An Overview of the FIDIC Contracts
A. The history FIDIC
FIDIC stands for Fédération Internationale Des Ingénieurs-Conseils, best translated from the French as the International Federation of Consulting Engineers.
The Organisation dates from before the First World War, when 59 participants met at the World Exhibition in Ghent in Belgium, agreeing a formal constitution on 22 July 1913.
“The overall mission of the Federation is “to improve the business climate and promote the interests of consulting engineering firms, globally and locally, consistent with the responsibility to provide quality services for the benefit of society and environment.”[1]
B. FIDIC Contracts
In 1999 FIDIC published a ‘suite’ of contracts, which became known as ‘the Rainbow Suite’ because of the various colours of the covers, these have been refined and developed in the intervening years and today the suite comprises the following contracts:
1. Conditions of Contract for Construction for Building Engineering Works Designed by the Employer (the Red Book)
2. Conditions of Contract for Construction Multilateral Development Banks (MDBs) Harmonised Edition for Building and Engineering Works Designed by the Employer (the Harmonised Red Book)
3. Conditions of Subcontract for Construction for Building and Engineering Works Designed by the Employer (the Red Book Subcontract)
4. Conditions of Contract for Plant and Design-Build for Electrical and Mechanical Plant, and for Building and Engineering Works, Designed by the Contractor (the Yellow Book)
5. Conditions of Contract for EPC (Engineering Procurement and Construction) / Turnkey Projects (the Silver Book)
6. Short Form of Contract (the Green Book)
7. Conditions of Contract for Dredging and Reclamation Works (the Blue-Green Book)
8. Client/Consultant Model Services Agreement (the White Book)[2]
Purpose of the contracts is to set out the obligations of each of the parties for each of the conditions of contract contained in the FIDIC suite in a simple and easily understood manner and this has been done by listing each party’s obligations separately in a table format. The conditions often require the parties to perform their obligations within specific times and tables therefore also include details of any time frames that are included within the conditions.[3]
FIDIC Conditions of Contract are recommended for general use in works subject to international tender and also suitable for use in national tenders. It has been accepted, while preparing FIDIC Conditions of Contract, that some Clauses shall be implemented generally and some should be modified depending on the features of the Work and location.[4]
C. Areas of Use of the Leading Forms
C.1. Red Book
Construction works: It is applicable to any construction works where the employer carries out the design.
Design: It is used for the works mostly designed by the employer.
Project administration: The engineer who is employed by the employer is responsible for the administration of the Project.
Payment method: Parties agree the rates to be applied to the quantity of works. The employer takes the risk that the quantities it estimates will be accurate, and the contractor must ensure that its unit prices for the quantities are sufficient.
Risk allocation: Risk allocation is fair and balanced.
C.2. Yellow Book
Construction works: It is applicable to the provision of electrical and/or mechanical plant, and for the design and execution of building oe engineering works.
Design: It is used for the works mostly designed by the contractor.
Project administration: The engineer who is employed by the employer is responsible for the administration of the project.
Payment method: Parties agree on a set price, so the contractor takes the risk of quantities.
Risk allocation: Risk allocation is fair and balanced.
C.3. Silver Book
Construction works: It is for turnkey projects.
Design: It is used for the works designed by the employer.
Project administration: The employer or its representative is responsible for the administration of the project.
Payment method: Parties agree on a set price.
Risk allocation: This contractor puts enormous risk on the contractor, such as completion to time, cost and quality are transferred to the contractor, for which the employer would pay a premium.[5]
D. FIDIC Rules in Turkey
Today FIDIC is applied 30% of international construction projects and in Turkey FIDIC mostly preferred in high volume construction projects such as Marmaray Bosphorus Project, Baku Ceyhan Pipeline Construction Project, Ankara-Istanbul Highway Construction.
FIDIC Contracts are used in construction works tendered by the Central Finance and Contracts Unit of the Ministry of Treasury and Finance, the Ministry of Industry and Technology Competitive Sectors Program, the Ministry of Environment and Urbanization, Department of EU Investments, and the Ministry of Transport and Infrastructure Transport Operational Program institutions.
The Turkish building construction industry is one of the drivers of economic growth. Many building projects were completed by contractors for private owners in the last decades. Turkish contractors are very familiar with international standards because many of them routinely undertake projects overseas. However, bespoke contracts are commonly used in local building projects by many private owners. This study investigated time and cost-related issues in 304 such contracts undertaken in Turkey and compared the findings with the relevant clauses in FIDIC Red Book, one of the most commonly used international standards.[6]
E. Dispute Resolution in FIDIC
FIDIC can generally be described as consisting of the following components:
E.1. Engineer’s Determination
The Employer shall appoint the Engineer7 to carry out specific duties and/or exercising authority as specified or implied by the Contract. The Engineer shall be deemed to act on behalf of the Employer when carrying out his/her duties unless stated otherwise and it will usually be the Employer that reimburses the Engineer.
E.2. The DAAB (Dispute Avoidance/Adjudication Board)
The main objective of the DAAB (Dispute Avoid- ance/Adjudication Board) is to settle disputes be- tween the parties without having to go through often lengthy and costly arbitration procedure.
E.3. Arbitration
If the parties have not agreed otherwise in their particular conditions, the arbitration will be settled in accordance with the Rules of Arbitration of the International Chamber of Commerce (ICC). When entering into the contract, the parties should therefore carefully consider if any deviation from this fall-back provision is need- ed, e.g. if another set of rules for international arbitration should apply the number of arbitrators; the seat of the arbitration, etc.
F. Conclusion
BIBLIOGRAPHY
1- Baker, Mellors, Cahlmers, Lavers, 2013, FIDIC Contracts: Law and Practice, CRC Press, p.1.
2- Dr. Jur. Tunay Koksal, FIDIC Conditions of Contract as a Model for an International Construction Contract, International Journal of Humanities and Social Science, Vol.1 No.8; July 2011, p.144
3- FIDIC website: https://fidic.org/
4- Hewitt, A. (2014). The FIDIC Contracts: Obligations of the Parties. John Wiley & Sons., p. 10,11.
5- Levent Sümer, David Arditi, ‘Turkish building construction contracts vs. FIDIC contracts’, Golden Light Publishing, p.115.
6- Sinem Özyiğit, “Claim Notices Under The Fidic Contracts: A Comparison Of The Civil Law And Common Law Perspectives”, YÜHFD, C.XIX, 2022/Özel Sayı, p.391-448.
[1] Baker, Mellors, Cahlmers, Lavers, 2013, FIDIC Contracts: Law and Practice, CRC Press, p.1.
[2] FIDIC website: https://fidic.org/
[3] Hewitt, A. (2014). The FIDIC Contracts: Obligations of the Parties. John Wiley & Sons., p. 10,11.
[4] Dr. Jur. Tunay Koksal, FIDIC Conditions of Contract as a Model for an International Construction Contract, International Journal of Humanities and Social Science, Vol.1 No.8; July 2011, p.144
[5] Sinem Özyiğit, “Claim Notices Under The Fidic Contracts: A Comparison Of The Civil Law And Common Law Perspectives”, YÜHFD, C.XIX, 2022/Özel Sayı, p.391-448.
[6] Levent Sümer, David Arditi, ‘Turkish building construction contracts vs. FIDIC contracts’, Golden Light Publishing, p.115.
