This is the final instalment of a four-part series on the FIDIC White Book. The previous posts have provided an overview of the White Book, an in-depth examination of changes from the 4th to the 5th edition, and a look at critical changes from 2006 to 2017. This post will complete the examination of critical changes in the 2017 edition.

Agreement Termination

  • If the Consultant breaches a material term or condition, the Client may give Notice outlining the breach.
  • If the Consultant fails to remedy the breach within 28 days of Notice, the Client may terminate the agreement with 14 days’ notice.
  • Immediate termination is possible if the Consultant becomes insolvent or breaches anti-corruption measures.
  • In these cases, the Client assumes control of records and documents, claims reasonable costs from the Consultant, and withholds payment until the accomplishment of stated entitlement.

Additional Termination Rights for Client

  • The Client has the discretion to terminate the agreement by giving the Consultant 56 days’ notice, without intending to seek services elsewhere.
  • Termination is also allowed if an exceptional event causes a suspension of services for more than 168 days. The Consultant will be paid an agreed remuneration in this case.

Termination Rights for Consultant

  • The Consultant can terminate the agreement if the Client’s suspension of service extends beyond 168 days, following a notice of 14 days.
  • Non-payment can lead to termination if the Consultant does not receive payment within the due date plus 7 days of qualifying suspension plus 42 days after suspension, with a notice period of 14 days.
  • Immediate termination is permitted if the Client becomes bankrupt, insolvent, or breaches anti-corruption measures.
  • If the suspension of services due to an exceptional event surpasses 168 days, the Consultant can terminate the agreement with 14 days’ notice.
  • In all cases of the Consultant terminating the agreement, the Consultant is entitled to be paid for the loss of profit on the services not performed due to termination.

Payment Terms:

  • The Client must pay within 28 days from the date the Consultant issues an invoice, covering service payment, variations, and exceptional costs.
  • Exceptional cost bases are outlined in Appendix 3 (Remuneration & Payment).
  • If rates and prices are not applicable, new rates should be agreed upon. In the absence of agreement within 14 days, reasonable rates and prices will apply.
  • Delayed payment within 28 days will result in the payment of compensation (financing charges) at the rates stated in Appendix 3.
  • If any item in an invoice is disputed by the Client as not properly due, the Client can give Notice of intention to withhold payment within 7 days, but must pay the remainder promptly.

Insurance Obligations:

  • The Consultant must maintain professional indemnity insurance (PII), public liability insurance (PLI), works compensation insurance, employer’s liability insurance, and other insurances required by applicable law.
  • Professional indemnity insurance must be maintained for the specified liability period.
  • If any of the required insurances are cancelled, the Consultant must promptly notify the Client.
  • Additionally, the 5th edition emphasizes the importance of placing such insurances with reputable international insurers.

Dispute Resolution:

  • Once a dispute arises, the senior representatives of both parties shall meet within 28 days of receiving a written Notice to attempt an amicable resolution.
  • If the dispute remains unresolved, adjudication should be initiated within a maximum of 56 days upon written request.
  • If no further Notice is given within 28 days of the adjudication decision, the decision becomes binding.
  • If no decision is reached within 28 days from the adjudicators or a Notice of Dissatisfaction (NOD) is issued within 28 days after the decision, both parties shall attempt an amicable settlement.
  • Unless agreed otherwise, arbitration may commence after 28 days from the Notice, even in the absence of an attempt at an amicable settlement. International arbitration shall be pursued.
  • If arbitration does not commence within 182 days from the Notice of Dissatisfaction, the NOD will lapse and become invalid.

In conclusion, the 2017 FIDIC White Book has substantially updated aspects of the contract, such as termination, payments, insurance obligations, and dispute resolution.

It is vital for both parties to understand and comply with these provisions to ensure a smooth and fair contractual relationship.

The previous three posts can be read here: part 1, part 2, and part 3.

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

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