FIDIC 2016 Day01-1450 Managing Claims Under FIDIC, PPT Adrias Tan

Adrias Tan
MSc BSc(Hons) LLB(Hons) FCIArb FSIArb
Senior Legal Counsel, Hyundai Engg & Construction Co Ltd

Managing Claims Under FIDIC
© 2016 Adrias Tan MSc BSc(Hons) LLB(Hons) FCIArb FSIArb
Adrias Tan
MSc BSc(Hons) LLB(Hons) FCIArb FSIArb
Senior Legal Counsel, Hyundai Engineering & Construction Co Ltd
Fellow, Chartered Institute of Arbitrators
Fellow, Singapore Institute of Arbitrators
Fellow, Singapore Institute of Builders
Member, Society of Construction Law, UK
Member, Society of Construction Law, Singapore
Associate Member, Singapore Academy of Law
Associate Lecturer, Royal Melbourne Institute of Technology (SIM Singapore)
Panel of Arbitrators, SIArb

• Claim and Procurement
• After Contract Award: How to minimise Claims and, if the
Claims are disagreed, how to avoid contested Claims from
becoming disputes?
• Pursuing Claims (if you haven’t managed to avoid them!)
• Civil v Common Law comparison: different approaches to
Claim Quantification
• The Requirements for Notices of Claim
• Can the Conditions Precedent for notices always be enforced?
• What constitutes detailed particulars of a Claim?
• The Engineer’s Obligations
ADRIAS TAN

Claim and Procurement
• Claims Differentiated from Variations
• Contractual Provisions on Variations
– Alterations and Modifications to Original Scope and
Extent of Permanent Works
• Contractual Provisions on Claims
– Compensation not anticipated in Original Contract
• Cost Implications from Variations
– Evaluation and Remeasurement
• Cost and Time Implications from Claims
– Express contractual provisions entitling submission of
claims

• Contractual Basis for Variations
– Changes in quantities of any item of work included in the
Contract
– Changes to quality and other characteristics of any item of
work
– Changes to levels, positions and/or dimensions of any part of
work
– Omission of any work unless it is to be carried out by others
– Any additional work, Plant, Materials or services necessary for
Permanent Works, including any associated Tests on
Completion, boreholes and other testing and exploratory work
– Changes to sequence or timing of execution of works

• Contractual Basis for Claims
– Delayed drawings or instructions
– Right of access
– Setting out
– Unforeseen physical conditions
– Fossils
– Testing
– Extension of Time for Completion
– Loss and Expense due to
Variations
– Delay caused by Authorities
– Suspension of works
– Evaluation and
Measurement
– Omissions
– Value Engineering
– Interference with
tests on completion
– Changes in legislation
– Employer’s Risks

Minimising and Avoiding Claims
• Commercial Risks and Monetising Profits
• Complexity of Claims
– Changes in Design Intent and Employer’s Requirements
– Ambiguities in Contract Documents
• Contracting Strategies
– Lump Sum EPC
– Reimbursable
– Mixed or Hybrid Design/Bid/Build Procurement, etc
• Dispute Adjudication Board
– Resolving disputes at early stages

Pursuing Claims
• Administration and Management of Contract
– Familiarity with Contract Documents, Forms of Contract
– Familiarity with Contractual procedures and protocol
• Claims Management
– Notices and Timelines
– Substantiation of Information
• Notices and Correspondence
– Timeline Condition Precedent
– Notices for Actual and Potential Delay
• Contemporary Records
– AG Falkland Islands v Gordon Forbes Construction

Different Approaches to Claim
• Common Law Approach
– Timescales: Directory or Mandatory Requirements
– Bremer Handelgesellschaft v Vanden Avenne Izegem
• Notice precedent held binding if precise time is stipulated
• Express language used on forfeiture of rights due to non
compliance with condition precedent
– Multiplex Construction v Honeywell Control Systems
• Condition precedent allows Employer opportunity to
withdraw instructions with time implications
– Heilbut, Symons v Buckleton
• misstatement of facts, negligent misrepresentation,
fraudulent misinterpretation of contract terms

• Civil Law Approach
– More Lenient – Non compliance with time bar not fatal
– UAE Civil Code Article 243(2)
• “With regard to the rights (obligations) arising out of the
contract, each of the contracting parties must perform that
which the contract obliges him to do”
• “If the wording of a contract is clear, it may not be
departed from by way of interpretation to ascertain the
intention of the parties”
• “The contract must be performed in ... good faith”

