What Qualifies as a Force Majeure event under FIDIC?
One of our distance learning students contacted me for some advice on a claim that she had received based on force majeure on a contract under the FIDIC Yellow Book. My advice may be summarised as follows and is also applicable to the 1999 FIDIC Red Book:
To qualify as a force majeure event, the event or circumstance needs to tick all the boxes defined in Sub-Clause 19.1 (Definition of Force Majeure), which lists the following criteria:
- Beyond a Party’s control;
- The Party could have not reasonably anticipated;
- The Party could not have reasonably avoided;
- Which is not substantially attributable to the other Party.
The sub-clause then lists examples of types of exceptional event or circumstances that should be considered as force majeure. The list includes war, hostilities, rebellion, disorder and natural catastrophes and several other circumstances. The list is not definitive and provided that an event is of a similar nature, it should qualify.
Sub-Clause 19.2 (Notice of Force Majeure) requires the party to give notice within 14 days.
Sub-Clause 19.4 (Consequences of Force Majeure) provides that, if notice has been given, the Contractor may claim for an extension of time if the Time for Completion will be delayed and the payment of any Cost for some, but not all circumstances. This sub-clause refers back to Sub-Clause 19.1 for the types of event under which Cost may be claimed.
Hi Mazo,
The 1987 edition of the Red Book does not include force majeure, but Clauses 20.4 and 65 contain similar provisions.
I hope this helps.
What’s the equivalent sub-clause of this in 1987 FIDIC? Thank you.
Hi Mazo,
Many thanks for you comment and interest. Andy will get back to you directly as soon as he can. He is currently travelling, so please bear with us. Regards, Tarryn
The event is not exceptional nor is it something which such party could not reasonably have provided being a common occurrence in third world countries. As such I do not consider it a force majeure event.
Hello Andy,
I have a question relevant to the force majeure definition and cases. I am working as a CA from the contractor’s side. During the project execution, a bundle of economic decisions had been taken leading to de-valuing the local currency by 140% from its base rate. The decision caused huge disturbance to the project and our imported materials needed for the project were delayed. This event never happened before in the history of my country, EGYPT. Can we consider this as a force majeure event? The employer imposed delay penalties claiming that the impact for the currency exchange rate has been paid to the contractor and the delay in imported materials cannot be considered as force majeure.
Kevin,
Thank you or adding some useful advice to my additional blog. To my mind, the purpose of this forum is to provide a forum where the more experienced of us may advise and help those who have less experience.
I would have loved to have been the person responsible for responding or providing a determination of the turbine/bridge event. From memory, FIDIC does not include ‘stupid drivers’ in the list of force majeure examples
Andy
It’s a bit worse than that as part of a supply and fit contract includes planning the route; i.e. it’s part of the package to plan the ‘work’, which in this case means getting the parts to the site. It’s not really FIDIC related specifically, but was a FIDICish based contract and I suppose mainly serves to demonstrate that on a lot of jobs every claim you see is so off the wall that the idea any amount of contractual knowledge will help to explain why it’s obviously not compensatable is far less useful than having an understanding of the lack of basic common sense that you’re always going to come up against—often so bad that you’ll doubt that you’ve understood their claim properly. As for explaining why it’s not payable, that’s something that’s also very hard as the most worrying thing is that some of these people actually are not chancing their arm and are actually counting on getting paid for this.
Tom,
The obverse to contractors who chance their arm by submitting spurious claims (whether they genuinely believe that they have entitlement or not), is those who have entitlement, but do not submit a proper claim. EC Harris’ Global Construction Dispute Report cites inadequately expressed claims as one of the top reasons for disputes.
If you are the party responsible for producing the claim assessment or determination, you basically have two choices:
1. Deal with all the essential points of a claim in the assessment to convince ether Employer that the claim and your assessment is just;
2. Bearing in mind that the onus is on the claimant to prove his case, reject the claim on the basis that the claimant has not demonstrated entitlement or possibly request additional particulars.
In earlier years, in an effort to settle matters proactively, I often went down the former route. This however did nothing to encourage the contractors to up their game and they continued to submit rubbish and expect me to do their job for them. These days unless the circumstances are exceptional, I tend to adopt tactic Number 2, as it is not the Engineer’s job to produce the claims, only to make a determination based on what has been submitted and the provisions of the contract.
Hello Saif,
The way I interpret SC19.4 [Consequences of Force Majeure] is that the Contractor must follow the existing contract procedure for demonstrating entitlement to time and/or cost in accordance with SC20.1 [Contractor’s Claims] once notice of Force Majeure has been given pursuant to SC19.2 [Notice of Force Majeure].
Determination or agreement of the Force Majeure claim / delay event will then follow once the Parties have been consulted under SC3.5 [Determinations].
Dear
when the employer receiving the notice form contractor as claim cause consequences of FORCE MAJEURE , the employer shall be proceed according to sub-clause 3.5 to approved such claim or just the employer can be approved without any procedures because this is common events.( the employer aware about it )
Regards
Saif aljunaiibi
According to Skoda Turbines, driving under a bridge at high speed and sheering off the turbine they were delivering to the one of a kind RDF Waste to Power Plant Industrie Park Hochst, for Infraserve, where they subcontracted to Ebara Environmental.
Do you think we paid them?
Please detail why they were or weren’t paid under the circumstances to encourage better understanding of what falls within this allegedly allusive sub-section of claims.
Hello Tom,
From the information you provided in your response you seem to be saying that the alleged Force Majeure event was caused by driving at high speed under a bridge.
I would suggest that this type of occurence was not intended to be covered by the “…but is not limited to…” part of SC19.1 [Definition of Force Majeure] the event of which should be of a similar nature to those listed. For example flooding or tsunamis is not listed under natural catastrophes.
In addition, the cause in this case, the driving under a bridge at high speed, is something that is within the control of the Party and could reasonably have been provided against before entering into a contract. The standard of driving is within the control of the hauliers as is the route taken to delivery the consignment. Any responsible haulier will know if height is going to be an issue and plan ahead by choosing a safe route or an alternative method of delivery say by sea (ship) or by air (helicopter). Of course there is another alternative which is to increase the clearance height of the offending bridge/s along the route!!
To conclude I do not think a claim of Force Majeure is valid in this instance.
This would be my interpretation from the information you have provided.
Hello Andy,
Recent experience on Force Majeure events revealed that there are effectively six (6) criteria for classifying an event under Force Majeure which is confirmed in the ‘The FIDIC Contracts Guide’ (Page 292).
Apart from SC19.1 a) to d) the event must be “exceptional” and “…it prevents the affected Party from performing…any of its obligations.”
This brings into the equation the definition of “exceptional” in respect of Force Majeure. FIDIC defines this as “…not merely “unusual”.”
Kind Regards