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Force Majeure

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Jihad Daniel
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In the case of Force Majeure defined in FIDIC Conditions of Contract for Construction clause 19.1. Building’s Contractor gave notice of such Force Majeure (acts of war) that prevented from performing his obligations under the Contract. However the Employer believed that the Contractor has the duty to minimize the delay in the performance of the Contract as a result of the Force Majeure under clause 19.3 of the FIDIC by at least continuing all necessary office and engineering works during this Force Majeure period, specially that the building’s location is far from the war areas. The Employer added that clause 19.4 under FIDIC is applied when the Contractor is prevented from performing any of his obligations and lack of labors (majority of foreign labors who escaped to their own countries due to the war consequences) to proceed at least with the internal building’s finishing works, does not fall within the Employer’s risk but is the Contractor’s responsibility.
How do you think the Engineer shall deal with such case?

Replies

Ernest J. HANNA
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Dear Friend,

"war",declared or not, is definitely not a Contractor’s Risks. The Employer is the indicated Risk holder in such case and the Employee (Contractor) cannot support any of Special risks nor its continous effect ...
Shortage in manpower, materials as well, are Employer’s liability and the Contractors (Employee) liability cannot be called if the Contractor uses its utmost to solve the shortage. Therefore, the Employer should compensate (outbreak of war) for increased costs (manpower, material,..) till the return to prevailing conditions before the occurence of war event. The Contractor is only responsible for direct damages to the site (including his own equipments) and the uninspected works. Employers liability is also called for time extension and for money compensation (refer to corrected Hudson formula applicable for such event, where compensation dosn’t cover OH over OHP). In addition, i draw your attention that the Contract is first of all under Country’s local law then is under Fidic provisions. Do not expect from Engineer’s side any fair determination in this particular case, because himself is Employer’s Agent and cannot determine fairly such issue.

In am personally involved in Claims related to war in Lebanon (since 1996) and i cannot predict the issue. Under Fidic 4th edition reprinted 1992 i am using mainly the following sub clauses: 12.2, 20.4a, 44.1, 44.2, 65.1, 65.2, 65.5 etc...

The Engineer and the Employer should be aware that delaying fair compromise in this particular situation will be in first place harmfull for the Project. Contractor’s difficulties becomes their own problems. Therfore they have to deal with the Contractor on factual basis by proposing an interim determination allowing the Contractor an EOT and money Compensation.

Hope that my experience will helps you.

Ernest J.
Andrew Flowerdew
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John,

Your’e probably right but I rarely see an unamended version of FIDIC, or come to that, any other standard form, these days.
John Whitney
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Seems clear to me. FM applies if the Contractor is prevented from carrying out any of his obligations (not ALL of them). Internal finishes is just one of the Contractor’s obligations - so the FM clause must apply.


John
Andrew Flowerdew
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Jihad,

Have a read, it may be of help - and the contractor will normally always have an implied duty to mitigate ANY delay.

http://tldb.uni-koeln.de/php/pub_show_document.php?pubdocid=126600

Two important points to think about is whether the clause says "....any of the contractors obligations..." or "....all of the contractors obligations..." must be affected in order for the clause to take effect. Secondly, what is the law of the contract as civil law and common law systems will take slightly differing views, but as can be seen from the paper, a fairly restrictive view is taken in all cases.