Changes To The Claims Provision In The Proposed Second Edition Of The Yellow Book

In December 2016 at the FIDIC Users Conference held in London, FIDIC presented a pre-release version of its second edition of Conditions of Contracts for Plant and Design Build ("the Proposed 2017 Yellow Book") which is due to be published during the course of 2017.1 This article addresses the changes, in relation to the Claims provisions, between the first edition of Conditions of Contracts for Plant and Design Build ("the 1999 Yellow Book") and the Proposed 2017 Yellow Book. The main changes to the Claims provisions in the Proposed 2017 Yellow Book are as follows: 2.1 The procedure for Employer and Contractor Claims is now addressed in one place under Clause 20, with both Parties being subject to the same procedure and obligations. 2.2 Clause 20 now deals solely with Claims, with dispute resolution being addressed in a new Clause 21. 2.3 Clause 20 categorises Claims, and the procedures are different depending on the type of Claim. 2.4 Clause 20 contains two obligations that may result in a claiming Party losing its right to claim in the event of non-compliance, the first being the obligation to provide an initial Notice of Claim within 28 days, and the second being the obligation to provide a fully detailed Claim within 42 days. 2.5 Clause 20 provides the opportunity for a claiming Party who has not complied with the time limit obligations noted above to obtain a ruling from the Dispute Adjudication/Avoidance Board for a waiver of the obligation to comply with these time limits.

Employer and Contractor Claims addressed in one place

In the 1999 Yellow Book the procedure for Employer Claims is governed by Sub-Clause 2.5, whereas the procedure for Contractor Claims is governed by Sub-Clause 20.1. In the Proposed 2017 Yellow Book both Employer and Contractor Claims are governed by a single clause. However, this is more than cosmetic change because under the 1999 Yellow Book it is not only the case that Employer and Contractor Claims are governed by different Sub-Clauses but also that the procedure and obligations in respect of those Claims are different. The most striking difference between the Parties' respective obligations concerns the obligation to give notice of their Claims and the consequences of not complying with that obligation. In the 1999 Yellow Book the Contractor is under an obligation to give notice of its Claim as soon as practicable, and not later than 28 days after the Contractor became aware, or should have become aware, of the event or circumstance giving rise to the Claim. In the event the Contractor failed to comply with this notice obligation then the Employer would be discharged from all liability in connection with the Claim. In many jurisdictions the Contractor's notice obligation has been treated as a strict condition precedent such that non-compliance means that the Contractor loses its right to claim. In contrast the Employer is under an obligation to give notice of its Claim as soon as practicable after the Employer became aware of the event or circumstances giving rise to the Claim, i.e. there is no equivalent 28-day time limit. There is also no equivalent express provision to the effect that the Contractor would be discharged from all liability in connection with the Claim if the Employer did not comply with its notice obligation. Because the obligations are expressed differently there has been uncertainty as to whether non-compliance by the Employer with its notice obligations would mean the Employer loses his right to claim. The obligations and consequences of not complying with those obligations under the 1999 Yellow Book are considered by many practitioners to be unbalanced in favour of the Employer. The Proposed 2017 Yellow Book redresses this balance and sets out the same procedure and obligations for both the Employer and the Contractor within the same Clause. Different procedures depending on the type of claim

The next feature of the revised Clause 20 is that it categorises Claims into different types and provides for different procedures depending on this categorisation. The first category is where a Party has a Claim for additional payment or extension of time. These Claims therefore include Contractor Claims for additional payment and extension of the Time for Completion of the Works and Employer Claims for additional payment (or a reduction of the Contract Price) and extension of the Defects Notification Period. The second category is for Claims for any other relief not falling into the first category. An example of a Claim falling into the second category might be one for specific performance (i.e. to compel one Party to comply with its obligations). The...