FIDIC Red Book Contract: An International Clause-by-Clause Commentary

Edited by Christopher R. Seppälä

Published by: Wolters Kluwer
ISBN: 9789403520605
1,464 pages, £239
Publication date: May 2023

Reviewed by Thayananthan Baskaran and Shaagita Rajenthiran

The FIDIC Red Book Contract: An International Clause-by-Clause Commentary by Christopher R. Seppälä provides a comprehensive analysis of the FIDIC Red Book contract, the most commonly used FIDIC contract. This book is an essential supplement to practitioners in understanding and navigating its complexities, as it offers a detailed explanation of each clause in the contract, helping readers ascertain the rights and obligations of the contracting parties.

The Commentary is well researched and backed by international legal principles and authorities from common law as well as civil law jurisdictions. As the author acknowledges that the earlier editions of the Red Book were modelled closely on an English standard form of contract conditions, the author seeks to cite civil law and international legal material as the FIDIC forms are not intended for use only in common law jurisdictions but universally.^[1] The author also offers practical insights and examples to further illustrate the concepts discussed.

The book consists of five chapters. Chapter 1 serves as a general introduction to the book and serves as an excellent starting point for readers: the author’s comprehensive introduction provides a solid foundation for the rest of the book, setting the stage for a detailed overview of what to expect in subsequent chapters.

In Chapter 2, the author compares the common and civil law positions in relation to the usual issues that arise under international construction contracts. In the course of making this comparison, the author delves into the origins of these two systems of law to illustrate the differences in these systems in relation to international construction contracts.^[2] Observing that parties to a FIDIC contract may elect to be governed by international legal principles, the author also provides a consideration of the International Institute for the Unification of Private Law (UNIDROIT) Principles and its relevance to a FIDIC contract.^[3] The author concludes that the UNIDROIT Principles may be useful as a resource to fill in gaps or to assist in the interpretation of domestic law.^[4]

Chapter 3 focuses on the different approaches taken by state courts in civil and common law countries as well as the UNIDROIT Principles in contract interpretation. The author explains that the UNIDROIT Principles may be stated to reflect best practice as far as the law of international commercial contracts is concerned as the UNIDROIT Principles have been prepared by experts from both civil and common law systems.^[5]

Chapter 4, which forms most of the book, provides a clause-by-clause commentary. The commentary begins with the main changes from the Red Book 1999 and related provisions, followed by an analysis of each clause, related law relevant to the provision, and finally suggests improvements to certain clauses.

The author explains key clauses such as Clause 18: Exceptional Events. Through detailed analysis and practical examples, the author explores the circumstances in which a party may be relieved temporarily from performing any obligations under the contract if prevented from doing so by an exceptional event and the further relief to which it may be entitled to. Under Sub-Clause 18.6: Release from Performance under the Law, the author delves into the doctrine of frustration under English law and the doctrine of impracticability under United States law, establishing a common ground between the systems that the rarity of the situations in which the doctrines can be invoked so as to enable a party to be relieved from a contract helps explain the practical importance of Clause 18.^[6]

The final chapter of the book is a practical explanation on FIDIC forms relating to the Dispute Avoidance/Adjudication Board, as well as miscellaneous documents included in the Red Book 2017 comprising, amongst others, an advisory note from FIDIC regarding building information modelling systems and forms of securities. In similar fashion to the preceding chapter, the commentary begins with the main changes from the Red Book 1999 and related clauses followed by an analysis and finally suggested improvements.

Overall, this book is an excellent resource for anyone working with the FIDIC Red Book contract, as the book provides authorities from both civil and common law jurisdictions for a universal application. The thorough and well-researched analysis, coupled with practical insights and examples, makes it an invaluable tool for understanding the intricacies of this FIDIC form.

Notes

^[1] Commentary, 3–5.

^[2] Ibid, 52–54.

^[3] Ibid, 138–139.

^[4] Ibid, 151.

^[5] Ibid, 177–181.

^[6] Ibid, 1,088–1,089.

FIDIC Contracts in the Americas

Edited by Dr Donald Charrett

Published by Informa Law, Routledge 2023
ISBN 9781032062259
370 pages, £150
Publication date: 18 July 2023

FIDIC Contracts in Africa and the Middle East

Edited by Dr Donald Charrett

Published by Informa Law, Routledge 2023
ISBN 9781032074399
452 pages, £150
Publication date: 20 September 2023

Reviewed by Dr Cyril Chern

Dr Donald Charrett has once again brought clarity to the operational side of FIDIC contracts in the latest books in the FIDIC Contracts series (of which he is the editor).

