CONSTRUCTIVE THINKING
FIDIC 2017 – AN INTRODUCTION
For users of engineering contracts globally, 2017 was an
eventful year, with both NEC4 and FIDIC publishing new
editions of their contracts, albeit that the new FIDIC
editions only became available as the year was ending.
However, whilst NEC4 was launched under the banner
“Evolution not Revolution” with emphasis placed on the fact
that the new contract was merely a further iteration of the
predecessor contract, the same cannot be said of the FIDIC
second edition contracts (Red, Yellow and Silver), which
represent a clear departure from the previously widely-used
and highly-respected first edition forms.
Firstly, there is the increase in size – the new FIDIC
contracts are 50% longer than the previous versions.
The additional word count has been necessitated in part by
a marked change of approach. The contract now includes
a great deal more process, having evolved into more of a
project management tool, necessitating the application of
time bars and other procedures. There is nothing wrong
with this approach; the ICE withdrew its own contracts
as part of a strategic approach “to promote what we see as
a more collaborative approach to contract management which
offers value for money to clients and the construction industry at
large”, an approach which involved endorsing the NEC suite,
which first pioneered the concept of contract as project
management tool rather than a mere record of the parties
rights and obligations.
The new FIDIC contracts however lack the lightness of
touch of the NEC suite. Whilst neither contract should
be left in the drawer (because the intention is that they
should be used to actively manage the works), engineers
may require use of a small wheelbarrow to keep the new
FIDIC book, weighing in at nearly 200 pages (120 + pages
of conditions, plus appendices), readily to hand on site.
There is much detail in the new FIDIC contract, with many
intertwined clauses, which will render attempts to amend
it both tortuous and risky. Some may see this as a positive
attribute, and it was to some extent the drafters’ intention,
and yet a contract that cannot be readily streamlined or
simplified, nor modified or amended to suit the specific
demands of a particular project – and FIDIC contracts are
intended for use on a vast array of different projects in very
different locations – may render it a good deal less user-
friendly.
It will also feel a lot less user-friendly to those who are not
native English speakers. It is only available at present in the
English language, and it is quite an arduous read for those
of us who have English as a first language. Another issue
for those from foreign jurisdictions, in particular civil
code jurisdictions, will be its length. Contracts in civil
code countries tend to be much shorter, because a large
proportion of the conditions and requirements that apply to
the works are contained within the civil code. It therefore
has always been a hard job to persuade parties from
civil code countries that a contract of the length of most
standard forms is needed. FIDIC 2017 makes it that bit
harder.
To give you a flavour of the level of prescription and
detail, clause 3, dealing with the Engineer, runs to
6 pages plus 3 charts whilst sub-clause 3.7 (Agreement
or Determination) is a step-by-step guide to the procedures
the Engineer is required to undertake, involving 5 further
sub-sub-clauses. Doubtless the detail was inserted with
the best of intentions – the stated aim of the new draft
is “Improved Clarity and Certainty” – and this is achieved
by highly prescriptive provisions setting out exactly what
is expected. However, such detailed and prescriptive
drafting tends to suffer most from the law of unintended
consequences. The more prescriptive the drafting, the more
risk there is that if you have overlooked something, then the
assumption will be that you did not intend to deal with it
because you have prescribed everything else in such detail.
At its most basic level, more words tend to give people
more to argue over.
There is an irony to this, as the contract drafters have
stated that the ‘core aim’ of the “Improved Clarity and
Certainty” is to reduce the risk of disagreements regarding
interpretation of the contract terms. But take, for example,
the Engineer’s Determination at clause 3.7.2. The engineer
is required to give a notice of his determination stating
that it is a notice, and describing the determination in
detail with reasons and detailed supporting particulars.
The prescription in that one provision could lead to
numerous arguments:
■■ What if the Engineer serves a notice which complies with
the detailed requirements except that it fails to state it
is a notice? It is still a notice in practical terms, but the
Contractor may argue that it did not believe the notice
was a notice, and did not act upon it, because it did not
state it was a notice in accordance with the requirements
of the clause. This could in turn lead to delay claims if the
notice has to be formally re-issued.
■■ What constitutes ‘detail’ when describing the
determination? The parties may have differing views on
whether enough detail has been given (this is a frequent
occurrence in relation to supporting detail for e.g. final
account claims). Similarly the ‘detailed’ supporting
particulars may lead to arguments about whether
the particulars have been provided, whether they
accompanied the Notice or not and whether they were
sufficiently detailed.
The drafting in the 1999 edition was much less likely to
engender these sorts of arguments, and the sheer number
of requirements means there is a danger that compliance
with the contract procedures begins to distract from the
actual works, particularly when you consider that there are
70 clauses which may necessitate the serving of notices.
There are a number of areas where those who are used to
the 1999 forms will find changes – design liability, insurance,
and the claims and disputes provisions. We shall be looking
at these in more detail in future articles.
It follows that the sheer complexity of the contract will
only make it suitable for use on large projects. Even then,
it requires a steep learning curve, as well as parties on both
sides with a high degree of sophistication and experience
not to mention sufficient resources to be able to put in
place management procedures which will allow them
to operate the 2017 contract without falling foul of the
various sanctions, deeming provisions and time bars. If one
disregards for a moment the 1999 Red, Yellow and Silver,
there is nothing sitting between the Green book –
intended for use on relatively straightforward projects –
and the new FIDIC 2017. And yet, the vast majority
of projects will fall somewhere in between those two
extremes, so what are the options?
It is possible to bolster the Green Book by liberal and
judicious amendments to make it suitable for use on
projects up to a value of £20 million. For projects at the
£40/50 million level, the better option may be to continue
to use the 1999 forms, and that calls into question whether
the 2017 forms are in any way an enhancement or refresh
of the original first editions. They are a very different form,
which in all probability will result in them being used in a
very different way.
Time will tell how quickly FIDIC 2017 will be adopted in
practice. In the short to medium term, there is a real risk
that the books will largely remain on the bookshelf, and the
industry will continue to use the familiar first edition forms
with amendments, at least until there has been time for
participants to familiarise themselves fully with the forms.
Even then, it is unlikely that FIDIC 2017 will prove suitable
for use on a majority of projects.
Rachel Chaplin and Ian Doig

Ian Doig
Partner
T  +44 (0)114 283 3356
M  +44 (0)796 855 8936
ian.doig@dlapiper.com

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