The Difference Between Claim and Dispute Submissions - FIDIC Omissions

The Difference Between A Claim to the Engineer & A Claim in Arbitration?

A student recently asked, "is there any difference between a claim submitted to the Engineer and one submitted for arbitration?" My response was along the lines of “Yes, there frequently is, but there shouldn’t be”.

The Scenario:

Let me explain why by describing a very frequent scenario related to claims.

  1. The Contractor considers that he has a justifiable claim for a significant amount of money or an extension of time. This claims in turn, will negate delay damages.
  2. Our Contractor reviews the resources available to them. They allocate responsibility for preparing the claim. However, they do not ascertain whether the person preparing the claim has adequate qualifications or experience to prepare it to a suitable standard.
  3. The person given the responsibility does their best. However, lacking the necessary experience and skills, the claim is not prepared to a good standard.
  4. The Engineer rejects the claim because it cannot be understood. It does not contain adequate information, it is not substantiated or it does not prove that the claim is justifiable. Even an impartial engineer would be acting correctly in doing so. A defensive engineer would love that fact that he has an excuse to reject the claim.
  5. The contractor, still considers that a justifiable claim exists and also thinks that the engineer has acted unfairly. After several months of indecision, the Contractor elevates the matter to a dispute and calls in the lawyers.
  6. The lawyers examine the claim and response and advise the Contractor that they agree the Contractor has entitlement. But, the claim needs expressing properly if the matter is to succeed at adjudication or arbitration.
  7. The contractor still does not have anyone on the team with qualifications or experience to prepare an adequate claim. So the lawyers offer to either prepare it themselves. Or they recommend that the contractor bring in someone with appropriate skills.
  8. The properly prepared claim appears before the adjudicators and arbitrators. They in turn make an award in favour of the contractor. The whole process by this time will have taken years rather than weeks and involved the contractor in considerable time and cost.

The Reality

Maybe now you can understand why, frequently there is a difference between a claim to the Engineer and one submitted for arbitration. More importantly, you may see why there shouldn’t be such a difference. Had the Contractor just prepared his claim to a suitable standard in the first place, rather than trying to save money on the claim preparation, the matter would have been resolved quickly and for a reasonable cost.

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