24 Oct

FIDIC, (Federation Internationale Des Ingenieurs Conseils), International Federation of Consulting Engineers aims to find a resolution in construction sector. There are five different FIDIC contracts in different colors that regulates different and separate obligations and rights. Today FIDIC is applied to 30 % of international construction project contracts. In Turkey, FIDIC mostly was preferred in high volume construction projects such as Marmaray Bosphorus Project, Baku Ceyhan Pipeline Construction Project, Ankara- Istanbul Highway Construction.

Especially in construction and infrastructure contracts it is highly be advised to prepare contracts very detailed and clear instead of choosing a states’ law as a governing law. FIDIC provisions are the rules which are prepared by experts in subjects that contracts cover and non-binding and non-obligatory rules. FIDIC does not include a binding provision only offers sample contracts for parties, which means that the provisions will be applied only if the parties of a contract assign FIDIC Rules in case of dispute.

While choosing the right contract for future possible arising disputes risk dispersion is significant for parties. FIDIC standardized construction contracts consist of two sets of general and special conditions, and special conditions are formed by parties in order to set several rules in a project for instance so that parties can arrange several conditions including risks. FIDIC standardized construction contracts  have also standard printed appendixes which include letter of acceptance, contractor’s proposal, technical specifications, projects and bill of quantities.

In construction contracts have several disputes mostly arising from amendment in routing, late payment or nonpayment of progress billing or breach of contract. Every sort of disputes in the scope of FIDIC contracts will be settled in accordance with article 20 of FIDIC standardized construction contracts . Disputes while project is continuing, FIDIC may provide alternative resolutions for the sake of continuous of the project. Several nonobligatory resolution options such as reconciliation and mediation and obligatory and binding options such as arbitration motivate creditors to give credit for the projects.

According to ICC (International Chamber of Commerce) data, 21 % of the applications are related to construction subjects and many of the contracts which are subject to applications are foreseen FIDIC in their arbitration clauses.

In 1999, regulations of standardized construction contracts were amended fundamentally. Before 1999, FIDIC standardized construction contracts had three-phase system which foresees to apply  engineer first in case of a dispute and engineer’s decisions shall have been waited and after the decision one of the parties could appeal against the decision by using arbitration clause in their agreement. During that time  parties should have tried to effort to settle amicably, otherwise the arbitration procedure would begin in a period of time set by the agreement between the parties. However these significant authorities of the engineer was revoked after the amendment in 1999 due to several reasons particularly lack of objectivity of the engineers. Those mentioned authorities have been transferred to a board called Dispute Adjudication Board.

After the amendment, above mentioned three-phase structure have been maintained in FIDIC  standardized construction contracts but Dispute Adjudication Board (DAB) have been brought in the dispute resolution system of FIDIC.  In cases where either party intends to appeal against the DAB, it may only initiate the arbitration procedure as defined in the contract. FIDIC books include regulations regarding the alternative agreements which can be signed by parties and DAB so that parties may draft these agreements and set procedures and principles by their projects considering that FIDIC does not aim to bind parties but to provide convenience by offering several set of rules under certain forms.

Dispute Adjudication Board (DAB) consist of one or three persons who are independent experts on specific subjects. If it is decided DAB to consist of three experts by parties, either party show a candidate to submit the approval of the other party and third member is chosen by the other two members assigned by the parties of the agreement. Unlike national courts nor arbitral court decisions, decisions given by the DAB are not binding and exerciable. DABs are not only resolve the disputes but also prevent disputes arising if DAB is established by the beginning of the project so that DAB can be a mechanism which  solve the problems between problems before the problem transform to a dispute. The most significant advantage of the DABs are that there is an expert council during the agreement and project  so that experts can easily interfere the problems and monitor the process in the all project duration.


Herdem Law Firm, Istanbul Turkey

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