FIDIC contracts 2017—what’s changed?

This Practice Note summarises the key changes made in the FIDIC Red, Yellow and Silver Books 2017
(second editions) as compared with the 1999 ‘first editions’ of those contracts.
FIDIC launched the second editions at its 2017 annual users’ conference in December 2017. It intends
to publish its own guide to the contracts in due course, as it did following publication of the 1999
editions. For a report on the 2017 conference, see News Analysis: FIDIC Red, Yellow and Silver Books
2017: conference report.
References to clauses are to clauses in the Red, Yellow and Silver Books 2017 unless otherwise
stated.

Aims of the update

The key aim of the update was to increase clarity and certainty so that each party knows exactly what it has to
do, and when. The forewords to the Red and Yellow Books state that the goal was to achieve this while
maintaining FIDIC’s fundamental principles of fair and balanced risk allocation. Like the 1999 version of that
contract, the Silver Book does not claim to be as ‘balanced’ in its risk allocation, but rather to increase clarity and
certainty while maintaining the principles of risk allocation set out in 1999.

The contracts committee was asked to consider, and adopt where appropriate, innovations made in the Gold
Book (2008) and Pink Book (2010). Other aims were to harmonise the three contracts to a larger extent than
was the case in the 1999 editions, reflect international best practice and address feedback from users.

Key changes
Key changes in the 2017 versions include:

1. •
more extensive contract administration procedures
2. •
the promotion of dispute avoidance
3. •
Engineer’s role is strengthened
4. •
greater parity between the parties, eg in relation to claims and confidentiality
5. •
new quality management provisions
These and other changes are discussed below.

Contract structure
The clauses follow a similar order to the 1999 versions, but the ‘General Conditions’ now contain 21 clauses
instead of 20 as dispute resolution has been separated from claims and is now dealt with in new clause 21. The
clauses dealing with risks and insurance have been reordered.
The Particular Conditions are now divided into Parts A and B. Part A (called the ‘Contract Data’) contains the
project-specific information that was previously contained in the Appendix to Tender. Part B contains the
‘Special Provisions’, which amend the General Conditions.

The guidance notes are fuller than in the 1999 versions and include three pages of advisory notes for projects
using building information modelling (BIM) systems. The guidance also includes a recommendation for the
parties and those drafting the Special Provisions on their behalf to follow the five FIDIC ‘Golden Principles’.
These are elements that FIDIC state should be retained if a contract is to call itself a true ‘FIDIC’ contract. This is
an attempt to combat the practice of altering the General Conditions so extensively via the Particular Conditions
that they are no longer recognisable as a fair and balanced FIDIC contract.

Definitions
The definitions are now set out in alphabetical order making them easier to use. Some new terms have been
added, such as ‘Claim’, ‘Dispute’ and ‘Notice’. ‘Cost Plus Profit’ is defined—profit is the percentage set out in the
Contract Data with the default being five per cent if none is specified.

Some terms are also used with both an initial lower case and upper case letter, with the meaning varying
accordingly. An example of this is ‘programme’ which becomes the ‘Programme’ once it has been submitted to
the Engineer (Employer in the Silver Book) and a Notice of No Objection has been given or deemed to be given
in accordance with clause 8.3.

The interpretation provisions include an explanation of the difference in meaning between ‘may’ and ‘shall’.

Project management
The contracts are much more prescriptive than they were before. There are 50% more words in the 2017
contracts than in the 1999 editions, and much of the new content arises as a result of the more detailed
processes. The aim of the detail is to ensure that each party knows exactly what it is meant to do, and when.

Some of the processes that are now set out in more detail include those relating to:

1. •
giving notices—discussed further below
2. •
agreement or determination by the Engineer (Employer in Silver Book) under clause 3.7—discussed further
below
3. •
setting out
4. •
discovery of errors in the Employer’s Requirements
5. •
health and safety obligations
Some changes are designed to ensure that there is a consequence if a party does not carry out a task on time so
that processes are not held up. For example, if the Engineer (Employer in the Silver Book) fails to issue a
Performance Certificate within the timescale in clause 11.9, the certificate is deemed to have been issued. The
parties may alter the time limits by agreement via the Particular Conditions at negotiation stage.

There is a greater administrative burden on the Contractor, Employer and Engineer under the 2017 contracts.
Each will need to invest sufficient resource into its teams and ensure that they familiarise themselves with the
terms of the contract. If not, it is likely that disputes will arise and/or the parties will miss out on entitlements.

