Contract Users’ Newsletter ISSUE 6 August 2020
Published by the International Federation of Consulting Engineers (FIDIC)
www.fidic.org
Responding to an unprecedented global crisis The FIDIC contracts arena was already facing a busy year ahead, but then the Covid pandemic hit and FIDIC organised its response to the crisis, reports newsletter editor, ANDY WALKER. WALKER Much has happened since the last issue of this newsletter five months ago. Our February/March edition was published to coincide with the FIDIC Middle East Contract Users’ Conference in Dubai, but little did we know that this conference would be our last contract users’ gathering for some time as March ushered in the arrival of the Covid-19 crisis and a global lockdown which has changed everything. Notwithstanding the ongoing crisis and the disruption it has brought to the global construction sector, FIDIC has been able to continue its work on all fronts, although with some adaptations to respond to an unprecedented situation. Our events and trainings have moved online and the investments that FIDIC has made in its digital infrastructure over the past year have certainly started to pay off. This issue of the FIDIC Contract Users’ Newsletter gives an update on a number of those events, including our very successful and well-attended Covid-19 webinar series, and we also report on how
Panelists at one of FIDIC’s popular Covid-19 webinars.
various countries across the world have handled the impact of the crisis on their construction industry. That report, on page 4-5 of the newsletter was written by Fanny Dastugue, the director general of the Confederation of International Contractors’ Associations. Fanny is one of the members of our new editorial board for the newsletter, which you can read all about on page 2. We are looking forward to the new board members providing strategic guidance on the newsletter’s future development and it’s great to have them as part of the FIDIC team.
Elsewhere, we give an update on how our contract training has continued during the Covid crisis, highlight news of the crisis guidance FIDIC has issued to the industry and we also report on the launch of the FIDIC Contract Users’ Awards 2020 which is now up and running for a second year. We hope that all our readers are staying safe in challenging times and, as always, we welcome all your feedback on the newsletter so please keep sending us that by email or through your comments on social media.
https://bit.ly/2DgCnRF
Issue 6 - August 2020
2 FIDIC Contract Users’ Newsletter
Contracts’ newsletter editorial board formed Members of the FIDIC Contract Users’ Newsletter editorial board
A new FIDIC Contract Users’ Newsletter editorial board has been formed to support this publication and provide strategic guidance on its future development, reports newsletter editor, ANDY WALKER. WALKER The FIDIC Contract Users’ Newsletter editorial board will support the publication and provide strategic guidance on the development of content, structure and the publication’s programme. The editorial board will also assist the editorial team with the development of news and feature story coverage, provide industry feedback on contract usage and assist FIDIC in exploiting market opportunities to expand the global usage of its contract documents. Members of the editorial board will serve for a two-year period and FIDIC will consider additional stakeholders to join the board after two years of operations. The editorial board, which will meet quarterly via FIDIC’s remote meeting facility, had its first meeting on Monday 11 May 2020. Members (see box on this page) discussed the production schedule for future editions of the newsletter and there was a strong feeling that there should be a reasonable break between newsletters to allow for a broader range of issues to be covered, rather than tailoring each issue to a specific contract users’ conference as has previously been the case.
Issue 6 - August 2020
Dr Nelson Ogunshakin, FIDIC Chief Executive
Members also discussed the circulation of the newsletter and sector reach highlighting the need to increase circulation in order to raise profile as a key priority. It was felt by all those attending that a wider readership would help to increase contributors to the newsletter and better connect FIDIC to different industry sectors. FIDIC is keen to see regular content and contributors to the Contract Users’ Newsletter from its six operating regions, namely Europe, Africa, Middle East, Asia Pacific, South America and North America. Individual FIDIC contract users are also invited to make regular contributions to the newsletter. Users include the following groups: • Consulting engineers • Contractors • Procurement professionals • Multilateral funding agencies • Multinational organisations • Global, regional and national clients, private and public • Academic professors or lecturers on contracts and procurement issues • Legal experts Editorial board members agreed that going forward
Daduna Kokhreidze, Head of Legal and Compliance, FIDIC
Andy Walker, Contract Users’ Newsletter Editor and FIDIC Communications Advisor
Margot Day, Global Director of Risk and Commercial Law, BuroHappold
Maria Eugenia Roca, Chief of Operations, Inter-American Development Bank, Country Office Bahamas
the publication would be published quarterly to coincide with the start of each quarter. Therefore, future issues for 2020 will be published around the start of Q3 and Q4 with subsequent issued planned for the beginning of each quarter after that. Members also discussed current and emerging contract
Aisha Nadar, FIDIC Board Liaison for the Contracts Committee
Vincent Leloup, Chair, FIDIC Contracts Committee
Fanny Dastugue, Director General, Confederation of International Contractors’ Associations
Rob Morson, Partner, Pinsent Masons South Africa
James Perry, President, Dispute Resolution Board Foundation
issues and advised on areas for inclusion in future issues of the newsletter, which will be published in digital format and circulated by email distribution and via the FIDIC website.