In total, the five books in the series cover over 53 jurisdictions, utilising 110+ jurisdictional experts with in-depth knowledge of their particular jurisdictions, all marshalled into the comprehensive texts edited by Dr Charrett. These new titles are FIDIC Contracts in the Americas and FIDIC Contracts in Africa and the Middle East, which follow on from the great success of his other leading texts in this series: The International Application of FIDIC Contracts (2019), FIDIC Contracts in Asia Pacific (2021), and FIDIC Contracts in Europe (2021).

These new titles continue in the tradition of showing the practical side to the application of the FIDIC contracts in the various jurisdictions. For each region, the intricacies and difficulties of dispute resolution and the use of FIDIC contracts are shown, so that any practitioner can easily see the legal situation and what obstacles may or may not be encountered in the use of FIDIC contracts in any of the countries covered. Each of the leading countries in the region of these books is covered and each also deals with the current construction conditions, legal conditions, and interaction with FIDIC contract forms.

As an example, in the title dealing with the Americas the various chapters are written by leading lawyers and experts in the various countries in which FIDIC operates, covering issues which are necessary to understand before doing business there. Thus, in the chapter on applying FIDIC contracts in Mexico, one section deals with what special provisions in the Particular Conditions are necessary for consistency with applicable laws in Mexico. This is written by a leading legal practitioner in Mexico and covers all that one would need to know as to the use of FIDIC contracts in that country. 

For example, a typical FIDIC notice provision states that notice must be given within 28 days of any event, the result of which is that the date for completion ‘is or will be delayed’ – what does this mean, what is the notice to look like and what is it to say? This is where the problem starts. If one wanted to know whether this is good law in Chile, this newest book points out that in Chile the law is not clear as to this sort of provision, and it remains to be seen whether this provision will be given effect under Chilean law as it precludes a party from performing actions in defence of its rights. It can be equated to a statutory limitation provision, and it might not be deemed acceptable to reduce four or five years of the statutory limitation period to 28 days. Such a limitation may be deemed contrary to Chilean public policy, as it would dramatically reduce and shorten access to justice – a very valuable point to be aware of for any practitioner who is not from Chile.

This manner of presentation for each country in the series holds true for both new books. As an example in FIDIC Contracts in Africa and the Middle East, the chapter on applying FIDIC contracts in Angola has a section covering which FIDIC General Conditions are incompatible or inconsistent with governing law of the contract in Angola. This is all valuable information for those labouring in the field of construction contacts.

All of this is edited and put together by Dr Charrett, and comprises the essence of his long and exemplary career as barrister, arbitrator, mediator, expert and dispute board member with vast international experience practising in technology, engineering and construction disputes. His ability to synthesise the various countries and their experts into these two new editions makes for outstanding reference books which are a pleasure to read and understand.

These are ‘must have’ and ‘go-to’ books for any contractor, solicitor, barrister, engineer and employer who uses FIDIC contracts. In particular, the information contained therein will save time and money for all those who use them – I highly recommend these books.

UNIDROIT Principles of International Commercial Contracts: An Article-by-Article Commentary, Second Edition

By Eckart Brödermann

Published by Wolters Kluwer 2023
ISBN 9789403503370
832 pages, £192
Publication date: 15 May 2023

Reviewed by Thayananthan Baskaran and Hanisah Rusli

Various laws may be relevant to an international construction contract. For example, the law of the state in which the site is situated, the law of the contract and the law applicable to dispute resolution proceedings. The law of the state in which the site is situated is dependent on the geographical location of the site and not on the agreement between the parties. The law of the contract and the law applicable to the dispute resolution proceedings are, however, dependent on the agreement between the parties. The parties may find it difficult to agree on the law applicable to the contract as they may be from different legal traditions, for example, the employer may be from a civil law jurisdiction, while the contractor may be from a common law jurisdiction. Even if both parties are from a common law jurisdiction, a party may be uncomfortable agreeing to the law of the other party’s state being applicable to the contract, simply because the party is not familiar with such laws.

The UNIDROIT Principles of International Commercial Contracts (the Principles) seek to address these difficulties by offering a codified set of rules that are drawn from various legal traditions. By way of background, UNIDROIT, or the International Institute for the Unification of Private Law, as the organisation is known in full, was founded as an organ of the League of Nations. At present, it is an intergovernmental organisation with 64 member states acting on the basis of the UNIDROIT Statute.^[1]

The origins of the Principles can be traced to 1968 when, based on a dialogue initiated by the Secretary-General of UNIDROIT that year, the Governing Council of UNIDROIT included in its working programme for 1971 the goal of ‘progressive codification of the law of contractual obligations’.

