EIC calls for fair contract conditions in Romania
EIC President Démarre and FIEC President Todini today jointly called on the European Commission to interdict the use of unfair contract conditions in public contracts financed by the EU Structural Funds which allocate virtually all of the construction risk to the contractor.
The joint initiative was provoked by the decision of the Romanian government to introcuce a number of unfair contract conditions in connection with its latest road works tenders. The new particular conditions enacted in March 2011 are mandatory and are derived from the FIDIC 1999 “Silver Book” which from the outset has been criticised by EIC as an unfair contract document.
The provisions in question increase the risk for contractors substantially, amongst others, with respect to the following Sub-Clauses:
- Sub-Clause 1.9 [Error’s in the Employer’s Requirements]
- Sub-Clause 2.1 [Right of Access to the Site]
- Sub-Clause 4.12 [Unforeseeable Physical Conditions]
- Sub-Clause 5.1 [General Design Obligations]
- Sub-Clauses 13.8 [Adjustment for Changes in Cost]
- Sub-Clause 16.1 [Contractor’s Entitlement to Suspend Work]
- Sub-Clause 16.2 [Termination by Contractor].
Moreover, the role of the Consulting Engineer, who under most FIDIC standard form of contracts shall administrate the contract, has been severely weakened by applying Particular Conditions used by the Multilateral Development Banks and in the FIDIC 2010 "Pink Book". The Engineer now needs to have obtained the specific approval of the Contracting Authority before taking action on appointing sub-contractors, extending the Time for Completion, issuing the Final Acceptance Certificate and as well with respect to Variations.
EIC strongly opposes such a restriction of the Engineer’s authority because it will inevitably result in the Contractor bearing these (potentially very substantial) time and cost effects until such time when the approval of the Employer is obtained. The new Particular Conditions in Romania thus create what EIC believes FIDIC never wanted: a self-certifying Employer on a crucial area of the Works.