3 FIDIC Contract Users’ Newsletter
Want a fair and balanced contract? Better choose FIDIC! No single party can bare all of the risk all of the time and unreasonable contract provisions are meaningless when the risk simply cannot be born, says Pinsent Mason’s ROB MORSON. MORSON I have lost count the number of times I have sat in a kickoff meeting for a new project and answered questions along the lines of: Should we be using a standard form of contract? Which standard form are lenders most likely to accept? Which standard form best protects our interests? Which standard form does the market best understand? Which standard form is likely to yield the best value and response from the market? Some of those questions are easier to answer than others and the one about protecting “our interests” is a loaded question – you doesn’t necessarily protect your own interests, considered holistically, by unreasonably or unfairly shifting risk to others. In many sectors and markets around the world, FIDIC has become not only the baseline contract but the international language of construction. It’s not unusual for negotiations to be based
on comparisons to the FIDIC approach on matters from claim administration to risk allocation. FIDIC has the ability, directly or indirectly, intentionally, or otherwise, to develop market thinking and approaches. In this context, it matters that its contracts are fair and balanced and that they at the forefront of best practice in built environment procurement and execution. FIDIC’s contracts must strike a balance between meeting current user requirements and driving users forward. The 2nd Edition of the Rainbow Suite was introduced in 2017, with broad consensus that the new edition was not only fair and balanced in its risk allocation but, equally importantly, fair and balanced in the contract and project administration approach between the employer and the contractor. The market importantly noted the equal treatment of employers and contractors in regard to claims.
One needs to look no further than the increased use of the word “parties” rather than “employer” or “contractor” to appreciate that the same rules and approach regulates both role players more frequently than before. Project developers and lenders, typically fulfil or significantly influence the employer role and tend to dictate the terms of engagement. If the baseline contract of choice is fair and balanced it is far more likely that projects will be procured and executed optimally. Moving away from an internationally accepted baseline is difficult and the better the baseline, the better it is for all stakeholders. If the experience of the Covid-19 pandemic has taught us anything, it is that no single party can bare all of the risk all of the time and that unreasonable contract provisions are in the end meaningless when the risk simply cannot be born. And
balanced or unfair contracts are also less likely to engender collaborative thinking and solutions when this is most needed. Through the Golden Principles, FIDIC has sought to direct the market when modifying its contracts. As we face a potential global surge in infrastructure procurement, with many nations speaking of an infrastructure-led economic recovery, we need to sit back as users and appreciate that fair and balanced contracts matter to everyone and that we should all care about that. Some regarded the 2nd edition of the Rainbow Suite as ahead of its time, or perhaps as trying to drive the market forward too quickly when it was introduced in 2017, but circumstances have shown that this was not the case. Rob Morson is a finance and projects partner at Pinsent Masons.
Issue 6 - August 2020
4 FIDIC Contract Users’ Newsletter
Covid crisis and construction Covid-19 has hit the infrastructure sector hard. Here, FANNY DASTUGUE looks at how various countries across the world have handled the impact of the crisis on their construction industry. The Covid-19 pandemic has detrimentally affected the world economy, but surely one of the most affected sectors is the construction industry. Some countries have handled the sanitary crisis putting in place exceptional measures and developing pragmatic initiatives to avoid massive chain insolvency. Confronted to an unprecedented situation, governments’ reactions are diverse and evolving. Many countries have elaborated health and safety guidelines and protocols allowing the continuation of construction works but generating important additional costs and delays to projects in the process. To balance the negative impact of Covid-19 in Europe, in addition to general economic revival packages, many countries implemented measures in direct support of companies, for example anticipated payments, access to financing, price adjustment mechanisms, tax rebates or deferral. In Germany for instance, in addition to federal guidelines about how to deal with disruptions in
Issue 6 - August 2020
the construction process under contract law, Covid-19 pandemic is to be classified as force majeure in future construction measures, so that execution deadlines are automatically extended. Also, to maintain the necessary liquidity of the companies, prompt payment of partial and final invoices is required. In the Netherlands, a government framework for fast payments of construction companies has also been implemented. In France, the professional organisations lobbied the Ministries of Economy and Housing to benefit from the sliding effect of the state of health emergency and obtain legal protection over a period during which contractors’ liability cannot be engaged and delays penalties cannot be applied. For state public procurement, employers are encouraged to bear a part of extra-cost directly linked to the worksites interruptions and to sanitary requirements. Another measure is the neutralisation until 2023 of the decrease of turnover to appreciate the economic and financial capacity of a
company when tendering for public works. In Italy, public works contracting authorities are allowed to increase to 30% the amount of the advance payment, compatibly with the available resources. From Ankara, Cigdem Cinar, deputy secretary general at the Turkish Contractors Association, explains that the Turkish government introduced an ‘Economic Stability Shield’ allowing for example that principal and interest rate payments of companies having cashflow problems are postponed for three months at least, the Credit Guarantee Fund limit is increased and loan priority channelled to the companies in need of liquidity. Besides, companies that may default in April, May or June due to the measures taken against the spread of Covid-19 will have a force majeure note
on their credit record. The payment terms of the Turkish Eximbank loans and the commitment closure period for short-term loans have been extended. And, contractors, under certain conditions, can request for termination or extension of the projects in public tender contracts. In Latin America the situation has a reserved diagnosis, according to Sergio Torretti, president of the InterAmerican Federation of the Construction Industry. In the private sector, initiatives to renegotiate the construction contracts can be observed. However, this willingness appears mainly in largescale projects. In local or smaller projects, conflicts are beginning to be resolved via judicial or arbitral procedures, but not through contractual agreements implemented in good faith between the parties.