• Civil Law Approach
– UAE Civil Code Article 318
• “No person may take the property of another without
lawful cause, and if he takes it he must return it”
– Doctrine of Unjust Enrichment
• The Employer precluded from relying on a time bar
provision to avoid payment to the Contractor for works
performed and for works from which the Employer has
benefitted particularly if the only reason for withholding
payment is the lateness of the Contractor’s claim

Requirements for Notices of Claim
• Notice in Writing
– Notice served under Clause 20.1
– Within 28 days after he “became aware, or should have
become aware, of the event or circumstance”
• When should the Contractor be aware: Imputed Knowledge
or Objective standard
• Question: who is the arbiter of when the Contractor should
have become aware, the Engineer or Contractor?
– Event or Circumstance Giving Rise to Claim
• Fully detailed claim, monthly updated particulars,
extension of time required and/or additional payment
• Keeping of contemporary records

Enforcing Condition Precedent
• Doctrine of Consensus ad Idem
– “If the Contractor fails to give notice of a claim within
such period of 28 days, the Time for Completion shall not
be extended, the Contractor shall not be entitled to
additional payment, and the Employer shall be
discharged from all liability in connection with the claim”
• Rationale
– Contractor notifies Employer, to enable Employer to avert
unintended consequences
– potential disputes resolved early
– Failure to comply with timescale – party loses right of
claim

• Multiplex Constr v Honeywell Control Systems
– “Contractual terms requiring a contractor to give prompt
notice of delay serve a valuable purpose; such notice
enables matters to be investigated while they are still
current. Furthermore, such notice sometimes gives the
employer the opportunity to withdraw instructions when
the financial consequences become apparent” per Justice
Jackson
– Notice triggered not only upon Contractor becoming
aware of relevant event or circumstance, but also when
Contractor should have become aware of it

• Non Compliance Not Fatal
– “If the Contractor fails to comply with this or another
Sub-Clause in relation to any claim, any extension of time
and/or additional payment shall take account of the
extent (if any) to which the failure has prevented or
prejudiced proper investigation of the claim …”
– Whether enforcing time bar amounts to a penalty in the
face of an Employer’s Valid Delay Factor or a Valid
Variation
– Onus of proof that the time bar should be imposed
generally lies with the Employer

• Obrascon Huarte Lain SA v HM’s AG for Gibraltar
– Technology and Construction Court (TCC) in London
adopted a relaxed interpretation of this requirement,
ruled that the 28-day period for notifying a claim for EOT
only begins following the onset of actual delay flowing
from the event or circumstance which caused it
– Judge Akenhead J remarked that he could see no reason
why Clause 20.1 should be construed strictly against
Contractor:
"can see reason why it should be construed reasonably
broadly, given its serious effect on what could otherwise
be good claims for instance of Employer’s breach "

– notice of a claim for EOT does not have to be given
pursuant to Clause 20.1 until there actually is delay,
although Contractor can give notice when it reasonably
believes that it will be delayed
– Clause 8.4: entitlement to extension arises if and to the
extent that the completion “is or will be delayed by”
various listed events, such as variations or
“unforeseeable” conditions
– Extension of time can be claimed either when it is clear
that there will be delay (prospective delay) or when delay
has at least started to be incurred (retrospective delay)

– Clause 20.1: “event or circumstance” described in can
mean either the incident (variation, exceptional weather
or one of the other specified grounds for extension), or
the delay which results or will inevitably result from the
incident in question
– Clause 8.4: Wording is “is or will be delayed by”, and not:
“is or will be delayed whichever is the earliest”

• Chiemauer Membran-und Zeltbau GmbH v New
Millennium Experience
– English Court of Appeal held that such condition
precedent is not enforceable
– Depending on commercial sense and intentions of
contracting parties, and even for some condition
precedent clauses, a court or arbitral tribunal may refuse
to interpret it literally

Detailed Particulars of a Claim
• Chiemauer Membran-und Zeltbau GmbH v New
Millennium Experience
– Contractor to submit Fully Detailed Claim within 42 days
of “event or circumstance”
– Contractor can propose for the Engineer’s approval an
extended time period to submit a detailed claim
– Cause and effect of Delay, Culpable and Concurrent
Delay, reasonable measures taken to mitigate delay
– Particulars include correspondence, meeting minutes,
site records, photographs, narratives, schedules, etc
– Updated construction program showing planned,
impacted and actual schedule

