In this case, the Court of Appeal unanimously dismissed an appeal against Akenhead J's decision that the employer (AGG) was entitled to terminate the contractor's (OHL) engagement under a contract based on the FIDIC yellow book. The appeal was based on three grounds:
- that the court had wrongly rejected OHL's claim for relief arising from unforeseeable physical conditions under clause 4.12
- the court had erred in failing to find that certain engineer's documents constituted variations under clause 13.1
- the court had erred in finding AGG had validly terminated the contract under clauses 15.2 (a), (b) and (c)(i)
In relation to ground (1) the Court of Appeal confirmed the approach required by clause 4.12, "The contractor must draw upon its own expertise and its experience of previous civil engineering projects. The contractor must make a reasonable assessment of the physical conditions which it may encounter. The contractor cannot simply accept someone else's interpretation of the data and say that is all that was foreseeable." In relation to ground (2) the Court noted that the first instance decision relied on a finding of fact following "heated discussion" during the trial and as such could not be re-opened. Ground (3) arose out of AGG's termination of OHL's engagement on grounds that it failed to comply with a notice to correct, and abandoned or failed to proceed with the works. In considering OHL's failure to proceed the Court relied on the decision in Sabic v Punj Lloyd , noting that there had been a serious breach of clause 8 (the obligation to proceed with the works with due expedition) which "is not directed to every task on the contractor's to-do list. It is principally directed to activities which are or may become critical". OHL had no excuse for its failure to proceed with the tunnelling works.
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