Notices of Claim and Civil Law
I recently read an interesting article by Joseph Durkin, Senior Vice President at Burford Capital. The article discusses notices, with a focus on the Saudi Arabian jurisdiction.
This region is known for using FIDIC. And under FIDIC, once aware of an event which provides entitlement to claim, the Contractor must submit a notice of claim within 28 days. If notice is not given, the Contractor loses all entitlement. Now, in a common law jurisdiction, the situation is simple. If the Contractor has signed an agreement which says that if they do not submit a notice, the court will uphold the Contract. As a result, the Contractor will not be entitled to anything. In civil jurisdictions, however, things may not be quite so straightforward.
The article refers to the findings of tribunals in Saudi Arabia, Dubai, Qatar and Kuwait. In these jurisdictions, the parties must act in good faith. The article explains that in some circumstances, however, the notice provisions have not been upheld either entirely or partially by arbitral proceedings or in the courts. The important phrase here, however, is “in some circumstances”. In some cases, the situation is certainly not clear cut-and in other circumstances, the time bar has been upheld. Whilst the article draws on Middle East experiences, it doesn’t matter where in the world you are working, this situation is fairly typical of civil law jurisdictions.
Given the uncertainty of such a situation, isn’t it better to simply give notice within the time frame rather than be forced to spend time and a lot of money challenging a decision via legal proceedings?
10 Tips for Notices
Preparing and sending a notice of claim is not an onerous task, so here are my 10 top tips for getting notices right:
1. Ensure that the document is identified as a notice.
2. Ensure that the notice is delivered to the address(es) stated in the Contract.
3. Ensure that the notice is delivered by the means stated in the Contract.
4. Ensure that the notice is copied to the Employer.
5. Make reference to the clause(s) of the Contract which require the notice to be given.
6. Briefly describe the circumstances of the event giving rise to the notice.
7. Record relevant dates in the notice.
8. Restrict the contents of the notice to the requirements of the clause that requires the notice to be given. Do not go into detail of the effect of the event. The time to do this is when you submit the particulars of the claim.
9. Avoid accusatory language and finger pointing. A simple statement of the facts cannot be argued and is less likely to elicit a defensive response.
10. If you are unsure whether the event will have an effect on the time for completion or will incur additional cost, send a notice anyway. If, having later examined the circumstances more thoroughly, you decide not to submit a claim, then it’s a simple matter to write to confirm the situation.
Interested in learning more about notices under FIDIC? Check out our FIDIC e-courses where we cover this topic and much more regarding your obligations, rights and remedies under these popular contracts.
You may also be interested in adding these books to your bookshelf: FIDIC 1999 Notices and FIDIC 2017 Notices.
Can a FIDIC Engineer Reject the Contractor's Programme?
One question that is often asked by students is “what actions can the FIDIC engineer take after reviewing the contractor’s initial programme?”. Many people think that the engineer may ‘reject’ the programme if he/she has reason to do so, but this is incorrect.
Let’s have a look at what Sub-Clause 8.3 (Programme) of the 2017 Edition of the Red Book has to say on the subject.
Firstly, it includes a lengthy list of requirements and inclusions that the programme should comply with. The detailed wording has been reduced here for clarity:
- The programme shall be prepared using programming software stated in the specification.
- The commencement date and the time for completion, of the works and of each section.
- The date the contractor will be given right of access to and possession of the site.
- The order in which the contractor intends to carry out the works.
- The review periods for submissions.
- The sequence and timing of inspections and tests.
- All activities, logically linked and showing the earliest and latest start and finish dates and the critical path.
- The dates of days of rest and holiday periods.
- Key delivery dates of plant and materials.
- A supporting report which includes:
- a description of all the major stages of the execution of the works
- a general description of the methods which the contractor intends to adopt in the execution of the works
- the contractor’s estimate of the number of personnel, and equipment required on the site.
Sub-Clause 8.3 (Programme) then goes on to deal with the engineer’s actions after receiving the programme for review:
‘The Engineer shall Review the initial programme… submitted by the Contractor and may give a Notice to the Contractor stating the extent to which it does not comply with the Contract …’
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10 Things Construction Gets Wrong When it Comes to Claims
Inadequately expressed claims are one of the leading causes of time-consuming and costly disputes. Avoid common mistakes to ensure acceptance of claims.
In this post, we set out ten common reasons that claims end up as disputes and offer best practice tips so you can ensure you do better. Take a look at the following, have you fallen foul of them? Are you constantly looking out for them so you can avoid them?
Common Mistakes
- Contractors wait until the end of the project to submit claims, instead of submitting claims when entitled to, as the project progresses.
- Contractors include several delay events into a single consolidated claim instead of preparing separate claims for each delay event.
- Contractors do not give notices of claim within contractual timeframes, and notices do not contain necessary information.
- Claims do not contain an adequate examination of cause, effect, and entitlement to justify the claim.
- Claims are not adequately substantiated to prove that the claim is just.
- Engineers and contract administrators do not follow their contractual obligations to respond to claims and attempt to reach agreement.
- Both claims and responses to claims are poorly expressed, so the recipient has difficulty in understanding the claimant or respondent’s positions.
- Delay analyses to demonstrate extensions of time are not performed following good practice.
- Cost claims are poorly demonstrated and substantiated.
- Those tasked with preparing and responding to claims are inadequately trained and qualified.
