INTRODUCTION ..................................................................................................

3
GENERAL INDEX IN ALPHABETICAL ORDER ............................................... 25
CLAUSE 1 : DEFINITION AND INTERPRETATION......................................... 34
CLAUSE 2 : OBLIGATIONS OF THE ENGINEER ............................................ 45
CLAUSE 3 : ASSIGNMENT ............................................................................... 53
CLAUSE 4 : SUB-CONTRACTING .................................................................... 54
CLAUSE 5 : LANGUAGE OF THE CONTRACT ............................................... 57
CLAUSE 6 : DRAWINGS TO THE CONTRACTOR........................................... 61
CLAUSE 7 : DRAWINGS AND INSTRUCTIONS............................................... 64
CLAUSE 8 : GENERAL OBLIGATIONS OF THE CONTRACTOR ................... 67
CLAUSE 9 : FORMAL CONTRACT AGREEMENT ........................................... 71
CLAUSE 10 : PERFORMANCE SECURITY ...................................................... 73
CLAUSE 11 : INFORMATION REGARDING CONTRACT ................................ 76
CLAUSE 12 : TENDER AND RATES ................................................................ 79
CLAUSE 13 : INSTRUCTIONS FROM THE ENGINEER ................................... 83
CLAUSE 14 : WORK PROGRAMME................................................................. 87
CLAUSE 15 : CONTRACTORS SUPERINTENDENCE .................................... 90
CLAUSE 16 : CONTRACTORS EMPLOYEES ................................................. 92
CLAUSE 17 : SETTING OUT ............................................................................. 93
CLAUSE 18 : BOREHOLES AND EXPLORATORY EXCAVATION ................. 95
CLAUSE 19 : EMPLOYERS RESPONSIBILITIES ........................................... 96
CLAUSE 20 : CONTRACTORS RESPONSIBILITIES ...................................... 97
CLAUSE 21 : INSURANCE OF WORKS ......................................................... 101
CLAUSE 22 : INDEMNITY ............................................................................... 107
CLAUSE 23. : INSURANCE LIABILITIES ....................................................... 108
CLAUSE 24 : ACCIDENT OR INJURY ............................................................ 109
CLAUSE 25 : TERMS OF INSURANCE .......................................................... 111
CLAUSE 26 : LEGISLATIONS AND REGULATIONS ..................................... 112
CLAUSE 27 : FOSSILS.................................................................................... 114
CLAUSE 28 : PATENT RIGHTS ...................................................................... 115
CLAUSE 29 : INTERFERENCE AT WORK SITE ............................................ 116
CLAUSE 30 : DAMAGE AT WORK SITE ........................................................ 116
CLAUSE 31 : OPPORTUNITIES FOR OTHER CONTRACTORS ................... 118

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CLAUSE 32 : KEEP SITE CLEAR OF OBSTRUCTIONS ............................... 120
CLAUSE 33 : CLEARANCE OF SITE ON COMPLETION .............................. 121
CLAUSE 34 : ENGAGEMENT OF STAFF AND LABOUR .............................. 121
CLAUSE 35 : RETURNS OF LABOUR AND EQUIPMENT ............................ 122
CLAUSE 36 : FACILITIES FOR TESTING ...................................................... 122
CLAUSE 37 : INSPECTION AND TESTING .................................................... 125
CLAUSE 38 : INSPECTION OF PART OF WORKS ........................................ 128
CLAUSE 39 : REMOVAL / REPLACEMENT OF MATERIAL / PLANT........... 130
CLAUSE 40 : SUSPENSION OF WORKS ....................................................... 131
CLAUSE 41 : COMMENCEMENT OF WORKS ............................................... 135
CLAUSE 42 : HANDING OVER POSSESSION ............................................... 136
CLAUSE 43 : COMPLETION OF WORK ON TIME ......................................... 140
CLAUSE 44 : EXTENSION OF TIME ............................................................... 141
CLAUSE 45 : WORKING HOURS ................................................................... 150
CLAUSE 46 : RATE OF PROGRESS .............................................................. 151
CLAUSE 47 : LIQUIDATED DAMAGES .......................................................... 154
CLAUSE 48 : TAKING OVER / SUBSTANTIAL COMPLETION ..................... 158
CLAUSE 49 : DEFECTS LIABILITY PERIOD.................................................. 162
CLAUSE 50 : SEARCH FOR CAUSE OF DEFECT......................................... 166
CLAUSE 51 : VARIATION / ADDITIONS / OMISSIONS ................................. 167
CLAUSE 52 : VALUE OF VARIATIONS .......................................................... 174
CLAUSE 53 : NOTICE FOR CLAIM ................................................................. 179
CLAUSE 54 : CONTRACTORS EQUIPMENT ................................................ 183
CLAUSE 55 : BILL OF QUANTITIES .............................................................. 186
CLAUSE 56 : MEASUREMENT OF WORKS .................................................. 188
CLAUSE 57 : NET MEASUREMENT OF WORKS .......................................... 189
CLAUSE 58 : PROVISIONAL SUM ................................................................. 190
CLAUSE 59 : NOMINATED SUB-CONTRACTOR .......................................... 192
CLAUSE 60 : CERTIFICATES & PAYMENTS OF THE CONTRACTOR ........ 198
CLAUSE 61 : DEFECTS LIABILITY CERTIFICATE ........................................ 217
CLAUSE 62 DEFECTS LIABILITY CERIFICATE ............................................ 219
CLAUSE 63 : TERMINATION .......................................................................... 221
CLAUSE 64 : REMEDIES ................................................................................ 233