5 FIDIC Contract Users’ Newsletter
n – the global response
This notwithstanding, local chambers of commerce developed initiatives to support an understanding between owners and contractors. The Arbitration and Mediation Centre of the Chamber of Commerce of Santiago de Chile stands out. It has made available to the public the possibility to develop up to 1,000 free mediations to deal with disputes related to the pandemic. In the public sector, in most cases, public works were declared as a strategic activity. Companies must continue executing the works and cannot invoke force majeure despite mobility limitations and sanitary measures decreed by the authorities affecting the economic balance of the contract. According to Alex Wagemann, chairman of the Construction Contracts Working Group of CICA, contractors tend to issue direct claims to the authority or, initiate judicial or arbitration procedures based on the
government acts and, in some cases, the “théorie de l’imprévision” or hardship. However, although the hardship has been generally accepted by the doctrine, it is not normally accepted by the courts in Latin America and many times, the “Governement Act theory” is not fully accepted either. This has been raising legal discussions which may result in significant judicial and arbitration conflicts within the region, considering the historical inflexibility of the Latin American states to seek negotiated solutions with contractors. As an exception, the state of Sao Paulo implemented a mediation system to face the disputes related to Covid-19, available for public works contracts. From Tokyo, Yoshihiro Yamaguchi, vice president of the Overseas Contractors Association of Japan explains that for ODA projects
supported by the Japanese government and JICA (both Yen loans and grants projects), under JICA General Conditions of contract, the pandemic is not listed as a force majeure. The project owners are not sure to admit extensions of time and extracost to cope with the changes of policies. Nevertheless, the parties are on the way to have a mutual understanding, said Yamaguchi. On the contrary, the China Council for the Promotion of International Trade has issued a record number of “force majeure certificates” to exempt Chinese companies from their contractual obligations. Similarly, the Russian Chamber of Commerce and Industry is issuing force majeure certificates related to Covid19. But, what will be the value of such certificates in an
international dispute? The debates on the sharing of risks and costs induced by the pandemic are ongoing, often finding answers at local level. The issue of additional costs resulting from the stoppage of construction sites, the implementation of health recommendations or the new operating mode generating productivity losses is still at the centre of all discussions. All players in the sector should benefit from a cooperative and balanced approach. Fanny Dastugue is the director general of the Confederation of International Contractors’ Associations.
Issue 6 - August 2020
6 FIDIC Contract Users’ Newsletter
FIDIC launches new International Financial Institutions Committee A new committee and advisory group is set to improve the effectiveness and visibility of FIDIC’s work with the international financial institutions and multilateral development banks. FIDIC has launched a new International Financial Institutions Committee (IFIC) as part of a significant strengthening and upgrading of its committee structure and international external affairs and stakeholder relations capability. The new committee is an important development ion the contracts arena as it will improve FIDIC’s liaison and influencing with international financial institutions (IFIs) like the multilateral development banks and other international funding agencies which have an important influence on
Issue 6 - August 2020
the global infrastructure sector. The committee is set to play a key role in FIDIC’s work with IFIs and related organisations in the development of policies, guidelines and processes to improve financial management, procurement and to enable implementation of innovations and best practice. Commenting on the setting up of the new committee, FIDIC chief executive Dr Nelson Ogunshakin said: “The launch of our new International
Financial Institutions Committee is part of a detailed and thorough review of FIDIC’s public engagement work where we have sought to ensure that our committees and other representative bodies better reflect geographic diversification and have the right skills set to be more effective in a changing marketplace. Competition was stiff to sit on these revamped committees, with over 350 industry experts from around the world applying to be members. “The new IFI committee, in common with a number of other
7 FIDIC Contract Users’ Newsletter
revamped committees we will be announcing over the coming weeks, will enable FIDIC to be more external facing and help us to make a positive impact on and influence in the global infrastructure industry. Going forward, we plan to be more vocal and more visible to meet the challenges our industry faces as it moves out of the Covid crisis and beyond.” The chair of the new FIDIC International Financial Institutions Committee is Manish Kothari, president and CEO at US multidisciplinary consultancy firm Sheladia Associates. Commenting on his new role, he said: “I’m deeply honoured and humbled by this appointment and am looking forward to working as the first chair of this crucial new FIDIC committee and to collaborating with some amazingly talented people from across the world. “Our key aim will be to build ‘Partnership with Purpose’ between the international finance institutions and FIDIC based on trust, collaboration
and strong relationships - something that is vital for the global infrastructure industry as we seek to find sustainable and resilient solutions in the face of the global pandemic and many infrastructure challenges. The committee will continue to promote FIDIC’s core principles of quality, integrity and sustainability and work towards better infrastructure while creating positive impact in the communities where we work.” The new committee, which will meet quarterly, will monitor changes in the priorities of the IFI sector and identify relevant topics on which FIDIC should contribute to or address as a strategic priority. It will also work with IFIs to improve the business environment for engineering services for IFI-funded work and enable the sector to contribute more positively to the UN’s Sustainable Development Goals. The committee will also work closely with FIDIC’s integrity management committee and the IFI sector to implement a strong anti-corruption
