This article aims at answering to the following questions: What is the limitation period applicable to the Contractor in FIDIC 1999 Red Book General Conditions of the Contract? When does the limitation period in such Contracts start to run? Are the DAB proceedings likely to suspend or to interrupt the limitation period? What is it that the Contractor must know?
Legal basis
Under the provisions of Sub-Clause 20.1 of the General Conditions of Contract for Construction (GCC) for buildings and engineering works designed by the Employer – FIDIC 1999 Red Book – Contractor’s Claims:
“If the Contractor considers himself to be entitled to any extension of the Time for Completion and/or any additional payment, under any Clause of these Conditions or otherwise in connection with the Contract, the Contractor shall give notice to the Engineer, describing the event or circumstance giving rise to the claim. The notice shall be given as soon as practicable, and not later than 28 days after the Contractor became aware or should have become aware of the event or circumstance.
If the Contractor fails to give notice of a claim within such period of 28 days, the Time for Completion shall not be extended, the Contractor shall not be entitled to additional payment and the Employer shall be discharged from all liability in connection with the claim. Otherwise, the following provisions of this Sub-Clause shall apply.
The Contractor shall also submit any other notices which are required by the Contract, and supporting particulars for the claim, all as relevant to such event or circumstance.
The Contractor shall keep such contemporary records as may be necessary to substantiate any claim, either on the Site or at another location acceptable to the Engineer. Without admitting the Employer’s liability, the Engineer may, after receiving any notice under this Sub-Clause, monitor the record-keeping and/or instruct the Contractor to keep further contemporary records. The Contractor shall permit the Engineer to inspect all these records, and shall (if instructed) submit copies to the Engineer.
Within 42 days after the Contractor became aware (or should have become aware) of the event or circumstance giving rise to the claim, or within such other period as may be proposed by the Contractor and approved by the Engineer, the Contractor shall send to the Engineer a fully detailed claim which includes full supporting particulars of the basis of the claim and of the extension of time and/or additional payment claimed.
If the event or circumstance giving rise to the claim has a continuing effect: (a) this fully detailed claim shall be considered as interim; (b) the Contractor shall send further interim claims at monthly intervals, giving the accumulated delay and/or amount claimed, and such further particulars as the Engineer may reasonably require; and (c) the Contractor shall send a final claim within 28 days after the end of the effects resulting from the event or circumstance, or within such other period as may be proposed by the Contractor and approved by the Engineer.
Within 42 days after receiving a claim or any further particulars supporting a previous claim, or within such other period as may be proposed by the Engineer and approved by the Contractor, the Engineer shall respond with approval, or with disapproval and detailed comments. He may also request any necessary further particulars, but shall nevertheless give his response on the principles of the claim within such time.
Each Payment Certificate shall include such amounts for any claim as have been reasonably substantiated as due under the relevant provision of the Contract. Unless and until the particulars supplied are sufficient to substantiate the whole of the claim, the Contractor shall only be entitled to payment for such part of the claim as he has been able to substantiate.
The Engineer shall proceed in accordance with Sub-Clause 3.5 [Determinations] to agree or determine (i) the extension (if any) of the Time for Completion (before or after its expiry) in accordance with Sub-Clause 8.4 [Extension of Time for Completion], and/or (ii) the additional payment (if any) to which the Contractor is entitled under the Contract.
The requirements of this Sub-Clause are in addition to those of any other Sub-Clause which may apply to a claim. If the Contractor fails to comply with this or another Sub-Clause in relation to any claim, any extension of time and/or additional payment shall take account of the extent (if any) to which the failure has prevented or prejudiced proper investigation of the claim, unless the claim is excluded under the second paragraph of this Sub-Clause.
Doctrine and judicial practice have established that civil law principles are applicable to the contract concluded between the Employer and the Contractor.
Thus, a contract concluded in Romania based on FIDIC Red Book is also governed by legal provisions regarding the statute of limitations (Decree-Law 167/1958 regarding the statute of limitations and the 1864 Civil Code or the New Civil Code).
According to both the old and the new regulation, the limitation period is 3 years. The New Civil Code mentions, however, that the parties may establish another limitation period.
According to Sub-clause 20.1 of the GCC Red FIDIC, we conclude that the Contractor’s right to act starts as follows:
The statute of limitations starts to run when the Contractor submits to the Engineer its notification of intention to claim describing the event or circumstance giving rise to the claim.
The suspension or interruption of the statute of limitations cases are clearly and limitative established by the law. The DAB proceedings are not provided by the same as being able to suspend or interrupt the statute of limitations period. Our conclusion is, hence, that the DAB proceedings are not likely to suspend or discontinue any limitation period, the latter being interrupted only by submitting a request for arbitration.
Therefore, the Contractor must submit its request for arbitration within three years since it submitted the notification of intention to claim. If the Contractor fails to do so, its claim and/or any additional payment can be dismissed subsequently to the fact that the Statute of limitations occurred.