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FIDIC Contract Users’ Newsletter
F
ollowing the news that the World Bank has renewed a key agreement to use FIDIC standard contracts for a further five years, FIDIC CEO Dr Nelson Ogunshakin spoke about the significance of the bank’s move and what it means for the global engineering, construction and infrastructure sector. Why is it important for FIDIC to have a relationship with organisations like the World Bank? It is vitally important because the World Bank is an influential player in the global marketplace in which FIDIC operates and our longstanding and close relationship is a strength for both organisations and the industry that we represent. We have an open two-way dialogue with key officials at the World Bank and I know that they value that. Because of their fair and balanced approach, FIDIC contracts offer international funding organisations a much greater degree of certainty in their procurement and we are delighted that the bank is providing an endorsement of the fair and balanced approach that these documents offer to parties on major construction contracts. What does the agreement you have signed with the World Bank mean in practice? FIDIC has granted the World Bank a non-exclusive licence to refer to nine major FIDIC contracts for projects they finance and use the documents as part of the bank’s standard bidding documents. The contracts include the 2017 Second edition FIDIC contracts, as reprinted in 2022, which cover a wide range of international construction and infrastructure work. In practice, this means that a considerable proportion of the bank’s construction procurement will be carried out with reference to FIDIC contracts and this will benefit many stakeholders – the bank, parties to those contracts, the wider industry and of course end users. Issue 11 - December 2023
What are the benefits to the industry of using FIDIC contracts? In adopting these contacts on major projects the bank is providing an endorsement of the approach that these documents offer to parties on major construction contracts. That approach is a fair and balanced one, with due regard to an equitable allocation of risk and one which promotes good relationships between all parties to the contract. By having such major international market buy-in for our contracts - which also includes our recent contract reprints and new editions – we believe this will also influence the global supply chain to also adopt FIDIC contracts, thereby creating even more certainty in the planning and delivery of major international construction and infrastructure projects. It is also worth noting that World Bank funding brings in additional private sector funding and involvement,
leveraging in more money to the table to benefit both the industry and also end users. FIDIC contracts are highly regarded for their dispute avoidance provisions. Tell us about those. FIDIC contracts contain embedded dispute avoidance provisions, including requiring the use of standing dispute avoidance and adjudication boards (DAABs) for dealing with disputes should they arise. By following the guidance contained in the FIDIC contracts, the likelihood of a dispute escalating and ending up in arbitration is minimised and the approach we advocate always is dispute avoidance, where communication between the parties is crucial. FIDIC has also recently issued guidance in this area in the form of a practice note to highlight awareness of the dispute avoidance function of dispute boards for FIDIC contract users and adjudicators and to ensure
