Employers love Sub-Clause 20.1 of FIDIC. It’s a time bar. The contractor has 28 days to bring a claim for time and money. If the Contractor misses the 28 day window it loses its right to bring a claim. If the contractor is late, employers point to the time bar, shout, “too late!” and put the claim in the bin. Following the Obrascon case, can an employer still behave in this way?
In this case the contractor, Obrascon, was engaged on the FIDIC Yellow Book, with a few minor tweaks, to design and construct a road and tunnel. There had been issues relating to bad weather and the discovery of rock. This had affected the progress of the works and the contractor submitted a claim for more time. The employer, the Government of Gibraltar, argued that the contractor’s claim was time-barred. The contractor disagreed.
Sub-Clause 20.1 says that the clock starts ticking from when the Contractor becomes aware, or should have become aware, of the event or circumstance giving rise to the claim. The employer argued that the clause should interpreted strictly – i.e. 28 days from knowledge of the relevant event giving rise to the claim. The contractor argued that the 28 days should run from when the contractor knew that the event affected the progress of the works. This was later than the date of the relevant event itself.
Mr Justice Akenhead preferred the contractor’s arguments. He determined that notice does not have to be given until the contractor is aware, or should have been aware there, of the delay. This is good news for contractors as the clock will often start ticking later than the date of the relevant event. However, the judge made it clear that contractors are still required to issue a notice. If they forget, therefore, employers will still be able to point to the time bar, shout, “too late!” and put the claim in the bin.