regime across client organisations, contractors and consultants. Working alongside the new committee will be an advisory group made up of individuals representing the international financial institutions and the multilateral development banks. FIDIC was keen to receive input from these important organisations and members of the advisory group will attend FIDIC IFIC meetings and share knowledge, experience and highlight IFI and MDB expectations regarding the committee’s work. The advisory group will also identify relevant topics on which FIDIC should contribute or address as a strategic priority and also share experience on the use of FIDIC contracts and agreements in their organisations’ standard bidding documents and make recommendations on future updates and developments. Members of the group will also share IFI and MDB policies related to FIDIC operations.
Issue 6 - August 2020
8 FIDIC Contract Users’ Newsletter
Covid-19 guidance for FIDIC contract users
FIDIC was quick off the mark when the Covid19 crisis hit the construction sector, publishing and circulating invaluable guidance to the global industry on the pandemic’s effect on contracts and projects. When it was clear early on in the pandemic that Covid-19 was going to have a material and global impact on the delivery of construction projects across the world, FIDIC swung into action to provide much-needed guidance to users of its contracts, publishing its Guidance Memorandum to users of FIDIC Standard Forms of Works Contract. With many of those construction projects being delivered under FIDIC standard forms of contract, with the assistance of its contracts committee FIDIC issued a guidance memorandum containing an outline of the provisions in FIDIC’s various general conditions of contract for works which may be
Issue 6 - August 2020
relevant with regard to likely scenarios that are arising as a consequence of Covid19. FIDIC’s main purpose in drafting the guidance memorandum was to help parties to a FIDIC contract to consider mutually satisfactory solutions and avoid disputes arising between them. The guidance highlights that the Covid-19 pandemic is a unique broad scale and extraordinary event which should be recognised as such by all parties to a contract. In line with its Golden Principles, which set out the essential characteristics of its general conditions of contract that should not be amended if the contract is to be regarded as a genuine FIDIC contract, FIDIC has reminded all members of the construction
FIDIC’s Guidance Memorandum to users of FIDIC Standard Forms of Works Contract can be downloaded at https://bit. ly/3k1eqhv
community to particularly keep in mind some key principals when working on projects. Namely that FIDIC: • Promotes cooperation and trust between contracting parties • Does not support any party taking undue advantage of its bargaining power • Discourages adversarial attitudes and encourages dispute avoidance; and • Encourages timely and adequate payment in accordance with the contract to maintain cashflow. All the above are particularly important and best practice in many countries during the pandemic has seen the construction sector follow these principles. FIDIC was
keen to get the guidance to market as soon as possible and its contracts committee and inhouse legal team and advisors have played a key role in providing the global industry with guidelines that have been extremely well received. Of course, there are many factors which come into play with regards to Covid-19 in the construction sector, resulting in numerous possible scenarios and interrelationships. FIDIC’s Guidance Memorandum to users of FIDIC Standard Forms of Works Contract takes the approach of outlining several possible scenarios to which relevant contract likely responses are provided. Users are able to decide which scenarios are most applicable to their case
9 FIDIC Contract Users’ Newsletter
at hand. Seven scenarios look in some detail at how to deal with potential situations demanding a contract response to the crisis. The first scenario outlines a situation where local authorities and/or government have not brought forward any new piece of legislation or regulation banning construction activity or works on site, but where a contractor is facing difficulties in mobilising personnel because they fear for their safety. As a result, the contractor is finding it hard to obtain goods due to issues in their supply chain. The guidance goes on to explain in simple terms the possible remedies to such a situation that can be explored under the different FIDIC contracts. The guidance also importantly highlights that all the FIDIC contracts hold unique fully-fledged dispute avoidance features, reminding users that on a live and realtime basis, dispute boards can provide useful opinions and advices as to how handle the Covid-19 situation under the specific terms and facts of each individual contract. Should
parties fail to reach common ground, and find themselves entrenched in adversarial attitudes, dispute boards can greatly assist in bringing parties back to an amicable territory, or, if not possible, to quickly issue decisions as to their matters in dispute. In all its guidance around Covid-19, FIDIC has been keen to stress the need for the construction community to be focused on the successful delivery of their projects in a way that sustains the longterm viability of the industry. This means having an understanding that solutions to project difficulties will not only be found within the four corners of any contract. Care should also be given to the impact of the governing law of the contract, decisions and recommendations from governments/authorities, social responsibility and longterm versus short-term views. “Little or nothing can be recovered from an insolvent business. Enforcing strict and rigidly contractual rights may not be in one’s long-term interest if that means bringing one’s own supply chain to collapse,” says FIDIC.