Engineer’s Obligations
• Engineer has 42 days to Approve or Disapprove with
Detailed Comments
– Engineer can propose for the Contractor’s approval an
extended time period to respond
– Request “any necessary further particulars”
– Engineer unreasonably delaying a response to a Claim or
requesting unnecessary further particulars
– Clause 3.5: consulting with Contractor, try to reach an
agreement. If not possible to reach agreement, make a
fair determination

• Engineer Failure to Respond within 42 days
– No express sanctions for the Engineer’s failure to provide
a timely response
– Effect is Contractor unduly relieved of his contractual
obligations; Contractor not kept aware of his contractual
rights and entitlements arising from such valid claims and
notifications

• Prevention Principle
– Where Engineer fails to provide a timely response or fails
or refuses to grant an extension of time inspite of the
Valid Delay Factor
– Employer precluded from holding Contractor to
completion date, due to Employer or his authorised
Representative’s act or omission preventing Contractor
from completing by that date
– Completion time becomes at large; obligation to
complete by specified date replaced by implied obligation
to complete within a reasonable time

• Roberts v Bury Improvement Commissioners
– well established principle at common law that:
“... no person can take advantage of the non-fulfilment of
a condition the performance of which has been hindered
by himself ...” per Blackburn and Mellor JJ
– Reason for that rule is that otherwise a most
unreasonable burden would be imposed upon the
Contractor
– Employer’s right to impose liquidated damages for delay
replaced by unliquidated damages, based on new
‘reasonable time’ completion date

• Shawton Engineering Ltd v DGP International Ltd
– Court of Appeal held that what is a reasonable time has
to be judged as at the time when the question arose, in
the light of all the relevant circumstances:
“There were variations, but no contractual mechanisms
for extending time on account of the variations (or the
mechanisms have failed). The effect in law of the
variations was that the Contractor became obligated to
complete their work within a reasonable time”

• Shawton Engineering Ltd v DGP International Ltd
– The judge rejected that a reasonable time should be
ascertained by reference to the Original Contract Periods
as extended only by the agreed periods for variations
– “The question of what is a reasonable time within which
to complete particular work is an objective question and
is not dependent upon the actual time which a person
may have agreed to carry out the work. Parties may have
over or under estimated what time the work would
actually require. The time which has to be ascertained is
the time it would reasonably take to complete the whole
of the works”

FLOW CHART – Clause 20.1 Claims

 Interactive Voting System – Multiple Choice Questions
 The Engineer is empowered under the
prevailing express conditions to
require that the Contractor submits
claims for evaluation of Variations
pursuant to Clause 20.1 and subject to
the timeline condition precedent before
he is entitled to compensation for the
additional work instructed?
1) AGREE
2) DISAGREE

 Interactive Voting System – Multiple Choice Questions
 If the Engineer delays, refuses or fails
to respond to the Contractor’s Claims
pursuant to Clause 20.1, the
Contractor’s rights may be prejudiced
as a result. The FIDIC Forms should
address this lacuna.
1) AGREE
2) DISAGREE

MSc | BSc(Hons) | LLB(Hons) | FCIArb | FSIArb
Adrias has more than two decades of practical working experience
in the construction industry, working currently as in-house legal
counsel for an MNC Company. Adrias is professionally trained in
litigation, arbitration, adjudication, mediation and dispute
resolution, and is an accredited arbitrator. He has handled several
institutional and ad-hoc arbitral proceedings, as well as having
tutored in SIArb, and conducted numerous workshops and
seminars on diverse construction, contractual and legal issues
including various Standard Forms of Contracts. He also lectures at
the Royal Melbourne Institute of Technology, at the Singapore
Institute of Management Campus teaching law subjects.
email: adriastan@yahoo.com
sg.linkedin.com/in/adrias-tan-5ab34035
Adrias Tan

FIDIC 2016 Day01-1450 Managing Claims Under FIDIC, PPT Adrias Tan

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (20)

Similaire à FIDIC 2016 Day01-1450 Managing Claims Under FIDIC, PPT Adrias Tan

Similaire à FIDIC 2016 Day01-1450 Managing Claims Under FIDIC, PPT Adrias Tan (20)

FIDIC 2016 Day01-1450 Managing Claims Under FIDIC, PPT Adrias Tan