What is meant by Red Data Book

FIDIC Glossary of FIDIC 1999 and 2017

This glossary is based on the FIDIC Rainbow Edition 1999. The 2nd edition of the FIDIC contractual conditions includes

  • the FIDIC Red Book, 2nd edition 2017: Conditions of Contract for Construction (Second Ed. 2017) for Building and Engineering Works designed by the Employer
  • the FIDIC Yellow Book, 2nd edition 2017: Conditions of Contract for Plant & Design-Build (Second Ed, 2017) for Electrical & Mech. Plant & For Building & Engineering Works Designed by the Contractor
  • the FIDIC Silver Book, 2nd edition 2017: Conditions of Contract for EPC Turnkey Projects (Second Ed, 2017).

The new contractual conditions were presented by FIDIC in London in December 2017. They can be obtained from the VBI. The glossary will gradually also include the 2017 FIDIC contracts.

The translation of FIDIC contract texts is a difficult undertaking because the translator often becomes an interpreter. Occasionally the translation language lacks the necessary equivalent to the term from the original language. Occasionally, the translation leads to a concept being given a meaning which it does not have in the origin. A wrong understanding of the FIDIC contracts can lead to serious problems. For example, anyone who confuses the “Defects Notification Period” with the statutory warranty for defects will be informed of a better one at the latest when defects occur after the performance certificate has been issued. The situation is similar with the premature use of English technical terms when translating into English. For example, the English term “warranty” does not correctly express that the German warranty for defects is meant.

The German translations of the FIDIC Books 1999 available from the VBI point out in detail the essential differences to German contract models. Translations exist of the FIDIC Red Book 1999, the FIDIC Yellow Book 1999, the FIDIC Silver Book 1999 (Rainbow Edition 1999) and the FIDIC White Book, 4th edition 2006. A translation of the FIDIC Green Book (also short form of Called contract). In 2013 the translation of the FIDIC Gold Book (Design, Build & Operate) was added. All VBI translations contain an introduction to the contract. Additional information on FIDIC contracts is available from the VBI, e.g. Volume 17 of the VBI series of publications on “FIDIC Contract Management” and Volume 15 on Dispute Adjudication. Together with FIDIC, the VBI also organizes FIDIC seminars. The organizer is Nestor Bildungsinstitut GmbH.

An attempt is made here to explain and paraphrase some terms that are important when using FIDIC documents. A bon mot from Oliver Wendell Holmes may express how difficult this is:

A word is not transparent and unchangeable like a crystal. It is the shell of a living thought and can vary greatly in color and meaning depending on the circumstances and the time in which it is needed.

Oliver Wendell Holmes, The Theory of Legal Interpretation, 12 HARV. L. REV. 417 at 417 (1899).

Asset Replacement Fund: This term is introduced in the FIDIC Gold Book. The fund contains the financial resources to be calculated by the entrepreneur for the exchange of durable assets during the 20-year operating phase in the Gold Book.

Accepted contract amount: According to the definition in the FIDIC contract, this is the contract price accepted by the client. The FIDIC standard price contract (Red Book) is only an estimate, as the billing is based on the “Bill of Quantity”. The dimensions given in this document (given for the purpose of calculating the quotation) do not have to be correct, but are subsequently determined by measurements. Furthermore, the entrepreneur can assert additional costs if the risk occurs that is contractually with the client.

Claim: is the description of the fact that the claimant invokes a claim. In the Anglo-Saxon world, the term claim is usually understood as an “assertion of a right”, that is, the assertion of one or the appeal to a right as a claim.

Contractor All Risk (CAR): A term commonly used in international business for the type of insurance that covers the risks described in Clause 18 of FIDIC 1999, some of which are regulated in Clauses 17 and 19. The insurance essentially covers damage to the building up to the taking-over (and in some cases also up to the issue of the performance certificate), the risk of causing damage to the property of neighbors and their health, as well as the company's staff. “Claims based” insurance policies are increasingly in use, which require the insurance to be held over the entire period of liability. This requires to be clear about the statutory limitation periods for claims from the contract or in connection with the contract.