FIDIC contract users should: • Familiarise themselves with the terms of their specific contract. • Understand the specific nature of local government policy and actions. • Seek legal advice specific to the relevant jurisdiction. • Seek, through cooperation, negotiation and open dialogue, practical and realistic solutions to the challenges we are all facing together. • Uphold the FIDIC Golden Principles, bearing in mind the considerations underpinning those. • Not only consider contractual and legal matters to handle projects throughout this crisis, but also consider long-term business interests, social responsibility, long-term health of supply chains and of societies at large. • Keep an objective view - although this crisis calls for specific/fit-for-purpose remedies and a rather lenient and open-minded approach, causation is as always critical and one should be able to differentiate difficulties caused by the COVID-19 crisis from those which would have been experienced in any case, but for the crisis.
Issue 6 - August 2020
10 FIDIC Contract Users’ Newsletter
Massive turnouts for FIDIC contracts Covid-19 webinars FIDIC’s series of webinars on the Covid-19 crisis have attracted thousands of attendees from around the world and the events on contractual matters were especially well attended.
Issue 6 - August 2020
When the coronavirus crisis hit the construction sector, part of FIDIC’s repose was to hold a series of webinars to provide assistance and support to global industry professionals on key issues. The response to these webinars was nothing short of amazing, with the 18 events in the series attracting more than 9,000 attendees from across the globe to listen to international line-ups of expert speakers from all parts of the construction and infrastructure industry. The events on contractual issues were especially well attended. The second of FIDIC’s Covid-19 series of webinars took place on 9 April with an event focusing on force majeure. The webinar, which was attended by more than 850 attendees, explored how Covid-19 could impact various aspects of projects, including supply and labour, health and safety requirements, activities on site and performance. Contractual issues including force majeure clauses as well as other relevant clauses in FIDIC forms of contract were discussed at length during the 90-minute event. Charles Kim, chief legal counsel of ACEC shared his thoughts from the USA on force majeure in a Covid-19 context. Consulting with legal counsel was obviously vital, he said. He took a wider look at the projections for the pandemic that will impact on the construction industry and said that it will be difficult for stable business plans to emerge from a situation where the intensity of the pandemic rises and falls in an uneven way. Like other speakers, Kim stressed that it was necessary to preserve “a good faith collaboration between contract parties” and be mindful that “a successful outcome will rest on an understanding that we are all in this together”.
