If Clauses 12 “Evaluation” and 13 “Variations” come within the ambit of Sub-Clause 20.1, can Sub-clause 20.1 be avoided when it comes to valuation orders?

Let’s imagine: what if the Engineer in a FIDIC Red Book fails to issue a Variation Order based on Clauses 12 and 13 and, at the same time, the Contractor does not serve a formal notice of claim under Sub-Clause 20.1. Can, in this case, the Engineer reject the request for a Variation Order for not being notified in the timeline set out in Sub-Clause 20.1, or will he still issue the Variation Order?

Facts:

  • The Red Book published by the International Federation of Consulting Engineers (FIDIC) places the responsibility for measuring and valuing work on the Engineer. Fact.
  • The fact that the Contractor makes the measurement and valuation of its own work does not absolve the Engineer of its duty to measure and value the work actually executed. Fact.

Argument:

In one opinion, there is no need for the Contractor to make a claim under Sub-Clause 20.1 to enable the operation of Clauses 12 and 13 if the Engineer fails to issue a Variation Order.

The intent of Clauses 12 and 13 is that the Engineer should carry out the function of measurement and valuation as part of its role as specified in the Red Book and without notice from Contractor.

Therefore, the Contractor is entitled to expect that the Engineer carries out its duty under Clauses 12 and 13 and does not have to give a notice under Sub-Clause 20.1.

The notice-giving provisions of Sub-Clause 20.1 apply only when specifically stated in the Red Book, for example in Sub-Clause 1.9, which entitles the Contractor to an extension of time or to the payment of cost plus profit, subject to Sub-Clause 20.1. If the Red Book is silent on this issue, then the respective Sub-Clause does not apply.

Consequently: (i) the Engineer cannot rely upon the breach of the notice-giving obligation in Sub-Clause 20.1 as grounds for rejecting a claim for a Variation Order based on Clauses 12 and 13, and (ii) the Employer must pay the Variations that the Engineer rejected as not being claimed in a timely manner in accordance with Sub-Clause 20.1.

In another opinion, in the event the Engineer does not comply with any of the Red Book provisions, the only way for the Contractor to obtain satisfaction of its claims is to resort to the provisions of Sub-Clause 20.1.

The fact that Clauses 12 and 13 do not directly refer to Sub-Clause 20.1 for conflict resolution in relation to Variations does not make Sub-Clause 20.1 ineffective in this respect. Sub-Clause 20.1 is an umbrella clause for each and every claim under the Red Book. The operation of Clauses 12 and 13 implicitly involves the observance of Sub-Clause 20.1.

However, the exact opposite conclusion to the one above may be reached.

Conclusion:

While the debate is still open, a prudent approach will have the Contractor issue a Sub-Clause 20.1 notice in relation to any claims based on Clauses 12 and 13 of the Red Book. The same prudent approach will guide the Engineer not to rely upon the notice-giving watershed for rejecting a claim that was not made in due time.