Contracts Committee: The FIDIC Contracts Committee is a permanent establishment that is responsible for the work in the project-specific task groups that develop and further develop the various FIDIC contracts.

Defects Notification Period (Notice of defects period, see clause 1.1.3.7 FIDIC Red Book): This is a special period within which the entrepreneur must remedy defects that occur. This period is sometimes referred to as the “maintenance period”. In essence, it is a special legal remedy that is not provided for in common law and ultimately has nothing to do with the warranty for defects that already exists. The latter depends on common law exclusively for damages. This contract phase is part of the performance of the contract. The statutory warranty for defects begins only after the so-called performance certificate has been issued.

Delay Damages: Flat rate compensation for delay damages (no contractual penalty, see clause 8.7 FIDIC Red Book 1999): After common law are penalties (Contractual penalty agreements) ineffective. Be a substitute liquidated damages agreed, which are agreed as damage compensation amounts estimated in advance for delays or exceeding the construction time. It follows from the context of Sub-Clause 8.7 FIDIC 1999 that the FIDIC documents do not want to regulate contractual penalties. This in turn has an impact on the understanding of Sub-Clause 17.6 (limitation of liability), because the “Delay Damages” already represent a limitation of liability for damage caused by exceeding the construction time.

Dispute adjudication: This is an alternative (i.e. out-of-court) dispute resolution procedure that is regulated in Clause 20 of the FIDIC Terms and Conditions and supplementary contractual documents. There is largely contractual freedom because there are no legal models for this type of dispute settlement on the European continent. In Europe alone in England there are rudimentary legal regulations in the Housing Grants, Construction and Regeneration Act 1996. These are, however, mandatory and primarily serve the purpose of quick liquidity procurement. The aim of alternative dispute resolution within the meaning of the FIDIC contracts is a fast, professional and construction-related dispute resolution. FIDIC-approved adjudicators are kept in lists. The VBI has been training adjudicators for international assignments since 2007. At the international level, FIDIC maintains a list on which FIDIC-certified adjudicators are entered.

The Dispute Adjudication Board (DAB) issues rulings on disputes on a contractual basis, which the parties submit to the DAB for decision. On a contractual basis, the verdict must be issued within 84 of the filing of the action. In the construction contract, the parties undertake to observe and comply with these decisions, without prejudice to the possibility of having judgments made to be reviewed in arbitration proceedings. If a party refuses to comply with such a ruling, it violates contractual obligations that can lead to the termination of the contract.

The award procedure allows the adjudicators the greatest possible freedom to organize the procedure. It can also clarify the matter ex officio. In essence, the DAB is only required to observe the elementary principles of legal proceedings, i.e. to hear the parties impartially and to give them the opportunity to present their case.

The Dispute Adjudication Board (DAB) can also be used to avoid disputes if it is ordered for the entire duration of the construction contract processing, which is automatically provided for in the FIDIC Red Book, for example. The DAB then regularly visits the construction site, informs itself about the status of the construction process and is available as an independent body at the joint request of the parties to provide advice and information on the interpretation of contracts.

With the publication of the 2nd edition of the FIDIC contracts from 1999 in December 2017, FIDIC introduced a new term: Dispute Avoidance and Adjudication Board (DAAB). It fulfills the same task as the DAB; but the expectations are more on avoiding disputes.

Engineer: The so-called engineer, whose position and task is regulated in more detail in Clause 3 of the Red Book and the Yellow Book 1999/2017, does not only designate a professional group, but also includes a special task in the construction contract that must be respected by both parties to the construction contract is. The engineer takes on numerous tasks and is, in particular, the point of contact for all mutual rights and claims arising during the construction process. Both parties must involve the engineer as a contractual institution in the pursuit of their own claims, which the engineer either establishes or on which he reaches an agreement between the parties. The engineer according to FIDIC Conditions draws his special position from the construction contract between the contractor and the customer. The customer and the entrepreneur are contractually obliged to accept the role and performance of the tasks of the engineer. Both contracting parties are bound by the actions of the engineer. The special role of the engineer is explained in detail in English law.

