An Introduction to FIDIC Contracts

The following is a contribution from our Guest Blogger this month; Nick Longley from HFW.

FIDIC Contracts are commonly used for construction and infrastructure projects across the globe.  Our experience of them extends to South and South East Asia, Africa and Eastern Europe, although they are also commonly used in North Asia, particularly Korea and the PRC.  FIDIC produces standard form contracts for a wide variety of construction contracts.  These contracts are known as the Rainbow Suite of Contracts as each standard form has a different colour as its front cover.  The most well known, the Red Book which is a traditional construction only contract, the Yellow Book, which is the Plant Design and Build contract, often used for process plants, and the Silver Book for EPC contracting.  However there are many others, such as a Minor Works Contract and a standard consultancy agreement, the White Book.  The main standard forms to the extent possible include very similar provisions within 20 Standard or "Core" Clauses.  This allows an easy comparison between the various standard forms.    Of course, the standard clauses are regularly amended and may need amendment to deal with local laws and regulations.

Common with the new breed of construction contracts, such as the NEC suite of contracts, FIDIC contracts are written in plain English.  This means that they are easier to understand and apply and will be particularly useful when parties are from different countries, have different cultures and speak different languages.  FIDIC's stated philosophy is to reduce claims.  This is done by adopting processes such as the Disputes Adjudication Board, which is intended to deal with disputes as and when they arise rather than to leave them to fester.  However, FIDIC does not adopt the same "early warning system" that is adopted by the NEC and generally does not require the increased site staffing levels which are expected with the NEC Contracts.

FIDIC Contracts include an unusual provision which requires the engineer to consult between the parties if a claim is made to attempt to reach a settlement.   Contractors need to be aware however that there is a strict condition precedent which will bar claims if it is not complied with.  The condition precedent extends not only to claims for additional cost, but to claims for extensions of time.   Unusually, the employer also has to give notice of claims but unlike the provisions for contractor's claims, the employer's claim is not time-barred if not made in time.  

FIDIC Contracts are, subject to amendment, one of the contract forms that we would recommend using for infrastructure projects.   Nick would be happy to advise further.

Nick Longley. Nick.longley@hfw.com.

Nick is a partner in Holman Fenwick Willan's construction team.  Nick is based in Hong Kong and Melbourne.  He has extensive experience in advising on amendments to and claims under FIDIC Contracts relating to roads, bridges, airport facilities, water treatment plants and power plants.