Sub-clause 20.1 of the common and civil law FIDIC
The contractor’s notice of claim provisions of sub-clause 20.1 are one of the most sensitive provisions of FIDIC contracts. However, the effectiveness and enforceability of these provisions may be affected by the law which the parties have chosen to govern the contract.
Main characteristics of sub-clause 20.1 of the FIDIC contract
Sub-clause 20.1 provides that the contractor must notify the engineer of any claim related to an extension of the time limit for completion and / or any additional payment, “as soon as possible”, and within 28 days of the date on which the contractor “Became aware, or should have known, of the relevant event or circumstances”. In the absence of notice within this period, FIDIC contracts specify that the contractor may not claim any extension of time or additional payment. In addition, the employer will be released from all liability in connection with said claim.
Common law approach
English law has historically taken a strict approach to limitation clauses such as these and considers compliance with sub-clause 20.1 as a condition precedent to the contractor’s request for an extension of time and additional payment. This interpretation was recently confirmed by the High Court in Obrascon Huarte Lain SA v Attorney General of Gibraltar. 2 This means that if the contractor does not provide the required notice, the contractor will lose his contractual rights and will no longer be able to claim an extension of time or additional payment. This potentially provides the employer with a full defense in the event of a contractor’s claim. It can reasonably be expected that this interpretation will be followed in other common law jurisdictions.
Civil law approach
Civil law courts generally take a more lenient approach. Although the starting point is that the parties are bound by the terms of the contract, strict non-compliance with sub-clause 20.1 may not necessarily prevent the contractor’s claims from being pursued on the basis of arguments. under applicable civil law. The entrepreneur will bear the burden of proof that his complaints are valid and are not affected by his breach of his notice obligation. Confronted with an alleged non-compliance with sub-clause 20.1, an entrepreneur could raise arguments based on a violation by the employer of the principle of good faith3 or that the fact that an employer relies on the default of a contractor to give timely notice constitutes an illegal exercise of a right because the consequences are disproportionate to the harm that will be suffered.4 Finally, most civil codes strictly regulate limitation periods5 and it may be possible for a entrepreneur to argue that a limitation provision that contravenes the Civil Code is inapplicable. The availability of these arguments and their success will depend on the particular facts and applicable law, as well as their acceptance by the competent court or arbitral tribunal.
Conclusion – the future?
Future second editions of FIDIC contracts to be published shortly are expected to relax the strict provisions of current contracts by giving DAB an element of discretion to override the 28 day notice period when the late submission was “acceptable” in the circumstances. . If adopted, this could reassure entrepreneurs, but is not without uncertainty as to when such relief may be available.
Regardless of jurisdiction, contractors should ensure that they comply with the contractual requirements of sub-clause 20.1 to give timely notice of claims to avoid uncertainty.