session 1: startingoutright: daab and fidic 2017 clauses · effective project management ... –...

Session 1: Starting Out Right:DAAB and FIDIC 2017

clauses

Aisha Nadar Member, FIDIC Board of Directors

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Effective Project Management

• Issues raised, addressed and disputes resolved during project progress– Dispute avoidance and containment

• Project success requires effective handling of claims and disputes– Timely raising of issues– Open and structured communication– �Real Time� issue resolution

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Exploring One of Your Climbing Tools: the New FIDIC Contracts

Risk Handling Practice in FIDIC Contracts

• FIDIC Guide, pp. 88-89“…. Major projects give rise to major risks, which have to be dealt with if they occur....In these events, the claims procedures are specified so as to provide the degree of formality considered necessary for the proper administration of a…project.

Complying with these procedures and maintaining a co-operative approach to the determination of all adjustments should enhance the likelihood of achieving a successful project.”

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DAAB and the FIDIC 2017 Rainbow Suite • Red Book

Conditions of Contract for Construction for Building and Engineering Works Designed by the Employer, 2nd Edition 2017

• Yellow BookConditions of Contract for Plant and Design Build, for Electrical and Mechanical Plant, and For Building and Engineering Works, Designed by the Contractor, 2nd Edition 2017

• Silver BookConditions of Contract for EPC/Turnkey Projects, 2nd

Edition 2017

The 2017 UpdatesClaims separated from disputes

• Clause 20: Employer’s and Contractor’s Claims• Clause 21: Disputes and Arbitration• Defined terms– “Claim” – request or assertion• Engineer: Determine Claims (SC 3.7.2)

– “Dispute” – claim made, and rejected, and first party does not acquiesce (submit or comply silently or eg by serving a NOD);• DAAB: Decides Disputes (SC 21.4.3)

The 2017 UpdatesClaims separated from disputes

• The addition of definitions of Claim and Dispute – a step in the right direction?

DAAB and the FIDIC 2017 Rainbow Suite

• Standing Dispute Avoidance and Adjudication Boards (DAAB)– Ad hoc DAB no longer recommended– Constitution of DAAB even where one Party objects– Focus on dispute avoidance • Assistance and informal discussions to resolve

disagreements (21.3)– DAAB decision binding on Parties and Engineer• Closing the 20.7 gap

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• Standing Dispute Avoidance and Adjudication Boards (DAAB)– Ad hoc DAB no longer recommended– Constitution of DAAB even where one Party objects– If fees not agreed, either Party or the DAAB Member may

apply to the appointing entity to set the amount of the non-agreed fee

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• Standing Dispute Avoidance and Adjudication Boards (DAAB)– Contract Data• 21.1............. list of proposed members of DAAB– proposed by Employer– proposed by Contractor

• 21.2............. Appointing entity (official) for DAAB members.– Unless otherwise stated, it shall be the President of

FIDIC or a person appointed by the President

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• Standing Dispute Avoidance and Adjudication Boards (DAAB)– Focus on dispute avoidance • Assistance and informal discussions to resolve

disagreements (21.3)

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Sub-Clause 21.3 Avoidance of Disputes

• Parties may jointly request (in writing, with a copy to the Engineer) the DAAB to provide assistance and/or informally discuss and attempt to resolve any issue or disagreement that may have arisen between them during the performance of the Contract. – If the DAAB becomes aware of an issue or disagreement, it

may invite the Parties to make such a joint request– Request may be made at any time, except during the period

that the Engineer is carrying out his/her duties under Sub-Clause 3.7 Agreement or Determination, unless the Parties agree otherwise.

Sub-Clause 21.3 Avoidance of Disputes

• Informal assistance may take place during any meeting, Site visit or otherwise.– Both Parties shall be present at such discussions• Unless the Parties agree otherwise,

– DAAB views may be orally or in writing– Parties are not bound to act on any advice given during

such informal meetings, and the DAAB shall not be bound in any future Dispute resolution process or decision

– DAAB is not to exercise dispute avoidance powers while Engineer’s determination is pending

Avoiding DisputesDAAB Rules

• Rule 2: Where Sub-Clause 21.3 [Avoidance of Disputes ] of the Conditions of Contract applies, the DAAB (in the case of a three-member DAAB, all three DAAB Members acting together) may give Informal Assistance during discussions at any meeting with the Parties (whether face-to-face or by telephone or by video conference) or at any Site visit or by an informal written note to the Parties.

Avoiding DisputesDAAB Rules

• Rule 3: The purpose of meetings with the Parties and Site visits by the DAAB is to enable the DAAB to:– (a) become and remain knowledgeable about the

contract and informed the Parties’ performance of the Contract; the Site and its surroundings; the progress of the Works

– (b) become aware of, and remain informed about, any actual or potential issue or disagreement between the Parties; and

– (c) give Informal Assistance if and when jointly requested by the Parties.

Resolving Disputes

• Sub-Clause 21.1 – �Disputes shall be decided by a DAAB in accordance with

Sub-Clause 21.4…�

• Sub-Clause 21.4.3 – It is referred to a DAAB within 42 days of notice of

dissatisfaction[NOD] from Engineer’s determination (3.7)

• If no reference to a DAAB within 42 days, NOD deemed to have lapsed SC 21.4.1(a)

– The DAAB shall complete and give its decision within: 84 days

– The decision shall be reasoned and given in writing


• Standing Dispute Avoidance and Adjudication Boards (DAAB)– DAAB decision binding on Parties and Engineer• Closing the 20.7 gap

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Resolving Disputes

• DAAB Decisions– Any order for a payment is immediately due and payable

without a certificate– The DAAB may require the payee to provide an

appropriate security as part of the decision SC 24.4.3(ii)• At the request of a Party but only • If there are reasonable grounds for the DAAB to believe

that the payee will be unable to repay such amount in the event that the decision is reversed under Sub-Clause 21.6 [Arbitration]

Resolving Disputes

• DAAB Decisions– The decision shall be binding on both Parties, who shall

promptly give effect to it• Whether or not it is subject to a NOD or partial NOD

(SC SC21.4.4(i)(ii))• The Employer shall be responsible for the Engineer’s

compliance with the DAAB decision

Resolving Disputes

• Sub-Clause 21.7 – Enforcement via arbitration, in the event of party failure

to comply• Whether binding or final and binding

Challenge of DAAB Members

• Rule10: Objection Procedure• Rule11: Challenge Procedure

Guidelines for DraftingFIDIC Golden Principles

• GP5: All formal disputes must be referred to a Dispute Adjudication Board for a provisionally binding decision as a condition precedent to arbitration.

An Introduction to the Revised FIDIC Conditions of Contracts

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Aisha Nadar

Member, FIDIC BoardAdjudicator, FIDIC’s President’s List

Advokatfirman Runeland ABSturegatan 12SE-11436 StockholmSwedenT: +46 725 765 510E: [email protected]

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session 1: startingoutright: daab and fidic 2017 clauses · effective project management ... –...

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