This is the second in a multi-part series on changes to the FIDIC White Book 5th Edition published in 2017. The previous post provided an overview of changes. In this post, a clause-by-clause comparison will examine the difference between the 2006 and 2017 editions.

Detailed Differences in Each Clause – 2006 Vs 2017 Editions

Clause 1 (General Provisions). Although there were 10 Sub-Clauses in the 4th edition, the 2017 edition has 16 Sub-Clauses. While Communications and Notices were two separate Sub-Clauses earlier, in the 5th edition, the two have been combined as with the entire 2017 FIDIC Rainbow Suite.

The new Sub-Clauses include Confidentiality, Relationship of Parties, Agreement Amendment, Severability, Non-Waiver, and some important additions like Priority of Documents and Good Faith. Copyright in the previous edition has been changed to Intellectual Property –copyright is one form of intellectual property. The new sub-clause is much broader and covers four items: patents, trademarks, copyright and trade secrets.

Clause 2 (The Client). The sub-clauses in both editions are generally the same although the latest edition is more detailed. However Sub-Clause 2.9 (Payment of Services) in the 4th edition has been omitted from the latest edition.

Clause 3 (The Consultant) has 7 Sub-Clauses in the 4th edition, whereas in the new edition, there are 9 Sub-Clauses with the additional two being Sub-Clause 3.8 (Safety & Security of Consultant’s Personnel) and Sub-Clause 3.9 (Construction Administration). Minor changes are there in the names of Sub-Clauses in the two editions as highlighted in the presentation, but more than that the contents have been refined in the latest edition. This analysis is a high-level one and we will try to go into details as we move along.

Clause 4 has been updated from 2006 (Commencement, Completion, Variations & Termination) and separated in the 5th edition into Clause 4 (Commencement & Completion) with new Sub-Clauses of Programme and Rate of Progress of Services. Two new clauses have been created: Clause 5 (Variation to Service) and Clause 6 (Suspension of Services & Termination of Agreement) where the effects of suspension and effects of termination and its procedures are more detailed.

(Payment) has similar sub-clauses in both editions except it is Clause 5 in the previous edition and Clause 7 in the latest edition. Similarly, you can see changes in Liabilities & Insurances apart from the clause numbering. As for Dispute & Arbitration, as with the entire Rainbow Suite of the 2017 edition, Adjudication has been added and its consequences for failure to comply with such decisions have been added as separate Sub-Clauses and are well-detailed in the 5th edition.

Although the structure between the 4th and 5th editions are similar, the latest edition has more elaborated clauses making them more convenient for implementation compared with the previous edition. Variation & Termination have been separated from Commencement and Completion and Rules for Adjudication have all been added to the 5th edition. Additionally, a new obligation on the parties has been included – to act in good faith and in the spirit of mutual reliance.

Now a clear order of precedence for documents is established within the form of agreement making it more clear that Particular Conditions take precedence over the General Conditions.
Another refinement in the new edition is the guidance to complete Appendix 1 (Scope of Work) with a detailed description covering:

  • exclusions,
  • function & purpose of the services,
  • additional information relied upon by the Consultant in the discharge of the services that cannot be reviewed by the Consultant for accuracy and sufficiency (for example, sub-surface or hydrological conditions), and finally,
  • the construction administration requirement to be fulfilled by the Consultant and identify the interface management between the services and services provided by others, etc.

While the 4th edition does contain a Termination for Convenience clause, it does not differentiate the effect of it from other forms of termination. However, the 5th edition clarifies that if the agreement is terminated by the Client for convenience, then the Consultant shall be entitled to be paid the loss of profit that would otherwise have been earned on the services not performed due to the termination.

The 5th edition allows for termination by either party, the Client or Consultant, immediately, on defaults like bankruptcy and corruption. The Consultant’s right to terminate for suspension of work is now reduced to a shorter time frame – down from 182 days to 168 days.

One other improvement in the 2017 edition is that the Consultant has the right to suspend services 7 days after Notice has been given from the date of non-payment, whereas the 4th edition only permitted suspension following 28 days of non-payment.

Variation is now a separate clause in the 5th edition, with clear time limits for the submission of variation requests and the proper method of valuation. In short, according to the 5th edition, a variation may be issued if either:

  • there is an amendment to scope of services and personnel, equipment & services provided by the Client or
  • an omission of part of the services which is no longer required for the Client or changes in the specified sequence or timing of the performance of service or changes in the method of implementation of services

The 5th edition includes for a detailed exceptional event procedure, which shares the risk of an event between the Client and Consultant. Also, a new provision for variation has been added: Where an exceptional event gives rise to an unavoidable change in the scope of services, then a variation shall be issued by the Client.

While a standard of reasonable skill, care and diligence only applies to the performance of the services according to the 5th edition, it has now raised the standard of care to the works to be expected from a Consultant experienced in the provision of services for projects of a similar size, nature, and complexity.

A comprehensive adjudication procedure including the appointment of an Adjudicator, his payment, etc. has been amended to the dispute resolution provisions and set forth in a new appendix of the 5th edition. Thereby, prior to any referral to arbitration, any disputes not resolved amicably will first need to be referred to adjudication

The 5th edition includes a new provision: if the Consultant is providing construction administration in relation to the services to be carried out under a works contract. Under these provisions, the Client shall indemnify the Consultant against any and all claims made by the Contractor against the Consultant arising out of the works contract. If an ambiguity or discrepancy is found between the Consultant’s obligations under the agreement and the Consultant’s duties, the Consultant shall give notice to the Client indicating the same and if necessary Client shall issue a variation to the services.

In the 5th edition, Appendix 4 now details what is to be included in the schedule. Within 14 days of the commencement date, the Consultant shall submit its programme which shall include as a minimum:

  • the order and sequence of services,
  • key dates for performance or delivery of parts of the services, and
  • key dates when decisions, consents, approvals, or information from the Client or third parties, are required to be given to the Consultant.

However, the new book does not impose a liability to reimburse as delay damages if the services are not completed within the time for completion.
In the 5th edition, the Consultant may, upon 7 days’ notice, revoke any intellectual property license granted in the event that the Client is in default of payment of any amounts due under the agreement. This is a fairly clear incentive to ensure that the Client does not unreasonably withhold payment.

Through the 5th edition, the Client has a new responsibility to accept that the Consultant will rely on the accuracy, sufficiency, and consistency of all the information provided by the Client or by others on behalf of the Client. Equally, the Consultant has an obligation to review such information to the extent achievable using the standard of care, to ensure that there is no manifest error, omission, or ambiguity in the information and to promptly give notice to the Client of any adverse findings.

So, the 5th edition White Book seems to have addressed many of the former problematic areas recognized in the 4th edition. Because of these changes, the parties will be in a good position to realize and manage their risk allocation.

The previous post in this series provided an overview of changes. The next post in this series will detail the new additions to the 2017 edition of the White Book.

This guest post was written by Mansoor Ali, FICCP and Jishma Joy. Would you like to learn more about the FIDIC White Book? Check out this webinar.

If you would like all of these posts in a single PDF, please email hello@instituteccp.com with the subject line FIDIC White Book.

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