A Force Majeure event has created an opportunity or a curse depending on which side of the Event you are on. The Damage to the affected Party only be compensated by Time and compensation by Cost may not be awarded. Under Force majeure circumstances, all Parties must endeavor to resume operations and obligations. Unlike the Squid Game, FIDIC Contracts allows Contractor to maneuver and find an amicable way out. In this article, we will asses the way forward for the Contractor to ensure obligations from other parties.
Throughout all Economies in the past two and a half year, Governmental Authorities have imposed COVID – 19 restrictions which have impaired Construction and disrupted planned Operations at Sites. As per the Force Majeure Suite in General Conditions of Contract, all Parties have attempted to mitigate the burden sharing of damages incurred.
Notify on end of Force Majeure event
As per Clause 19.2 General Conditions of contract Cost is not available for natural catastrophes such as volcanic eruptions, earthquake, hurricane, typhoon etc. It has been noted that the Employer’s determinations in most of the projects have been mostly a shift of entire risk of Cost to the Contractor. The impacted Party must also appreciate that Employer’s ambiguous take on the nature of Force Majeure event make avenue for damages and Claims since the Notified Party in all possibilities will attempt to evade determination of Cost compensation citing Force Majeure suite. An Employer may agree to reward only Additional Time compensation and Employer will deliberately exclude Cost compensation.
In a previous Article, we were able to appreciate provisions in Contract through which Contractor can establish their entitlement for compensation with both Time and Cost. Such awareness helps all Parties to better assess the following:
It is not viable for an experienced Contractor to highlight innumerable Force Majeure events. Thereby, it is beneficial for Contractor to deduce all impact on his Operations based on a single Force Majeure Event.
Better identification of Termination of Force Majeure Event and subsequent evaluation of compensation to damages as per more accurate and equitable provisions of Contract
Timely Identification of subsequent Additional Works as Variations caused by Instructions from Engineer / Subsequent Change in Legislation / Omissions.
Any Enterprise or Party can only notify on end of Force Majeure event after the impacted Party adapts need fully to operationalize. The Party must be able to substantiate his effectiveness by possibly incorporating Government Authorized rules and regulations or by proving to the Party of no impact on Event on the Site Operations. A party may notify and incorporate such rules and regulations as per Sub Clause 13.7, GCC, Changes in Legislation.
To further strengthen his entitlement as per Sub Clause 13.7 GCC, Contractor will have to maintain utmost vigilance and record every impact on his Operations at Site. Such records will reflect on the additional Costs incurred by Contractor to resume Operations as per issued Rules and Regulations. Contractor shall provide comparative assessments on following:
Impact on Time Cycle for Contractor’s Operations at Site; Example: Typical Concreting activities, Erection Activities etc.
Impact on availability of skilled manpower at Site, that is Labor, Supervision Staff, Site Inspectors etc.
Impact on procurement activities
Further, in international contracts Contractor may have to mobilize resources from across countries. Under such circumstances, Contractor must maintain diligent monthly records to substantiate impact on Operations at Site and procurement efforts.
In spite of all attempts and submissions, Contractor will be able to substantiate the continued impact of Change in Legislation, or a continued impact of single Force Majeure event. The provisions in Contract allow for Contractor to avail for Optional Termination, Payment and Release from Project.
As per Sub Clause 19.6 GCC, if Contractor encounters a continued effect of 140 total days due to the same Force Event cited above thereby entitling Contractor to notify for Termination of Works. Such measure entitle Contractor for the following :
Termination of Contractor’s obligations
Employer will have to release PBG and pay Contractor for demobilization and repatriation of Staff, removal of Temporary Works and Contractor’s Equipment.
Contractor continues to contest with Engineer and Employer on his entitlements for Damages as per submitted Claims
Diseases like COVID-19 may reoccur as an epidemic / pandemic given the changing Global Climate. As FIDIC Contracts is bound to evolve keeping COVID-19 on hindsight, we can expect a more relevant revision of FIDIC in the coming time where more influence may be given to Inventory Management, Health, Safety and a template to update Contract Amount in a more amicable way.
Happy Hunting!
Comentários