KluwerArbitration
Document information
Publication
The FIDIC Red Book
Contract: An International
Clause-by-Clause
Commentary
Organization
International Federation of
Consulting Engineers
Bibliographic
reference
'Chapter III: Contract
Interpretation', in
Christopher R. Seppälä ,
The FIDIC Red Book
Contract: An International
Clause-by-Clause
Commentary, (© Kluwer
Law International; Kluwer
Law International 2023) pp.
159 - 208
© 2024 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
Chapter III: Contract Interpretation
1 SCOPE OF CHAPTER
This chapter notes the special character of a FIDIC contract (1) and the frequent practical
need to interpret it. (2) The chapter then compares the different approaches of state
courts in civil law countries to contract interpretation with those in common law
countries and describes the rules of contract interpretation in the UNIDROIT Principles,
concluding with a list of widely accepted principles. (3) It then describes the particular
considerations which need to be taken into account in interpreting a FIDIC contract,
including the effect on such interpretation of an international arbitration clause, (4) and
concludes with a practical approach to interpreting such a contract. (5)
2 CHARACTER OF A FIDIC CONTRACT
When interpreting a FIDIC contract, it is necessary to bear its particular character in
mind. FIDIC contracts are drafted mainly by engineers for their practical use. As
P 160 Christopher Wade, a former Chairman of FIDIC’s Contracts Committee, has noted:
[I]t should be emphasised that the contents of the FIDIC documents are
essentially determined by engineers drawing on their extensive experience in
contract management and on many diverse projects – in other words their
‘engineering common sense’. Lawyers have performed an important role in
ensuring legal consistency, but the topics covered and the principles involved
are determined by engineers, and the Books are to be considered primarily as
handbooks for the management of the execution of engineering projects
according to the best modern standards and practice. (6) (Emphasis added)
As FIDIC contracts are for practical day-to-day use by engineers, they are intentionally
drafted – by engineers – in a language that an engineer can understand without having to
consult a lawyer. The industry-specific nature of the contract therefore needs to be borne
in mind.
For example, in the course of certain litigation in Singapore relating to RB/99, the courts
had initially set aside an ICC arbitral award enforcing a binding and not final decision of
a DAB providing for a payment to the contractor, (7) based on their interpretation of the
somewhat unclear wording of the dispute resolution clause (Clause 20) of RB/99.
However, when this issue was presented to the Singapore courts a second time, they
grasped the ‘engineering common sense’ of the DAB in a FIDIC contract, and, contrary to
their earlier ruling, (8) enforced the binding decision recognising – as they had not done
P 161 initially – that this ‘serves the financial objective of safeguarding cash flow in the
building and construction industry, especially that of the contractor, who is usually the
receiving party’. (9)
Thus, appreciating and giving due weight to the particular commercial / engineering logic
of a construction contract – such as the fundamental need to satisfy the contractor’s
reasonable cash flow requirements if it can be expected to continue to work without
interruption – are important to bear in mind in contract interpretation.
3 IMPORTANCE OF INTERPRETATION
Construction contracts often give rise to difficult issues of interpretation because, among
P 162 other things, of the following:
(i) They usually comprise a ‘documentary bricolage’ (10) – multiple documents of a
different nature (drawings, specifications, schedules, conditions of contract, bills of
quantities, etc.) – often drawn up by different people, each of which may address
the same or similar subjects but do so in dissimilar ways.
(ii) They have both a technical and legal content, and just as lawyers may have
difficulty understanding what is technical, so engineers may have difficulty
understanding what is legal; yet each is often expected to work with – and even
prepare – documentation having content of the other.
(iii) Whatever their profession, those who negotiate and prepare the contract may have
little previous familiarity with FIDIC forms and how to modify or supplement them.
(iv) Those preparing or drafting the contract may have an English or Commonwealth
background, and be employing common law principles and practices, whereas the
law governing the contract may be that of a civil law country.
(v) While the language of the contract may often be English, those who prepare and
negotiate the contract may lack fluency in English.
(vi) By whomever the contract is prepared, in the case of public works projects at least,
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