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CLAUSE 65 : SPECIAL RISKS........................................................................ 234
CLAUSE 66 : RELEASE FROM PERFORMANCE .......................................... 239
CLAUSE 67 : SETTLEMENT OF DISPUTES .................................................. 241
CLAUSE 68 : NOTICES ................................................................................... 251
CLAUSE 69 : DEFAULTS OF EMPLOYER ..................................................... 253
CLAUSE 70 : CHANGES OF COSTS AND LEGISLATION ............................ 261
CLAUSE 71 : COMPENSATION TO CONTRACTOR ..................................... 263
CLAUSE 72 : CURRENCY AND EXCHANGE RATES .................................... 264
MISCELLANEOUS AMENDMENTS ................................................................ 265

Introduction

PREFACE

This book is intended for anybody having dealings with FIDIC's "Red Book", the
4th Edition of the "Conditions of Contract for Works of Civil Engineering
Construction" published in 1987. Employers, engineers, contractors and their
respective advisors should all find something in this work to help them to
understand and make best use of these conditions of contract.

For those not familiar with the contract, the commentary to each clause starts
with a "plain English" paraphrase to enable the reader to understand the gist of
the clause as quickly as possible. Except where the meaning of the clause is
entirely obvious, each sub-clause is given a separate paragraph.

The volume also includes a set of some 94 "suggested forms" which may be
found useful by engineers, employers and contractors. These do not attempt to
anticipate particular situations but rather to use the wording of the clause to
produce a form of notice which would, it is hoped, leave no room for doubt or
debate as to whether a notice had been given, under which clause it had been
given or whether the notice was in a form which complies with the terms of the
contract. At the very least, the forms section will provide to the parties a
reference against which to check that the notice that they are giving has been
given and copied to the correct parties. There can be few types of disputes which
are as fruitless and frustrating as disputes over whether the correct form of notice
has been given in particular circumstances. Whilst there are often good reasons
for requiring notice to be given, it is rare that justice is done when an arbitrator is
forced by the contract to rule out a claim on the grounds that no or no adequate
notice has been given. In short, it is in everybody's interest that notices are given
properly. If parties wished to do so, they could agree at the outset that notices
which conform to those set out in this volume would not be open to challenges as
to form although they could of course be open to challenge in respect of their

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timing, their appropriateness or indeed the manner in which the blanks have
been filled.

Although the masculine pronouns "he" and "him" have been used from time to
time as a shorthand for the Employer, the Contractor or the Engineer, this is for
convenience and is not based on any assumption that the parties involved with
civil engineering contracts are necessarily male. The author is well aware that the
contrary is increasingly true. The usage is also consistent with the language of
the conditions.

Readers may find it strange that references will be found in this work to both the
ICE's 5th and 6th Edition. The ICE 5th Edition is referred to because the
draftsman of FIDIC's 4th Edition was plainly heavily influenced by ICE's 5th
Edition and the points of departure are interesting in themselves as well as being
useful to those readers familiar with the ICE Conditions. References to ICE 6th
Edition are included because of the history of the FIDIC form following in the
footsteps of ICE's drafting: it is therefore interesting to see which of the
innovations introduced by FIDIC in their 4th Edition have been adopted by the
ICE in their 6th. Knowledge of the ICE conditions is by no means necessary for
the user of this work, however.

