One of our blog subscribers requested advice on force majeure under the FIDIC Red or Yellow books. The good news is that the FIDIC force majeure clauses are nearly the same under the Red, Yellow, Silver, and Gold forms of contract, so the following is applicable to all of them.
Sub-Clause 19.1 (Definition of Force Majeure) the Red Book states that:
‘In this Clause, “Force Majeure” means an exceptional event or circumstance:
(a) which is beyond a Party’s control,
(b) which such Party could not reasonably have provided against before entering into the Contract,
(c) which, having arisen, such Party could not reasonably have avoided overcome, and
(d) which is not substantially attributable to the other Party.’
Thus, to qualify as a force majeure event, it has to tick all of the boxes (a) to (d) above.
The clause, however, goes on to offer further definitions as follows:
Force Majeure may include, but is not limited to, exceptional events or circumstances of the kind listed below, so long as conditions (a) to (d) above are satisfied:
(i) war, hostilities (whether war be declared or not), invasion, act of foreign enemies,
(ii) rebellion, terrorism, revolution, insurrection, military or usurped power, or civil war,
(iii) riot, commotion, disorder, strike or lockout by persons other than the Contractor’s Personnel and other employees of the Contractor and Sub-contractors,
(iv) munitions of war, explosive materials, ionising radiation or contamination by radio-activity, except as may be attributable to the Contractor’s use of such munitions, explosives, radiation or radioactivity, and
(v) natural catastrophes such as earthquake, hurricane, typhoon, or volcanic activity.’
So, not only does it have to meet the above requirements (a) to (d), but the event should also be ‘of the kind listed’ above.
If a force majeure event does occur and either party is prevented from performing its obligations, then the party affected is obliged to give the other party notice under Sub-Clause 19.2 (Notice of Force Majeure).
You will note that Sub-Clause 19.1 (Definition of Force Majeure) does not specify any remedy or entitlement in the case that a force majeure event occurs. For this we must look to Sub-Clause 19.4 (Consequences of Force Majeure), which states that:
‘If the Contractor is prevented from performing any of his obligations under the Contract by Force Majeure of which notice has been given under Sub-Clause 19.2 (Notice of Force Majeure), and suffers delay and/or incurs Cost by reason of such Force Majeure, the Contractor shall be entitled subject to Sub-Clause 20.1 (Contractor’s Claims) to:
(a) an extension of time for any such delay, if completion is or will be delayed, under Sub-Clause 8.4 (Extension of Time for Completion), and
(b) if the event or circumstance is of the kind described in sub-paragraphs (i) to (iv) of Sub-Clause 19.1 (Definition of Force Majeure) and, in the case of sub-paragraphs (ii) to (iv), occurs in the Country, payment of any such Cost.’
Consequently, the Contractor would be entitled to an extension of time if the event delayed the completion date. He would also be entitled to additional payment, but only under certain circumstances. The circumstances entitling the Contractor to additional payment are defined by reference back to Sub-Clause 19.1 (Definition of Force Majeure) where we will see that:
The event must have occurred in the Country where the Permanent Works are to be executed and
‘Natural catastrophes such as earthquake, hurricane, typhoon or volcanic activity’ are excluded
Consider the following: a claim for an extension of time and additional payment has been submitted by a contractor under the force majeure provisions when the police closed the project Site down for security reasons during a political conference that took place in a hotel across the road from the Site. Do you think that this comprises a qualifying event?
Leave a comment below with your opinion on whether the above scenario qualifies under FIDIC force majeure provisions and why or why not.
This blog was written by ICCP Executive Officer and Fellow, Andy Hewitt.
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Yes , this is FM since it fulfills 4 conditions of 19.1. The event is analogous to a lockdown. The contractor is entitled to EOT for the period he did not have access to site and maybe additional period if he can prove deadly caused due to this. He is entitled to additional costs but only on proof of evidence of the loss and direct causality due to this action..
Yes, this event comes under FIDIC force majeure because this event is an event of ‘but is not limited to, exceptional events or circumstances of the kind listed below’ and a man-made event (not ‘natural’ event) under sub-clause 19.1. Therefore, the contractor is entitled to an extension of time for completion and additional payment under sub-clause 19.4.
Yes it constitute Force Majeure complying the requirements under Clause 19.1 that (a) to (d). Despite directly not enlisted under Clause 19.1 (i) to (v), it qualifies as Force Majeure as the lists are not limited to those stated there in.
Why would a client pay for Force Majeure? In a country like Uganda where construction was allowed to continue, I do not see Covid qualifying as FM
Hi Paul,
FIDIC provides that either party may be excused from performance of their obligations in the case of Force Majeure. If COVID-19 has not affected the contractor’s operations, there is nothing to claim for, so nothing to pay.
Great article