In the FIDIC Gold Book, the Engineer has been replaced by the Employer's Representative. However, in terms of content, this does not mean a change in the position of the third party. It is different in the Silver Book. There is also an Employer's Representative there, but this is not an independent third party.

The 2nd edition 2017 of the FIDIC agreements did not really change the role. With the addition of a new language rule “to act neutrally”, the role of the independent decision maker is to be strengthened.

Extension of Time for Completion: means translated construction period extension, also abbreviated EOT. Claims for the extension of the construction period are spread over the entire contract and must be asserted in order to extend the construction period in the event of hindrances by the client or in the event of risks that the customer has assumed. If this does not happen, the entrepreneur is liable for damages for exceeding the construction time, even if he is neither responsible nor responsible for the excess. Ultimately, the waiver of the assertion of a claim for an extension of the construction period also means the waiver of objections to claims for damages from exceeding the construction period, also called delay damages.

EOT means time extension (with a very extensive legal background, see Clause 8.4 FIDIC Red Book): Time extension only serves one goal in legal terms, namely the maintenance of so-called “liquidated damages” in favor of the client. As a rule, compliance with the construction period is tied to “liquidated or delay damages” that the contractor owes if the construction period is exceeded. If circumstances arise for which the entrepreneur is not responsible according to the contract, he must be granted “time extension” in order to prevent “time at large”. If time at large occurs, the customer loses his claims to compliance with the construction time and to “liquidated damages”.

FIDIC: Fédération Internationale des Ingénieurs-Conseils. Nowadays FIDIC is mostly run as the International Federation of Consulting Engineers. FIDIC has existed since 1913. FIDIC is an international professional association that represents the interests of consulting engineers in more than 80 countries.

FIDIC Claim Management: All FIDIC Books 1999 contain a large number of so-called claims. The treaty does not define this term, it presupposes it. In case of doubt, what is meant is the assertion of a right or entitlement.

Claims can be for time extension, reimbursement of costs and / or additional profit. According to the FIDIC Conditions, these claims must be asserted in a contractually regulated procedure. This includes meeting the notice period of 28 days and the documentation requirements (contemporary records). Entrepreneurs must prepare carefully for these conditions and ensure that these claims are managed carefully and comprehensively. The careless handling of claims has considerable disadvantages because FIDIC has made compliance with the procedural requirements subject to sanctions. If the procedural rules are disregarded, this leads to the loss of the respective claims.

As a precaution, it should be noted that Anglo-Saxon companies and engineers are quite familiar with FIDIC contract management and that a functioning claim management is part of their daily routine. So-called quantity surveyors are mainly used there for claim management.

The 2nd edition 2017 introduces new definitions of claim management:

Force majeure: Force majeure (with no comparable legal background): English law does not recognize the concept of force majeure. Vis major is ultimately little more than an act of God. Hardship is neither a reason for a contract adjustment nor a reason for the termination of the contract. Force majeure must therefore be regulated by contract (cf. clause 19 FIDIC Red Book 1999).

The 2nd edition of FIDIC 2017 no longer uses the term Force Majeure and introduces the term Exceptional Event. There are no changes to the content.

Gold Book: This is the FIDIC Design, Build & Operate contract model. On the basis of the Gold Book, the entrepreneur undertakes to plan, build and operate the project. The heart of the contract is the Operation Service Period. Planning, execution and operation are functionally described in the employer's requirements.