As a user of commentaries of this sort, I am well aware that all too often the
particular practical problem, which a reader experiences is not, covered by the
commentary. As a writer, it is impossible to imagine all problems that might occur
even if time and the patience of the publisher would permit all problems to be
addressed. I should add that even in cases where the problem experienced by a
reader appears to have been addressed and an answer suggested, the reader
should take great care and should avoid any assumption that their particular
circumstances were being addressed. Discussion and submission in the absence
of particular facts is necessarily limited and the reader is urged to give careful
consideration and if necessary to take independent advice in relation to their
particular circumstances.

As this work is intended not only for lawyers but for the full dramatis personae of
a civil engineering project, it was decided that footnotes would be avoided and
references to legal cases given a firmly subordinate role. Given the range of legal
systems in which the FIDIC conditions are used, very often with the local law as
the law of the contract, an over-dependence on Commonwealth case-law would
not necessarily be helpful. Recent decisions and decisions from jurisdictions
other than England have been given priority.

It should be confessed at this early stage that the references to be found in Part
II, the Conditions of Particular Application, to dredging and reclamation have not
been the subject of any comment. Part II is however set out in full at the end of
this work.

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Finally, the author wishes to thank FIDIC for permitting the reproduction of the
Red Book for the purposes of this work.

ECC - LONDON

1: INTRODUCTION

Origins of FIDIC 4th Edition

FIDIC is the Federation International Des Ingenieurs-Conseils and is an

association of national associations of Consulting Engineers. They have been in
existence since 1913 and have their headquarters and secretariat in Lausanne in
Switzerland.

FIDIC have produced standard forms of contract for civil engineering projects
since 1957. The 2nd Edition was published in 1969 and the 3rd in 1977. As the
obvious comparison is between these conditions and those produced by the
Institute of Civil Engineers in the UK, known throughout this work as "ICE", it may
be helpful to record that the ICE 1st Edition was published in 1945 and the 4th
Edition in 1955. The 5th Edition was published in 1973 and it was upon this
Edition that the FIDIC 3rd Edition was closely modeled. FIDIC took the initiative
with their 4th Edition and it may be thought that ICE 6th Edition published in
January 1991 shows that FIDIC has repaid some part of its debt to the ICE. In
particular, FIDIC's ideas in relation to an express obligation upon the Engineer to
be impartial, the deemed obligation upon the Employer to disclose all information
concerning the ground conditions on site and the introduction of conciliation into
the disputes procedure after the Engineer's decision and before arbitration, may
well have influenced ICE's 6th Edition. To avoid confusion with FIDIC editions,
the ICE conditions are referred to in the commentary as ICE 5th and ICE 6th.

Nature of the Conditions

For those who are unfamiliar with FIDIC's Standard Form, it may assist if the
basic characteristics are set out:

- It is a form very much in the traditional English mode with Bills of

Quantities and a named Engineer whose functions include making certification
and other determinations independently of the Employer and indeed impartially
as between the parties.

- It is a re-measurement contract with the quantities in the bill treated as

approximate and the Contract Price having little relevance save as a means by
which the competing tenders might be judged.

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- The Employer may nominate subcontractors and has the power to make
direct payment in the event that the Contractor fails to do so. The Employer is not
made liable, as in some English forms, for delays by the nominated
subcontractors.

- Risk is divided in line with the philosophy that the Employer is best placed
to take on those risks which experienced contractors could not reasonably be
expected to foresee, which are outside the control of the parties and which are
not readily capable of being covered by insurance. Unpredictable ground
conditions are at the risk of the Employer.

The earlier editions of the FIDIC Conditions have been extensively used and the
4th Edition is rooted firmly in the tried and tested formula. The changes are
generally sensible and conservative and the 4th Edition will no doubt do equally
well.

The changes made from the 3rd Edition are referred to at the beginning of the
commentary under each clause. The principal changes are as follows:-

- Clause 2.6 (Engineer to Act impartially): an express obligation upon the

Engineer to act impartially as between the parties.

- The Engineer is required to consult with the parties under some 25

clauses prior to granting extensions of time, fixing rates or making an award of
costs. This consultation obligation is discussed further below.

- Design by the Contractor or one of his subcontractors is catered for in

clause 7.2 (Permanent works designed by Contractor), clause 8.1 (Contractor's
general responsibility) and clause 59.3 (Design requirements to be expressly
stated).

- Clause 44.1 (Extension of time for completion) now provides for an

extension for delays and prevention by the Employer.