A webinar on 16 April 2020 focusing on consultancy contracts saw more than 900+ attendees log on to discuss the various issues which consulting engineers may face while executing consultancy agreements with their clients and performing the role of the engineer during the current Covid-19 pandemic. Chaired by FIDIC CEO Nelson Ogunshakin, the speakers included Vincent Leloup, chair of the FIDIC contracts committee, FIDIC board member Liu Luobing from China, Systra chief executive Pierre Verzat from France, James Mwangi, president of FIDIC Africa, Andrew Read, a partner at Pederson Read in New Zealand and Clyde & Co partner David Brown from France. Vincent Leloup, chair of the FIDIC contracts committee, spoke about the role of the engineer in the FIDIC forms of contract, highlighting the wide range of powers that they have including for health and safety issues, which were particularly relevant given the current stipulations on the extra protective measures to be taken to guard against the spread of Covid-19. Leloup also outlined some of the exceptions and variations to terms included in FIDIC contracts that could be relevant during the current crisis. Notwithstanding the need for
11 FIDIC Contract Users’ Newsletter
consultants to be fully familiar with their contract terms, a literal interpretation of the contract was not the best route to take in the current climate, said Leloup, especially if this led to more disputes and potential bankruptcies. Repeating a mantra that was raised at many of the webinars “Dialogue was key at the present time,” Leloup said. The fifth in the series of online events on 21 April 2020 focusing on insurance issues was attended by around 700 attendees and looked at how insurance and liability issues within the FIDIC forms of contract may operate during the Covid19 pandemic and what security insurance provides for the project participants. Webinar speaker Michael Earp, senior vice president and executive director for commercial risk solutions at AON, reminded attendees that there had to be a precise and measurable link between losses that had been suffered and the terms of an insurance policy. Turning to business interruption, Earp said that any “peril” in that policy would need to be clearly defined and it was vital for consultants to look carefully at the terms of any “all risks” policy(ies) to see if viruses and pandemics were excluded from cover. The webinar on 23 April 2020 saw a record attendance. “Covid-19: ADR and the role of dispute avoidance” was attended by a massive 996 attendees and given that previous webinars looking at contracts in the context of the Covid-19 crisis had all raised the issue of avoiding legal and contractual disputes during the current period and avoiding the courts, the popularity of this event on ADR was no surprise. A stellar line-up for this webinar included FIDIC board member Aisha Nadar from Sweden, William Godwin QC, barrister at Arnold Porter, Nicholas
Gould, a partner at Fenwick Elliott, international judge and arbitrator Sir Vivian Ramsey, Mario Marti, chief executive at FIDIC’s Swiss member association Usic and James Perry, president of the Dispute Resolution Board Foundation. Former UK High Court judge Sir Vivian Ramsey said that although contract partners were taking different views and approaches during the current crisis, he thought that the industry was moving into an era of dispute avoidance and that more and more this process was taking place in
a virtual environment. “Parties were used to this digital process and successful negotiations were happening and settlements were being reached,” he said. Virtual hearings were becoming more common and it was likely that fewer people would have to travel around the world for arbitrations as a result, said Ramsey. The webinar series showed beyond doubt that there is a massive appetite for online events on contractual and other legal issues amongst global construction professionals. FIDIC will therefore be holding a second series of “Coming out of Covid” events, focusing on key project-related issues, in the autumn. Keep an eye on the FIDIC website for details of these and all other forthcoming events.
Issue 6 - August 2020
12 FIDIC Contract Users’ Newsletter
FIDIC Contracts Awards 2020 now open for entries The second annual FIDIC Contracts Awards are now open for entries which showcase the great work carried out by an individual, team, project or organisation. This year, FIDIC is running it second contract users’ awards as part of its annual International Contract Users’ Conference, which takes place in December. The FIDIC Contracts Awards aim to recognise excellence in the use of FIDIC contract forms for project delivery and showcase examples of good practice through collaboration from across the world. The purpose of the awards is to bring the community of FIDIC contract users together, to celebrate and highlight excellence and best practice and raise the profile of FIDIC contracts on a global scale. Winners of the awards embody real achievement and are a testimony to the great work carried out by the individual, team, project or organisation. In their inaugural year in 2019, seven FIDIC Contracts Awards were handed out with the winners drawn from all over the world. This year, following consultation with the industry, the number of award categories has been increased to ten and features the addition of an International Financial Institution of the Year Award and separate categories for adjudicators and trainers. Commenting on the awards, FIDIC chief executive Dr Nelson Ogunshakin, said: “Last year’s awards were a great start to an initiative that is showcasing the brilliant work of FIDIC contract users from around the globe. That work is making a real difference on innovative projects and it’s only right that individuals, teams, projects and organisations get the recognition that they deserve. These awards are a great way to raise profile in our industry and
Issue 6 - August 2020
Husni Madi with his Trainer of the Year Award at the FIDIC Contracts Awards in London in December 2019.
more widely and I encourage all users of FIDIC contracts to enter them.” The winners will be presented with their awards at the FIDIC International Contract Users’ Conference, which is currently planned to take place in London from Monday 30 November to Thursday 3 December 2020. As part of this programme, the awards will be presented on the evening of Tuesday 1 December. We are aware that the ongoing Covid-19 pandemic continues to create uncertainty and that a physical event may not be possible. If this is the case then a virtual event/awards ceremony will take place. The closing date for entries for the awards is 23 October 2020. The entry process has been streamlined this year and entrants can submit their entry online via the FIDIC website at https:// bit.ly/3fqanrK
Award categories for 2020 are as follows: • FIDIC Contracts Project of the Year • FIDIC Contracts Client of the Year • FIDIC Contracts Consultant of the Year • FIDIC Contracts IFI (International Finance Institution) of the Year • FIDIC Contracts Contractor of the Year • FIDIC contract legal or professional services of the Year • FIDIC Contracts trainer(s) of the Year • FIDIC Contract adjudicator(s) of the Year • FIDIC Strategic Partners of the Year • FIDIC Golden Principles Award
13 FIDIC Contract Users’ Newsletter
Keeping the industry training in challenging times Despite the challenges presented by the Covid-19 crisis, FIDIC has managed to maintain its contracts training courses and even introduce some new initiatives, reports SILVIA FOSSATI. Perhaps more than any other aspect of business, the training and events sector has faced particular challenges as a result of the coronavirus crisis. However, at FIDIC, like the industry we represent, we pride ourselves on being flexible and agile and we have managed to continue with our contracts training during the Covid-19 crisis, albeit with some changes and adaptations.
