Guidance for Quantity Surveyors by oecc

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									2010


   Guidance for Quantity
   Surveyors
   Dealing with Extension of Time Claims
   under FIDIC or Similar Forms and Legal
   Effect of Time Bar Provisions
How to Secure a Right

         (a) Identify the Right – Study, understand and investigate

         (b) Reserve the Right – Serve a Notice which requires to Establish the Right in the form
             of Doctrines of “Duty to Mitigate” and “He who see must prove it”

         (c) Claim the Right – Draft and submit the facts, arguments, entitlement and quantum

         (d) Prove the Claim – Demonstrate with detailed particulars

A. Why is a Securing a Right Necessary?

         (a) Employer/ Engineer may want to reduce the effect

         (b) How would the Employer/ Engineer know that the Contractor would require relief, if
             he does not notify his requirement?

         (c) To avoid “claims-by-ambush”

         (d) The Contractor may lose his right to whole or part of the relief, if securing of a right is
             not given where a notice is a “conditions precedent” to secure right

B. Clause 44 of FIDIC 04th Edition...

    Provided that the Engineer is not bound to make any determination unless the Contractor
    has

         (a) within 28 days after such event has first arisen, notified the Engineer with a copy to
             the Employer, and

         (b) Within 28 days after such notification submitted to the Engineer detailed particulars
             of any extension of time to which he may consider himself entitled in order that such
             submission may be investigated at the time.

    Such detailed particulars shall include reference to the Programme submitted to the
    Engineer pursuant to Clause 14 and shall clearly set out the basis and justification for
    extension of time to which the Contractor is of the opinion that he is entitled to receive.

C. Clause 44 [Extension of Time of Completion] of PWA Qatar...

    Should the amount of extra or additional work of any kind or other special circumstances of
    any kind whatsoever which may occur (other than through a default of the Contractor) be
    such as fairly to entitle the Contractor to an extension of time for the completion of the work
    the Engineer shall determine the amount of such extension and shall notify the PWA and the
    Contractor accordingly. Provided that the Engineer is not bound to take into account any
    extra or additional work or other special circumstances unless the Contractor has within 28
    days after such works has been commenced or circumstances have arisen or as soon as
    thereafter as is practicable delivered to the Engineer’s Representative full and detailed

Guidance for Quantity Surveyors                                                                  Page 2
    particulars of any claim to extension of time to which he may consider himself entitled in
    order that such submission may be investigated at that time ...

D. Consider DM [Dubai Municipality] wording...

    Provided that the Engineer shall not make any determination unless the Contractor has

         (a) within 28 days after such event has first arisen, notified the Engineer with a copy to
             the Employer, and

         (b) Within 28 days after such notification submitted to the Engineer detailed particulars
             of any extension of time to which he may consider himself entitled in order that such
             submission may be investigated at the time.

    Such detailed particulars shall include reference to the Programme submitted to the
    Engineer pursuant to Clause 14 and shall clearly set out the basis and justification for
    extension of time to which the Contractor is of the opinion that he is entitled to receive.

E. Clause 44 of MPW – Kuwait

    Clause 44 of CC requires the Contractor to:

         (a) Establish (“he who seek must prove”) that the delay in executing the Works is
             attributed to circumstances beyond the control of the Contractor which reasons could
             not be anticipated at the time of tendering and could not be warded off (Doctrine of
             “Mitigation”) ; and

         (b) Provision of full and detailed particulars to ER within 28 days of such works has been
             commenced or such circumstances have arisen or as soon thereafter as practicable
             in order that such claim may be investigated at the time.

F. Phraseology of Clause 44 of CC

    “If the quantities of the Works are modified or if the Contractor is asked to execute additional
    works which would result in increasing the value of the Contract or if it is established that the
    delay in executing the Works is attributed to circumstances beyond the control of the
    Contractor which reasons could not be anticipated at the time of tendering and that could
    not be warded off by the Contractor the Employer shall determine the amount of extension
    of time for the completion of the Works provided that the Contractor has within 28 days
    after such works have been commenced or such circumstances have been arisen or as
    soon thereafter as is practicable delivered to the Engineer’s Representative full and detailed
    particulars of any claim for extension of time to which he may consider himself entitled in
    order that such claim may be investigated at the time, and the Contractor shall not be
    entitled to any compensation in respect of such extension.”

