- By Azeez Nazar Sabri
Construction Contracts are very specific and complicated contracts.
Every major construction and engineering project involves many
contractual relationships. Disputes can arise from any of those
contractual relationships, ranging from Employer/ owner default in providing
construction inputs in time i.e. possession of clear work front, release of
drawing and release of payments etc. to
defaults of the Contractor in maintaining the desired progress and quality of
works. There are many other reasons of disputes including but not limited to
the disputes regarding certification by the Engineer, determination of
extension of time and additional cost on account suspension, variations/ extra works,
prolongation etc.
FIDIC Conditions of Contract for works of Civil
Engineering Construction, (Ed.1987 ) provide three tiers dispute resolution mechanism.
Clause 67 of the FIDIC provides following dispute
resolution mechanism.
1. Engineer’s decision.
2. Amicable settlement.
3. Arbitration.
However, in some contracts
parties also agreed under Conditions of Particular Applications to add one more
mode of dispute settlement in the form of Disputes Resolution Board ( DRB) or Disputes Adjudication Board ( DAB).
Engineer’s Decision
As per Sub-clause 67.1 if a dispute of any kind
whatsoever arises between the Employer and the Contractor in connection with or
arising out of the Contract or the execution of the works, whether during the
execution of the Works of after their completion and whether before or after
repudiation or other termination of the Contract, including any dispute as to
any opinion, instruction, determination, certificate or valuation of the
engineer shall be first referred in writing to the Engineer for his determination
with a copy to the other party. Within
84 days Engineer shall give his decision on the dispute (s).
If either party, Employer
or the Contractor, is dissatisfied with the decision of the Engineer or the
Engineer fails to give his decision within stipulated period of 84 days then
the aggrieved party can give notice to other party, with a copy to Engineer, of
his intention to commence Arbitration within 7 days after receipt of the
Engineer’s decision or expiry of aforesaid 84 days period. If no such notice is
given by either party the said decision of the Engineer shall become final and
binding upon the Employer and the Contractor.
Similarly, where the
parties agreed for DAB/DRB the DRB/DAB will give its decision within stipulated
period and if it fails to give decision within stipulated period or the
decision is not acceptable to one party, then such aggrieved party shall give
notice to the other party, with a copy to DAB or DRB to commence Arbitration, within
agreed stipulated time.
Amicable Settlement
Under Sub-clause 67.2
where notice of intention to commence arbitration has been given by the aggrieved
party under sub-clause 67.1, the parties shall attempt to settle such dispute(s)
amicably before commencement of the Arbitration. Unless the parties otherwise
agreed the arbitration may be commenced on or after 56 days after the day on
which notice of intention to commence arbitration of such dispute was given,
even if no attempt at amicable settlement thereof has been made.
Arbitration
As per Sub –Clause 67.3 if
the decision of the Engineer has not become final and binding and the amicable settlement
has not been reached within 56 days, shall be finally settled through
Arbitration under the Rules of Conciliation and Arbitration of the International
Chamber of Commerce by one or more Arbitrators appointed under such rules.
However, the parties are free to choose the governing Rules and venue of the Arbitration
and to give effect to the same they can make necessary changes under Conditions
of the Particular Applications.
( Author can be contacted at azeez_nazar@rediffmail.com)
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