Notices

The requirements for notices are set out in clause 1.3 and are now much more detailed. This is designed to avoid
disputes arising over whether or not a communication is a notice.

All notices have to be communicated in writing, which is a good project management discipline and avoids
uncertainty over whether or not a party has given notice orally. The unpopular requirement in the draft version
of the Yellow Book circulated at the annual users’ conference in December 2016 that each notice had to specify
the sub-clause(s) under which it was issued has been deleted.

Clause 1.3 also requires electronic communications to be transmitted from the addresses set out in the Contract
Data and assigned to authorised representatives of the parties, which is designed to remove uncertainty caused
by communications being sent from personal email addresses. Note that electronic transmissions are deemed to
have been received the day after they were sent, so parties should beware of overlooking this and consequently
missing deadlines.

Advance warning

The Contractor’s obligation in clause 8.3 of the 1999 contracts to give notice of any ‘specific probable future
events or circumstances’ which may adversely affect the work, increase the Contract Price or delay the Works is
now a wider obligation that applies to the Contractor, the Employer and the Engineer (in the Red and Yellow
Books) and is contained in clause 8.4 (Advance Warning). The obligations are not as extensive as the early
warning provisions in the NEC contracts (see Practice Note: NEC contracts—risk management), but are designed
to promote collaboration and ensure that communication flows between the parties and issues dealt with early
if possible.

Programme

The requirements in clause 8.3 (the Programme) are more detailed and prescriptive than those in clause 8.3 of
the 1999 contracts, in terms of both the format and contents of the initial and any revised programme.

The Engineer (Employer in the Silver Book) reviews the initial and any revised programme submitted by the
Contractor. If the Engineer/Employer does not give notice of any fault with the initial programme within 21 days
or a revised programme within 14 days, it is deemed to have issued a ‘Notice of No-objection’ and the
‘programme’ then becomes the ‘Programme’. There are similar time limits and consequences in the 1999
contracts but the 2017 contracts are clearer and more detailed in this respect.

The Engineer (Red and Yellow Books only)

FIDIC reiterated at the launch of the 2017 contracts that FIDIC contracts are ‘by engineers, for engineers’. The
more detailed, step-by-step approach throughout the new contracts applies to the Engineer’s duties, which are
more extensive than in the 1999 contracts.

In particular, the Engineer’s duty to agree or determine matters has been expanded. That duty is now contained
in clause 3.7. There is a new requirement for the Engineer to act ‘neutrally’ when carrying out its obligations
under this clause. There is information about what that is intended to mean in the guidance notes for the
preparation of the Particular Conditions.

Clause 3.4 states that the Engineer cannot delegate its authority to act under clause 3.7, while clause 3.2
expressly states that the Engineer is not required to obtain the Employer’s approval before acting under that
clause. The Engineer’s duties and authority under clause 3.7 are a key part of its function and these provisions
are designed to strengthen its role.

Another change expressly prohibits the Engineer from delegating its ability to issue a ‘Notice to Correct’ under
clause 15.1. The potential consequences of issuing such a notice are very serious and the reservation of this
power to the Engineer is in response to feedback FIDIC has received from users.

Dispute avoidance and dispute resolution

The disputes provisions have been taken out of clause 20, where they are found in the 1999 versions, and placed
in a new clause 21. This is intended to avoid the conflation of claims with disputes and emphasise that claims
involve the pursuit of entitlements under the contract and should not inevitably lead to conflict between the
parties.

Dispute avoidance and the DAAB

Dispute avoidance is a key feature of the new contracts. This is reflected not only in the amended title of the
dispute board, now called the Dispute Avoidance/Adjudication Board (DAAB), but in other changes. For
example, the DAAB is now a ‘standing’ DAAB in all three contracts whereas in the 1999 forms, the Dispute
Adjudication Board (DAB) was ‘ad hoc’ in the Yellow and Silver Books. FIDIC intends that the advance warning
provisions referred to above will also assist the parties to resolve issues before they turn into disputes.

There are new provisions in clause 21.3 to foster dispute avoidance. This is a consensual process that can either
be initiated by one of the parties or by the DAAB itself.

Another important difference is in the DAAB appointment process which should avoid the stalemate that can
arise under the 1999 forms if one party is trying to thwart the procedure.
The DAAB procedure is similar to that in the 1999 versions, but the drafting has been amended to clarify the
position in relation to the consequences of noncompliance with DAAB decisions that are binding but not final
that were unclear in the 1999 forms. The DAAB procedure is given ‘teeth’ via a new entitlement for a party to
terminate the contract if the other party fails to comply with a DAAB decision where the failure is a material
breach of the contract.