Whilst very common mistakes, these are all avoidable. They are all things you can keep an eye out for and minimise or even eliminate to ensure project success.
If you would like to learn how to submit successful claims and achieve quick resolution on projects, take a look at our e-courses.
Will Your Contract Admin Stand Up to Future Claims?
Good contract admin (or administration) is key to any successful project. If a claim is to succeed, it must contain certain essential elements: Cause, effect, entitlement and substantiation.
In other words:
- What happened that gave rise to the claim.
- The dates that various events occurred.
- The effect of delays on the time for completion
- In the case of incurred costs: Are they appropriate? Are they calculated correctly?
- Does the contract contain entitlement to compensation?
- Is every statement or fact in the claim substantiated?
We should also remember that the onus is on the claimant to prove that the claim is just. It is not the respondent’s job to do this when reviewing the claim.
To achieve this, the contractor’s contract administration systems must be able to support future claims. If they are not, it will be difficult or impossible to prepare a claim that fulfils these criteria.
Contract Administration: Things to Consider
Some things to consider in this respect are as follows:
- Is your record keeping adequate and can the records be easily retrieved?
- Are important and formal records drafted so that they may be understood by a person not familiar with the project?
- Are notices that are required by the contract given within the prescribed time frames? Do they contain the correct information?
- Has a baseline programme been established? Is it prepared in line with good practice?
- Are revised programmes prepared when circumstances dictate?
- Are progress updates accurate? It is difficult to subsequently claim a delay if progress has been reported showing no delay.
- Do monthly reports adequately record the events, and may they be understood by a person not familiar with the project?
- Are daily records of resources deployed to the project being maintained and submitted to the engineer on a regular basis?
- Do you have adequate and properly qualified and experienced resources to create and maintain efficient contract administration?
- Do you have adequate and properly qualified and experienced resources to prepare your claims?
If you can answer yes, to all these questions, there is a good chance of success for your claims. If not, then you may need to reconsider your approach.
For more help with these subjects, why not consider joining one of our e-courses?
FIDIC 2017: What You Need to Know Now
It is now 5 years since the FIDIC 2017 editions of the Red, Yellow and Silver Books were published. As anticipated, it’s taking the industry some time to get on board and adopt these latest editions on projects.
Change Can Be Uncomfortable....But it's Inevitable
Nobody likes change. Employers and engineers are no different. It can be uncomfortable and it takes time and effort to take effect. But, as time moves on more and more projects will move to the FIDIC 2017 editions and it's critical that project teams understand these contracts.
I also suspect that Read more
Increases in Material & Other Costs
The consultancy side of our business has recently received enquiries along the lines of the following. “We have come to the end of our project and are facing a huge loss due to increases in the cost of materials and shipping and because of measures that we have had to adopt to control COVID-19. What can we do?”
FIDIC 2017 Notices
A guide to the requirements, content and composition of notices under the FIDIC 2017 Red, Yellow and Silver books
Some of the biggest mistakes that contractors make when it comes to claims under FIDIC 2017 relate to notices. Such failures include failure to:
- Give notices when obliged to do so by the contract.
- Give notices within the time frames specified in the contract.
- Properly identify communications as notices.
- Record the necessary information within notices.
- Cite the contractual clause under which the notice is given.
- Address and/or copy the notice to the correct party.
- Deliver to the notice to the place specified in the contract.
- Deliver to the notice by the means of communication specified in the contract.
Claims Class Helps Student Secure US$1 Million
This month, I am going to allow myself a pat on the back because of a success story from a recent Claims Class student.
A person from an African country contacted me to discuss enrolling in one of our claims courses. They had found out about Claims Class after purchasing a copy of my book FIDIC 1999 Notices. This is what they shared with me.
The Problem
This individual works for a Contractor on a project under FIDIC where the Employer did not pay by the due date. The clauses entitling the Contractor to financing charges and to suspend the Works in the case of late payment had been struck out of the Contract.
Notwithstanding this, my contact wrote a letter. In it, they gave formal notice of non-payment and followed up with a notice of termination based on the example contained in the book. Upon receiving this notice, the Employer organized an emergency meeting. They not only made the outstanding payments but also paid the next certified amount before the due date.
The Result
The individual then put the lessons they learned on the course into action. They submitted claims for an 81-day extension of time and associated prolongation costs. The Engineer awarded a 60-day extension of time and costs in excess of US$ 1 million. I would like to think this was excellent value for the purchase price of the course and the book!
After this success, they considered the next steps in their career progression. They have decided to specialize in contractual matters and claims. They enrolled in our Perfect Claim E-Course and are currently on track for an excellent grade.
I wish them luck in their search for a new direction in their career.
If you would like to know more about our e-courses and how they can help you take the next step in your career, visit our e-courses page.
Why do Final Accounts lead to Disputes?
I recently provided advice on a dispute of US$250M. This sum includes variations, prolongation costs, acceleration costs, disruption costs and delay penalties. The dispute crystalised when the contractor submitted his final account. This is a familiar occurrence. In fact, a large proportion of disputes occur when the project is either nearing or after completion.
FIDIC 1999 Notices - Andy Hewitt's Latest Book
At the end of 2019 I was working with a contractor-client on several extension of time and additional cost claims. I needed to demonstrate that the contractor had complied with the contractual notice provisions in FIDIC.
This client had sent some notices. In most cases though, these didn’t comply with the contract requirements. In many cases they were completely meaningless as notices.