all. I would also like to acknowledge with gratitude the close involvement throughout of William Howard, president‐elect of FIDIC and the Executive Committee's primary liaison, and Zoltan Zahonyi, chair of the Contracts Committee.
Our task group reported to the Contracts Committee and we carried out our work under its general direction. At the London Users' Conference in December 2016 a pre‐release version of the Yellow Book was circulated and received extensive comment. This was carefully considered in preparing the eventual second editions of the three Books, along with comments and suggestions received as part of a wider consultation or friendly review by a long list of interested persons and organisations. Each of the Books was subject to a legal review before approval by the Executive Committee prior to eventual publication in December 2017.
The reaction to the new Books has been broadly positive, although they have been said to be too prescriptive and complex. To some extent this criticism was inevitable. One of the main aims of the new editions was to increase clarity and certainty so that the parties and the Engineer or Employer's Representative know exactly what is expected of them and when; another was improved project management and dispute avoidance. Fulfilling these aims was always likely to result in more prescription and complexity, but whether the right balance has been struck will be for users of the contracts to decide.
An important development since publication of the new forms has been the adoption by the World Bank of the 2017 contracts, with complementary special provisions. At the London Users' Conference in December 2018, one year after the new Books were rolled out, the World Bank revealed its intention to move away from using the Multilateral Development Banks version of the Red Book (the ‘Pink Book’) in favour of the 2017 Red Book with special provisions to cover areas of particular concern, such as the environment and social and anti‐corruption matters; the Bank indicated it would do likewise with the 2017 Yellow Book. Subsequently in early 2019 the Bank entered into a licence agreement with FIDIC permitting it to use the 2017 suite with its own conditions of particular application. FIDIC expects to enter into similar agreements with other development banks.
The aim of this book is to provide a clear and comprehensive guide to each of the 2017 FIDIC Books. After providing an overview the contracts will be examined clause by clause with the aim of showing how each Book compares and contrasts with the others and how the second editions compare and contrast with the first editions. Understanding the new contracts depends on seeing how they have developed from the first editions as well as how they relate to each other. There are also important points of intersection with the 2008 Gold Book, the FIDIC Design‐Build‐Operate form.
The first chapter seeks to put the three Books in context by indicating the extent to which they evolved from earlier forms and the distinctive characteristics of each, before providing an overview of the updates, including new potential risks for both Employer and Contractor, and then going on to consider, in the second chapter, key general provisions such as the new rules on notices and limitation of liability. Chapter 3 examines the enhanced role of the Engineer in the Red and Yellow Books/Employer's Representative's function in the Silver including the new procedure for determinations as well as the Employer's obligations and contract administration. The Contractor's obligations are considered in Chapter 4 while Chapter 5 examines his responsibility for design in the Yellow and Silver Books. Chapters 6 to 14 deal respectively with plant, materials and workmanship and staff and labour; time‐related provisions in the three contracts including extensions of time, and the Employer's right to suspend the works; testing on and after completion and the Employer's taking over of the works; defects after taking over, acceptance of the works and unfulfilled obligations; measurement (in the Red Book), the Contract Price and payment; the new variations regime and adjustments to the Price; termination and suspension; care of the works and indemnities and Exceptional Events (previously, Force Majeure). An important feature of the new contracts is their increased emphasis on clarity in the claims process and on dispute avoidance. These topics are examined in the final two chapters, 15 and 16, which deal respectively with the new claims and dispute resolution provisions of the 2017 forms.
I would like finally to express my thanks and appreciation to Dr Paul Sayer at Wiley Blackwell for his encouragement and support, and to Dr Peter Boswell, who so encouraged my involvement with FIDIC and interest in the contracts.
About the Author
William Godwin QC was legal member of the FIDIC Updates Task Group responsible for drafting the 2017 (second) editions of the Red, Yellow and Silver Books. A specialist barrister whose work often involves cross‐border projects, he has extensive experience of acting as counsel in international arbitrations and sits as an arbitrator and adjudicator. He writes and speaks regularly on FIDIC contracts, construction law and arbitration and is the author of International Construction Contracts: A Handbook (Wiley Blackwell 2013).
1 Overview of the 2017 Contracts
1.1 Introduction
The second editions of the three main FIDIC construction contracts were formally introduced at the London users' conference in December 2017. The new Red, Yellow and Silver Books had long been anticipated and represented the first update to the three main forms since 1999.
A key aim of the new contracts was to increase clarity and certainty. Users will find several new definitions, which are now in alphabetical order (clause 1.1). ‘Claim’, ‘Dispute’, ‘Notice’ and ‘Programme’, for example, are now defined terms; ‘may’, ‘shall’ and ‘consent’ are also defined, with the particular aim of assisting those whose first language is not English. ‘Particular Conditions’ is now defined to comprise Part A – Contract Data and Part B – Special provisions. ‘Plus reasonable profit’, as used in the 1999 Contracts, often caused difficulty. A new definition, ‘Cost Plus Profit’, now applies, and refers to a percentage for Contractor's profit to be stated in the Contract Data, or in default 5%.
One important procedural change concerns notices in the 2017 contracts. By a new clause 1.3 a notice must be in writing and identify itself as such, among other requirements. Notices are now required in many more situations than previously and, when given, trigger time limits. For example, under a new clause 3.5 in the Yellow and Red Books, or clause 3.4 in the Silver Book, if the Contractor considers that an instruction not stated to be a variation does in fact amount to one he must immediately, and before commencing any related work, give a notice to that effect with reasons. If the Engineer (Red and Yellow Books) or Employer (Silver Book) does not respond to this notice within a defined period by giving another notice confirming, reversing or varying the instruction he will be deemed to have revoked it.
The contract administrator's role in agreeing or determining any claim or other matter under the Contract is also set out in more detail than in the 1999 Books, and in a step‐by‐step fashion with time limits. Clause 3.7 of the 2017 Yellow and Red Books, for example, requires the Engineer first to consult the parties to try to reach agreement; if no agreement is reached within 42 days, or the parties give ‘early notice’ of no agreement, the Engineer must give a notice accordingly and within 42 days (or other agreed