The procedural rules of the DAAB have been substantially revised and expanded and set out the objectives of
the DAAB in relation to dispute avoidance and dispute resolution.

For more information about the DAAB in the 2017 contracts, see Practice Note: FIDIC contracts 2017—Dispute
Avoidance/Adjudication Boards.
For more information about FIDIC DABs under the 1999 contracts and the FIDIC Pink and Gold Books, see
Practice Note: FIDIC contracts (pre-2017 editions)—dispute adjudication boards. For more information about
dispute boards generally, see: Dispute boards—overview.

Amicable settlement and arbitration

The period for amicable settlement has been halved, to 28 days instead of 56. According to FIDIC, this is not
intended to belittle the amicable settlement phase but to shorten the overall timetable before arbitration. As
with the 1999 versions, the parties can proceed to arbitration after this whether or not any attempts at amicable
settlement have in fact been made.

One of the most controversial changes in the 2016 draft was the new requirement to commence arbitration
within 182 days after giving/receiving a notice of dissatisfaction (NOD) with the DAAB’s decision. Failure to do so
meant that the NOD would lapse and the parties would lose their entitlement to commence arbitration. FIDIC
has listened to the feedback and has deleted this requirement from the 2017 contracts.

Unless otherwise agreed by the parties, arbitration will take place under the International Chamber of
Commerce (ICC) rules, as in the 1999 contracts.

For more information about dispute resolution under the 1999 contracts and the FIDIC Pink and Gold Books, see
Practice Note: FIDIC contracts (pre-2017 editions)—dispute resolution.

Claims
One of the biggest changes in the 2017 contracts is that Employers’ and Contractors’ claims are now dealt with
in the same way and so both are subject to the notice requirements set out in clause 20.

The claims procedure is, like the other procedures in the 2017 contracts, more prescriptive and detailed than
before.

The same 28-day time bar on the initial notice of claim is retained in the 2017 contracts. There is however a new
procedure allowing a party to ‘appeal’ the time bar when it submits its fully detailed claim if it disputes that the
notice was late or considers that there are justifiable reasons for late notification. This was an innovation in the
Gold Book, but whereas in that form and in the 2016 draft, the power to waive the time bar was given to the
DAAB (called a ‘Disputes Board’ in the Gold Book), in the 2017 contracts, the power is given to the Engineer.

The fully detailed claim must be given within 84 days after the claiming party became aware, or should have
become aware, of the event or circumstances giving rise to the claim. This is longer than the period for
submitting the fully detailed claim in the 1999 contracts (42 days) but in the 2017 contracts, if the element of
the fully detailed claim comprising the ‘contractual and/or other legal basis of the claim’ is not given within 84
days, the notice of claim is deemed to have lapsed and the Engineer (Employer’s Representative in the Silver
Book) can give notice accordingly and the whole claim becomes time barred. If the Engineer/Employer’s
Representative does not give notice within 14 days, the notice of claim is be deemed to be a valid notice.

Another change is the more detailed requirement in clause 20.2.3 for the parties to keep contemporary records
which accords with good project management and is an example of the increased administrative work required
by the new contracts.

There is a new requirement in clause 3.7.5 for parties to issue an NOD in respect of a determination by the
Engineer (Employer’s Representative in the Silver Book) given under clause 3.7 within 28 days after receiving it if
they disagree with it. If neither party issues an NOD within 28 days, it becomes final and binding on both parties
and they lose their right to refer any dispute to the DAAB. Clause 3.7 also envisages that a party may issue an
NOD in respect of part only of a determination.

The claims procedure is considerably longer and more detailed than before and Contractors, Employers and
Engineers (or Employer’s Representatives) will need to spend time familiarising themselves with it at the outset
and complying with it as projects progress.

See Practice Note: FIDIC contracts 2017—Contractor and Employer claims. For more information about the
claims procedures in the 1999 contracts and the FIDIC Pink and Gold Books, see Practice Notes: FIDIC contracts
(pre-2017 editions)—Contractor claims and FIDIC contracts (pre-2017 editions)—Employer claims.

Variations
The changes made to the Variation procedure are an example of FIDIC including more detail and formality in the
2017 contracts in order to clarify procedures and avoid the parties reaching a deadlock situation.

