The

Master of
Construction Law importance
Program of using
Pekalongan University international
Indonesia accepted
GIORGIANA TECUCI standard
forms of
Partner, Tecuci Paltineanu SCPA
contract for
President, Dispute Resolution Board Foundation
(DRBF) Region 2 avoiding
25 May 2024
disputes NAME OR LOGO 1
 Common Causes of Disputes

• Inappropriate contract type

• Unclear, ambiguous, poorly drafted contracts
• Absence of a proper contractual proper dispute resolution
mechanism (system?)
• Lack of competence of project participants

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What (international) standard forms of contract bring:

1. Are (drafted and updated) based on the industry experience;

2. Are based on an extensive legal expertise;
3. Ensure that both parties’ interests are protected
4. Limit the misunderstandings and disagreements caused by poorly
drafted clauses;
5. Favour the development of a general “philosophy” of the contract;
6. Ensure the that a functional, pre-agreed “dispute avoidance
mechanism” is in place, part of the dispute resolution system
7. Allows for training

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 ○ Between a contract and a standard forms of contract:

○ Purpose of a contract:
FIDIC standard forms of contract Additional benefits of a standard
form of contract:
- to define the contractual relationship
Incorporate:
between the Parties:
- Good practice principles
- setting out: rights / responsibilities
and - Lessons learned & experience
- allocating risks. - Fair & balanced risks allocation
Drafted by different parties with Drafted by a professional organization
different interests and experience;
Sufficiently flexible to amend & tailor
Permits a Party to put itself into a
Favour the equal position of the parties
position of strength

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 1. Industry best practice

• Drafted by people within the profession

• Collect information (in an organized way)
• Permanent
• Before upgrading / preparing new documents

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 2. Extensive legal expertise:

• The drafting system

• Contract committees
• Task groups (various jurisdictions and legal systems)
• Friendly review
• Legal review
• Public consultation (test editions)

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3. Ensure that both parties’ interests are protected:

• Usually there is a balanced risk allocation:

• Based on the risk allocation principles
• Based on the generally accepted allocation
• Or at least a clear allocation
• Provisions of procedures
• Including “deemed clauses”
• Reasonable terms for fulfilling the obligation / follow the procedures
• Consequences for non-observing the obligations / procedures

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4. Limitation of misunderstandings / disagreements
caused by poorly drafted contracts

• Clear allocation of risks

• Regulation of the important aspects
• Clear and logical systematization of the contract
• Clear provisions

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5. Favour the development of a general “philosophy”
of the contract (1)

• Guides for drafting the Particular Conditions (PCs);

• Templates / models of documents based on the best practice / generally
accepted / used forms;
• Guides for interpretation and implementation of contracts;

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 What and how to change?

○ Only what is needed!

• To adapt to the project / applicable law / needs wishes of the parties
○ Only in the measure it is needed!
○ Re-establish the economical equilibrium!
○ Observe the authors’ recommendations or rules (e.g. FIDIC Golden
Principles)!

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 Drafting the Particular Conditions (PCs);

A FIDIC compliant contract offers:

• Transparency – procurement and

• Lessons learnt leading to a collection of implementation;
good / best practices – unitary practice
• Efficiency of the spending of public
– predictability, credibility;
money;
• Based on a uniform philosophy and
• An effective contract / project/risk
approach – FIDIC’s;
management tool;
• Acceptable by most international
• DAAB – avoidance and resolution role;
financing institutions;
• Provide an effective integrity
• Suitable for / covers most of the project
management tool - red flags;
types;
• Observes FIDIC copyright

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5. Favour the development of a general “philosophy”
of the contract (2)

• Guides for interpretation and implementation of contracts;

• Allow a unitary interpretation and application of contract (based on):
o Development of a general accepted philosophy of contract of general
application (based on):
▪ General understanding and application of the contract
▪ Case law / jurisprudence (in a larger sense to include the solutions
given by the DBs)
▪ Doctrine
o Consideration of the professional / industry “usages”

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 6. Ensure the that a functional, pre-agreed “dispute
avoidance mechanism” is in place

• The dispute resolution system is already included in contract,

o avoiding the risk of having a “midnight” or “champagne” clause,
o ensuring that a viable “avoidance of dispute” mechanism is in place.

• Offering the possibility of solving at the project level of any claim,

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 Choosing the right standard (checklist)

• Project Value
• Design provider
• Price / Payments / Financing
• Risks’ allocation
• Time
• Complexity of the project • Management of the Contract

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 Choosing the right standard

Main aspects to consider:

• the allocation of the essential functions found in the project and particularly
the design functions
• the allocation of the risks inherent in the project
• the allocation of the management role
• the contractor’s payment, the method and timing of remuneration for the
contractor

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 FIDIC standard forms of contract

• Today's most used forms of contract

• Considered to be International Best Practice standards

- deal with reliable contract administration;

- considered as good risk and integrity management tools
- provide rules ensuring prompt, clear, rational and foreseeable decisions;
- do not allow for unpredictable decisions;
- payments are made in accordance with the quality and quantity supplied.

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 Advantages of (FIDIC) standard forms of contract

- savings in time and cost on repetitive transactions;

- Parties are not be distracted by the need to interpret the contract;
- fewer disputes (frequent use gives common understanding);
- lower costs:
- tenderers do not need to allow time/cost for unfamiliar contracts;
- fair to all parties = greater contractor confidence and lower risk
contingencies;
- facilitate training

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AVOID the Disadvantages of standard forms of contract

• Users tend to dispense with legal advice.

• The only way to have a coherent view of a contract is to read the contract
cover-to-cover (all contractual documents)

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Why to use a FIDIC standard for public procurement?

DESCRIPTIONS

• International
(Add best
more explanations practice
and/or ~70
more slide) years in 200 countries
• Very adaptable & flexible
• Excellent management tool
• Clear and detailed guidance
• Backed up by FIDIC support

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 Public Works & Standard Contracts (FIDIC example)

What a public authority / MDB needs? What does FIDIC (2017) standard offer?

○ Transparency ○ Clarity
○ Conclusion
○ Clarity
mm ○ Step by step procedures

○ Procedures ○ Improved Contract management

○ Integrity / anticorruption prevention ○ Mechanisms for quality, time and money

control
○ Control over time
○ Prevention provisions
○ Control over money
○ Mechanism for avoidance of disputes
○ Quality
○ Sanctions for lack of integrity
○ General interest protection
○ Social / environmental enhanced obligations
○ Social / environmental enhanced obligations
○ Adaptability to the mandatory law

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 FIDIC…

“The universal respect with which the FIDIC documents are treated in the
infrastructure field is key in facilitating agreements being reached. The impact
of these forms should not be under-estimated and although in many
circumstances the forms may need adapting to particular local conditions and
the needs of particular industry sectors, they are nonetheless a good starting
point for those discussions, saving parties time and costs, particularly in
circumstances where there may be significant cultural differences between the
parties. ”
Mark Roe, Head of International Construction & Energy, Pinsent Masons, 2007

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 Are you in a position to avoid disputes?

- Is your contract documentation clear, concise, free of ambiguities?

- Your PCs respect the use of defined terms, do not modify unnecessarily the GCs
- Risk allocation has not been modified
- Is your DB provision operational?

- Are you familiar (or got trained) with the specific contract management and
administration?
- Project management;
- Employer / owner management;
- Constructor (& Designer) management;
- Record keeping is sufficiently detailed?
Then YES, you are equipped to avoid disputes!

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 Terima kasih!

Giorgiana.Tecuci@tp-law.ro

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