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‘Prevention is better than cure’ is a premiseof universal acknowledgement. Disputes are inherent in construction situations and the need for prevention of such cannot be over-emphasized. Express provisions in this regardare embodied in the ‘FIDIC Conditions of Contract-For Building and Engineering Works Designed by the Employer- 1999 Edition’(FIDIC New Red Book) onwards.
Besides, when one examines the standard forms previously practiced, ICE/ FIDIC model for instance, it would be revealed that preventive measures were intrinsicallyavailable there within.
The following provisions in the FIDIC (Old Red Books) contribute towards prevention of disputes;
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Engineer is identified as the Professional Contract Administrator, who has to inspect, examine, approve/ disapprove the works, issue instructions, make determinations, initiate/ take measurements, certify payments etc. |
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The Contractor should receive instructions only from the Engineer |
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In case the Engineer has to obtain Employer’s approval in exercising his functions, such have to be stated in the Particular Conditions. |
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Engineer ought to consult both parties in making decisions/ determinations in view of securing their mutual agreement (prominent in FIDIC 4) |
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Engineer should act impartially when the mutual agreement is not reachable (prominent in FIDIC 4) |
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Contractor is required to serve notifications to the Engineer in respect of entitlements for additional time and money (prominent in FIDIC 4) |
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Engineer’s instructions are required to be in writing; oral instructions are permissible but should be confirmed in writing (prominent in FIDIC 4). |
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Express provisions for prevention of disputes have been introduced in the FIDIC New Red Book (1999) and in Pink Book (MDB Harmonized Edition- 2005) onwards. An impartial body named the Dispute Board has been introduced, and the following provisions serve in the direction of prevention of disputes.
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The Dispute Board (DB) should undertake periodical site visits to get/ remain acquainted with the progressing of the works and to endeavour to prevent potential problems or claims from becoming disputes [Procedural Rule No. 2- MDB Harmonized Edition] |
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Parties may at any time jointly refer a matter to the DB for it to give its opinion. [Sub-clause 20.2; seventh paragraph] |
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The DB member/s have to be available for giving advice or opinions when requested by both the Employer and Contractor [Sub-clause 4(k) of the GCC of the DB Agreement] |
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Hence, it is important that the Parties as well as the members of Dispute Boards recognize the role of the Dispute Boards in prevention of disputes. It is submitted that the Sub-clause 20.2 which provides for the Parties to jointly refer any matter to the DB can be effectively used to avoid disputes. The Procedural Rule No. 2 of the MDB Harmonized Edition provides that one of the objectives of undertaking sites visits is to prevent potential problems/ claims becoming disputes.
Accordingly, the Parties are well placed to submit jointly, any matters of difference to the DB at the Site Visits for its opinion or advice. What is of prime importance is that they canmake such reference at any time: This can conveniently be done, by making the reference to the DB by one Party through the other Party. The DBs will do good by giving its opinion/ advice at its earliest convenience; and it will be always prudent for the DBs to promptly acknowledge such references and indicate the time required for giving its response. It is suggested that electronic communications can wellbe used to add efficacy to these transactions.
It is pertinent to mention that the preventive measures are onlypossible with the standing Dispute Boards that are specified in the FIDIC New Red Book/ Pink Book. It is observed that the Yellow Book (Plant and Design- Build), and Silver Book (EPC/ Turnkey Contracts) specify Ad-hoc DBs, envisaging the possibility of substantial fabrication and manufacturing works which are carried out away from actual construction sites.
However, it is found that there areinstances wherethe contractual provisions for standing Dispute Boardshave been altered in the Particular Conditions, adopting the provisions for Ad-hoc Dispute Boards. This militates against the object of prevention of disputes and also disturbs the mood and regime of the FIDIC New Red/ Pink Book.It is respectfully submitted that modifications to industrystandard forms must be attempted with extreme care and caution only:Although such might be effectuated in negotiated contracts, shouldbest be avoided in contractssecured through competitive bidding.
Last but not the least, it is to be stated that the FIDIC New Red Book/ Pink Book does not displace any of the avenues of prevention that were hitherto available to the Engineer. The Conditions require that the Engineer should consult both Parties and act fairly in making determinations. These are the basic requirements of Natural Justice. It is paramount that any administrative functionary who decides upon rights and obligations of others must observe the principles of natural justice, act reasonably, in good faith and in accordance with the law. Therefore, it is prudent for the personnel in the Engineer’s Organizations to direct their minds to the possibilities for prevention of disputes and act righteouslyas the party of the Professional Contract Administrator.
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