Obviously, we had to take the decision to cancel all our face-to-face courses during the lockdown, but this gave us the opportunity to enhance FIDIC’s online offer by organising six publicly distanced learning courses between mid-March and September, which attracted many attendants. We are very grateful to all those participants who supported our courses during a challenging time for everyone. We also organised events around some topics online for the first time, like our online course on EPC contracts and also a course on DAB/DAAB, which has proved very attractive for current and future adjudicators. Other
topics are recurrent courses, like our Module 1 on the Practical Use of FIDIC Contracts or Module 4 for Contracts Management, both of which have been highly demanded. We have also been able to continue with our training and development for emerging professionals in our industry. The Future Leaders Management Certificate (FLMC) is almost completed, with the sixth online webinar running in early August. This will be followed by an online exam (a first for FIDIC) and then the issuing of a FIDIC certificate to those participants who pass the exam. Again, we are grateful to all those young professionals who supported the FLMC and we look forward to them playing key roles in the industry in the future. In order to assist industry professionals looking for contract training opportunities in challenging times, FIDIC took the decision to reduce by 20% the cost of its online courses to allow for a larger attendance during the current coronavirus crisis. Some of our online courses have attracted an extremely high attendance, never experienced before. Online courses have also been provided to private clients in-house to train their internal staff. In a new initiative, FIDIC has plans to organise online courses in other
Understanding Dispute Adjudication Boards An online FIDIC training course outlining the requirements and procedures to be able to conduct a Dispute Adjudication Board. Find out more at https://fidic.org/events/ fidic-online-module-3-understandingdabs
languages than English and the first of these will be in Spanish during Autumn 2020, with a course on Module 1: Practical use of FIDIC Contracts. We are offering a special price to members of our pan-American federation FEPAC and full details of this course can be found at https://fidic.org/events/ fidic-online-m%C3%B3dulo-1-usopr%C3%A1ctico-de-los-contratosfidic An online course in Russian is also under preparation and will be added to the FIDIC training programme soon. In other news, we are preparing the ground for the introduction of a new learning management system platform and a new e-learning environment is also under development. This will allow a more scalable and efficient distance-learning tool which will facilitate the enhancement of FIDIC’s training portfolio, offering more training courses, a wider choice and an easy interface for registrants. Silvia Fossati is the training manager at FIDIC.
Issue 6 - August 2020
14 FIDIC Contract Users’ Newsletter
Making a difference with FIDIC contracts More clients are signing up to use FIDIC contracts on projects that are making a real difference to society and to people’s lives, reports FIDIC’s international client manager IEVA LIAUGAUDE. FIDIC contracts are widely used around the world in the delivery of a range of projects. Clients choose our documents because they know that by choosing FIDIC they will get fair and balanced contracts that help to achieve projects on time, within budget and with no major disputes. The FIDIC Contracts Awards (see page 12) provides a showcase for how our contracts are used and what they deliver but from time to time we also think it’s important to highlight some of the interesting clients, organisations and projects that are working with FIDIC contracts to deliver projects that make a real difference to people’s lives on an international scale. One such organisation that has chosen FIDIC is the Organisation for the Prohibition of Chemical Weapons (OPCW). They are currently upgrading their laboratory with the construction of a new Centre for Chemistry and Technology in the Netherlands. The ChemTech Centre will be a recognised leader in research, analysis, training, and capacity building. It will be a flagship for the OPCW and its broader community and will significantly enhance the capabilities and standing of the OPCW as the global leader in the effort to rid the world of chemical weapons. The scope of the project primarily consists of the construction of the new ChemTech Centre, which will provide enhanced and enlarged facilities for the laboratory, equipment store, and training, as well as the land and infrastructure required to accommodate and operate the
Issue 6 - August 2020
building. The project scope additionally includes the decommissioning of the current facility in Rijswijk and the transition from this facility to the ChemTech Centre. The project is already well under way with an architect, engineering and laboratory consultancy firms contracted using the FIDIC White Book with Particular Clauses. The OPCW is now in the process of selecting a contractor to proceed with the construction using the FIDIC Red Book as the design is being developed by the design team separately. The 3 € 3.5m budget for the project is exclusively funded by voluntary contributions to the ChemTech Centre Trust Fund and the new centre is currently planned to become operational at the end of 2022. Elsewhere, FIDIC has recently signed a standard single bespoke license agreement with International Hospitals Group Limited to use the FIDIC Construction (1999 Red Book) Subcontract 1st Ed (2011) for a hospital works project in in Suwaiq, Oman. In the post-Covid-19
climate, we may well see more healthrelated organisations using FIDIC contracts as hospitals and other health facilities are likely to be a growth area for many countries in future. FIDIC is also continuing its discussions with a number of multilateral development banks. We expect to sign a licence agreement with the Islamic Development Bank soon and we are talking to the European Investment Bank about an MoU of collaboration. We also expect to sign a licence agreement with the UN agency, the International Fund for Agricultural Development, very soon.
