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Universal view:International contractual issues around the globe Issue 01, 2011Indeed the Subcontract perfectly mirrorsthe Main Contract such that there is nocondition precedent attached to thetime in which a Contractor must bring aclaim, but the equivalent requirementson a Subcontractor are expressed in thisway, albeit that this is only done by crossreferenceand so the Subcontractor wouldonly know this by referring to sub-cl.20.1of the FIDIC Red Book 1999. Thereforeif the Subcontractor puts in his claimoutside of the time limit, the right to bringthe claim might be lost for good, howevermeritorious the claim might otherwisebe. Any such notice must be given within21 days, in order to give the Contractorthe chance to give timely notice to theEmployer, if appropriate. The remainingtimescales are similarly shortened, suchthat the detailed claim must be submittedwithin 35 and not 42 days.Then the Contractor is required to consultwith the Subcontractor to try and reachagreement on the claim, failing whichthe Contractor must then, within 42 daysafter receipt of the detailed claim, go on tomake a “fair determination” of the claim.Sub-clause 20.3 of the FIDIC Subcontract2011 notes that if by reason of anyfailure by the Subcontractor to followthe requirements set out in sub-cl.20.1and 2, the Contractor is preventedfrom recovering any sum other than inrespect of a Subcontractor claim thenthe Contractor, provided it follows theappropriate claims process itself, shallbe entitled to deduct that sum from theSubcontract Price.Subcontractor claims to the DABThe general scheme under the 1999 Redbook is this:(i) A dispute is referred to the DAB;(ii) The DAB then has 84 days to reach itsdecision;(iii) A party then has 28 days to serve aNotice of Dissatisfaction otherwisethat Decision becomes binding;(iv) There is then a 56-day period foramicable settlement; and if there is nosettlement then(v) A reference can be made toArbitration.The provisions of the FIDIC Subcontract2011 take steps to try and ensure thatdisputes arising out of the Subcontractcan be dealt with, without prejudicingthe rights of either the Contractor (andtherefore possibly the Subcontractor too)under the main Contract.Sub-cl.20.4, provides that if the Contractorconsiders 2 that the dispute raised by theSubcontractor is a dispute which involvesan issue related to a dispute between theContractor and Employer under the mainContract then, the Parties shall (a) deferreferral of the dispute to the Subcontractfor 112 days and (b) if the dispute hasnot been previously referred under themain Contract, the Contractor must referthe new dispute within 28 days. This is apositive obligation on the Contractor. TheSubcontractor is understandably obligedto give the Contractor in good time anyassistance that may be required 3 duringthe hearing process.Under sub-cl. 20.4 of the FIDICSubcontract 2011, the Subcontractorwill not be bound by the DAB Decisionunder the main Contract, but this shouldbe checked as the particular conditionsgive an alternative cl.20 to be used wherethe Subcontractor is to be bound by adetermination. If no notice is given by theContractor that the dispute is a RelatedIssue then either party is entitled to referthe dispute to the Subcontract DAB.This new Subcontract is a further stepalong the FIDIC road to standardisationand as such it is a welcome addition as ithas been specifically drafted to complywith the Red and Pink Books. Of course,to fully understand the risks and liabilities,as with every subcontract, the onus willbe on all parties to read the subcontracttogether with the applicable mainContract.Jeremy Glover, PartnerFenwick Elliott+44(0)207 421 1986jglover@fenwickelliott.com2This view can be challenged by the Subcontractor if he serves a notice in writing. The question would be decided by a pre-arbitral referee, using the ICC Rules for PrearbitralReferee Procedure.3And the Subcontractor is entitled to be involved, for example in any consultation with the Engineer.