Updating the FIDIC Rainbow Suite: the 2022 changes

By Sam Thyne, Associate, Fenwick Elliott

In November, at the 2022 FIDIC Users Conference, reprints of the 2017 Red, Yellow, and Silver Books were announced along with an accompanying updated FIDIC 2017 Contracts Guide. In addition to new amendments, the 2022 reprints include two previously issued errata published by FIDIC in December 2018 and June 2019, making the reprints the definitive issue of the 2017 second editions.

The 2022 amendments were developed in response to industry feedback with the aim to clarify and improve the 2017 text and support its increased use. The amendments themselves are a mix of minor corrections, useful clarifications and new more substantive changes, including the replacement of definitions. They make changes to the General Conditions, along with the DAAB agreement and DAAB procedural rules.

In this article, we look at the changes relevant to disputes. First changes around the Engineer’s determination process and definition of Dispute and Claims, then amendments made to the DAAB process.

Disputes and Claims 

Two of the most significant changes are:

• Clarifications around “matters to be agreed or determined”; and
• Amendments relating to the definition of Disputes. 

Sub-clause 3.7 of the Red Book (3.5 in the Silver Book) sets out the procedure that applies “[w]henever [the] Conditions” require the Engineer or Employer to agree or determine matters or Claims under the Contract. Previously the “matters” were not expressly stated, but the reprint lists each paragraph under which the Engineer is to agree or determine a matter, which assists in more user-friendly administration of the contract. Flowing from this amendment, the definition of “Claim” has been amended to exclude matters to be agreed or determined set out in the 3.7 list, making Claims (requests or assertions for entitlement) separate from the defined list of matters the Engineer or Employer agrees or determines.

The reprints have also made changes to the definition of “Dispute”. This change reflects the amendment to “Claim” and the list of matters to be agreed or determined. However, whilst the broad principle of the clause remains the same, (i.e. for something to be in dispute, it must have gone through the determination process and then be subject to a Notice of Dissatisfaction), FIDIC have introduced the concept of deemed Disputes in Sub-Clause 21.4. The reprints now provide circumstances which can be referred straight to the DAAB without the need of a Notice of Dissatisfaction. These include:

• Where there is a failure by the Employer to pay the Contractor within 42 days after the expiry of the payment period, or to comply with a determination to make payment by the Engineer/Employer or DAAB;
   
• Where the Contractor is entitled to receive financing charges under Sub-Clause 14.8 (Delayed Payment) but does not receive payment thereof from the Employer within 28 days after his request for such payment; or
   
• Where a Party has given:
  • a Notice of intention to terminate the Contract under Sub-Clause 15.2.1 [Notice] or Sub-Clause 16.2.1 [Notice] (as the case may be); or
  • a Notice of termination under Sub-Clause 15.2.2 [Termination]. Sub-Clause 16.2.2 [Termination]. Sub-Clause 18.5 (Optional Termination) or Sub-Clause 18.6 [Release from Performance under the Law] (as the case may be).

and the other Party has disagreed with the first Party's entitlement to give such Notice. 

These are, of course, areas where disputes often arise and this amendment may assist in a fairer administration of the Contract, preventing what may be a legitimate entitlement being disregarded due to failure to strictly comply with notice provisions.

The DAAB Process

There have been amendments both to the DAAB Sub-clauses, Agreement, and procedural rules. 

Sub-Clause 21.2, which applies where the parties fail to agree a DAAB member, has been amended to make the President of FIDIC the default appointing entity (rather than an entity nominated by the parties). This is more of a clarification, however, as the Contract Data states that, unless an appointing entity is stated, the default is the FIDIC President.

Under the DAAB Agreement, previously, DAAB members had to agree that they had not been employed by the parties in the 10 years prior to the signing of the DAAB Agreement. This period has been reduced to five years in the reprint. While relaxing a period of impartiality may raise eyebrows, this brings the FIDIC requirements more in line with other institutions, such as the IBA Guidelines, who specify three years as the period between previous service to a party. Further, it should open the door for a wider range of DAAB members to be nominated on panels.

Finally, the reprints make several amendments to the DAAB Procedural Rules with a focus on online meetings, which have become a feature over the last three years. However Procedural Rule 3 still stresses that site meetings and hearings should only be held on-line in exceptional circumstances, a sign of the value that FIDIC attaches to in-person meetings form a dispute avoidance point of view.

Conclusions

The other amendments include changes to the definition of “Exceptional Events” in Sub-Clause 18.1 to make it clear that they, indeed, had to be exceptional, amendments to the taking over provisions in Sub-Clauses 10.2 and 10.2, and clarifications to the interim payment provisions at final payment stage in Sub-Clause 14.13.

It bears mentioning that the changes will not automatically apply to 2017 FIDIC contracts already on foot. If parties want to use the amended provisions, they will have to specifically amend their current contracts to incorporate them.

Given the 18-year gap between editions, it is helpful that FIDIC are continuing to consider how the Rainbow Suite can adapt with the times. The 2022 reprints are a good balance of keeping true to the original intent of the 2017 text, while offering clarification which will help its longevity.

A further example of adapting with the times is FIDIC’s update to the ‘Advisory Notes to Users of FIDIC Contracts Where the Project Uses Building Information Modelling Systems’. In the 2022 reprints, FIDIC has updated the description of Building Information Modelling (BIM) and now includes references the ISO 19650 and 12006 series of standards. The advisory note states that FIDIC Contracts do not require a particular form of BIM Protocol, or other BIM documents, but one suitable example is the Information Protocol published by the UK BIM Framework. Given the importance of technology in today’s construction and engineering industries, we look forward to further developments of this advisory note and the work of FIDIC’s newly formed Digital Transformation Committee.  

We also look forward to future updates which see FIDIC incorporate changes into the contracts which reflect the challenge set out in their Diversity & Inclusion Policy. FIDIC aim for their contract documents to promote gender equality and diversity both in contract provisions and in the documentation that flows from the contract, such as letters between parties, dispute board engagement and engagement of subcontractors and suppliers. 

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