15 FIDIC Contract Users’ Newsletter
Work continues on FIDIC contract updates
Work continues on updating FIDIC’s contracts suite with a number of new publications and guides planned over the coming months, reports FIDIC’s international client manager, IEVA LIAUGAUDE. The FIDIC contracts team, led by our contracts committee, has been hard at work over recent months preparing for the publication of a number of new contracts and guides as part of FIDIC’s ongoing work to ensure that we provide relevant contract information for the global construction sector. Work on the FIDIC Short Form of Contract Update (Green Book) is progressing well and the publication has now completed friendly review stage, which means that it was looked at by knowledgeable industry professionals. The task group will now consider reviewers’ comments prior to final publication. If everything proceeds to plan, then we expect that the FIDIC Short Form of Contract Update will be published towards end of 2020 or early 2021. We are also anticipating a release later this year or early 2021 of the FIDIC Guide for the 2017 Rainbow Suite. We are hoping that this
publication will be a total game-changer in enhancing and clarifying the Rainbow Suite 2017 editions. We also see this guide as a powerful educational tool for all FIDIC users who are keen to utilise fair and balanced contracts that achieve projects on time, within budget and with no major disputes Elsewhere, expert drafters are proceeding with the finalisation of the Bronze Book (ODBO form of contract) for brownfield projects, another important contract in a key construction area that is expected to be highly anticipated by global users. This publication is currently in the hands of a FIDIC task group and a proposed test edition is expected at the end of this year or in 2020. Also in our contracts pipeline are publications on PPP projects, collaborative contracting, Guide to the 2017 Suite of Services Agreements, Guide to the Emerald Book and the compilation of
FIDIC Golden Principles for services agreements. To help inform our forward programme of publications, we recently conducted a FIDIC contract users’ survey, which received responses from 156 individuals from around the world. The survey was created specifically to canvas views on how FIDICs contracts should develop going forward and, with FIDIC member associations and affiliate members accounting for less than a quarter of responses, it is clear that our contract usage extends far beyond FIDIC’s membership base. Respondents also ranked new FIDIC contract development in order of priority and their feedback shows that publications on collaborative contracting partnering and alliancing, the EPCM form of contract, subcontracts to the 2017 Suite of Contracts, joint venture agreements for contractors, PPP contracts, the Green Book Update and a FIDIC form for
offshore windfarm projects are all eagerly awaited. The results of the survey are now being studied by the FIDIC contracts committee to help inform and prioritise future publications. In other contract news, we have recently received translations for the FIDIC Dredgers Contract 2016 in Spanish and French. The translations were done in cooperation with the International Association of Dredging Companies and we are also in dialogue with them regarding the signing of an MoU. In respect to key languages, we are hoping to conclude the translations of FIDIC Red 2017, FIDIC Yellow 2017 as well as Gold 2008 into Portuguese until end of 2020. We also have some other contract translations to be completed soon and Ukrainians, Vietnamese, Bulgarians, Serbians are rather busy in that regard. Watch this space for more updates soon.
Issue 6 - August 2020
16
Contract Users’ Newsletter
CONTACT US l Please send news, views and articles on FIDIC contracts to the newsletter editor Andy Walker at awalker@fidic.org
l For contract order queries email FIDIC at fidic.pub@fidic.org
l Send general FIDIC enquiries to fidic@fidic.org
Upcoming FIDIC conferences and events Details of future FIDIC conferences and events of interest, so make sure you save the dates today.
FIDIC Africa Contract Users’ Virtual Conference, October 2020 Pre-conference workshops: 19 October Main conference: 20, 21 and 22 October
FIDIC International Contract Users’ Conference, London December 2020 FIDIC Asia Contract Users’ Virtual Conference, November 2020
workshops: 30 November and 3 December Main conference: 1 and 2 December
Main conference: 10, 11 and 12 November Workshops: 13 November
Find out more and check the latest details at http://fidic.org/events
FIDIC International Infrastructure Conference 2021, 12-14 September 2021 Geneva, Switzerland
All dates/locations are subject to change and some events may be virtual depending on the Covid situation.
FIDIC CONTRACT USERS’ CONFERENCES 2020 FIDIC is grateful to the following partners and sponsors for supporting our contract users’ conference series.
CMS_LawTax_CMYK_from101.eps
Issue 6 - August 2020