The goals of the Commentary are expressly stated to be:

• to provide an overview in a nutshell for each of the 211 articles;

• to convey trust in a developed, pragmatic and sophisticated contractual regime, conveying personal experience of confidence in the quality of the Principles and the process of their making;

• to provide short and ‘compact’ comments to key issues; and

• to emphasise practical aspects of using the Principles, including a discussion of the limits of any given rule and the options for practitioners.^[2]

The Commentary achieves these goals admirably. In particular, it provides a concise and insightful explanation of the Principles, coupled with several practical examples, which bring the Principles to life. A practising construction lawyer would be able to easily relate to many of the examples provided.

The Official Comments on the Principles confirm that they are not limited to ‘ordinary exchange contracts’, but extend to ‘complex transactions in particular long-term contracts’.^[3] The Principles may therefore be adopted for international construction contracts, which are long-term complex transactions. In this context, two articles of the Principles are of particular interest.

The first is Article 2.1.18, which provides for the modification of the terms of a contract:

‘A contract in writing which contains a clause requiring any modification or termination by agreement to be in a particular form may not be otherwise modified or terminated. However, a party may be precluded by its conduct from asserting such a clause to the extent that the other party has reasonably acted in reliance on that conduct.’

Article 2.1.18 strikes a reasonable balance between the commercial need for certainty on one hand, and preventing unconscionable conduct on the other, by providing, generally, that if a contract provides for modification of its terms in a particular form then that form must be complied with if the modification is to be effective. To this general rule there is then the exception that a party may be stopped from insisting on such requirements of form due to its conduct, if the other party has relied on such conduct.^[4] This will apply to international construction contracts, which often provide that any modification of the terms of the contract is to be in writing and signed by the concerned parties.

The second is Article 5.1.3, which provides for a duty to cooperate in the following terms: ‘Each party shall cooperate with the other party when such co-operation may reasonably be expected for the performance of that party’s obligations.’

Again, a good balance is struck between a general duty to cooperate, which is then tempered by a limit of reasonableness. The reasonable limit, as the Commentary explains,^[5] may be viewed from the following aspects: (1) costs; (2) the economic balance agreed upon in the contract; and (3) any possible information asymmetry of the parties.

The duty to cooperate is particularly applicable to international construction contracts, where both the employer and the contractor must cooperate in terms of information, instructions and the site to ensure that the project is completed.

Article 5.1.3 is similar, in this regard, to clauses 2.2 and 4.6 of the FIDIC Conditions of Contract for Construction (2nd edition, FIDIC 2017), which provide:

‘2.2 Assistance

If requested by the Contractor, the Employer shall promptly provide reasonable assistance to the Contractor so as to allow the Contractor to obtain:

(a) copies of the Laws of the Country which are relevant to the Contract but are not readily available; and

(b) any permits, permissions, licenses or approvals required by the Laws of the Country (including information required to be submitted by the Contractor in order to obtain such permits, permissions, licenses or approvals):

(i) which the Contractor is required to obtain under sub-clause 1.13 [Compliance with Laws];

(ii) for the delivery of Goods, including clearance through customs; and

(iii) for the export of Contractor’s Equipment when it is removed from the Site [...]

4.6 Co-operation

The Contractor shall, as stated in the Specification or as instructed by the Engineer, co-operate with and allow appropriate opportunities for carrying out work by:

(a) the Employer’s Personnel;

(b) any other contractors employed by the Employer; and

(c) the personnel of any legally constituted public authorities and private utility companies,

who may be employed in the carrying out, on or near the Site, of any work not included in the Contract. Such appropriate opportunities may include the use of Contractor’s Equipment, Temporary Works, access arrangements which are the responsibility of the Contractor, and/or other Contractor’s facilities or services on the Site.

The Contractor shall be responsible for the Contractor’s construction activities on the Site, and shall use all reasonable endeavours to co-ordinate these activities with those of other contractors to the extent (if any) stated in the Specification or as instructed by the Engineer.

If the Contractor suffers delay and/or incurs Cost as a result of an instruction under this Sub-Clause, to the extent (if any) that co-operation, allowance of opportunities and coordination was Unforeseeable having regard to that stated in the Specification, the Contractor shall be entitled subject to sub-clause 20.2 [Claims For Payment and/or EOT] to EOT and/or payment of such Cost Plus Profit.’

In this second edition, the Commentary includes an annex to Article 5.1. This annex provides a useful checklist for construction contracts. The annex also suggests how the UNIDROIT principles may be used with the FIDIC contracts.

The Commentary provides a concise and practical explanation of the Principles, which may be adopted for international construction contracts. The balance struck by the Principles in defining the duties and obligations of the parties is reasonable and in line with the practice of the international construction industry.