FIDIC Monopolizing Contracts in Egypt

Fédération Internationale Des Ingenieurs-Conseils (FIDIC) is a French acronym that stands for “International Federation of Consulting Engineers.” In 1913, France, Belgium, and Switzerland formed a triangular alliance. In 1949, the United Kingdom became a member of the Federation. FIDIC is based in Switzerland and has over 60 countries as members.

The International Federation of Building and Public Contracting, the International Federation of Asian and Western Pacific Contractors Association, the Inter-American Federation of the Construction Sector, the Liked Contractors of America, the Global Development Banks, and other organizations have all ratified FIDIC contracts, which have been established and enhanced by industry professionals over the past fifty years, provide an internationally recognized framework for any engineering or construction project, simplifying contract management and facilitating cross-border collaboration.

These contracts are generally trusted worldwide due to their balanced approach to roles, duties, and risk management.

Types of FIDIC contracts

FIDIC has earned a reputation for developing standard form contracts for the building and engineering industries.

In order to achieve the objectives, FIDIC develops international standard forms of contracts for works (Short Form, Construction, Plant and Design-Build, EPC/Turnkey), as well as supporting resources such as standard pre-qualification forms.

The “Rainbow Suite” is a series of FIDIC in colors, as indicated:

Red Book:

“The Construction Contract” The most popular FIDIC contract, the Red Book is suitable for construction projects where the responsibility of design rests primarily with the employer. It’s First Edition 1999 or Second Edition 2017.

Yellow Book:

“The Plant and Design-Build Contract” The Yellow Book is suitable for construction projects where the majority of the design responsibility falls to the contractor, First Edition 1999 or Second Edition 2017.

Pink Book:

“The MDB Construction Contract”, the pink book is a version of the Red Book that is suitable for bank-financed projects for Building and Engineering Works Designed by the Employer.

Silver Book:

“The EPC/Turnkey Contract” The Silver Book is for turnkey projects. This contract places significant risks on the contractor, the contractor is also responsible for the majority of the design.

Green Book:

“Short form of contract”, The Green Book is suitable for projects that have a small capital value.

Gold Book:

Conditions of contract for design, build, and operation projects.

In the domains of management systems (quality management, risk management, integrity management, environment management, sustainability), and business processes (consultant selection, quality-based selection, tendering, procurement, insurance, liability, technology transfer, capacity building).

FIDIC also publishes business tactic publications such as policy statements, position papers, guides, guidelines, training manuals, and training resource kits.

What companies employ FIDIC contracts?

Anyone in the Architectural, Engineering, Construction, and Operations (AECO) industry who manages contracts is likely to encounter FIDIC contracts at some point.

These contract agreements were developed by the International Federation of Consulting Engineers (FIDIC) and are widely utilized throughout the global AECO business.

What makes people embrace FIDIC contracts?

Simply said, there’s a reason why FIDIC contracts are the most extensively used international industry standard. The FIDIC series of contract templates can also be used on practically any project in the AECO industry, and their effectiveness has been conclusively demonstrated on thousands of projects throughout the world.

They are intended to be well-balanced for all involved parties, and they cover all of the key aspects that must be outlined and agreed upon before a construction project can start.

Roles and authority, labor conditions, delays imposed by authorities, the procedure for dispute settlement and resolution, defect liability, as well as liability for errors, proving access to and on the site, procuring permissions and approvals, and unforeseeable physical circumstances will all be covered in depth in standard FIDIC contracts.

There shouldn’t be too many deviations to preserve the integrity of FIDIC contracts. Higher tender prices, higher disputes and claims, delays, and even contract termination could all arise from this.

However, since each project is different, some flexibility has been built in to ensure that each contract is tailored to the project accurately. All FIDIC contracts include instructions on how to include project-specific requirements termed Particular Conditions, as well as instances of why they might be needed.

Dispute Resolution Mechanisms in FIDIC Conditions of Contracts

Engineers’ decisions, amicable settlement, and arbitration are indeed the three major components of the FIDIC 1987 dispute resolution mechanism.

If the parties are dissatisfied with the engineer’s verdict or if the engineer fails to come to a decision within a reasonable time, the disagreement may also allude to arbitration.

Also, the arbitration cannot be started either the party has first attempted to settle the dispute at an amicable settlement or exceeds the 56 days after the day on which notice of intension to commence arbitration has been given to the other party. An amicable settlement was not included in FIDIC’s third edition.

First step – The engineer’s decision:

1. If a dispute arises between the Employer and the Contractor, the subject must be reported to the Engineer in written form, with a copy to the other party.
2. The engineer must inform the Employer and Contractor of his decision within 84 days of receiving the reference.
3. Until the Engineer’s decision is revised by an amicable settlement or an arbitral award, each is obligated to give effect to it.

There may be situations where the Engineer hasn’t given his decision within 84days or parties may dissatisfy with the Engineer’s decision. In such cases:

• Before the 70th day after the day on which he received the decision or
• Before the 70th day after the day on which the said period of 84days expired

A party can give a notice of intention to other by stating his intention to commence arbitration with a copy to the Engineer. The duration for giving notice of intention has changed to 70th days from 90th days when FIDIC revising from the 3rd edition to the 4th edition.

The Engineer’s decision shall become final and binding on both parties if no notification of intent to begin arbitration is given within 70 days of the date on which he received the decision.

There may be circumstances where a party somehow doesn’t comply with the Engineer’s decision. When this occurs, According to sub-clause 67.4, other parties can refer to the failure to arbitration.

The purpose of this sub-clause is to obtain an arbitral award that may be enforced internationally. This clause is also a fresh clause to FIDIC 4th edition.

Second step – Amicable settlement:

After either party sends notice of intension to commence an arbitration within such 70 days, parties can commence the arbitration subject to the following conditions:

• After an attempt to settle the dispute amicably or/and
• 56 days after the day on which notice of intention to commence arbitration

Parties can employ negotiation, mediation, Mini trial, or conciliation as ways of conflict resolution to reach an acceptable agreement. An amicable settlement has considerable benefits over the arbitration. It’s not just about saving time and money; it’s also about preserving strategic partnerships.

Third step – Arbitration:

Sub Clause 67.3: “(a) the decision, if any, of the Engineer has not become final and binding pursuant to Sub-Clause 67.1, and (b) Amicable settlement has not been reached within the period stated in Sub-Clause 67.2 Shall be finally settled, unless otherwise specified in the Contract, under the rules of conciliation and Arbitration of the International Chamber of Commerce”.

According to Sub-Clause 67.3, parties can refer the unsettled disputes to arbitration. According to this Sub-Clause procedural rule for arbitration is the International Chamber of Commerce (ICC) rules. But parties can alter the procedural rule as they wish, under particular conditions of the contract.

An arbitration award is binding and enforceable, but it may set aside or challenge the enforcement of the award based on limited grounds. Also, an arbitration award made in one state can enforce in other states when both are convention states for the New York Convention.

Engineers must obtain the employer’s approval before executing some particular authorities, according to FIDIC 1999 sub-clause 3.1 and FIDIC 1987 sub-clause 2.1, and the authorities should be as stipulated in the specific contract conditions.

Employers can use this clause to get his approval before making a decision under FIDIC 1987’s sub-clause 67.1. If that is the case, the phrase “cleromancy from stealing” will play a role once again.