- The amount of variation required to trigger an adjustment has been

increased from 10% in clause 52.3 (Variations exceeding 15%).

- A procedure for claims has been set out in new clause 53 (Procedure for
claims).

- Clause 60 (Payment) has now been drafted in full whereas the 3rd Edition
left the matter entirely in the hands of the parties to deal with in Part II.

- Under clause 67 (Settlement of disputes) an "amicable settlement"

procedure has been interposed between the Engineer's decision and arbitration.

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- If the Employer fails to pay on time, the Contractor is now given the option
of suspending work or reducing the rate of work as an alternative to
determination: clause 69.4 (Contractor's entitlement to suspend work).

In addition, there are numerous other material amendments and some changes
of vocabulary. Only 4 out of 185 sub-clauses escaped change altogether.

Amendment of FIDIC's 4th Edition

It is the author's experience and impression, quite unsupported by statistics, that

the FIDIC Conditions are used in an amended form, perhaps in a majority of
cases. Certainly, many of the major Employers in the Middle East adopt and
refine their own standard sets of amendments. These amendments are generally
aimed at adjusting the balance of risk in favour of the Employer rather than to
remedy any ambiguities, anomalies or discrepancies in the drafting. Clauses,
which it is suggested require attention in order to remove ambiguities, anomalies
and discrepancies and thereby to reduce the scope for conflict, are as set out
below. For the detailed criticism, the reader is referred to the commentary under
the particular clause referred to.

- Clause 2.1 (Engineer's duties and authority), inability to replace Engineer.

- Clause 2.5 (Instructions in writing), anomaly as to date of instruction.

- Clause 2.6 (Engineer to act impartially), breadth of item (d).

- Clause 7.1 (Supplementary drawings and instructions), clause 13.1 (Work

to be in accordance with Contract) and clause 51.1 (Variations): clarify
Engineer's power to instruct.

- Clause 37.4 (Rejection), clause 39.1 (Removal of improper work,

materials or plant) and clause 63.1 (Default of Contractor) item (c): remove
inconsistencies.

- Clause 42.1 (Possession of site and access there to): clarify reference to
the clause 14 programme.

- Clause 44.1 (Extension of time for completion): clarify item (b).

- Clause 46.1 (Rate of progress) and clause 63.1 (Default of Contractor)

item (b) (ii): resolve discrepancy

- Clause 49.2 (Completion of outstanding work and remedying defects):

clarify Engineer's apparent discretion to instruct remedial works.

- Clause 51.2 (Instructions for variations): resolve finally that an increase or

decrease in quantities amounts to "varied work".

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- Clause 52.3 (Variations exceeding 15%): put beyond doubt the calculation
of the 15%.

- Resolve relationship between clause 53.1 (Notice of Claim) and other

clauses with notice requirements.

- Clause 59.1 (Definition of "nominated subcontractor"): this definition

appears to be excessively wide.

- Clause 60.3 (Payment of retention money): clarify position after Taking-

Over Certificate.

- Sub-clauses 60.5 to 60.8: establish consistent policy in relation to breach

of contract.

- Sub-clauses 60.7 and 60.9 and clause 62.2 (Unfulfilled obligations): clarify
relationship between these clauses.

- Clause 63.1 (Default of Contractor): resolve doubt as to timing of the

Engineer's certificate and the Employer's notice and termination.

- Clause 65.3 (Damage to Works by Special Risks): clarify the Contractor's

apparent right to complete the works.

- Clause 67.1 (Engineer's decision): resolve relationship with clause 63.1

(Default of Contractor) and clause 69.1 (Default of Employer).

This list represents the headline items but other amendments are suggested in
the text and either party to the contract may wish to make further amendments in
their own interest. There is a further species of amendment, which might be of
benefit to both the parties such as amending clause 44 (Extension of time) and
clause 46 (Rate of progress) to enable the Employer to order acceleration in lieu
of extension of time or in circumstances where the Contractor's entitlement to
extension of time is a matter of dispute.

Generally, great care is needed when amending any standard form of contract.
These FIDIC conditions are generally well balanced and, as with any contract,
there are a great number of links and relationships between different clauses, not
all of which are express or otherwise obvious. With any amendment, therefore,
there is the danger of upsetting the balance or of creating unintended
consequential changes to related provisions. It is in the interests of all parties that
changes should be kept to a minimum.

2: THE ROLE OF THE ENGINEER

Clause 2.1 is entitled "Engineer's duties and authority" but it is necessary to look
right through the conditions to understand the full scope of his role. In the

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