2015/7/20 FIDICTimeBarProvisionsRealEstateandConstructionUnitedArabEmirates

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United Arab Emirates: FIDIC Time Bar Provisions

LastUpdated:30April2015
ArticlebyAndrewMacCuishandDenisMoriarty
Kennedys

Giventhefrequencywithwhichwehavereferredto,orhadothersreferusto,andEnglishCourtdecisioninterpretingpartof
theFIDICstandardform,wethoughtitwouldbeusefultorefreshyourknowledge.

ReadersmayrecallthedecisionofTheHon.MrJusticeAkenheadintheEnglishHighCourtcaseofObrasconHautreLain
SAv.HerMajesty'sAttorneyGeneralforGibraltar[2014]EWHC1028(TCC),andtheusefuldiscussionandviewsastothe
interpretationandoperationofaspectsofclause20.1(anditsinterplaywithclause8.4)ofthestandardFIDICcontract
conditionsinthiscase,theversiongenerallyknownasthe"YellowBook".

Ingeneralterms,cause8.4ofthoseFIDICConditionssetsouttheeventsentitlingacontractortoanextensionoftime,and
clause20.1addresseswhatcouldbecalledtheprocedureandmechanismfornotifyingandestablishingacontractor'sclaim
foranextensionofTimeforCompletionand/oranadditionalpayment,whethertheclaimarisesunderthecontractor
otherwise.

InthetimesinceitwasdeliveredinApril2014,thenumerousreferencestothatdecisiondemonstratesitsrelevancetothe
constructionindustry.ItisnotoftenthatacourtprovidesajudgmentonFIDICcontractsthatformofcontractmostlycomes
beforearbitrators,whereanarbitraltribunal'sdecision(award)isunlikelytobecomeknownbeyondtheparties(the
confidentialityobligationinvariablypreventsthat).

AcourtjudgmentbyMrJusticeAkenhead,adistinguishedjudgeoftheinternationallyrenownedTechnology&Construction
Court,wasthereforewelcomedbylawyersandotherprofessionalswhouseFIDIC.

Againstthatbackground,thesalientpointsofOHLv.Gibraltarareworthyofnote.

InhisjudgmentMrJusticeAkenheadhadtoconsiderwhethertheemployerwasentitledtoterminatethecontract.Thisissue
promptedaninterestingcommentaryinthejudgmentonthecontractor'srequirementswhengivingavalidnoticeofdelay
leadingtoconsiderationofanextensionoftime.MrJusticeAikenhead'scommentsinrelationtoClause20.1,andthecondition
precedentrequirementsnecessarytogivingavalidnoticeforextensionsoftimeandmoney,areofparticularinterestandthe
focusinthisarticle.

TosummarisebrieflythefactsofthecaseadisputearosebetweenObrasconHautreLainSA(OHL),aSpanishbased
contractor,andtheGovernmentofGibraltarregardingaprojectcalledtheAirportAccessTunnelWorks.OHLcontractedto
designandconstructaroadandtunnelundertheeasternendoftherunwayatGibraltarAirportthecontractwasgovernedby
thelawofGibraltar.Theprojectranovertime.Workswereduetobecompletedin2010,andtheGovernmentterminated
OHL'scontractinAugust2011,atwhichstageitwassaidthatonlysome25%ofthecontractedworkshadbeencompleted.

OHLsubsequentlyissuedproceedingsforbreachofcontractandinresponsetheGovernmentlodgedacounterclaimforthe
damagescausedbyOHL'sallegedfailuretocompletetheworkstheyhadcontractedtocarryoutonscheduleandwithinthe
allocatedbudget.

Centraltothecasewastheinterpretationofthenoticerequirementsrequiredforanextensionoftime.Theprincipalfocuswas
thusuponthefirsttwoparagraphsofclause20.1intheFIDICYellowBookConditions,whichread:

"IftheContractorconsidershimselftobeentitledtoanextensionoftheTimeforCompletionand/oranyadditionalpayment,
underanyClauseoftheseConditionsorotherwiseinconnectionwiththeContract,theContractorshallgivenoticetothe
Engineer,describingtheeventorcircumstancegivingrisetotheclaim.Thenoticeshallbegivenassoonaspracticable,and
notlaterthan28daysaftertheContractorbecameaware,orshouldhavebecomeaware,oftheeventorcircumstance.

IftheContractorfailstogivenoticeofaclaimwithinsuchperiodof28days,theTimeforCompletionshallnotbeextended,the
Contractorshallnotbeentitledtoadditionalpayment,andtheEmployershallbedischargedfromallliabilityinconnectionwith
theclaim.Otherwise,thefollowingprovisionsofthisSubClauseshallapply...."

Thisclauseputstheonusonthecontractortoprovideduenoticeforeither(i)aneventorcircumstancewhichnoweffectsthe

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2015/7/20 FIDICTimeBarProvisionsRealEstateandConstructionUnitedArabEmirates
dateoftheTimeforCompletionoraclaimforanadditionalpayment,or(ii)aneventthatwilleffectthecompletiondatesome
timeinthefuture.

Asthesecondparagraphquotedabovemakesclear,theeffectofthewordingofclause20.1isthatitisaconditionprecedent
clausewhichmeansthatshouldacontractorfailtoprovidetherequirednoticetheresultwillbethatthecontractorloosesits
entitlementtoanyextensionoftimeoradditionalpayment.Assuch,foracontractor,itisanonerousclause.

Clause20.1hastobeviewedinconjunctionwithClause8.4whichsetsoutwhenacontractorisentitledtoan28day
extensionoftimeandwhensuchanextensionbegins.Clause8.4goesontolisttheeventsthatentitlethecontractortoan
extensionoftime.

Theperceivedgeneralindustryinterpretationofclause20.1,beforeOHLv.Gibraltar,wasthatthebackstopdateof28days
forgivinganoticecommencedwhenthecontractorbecameaware,orshouldhavebecomeaware,oftheeventor
circumstanceinquestiononthatbasismanycontractor'sfoundtheyweretoolatetogivenoticewhenseekinganextensionof
time.

MrJusticeAkenhead,whenconsideringtheprovisionsofclause20.1inrelationtothecircumstancesofthecase,saidthat
clause20.1shouldbeconstruedbroadlyandclause8.4hadtobetakenintoaccountwhenconsideringextensionsoftime.

HewentontosaythatanextensionoftimeentitlementarisesifandtotheextentthattheTimeforCompletionisorwillbe
delayed.Adoptingthatlogic,aclaimcanbemadeeitherwhenitisobvioustherewillbeadelay,orwhenthedelayhasstarted
tobeincurred.

Toreachhisdecisionthatanextensionoftimecanbeclaimedforeitheraprospectiveorretrospectivedelay,MrJustice
Akenheadsaidthatclause8.4waswordedinsuchawaythatacontractorisentitledtochoosefromeitherpointwhendeciding
whichisthetriggerforgivingnoticeclearlanguagewouldberequiredinthecontracttodeprivethecontractorofthatoption.

Consideringtheabove,theOHLv.Gibraltardecisionhasbeenunderstandablyviewedasadvantageoustocontractors
operatingunderFIDICcontracts.Itwillbeinterestingtoobserveovertimetheimpactofthejudgmentonthedraftingof
conditionprecedentclausesregardingnoticesasemployers,invariably,seektoensurethatnoticebegivenattheearliest
possiblestage.

Thecontentofthisarticleisintendedtoprovideageneralguidetothesubjectmatter.Specialistadviceshouldbesoughtabout
yourspecificcircumstances.

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