G. Is it a condition precedent? – MPW Kuwait Wording…




Guidance for Quantity Surveyors                                                               Page 3
     •   Clause 44 states that “ ... the Employer shall determine the amount of extension of time
         for the completion of the Works provided that the Contractor has within 28 days ...”
         and then goes on to state what the Contractor has to do, in what manner and form, and
         the times within which he has to submit detailed particulars. The wording here is a
         significant departure from standard FIDIC [4th Edition] clause which states “ Provided
         that the Engineer is not bound to make any determination unless the Contractor
         has ...” [meaning, the Engineer is not duty bound]

H. Consider FIDIC 1999 Edition Wording...

     •   Sub-Clause 20.1 of FIDIC [Yellow & Red] books refer, wherein it states – If the
         Contractor fails to give comply within the prescribed time limit that:

     •   “the Time for Completion shall not be extended, the Contractor shall not be
         entitled to additional payment, and the Employer shall not be discharged from all
         liability in connection with the claim” [Sub-Clause 20.1] (13)

I.   Time bar - Dilemma …?

     •   This is a significant revision as the risk now exists that, whilst the Engineer is unable to
         any determination unless detailed particulars are submitted within the prescribed time, it
         is now open to the Kuwaiti Competent Courts of Justice (pursuant to Clause 67 of CC) to
         do so whether or not the time constrain of Clause 44 is fatal to the Contractor’s
         entitlement for an extension of time. In other words it could be argued that whilst this
         revision effectively stops the Engineer from making a determination on claims where late
         detailed particulars have been submitted, whether it is a condition precedent or not on
         the Contractor's entitlement is in the Judge’s hand. [Remember No Arbitration…]

     •   With reference to wording “in order that such submission may be investigated” may
         attract the Court to allow making common sense decision to restrict C’s entitlements in
         the absence of precise evidences. This is to say that if the E has taken by surprise at the
         end of the project for an EOT and his ability to investigate the claim is undermined.

J. What wording really necessary for conditions precedent reliance?

     FIDIC 99 [RED & YELLOW] Books [If the Contractor fails to comply within the prescribed
     time] that:

     “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”

     (1) This wording is clear and assuming the word all meaning to include all claims under the
         Contract and claims under law, the Contractor shall be deemed to have been forfeited
         his rights to seek an extension of time – or otherwise,

     (2) The Civil Code of the State of Kuwait should impose time constrains restricting
         contracting party to seek their entitlements – According to available information the

Guidance for Quantity Surveyors                                                               Page 4
         parties entertain (UAE situation) in excess of two years from the handing over of the
         project. Hence, C may be able to defend his claim against clause 44 time constrain

K. Some Important and Applicable Code of Law Provisions

    •    The Civil Code specifies, a contract shall be made "solely by virtue of the confluence
         of offer and acceptance". In terms of contractual relationship under consideration, the
         tender comprised "the offer" (by the Contractor) and the acceptance of the tender was
         in the form of "the acceptance" (by the Employer). The terms have then crystallised,
         along with other agreed terms, into the Contract. The effect of the Contract is stated as
         per the Civil Code, which provides that "with regard to the rights and obligations
         arising out of the contract, each of the contracting parties must perform what he
         is obliged to do". Would this favour the Employer to rely on condition precedent
         argument in case of a formal dispute resolution process OR

    •    The governing law requires, contracting parties to demonstrate “Good Faith and Fair/
         Honorable Dealings in their conduct and hence, an attempt to refute just enlistments
         may face serious resistance from courts. OR

    •    Articles 193 and 194 of the Civil and Commercial Code of the State of Kuwait provides
         that a doubtful clause to be interpreted in favour of the debtor, i.e. the party who
         stands to lose by the doubtful clause. Accordingly, as a matter of governing law, be
         the case that the Contractor is stand to lose in the form of levying of penalties for delays
         and expenses to execute works in case of this doubtful (Clause 44) in this provision of is
         interpreted against him – Will this pay the way?

L. What should be our Strategy to Evaluate the Claim?

    •    ER shall perform his duties in accordance with Clause 44 and it is too early to focus on
         Clause 67 however, we should advise the Employer of potential risks in case of a formal
         dispute resolution situation in line with “Begin with End in mind” principle

    •    Therefore, our initial determination will rely on time-bar provision to bring the Contractor
         to negotiation table so that the Employer keeps advantage over the Contractor to start
         with.

    •    Furthermore, we will maintain “No Penalty & No Additional Costs to the Contractor
         scenario” together with a recommendation of an appropriate EOT in view of the
         situation where the Employer is not ready to take the practical benefit of the facility as he
         has not yet provided perquisite clearances for power provision.

M. Important English Law Doctrines

    •    Doctrine of Prevention

    •    Doctrine of Time at Large

    •    Doctrine of Mitigation

Guidance for Quantity Surveyors                                                                Page 5

								
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