In the 2017 contracts, Variation instructions must state expressly that they are Variation instructions (clause 3.5
in the Red and Yellow Books, clause 3.4 in the Silver Book) in which case, the Variation procedure in clause 13
applies. The Employer may thereby have more clarity and control over costs as there is less scope for the
Contractor to claim at final account stage that an informal instruction amounted to a Variation. This also
potentially protects the Engineer from inadvertently instructing a Variation.

In the 1999 contracts, the procedure is much less formal and instructions do not have to state that they are
Variation instructions which can lead to disputes about whether or not a communication is a Variation
instruction.
The 2017 contracts provide for the scenario where the Engineer/Employer issues an instruction and the parties
disagree about whether or not it constitutes a Variation via a procedure in clause 3.5 (clause 3.4 in the Silver
Book). The effect of this may be that disagreements about whether or not an instruction constitutes a Variation
are aired and potentially resolved earlier.

The more detailed provisions in clause 13.1 also give the Contractor additional grounds for objecting to a
Variation than in the 1999 contracts.

The 2017 contracts state expressly in clause 13.3 that the Contractor can claim an extension of time and/or costs
arising from a Variation instruction without going through the claims procedure in clause 20.2. In the 1999
contracts, the Contractor must give notice in accordance with clause 20.1 in order to claim an EOT resulting from
a Variation but is not required to do so in order to claim any additional costs though the drafting is not explicit.

For more information about the Variation procedure in the 2017 contracts see Practice Note: FIDIC contracts
2017—variations, and for details about this topic in the 1999 editions and the FIDIC Pink and Gold Books, see
Practice Note: FIDIC contracts (pre-2017 editions)—variations.

Risks, liability and insurance

Clauses 17 to 19, dealing with risks and insurance, have been reordered and simplified. FIDIC wanted to move
away from the structure in the 1999 versions which uses the heading ‘Employer’s Risks’ in clause 17.3,
considering this misleading—it suggests that all risks not specifically listed in that sub-clause are the
responsibility of the Contractor when in reality, risks are allocated throughout the contract. FIDIC considers that
the new structure of the clauses is simpler and more logical.

Overall, the risk profile in the 2017 versions is not significantly different from that in the 1999 contracts,
although both parties have an increased risk of losing their entitlements by not being informed and diligent in
relation to their project management obligations.

Exceptional Events

The term ‘force majeure’ has been replaced by ‘Exceptional Events’ in the new contracts in order to overcome
problems arising because ‘force majeure’ is defined and treated differently in different jurisdictions. The
substantive provisions of the clause are largely the same as the force majeure provisions in the 1999 contracts
and are found in clause 18. Insurance (clause 18 in the 1999 versions) is now dealt with in clause 19 in a more
logical order, ie after both the ‘risks’ clauses.

Design responsibility

The Contractor gives a new ‘fitness for purpose’ indemnity at clause 17.4 of the Yellow and Silver Books and to
the extent it has design responsibility, the Red Book. This liability was unlimited in the 2016 draft, which was
extremely controversial. FIDIC has responded to the market’s concern and the fitness for purpose indemnity is
now subject to the limits on liability, which are now set out in clause 1.15 rather than within clause 17.
The purposes for which the Works are intended are defined in the Employer’s Requirements in the 2017
contracts (clause 4.1). This is narrower than in the 1999 versions, where the purposes are as defined in the
‘Contract’ which includes numerous different documents and categories of documents in addition to the
Employer’s Requirements. This benefits the Contractor and may help to avoid the uncertainties and disputes
that can arise if conflicting requirements are included in different documents drafted by different people.

Other changes
Other changes and additions in the 2017 contracts include those summarised briefly below.

Payment

Clause 14 now contains a process the Contractor can follow if it considers that it has been underpaid.

Employer’s financial arrangements

The requirements in clause 2.4 have been tightened up and benefit the Contractor.

Concurrent delay

A new provision in relation to concurrent delay is contained in clause 8.5.

Termination

The 1999 versions state that the Employer may not exercise its right to terminate the contract for convenience
in order to execute the Works itself or arrange for another contractor to do so. This restriction is not present in
the 2017 forms but the Employer may not execute the Works or arrange for them to be executed until it has
paid the Contractor the amount due under clause 15.6, which includes loss of profit.

As noted above, there is a new right of termination for either party if the other fails to comply with a DAAB
decision. A party may also terminate if the other party fails to comply with a binding agreement or final and
binding determination under clause 3.7.