Does COVID-19 really result in a force majeure claim under FIDIC?

August 18, 2020

Now that many construction and engineering contracts have recommenced after a period of shut down or slow down due to the issues surrounding Covid-19, many Contractors and Employers are having to assess and deal with the effects on their projects including whether extensions of time and damages should be awarded to the Contractor.  In this article, I consider the issues that arise and the position of the parties under the FIDIC suite of contracts. Most FIDIC contracts in the UAE utilise the law of England & Wales or the Federal Laws of the UAE.  Additionally, although FIDIC has published their 2017 updated form of contract most projects are currently using the previous versions originally published in 1999 or, in some cases, the earlier versions.  In order to be relevant to most readers, I have concentrated on the terms of the 1999 suite of contracts.  This being the case I should mention that the 2017 suite of contracts are not significantly different but rather have been re-written so as to provide greater certainty and clarity so that the Employer, Engineer and Contractor understand their respective roles and obligations to reduce the potential for disputes.  The Dispute Resolutions Procedures have also been updated so as to provide a more flexible approach.  ‘Force Majeure’ under the 1999 suite of contracts has been replaced by ‘Exceptional Events’ under the 2017 suite of contracts but the emphasis and direction of these clauses remain essentially the same.  The changed wording is, in reality, an effort by FIDIC to avoid the pre-conceptions of Force Majeure in civil law countries and allow the parties to understand what FIDIC meant by the terminology used.  Therefore, much of what is said in relation to the 1999 suite of contracts and Force Majeure is pertinent to the 2017 suite of contracts as well. Before looking at the contract itself it is perhaps worth noting that Force Majeure does not ordinarily result in a Contactor being awarded damages for delay.  Under most contracts and legal systems Force Majeure is seen to be an event that prevents the works being carried out but the event is not one that is a fault of the Employer or the Contractor but rather an event which could not have been foreseen by either party and thus the financial effect should be neutral.  In other words, neither party has accepted or indeed seen the risk of the Force Majeure event occurring as it was not within either party’s contemplation at the time that the contract was entered into. FIDIC expand this idea and set out definitions as to what their use of the term means.  It is important to understand that any case law or interpretation based on civil law concepts that deal with Force Majeure may not be applicable when construing the FIDIC suite of contracts.  Care should be taken when considering case law of civil law interpretations outside of the FIDIC contracts to ensure that the specific issues being considered to do indeed fall within the scope and wording of the FIDIC suite of contracts. FIDIC DEFINITION OF ‘FORCE MAJEURE’  Sub-Clause 19.1 (Definition of Force […]

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