Memorandum 2013: In March / April 2013 FIDIC published a so-called memorandum on clauses 20.6 ff., Which mainly deals with the new regulation of the enforcement of only binding DAB rulings. Furthermore, the arrangement of security deposits is regulated in the case of provisionally binding DAB awards (see Hök, FIDIC Memorandum 2013 for the execution of provisionally binding DAB awards, ZfBR 2013, 419 ff.).

network technology: Sub-clauses 8.4 and 13.3 suggest that the contractor draws up the construction schedule, which he must submit in accordance with sub-clause 8.3, on the basis of network technology. Sub-clause 8.4 only grants a right to EOT if the event concerned is on the relevant critical path or path. Only the Organe Book from 1995 contains an explicit reference to network technology. But the Rainbow Edition 1999 assumes its use.

Neutral: FIDIC 2017 regulates in sub-clause 3.7 the obligation of the engineer to act neutrally. What is meant is an uninfluenced opinion-forming, which cannot be impartial due to the one-sided economic ties to the client.

prompt: Immediately immediately (see clause 8.3 FIDIC Red Book): It is questionable whether the term can be translated really well as immediately, because there is no legal definition in English law within the meaning of Section 121 (1) sentence 1 BGB (without culpable hesitation).

Reasonable: reasonable, appropriate (standard of care): The term appears very frequently in the FIDIC Conditions and is usually used as a standard of care and consideration. Example: “A reasonable man” is a reasonable man who has to show the care that is typical for him. A “reasonable engineer” must act according to his or her expertise.

Skill and care: Diligence (standard of liability): The architect or engineer owes skill and care, while the building contractor is “strict”, i.e., regardless of fault, “fit for purpose”. If the planning is to be “fit for purpose”, the engineer assumes more than liability for “reasonable skill and care” (see Silver Book).

Subcontract form: So far only the FIDIC Red Book Subcontract Format from 2011 exists. A new Task Group is dealing with the Subcontract Format for Deisgn & Build contracts. The subcontract contract model is created as a back-to-back contract.The subcontractor should perform his obligations in such a way that the general or main contractor cannot be held liable under the main contract. The back-to-back principle entails an additional burden on subcontractors with obligations. A referral technique is common. The subcontractor assumes all of the main contractor's obligations in relation to the work that is subcontracted. In addition, there are obligations to keep the main contractor free from damage and disadvantages.

Taking over: Acceptance (but without the legal background of the BGB, cf. clause 10 FIDIC Red Book 1999/2017), therefore better adoption: In the FIDIC Books, the Taking-Over Certificate is issued after passing the “Tests on Completion”. The engineer is responsible. The consequences of taking over are conclusively contractually regulated. Recourse to similar national terms distorts the situation. In terms of German law, acceptance only takes place after the so-called “Defects Notification Period” has expired, i.e. when the performance certificate is issued (cf. Clause 11.9 FIDIC Red Book 1999), at least as long as the limitation period for the warranty for defects is to be determined.

Time for completion: is the construction time specified in the Appendix to Tender (Red & Yellow Book) or in the Particular Conditions (Silver Book) or in the Contract Data (Gold Book) in days (calendar days) within which the work must be completed . It is important that the time for completion only begins with the commencement date that is communicated unilaterally by the engineer. The notification must be made within 42 days of the conclusion of the contract.

Time Extension: see extension before Time for Completion

Unforeseeable physical conditions: This term (cf. sub-clause 4.12 FIDIC 1999) primarily regulates the subsoil conditions that deviate from the contractual documents. The entrepreneur does not have to calculate unforeseeable subsoil conditions. If necessary, he will receive a cost compensation and an extension of the construction period. The term physical condition is interpreted quite broadly. This can include blocked drainage ditches, for example.

variation: is a performance-changing arrangement that has been defined in the FIDIC contract (see Clause 1.1.6.9 FIDIC Red Book 1999; Clause 13.1 FIDIC Red Book 1999). A variation is any arrangement by the Engineer that results in a change in the contractually agreed works or affects the entrepreneur's freedom of choice with regard to the working methods.

The interpretation of English-language texts must always be in the context of the applicable law.

overview: The interpretation of legal texts is one of the fault lines between civil law and Anglo-Saxon legal systems. In the development of Roman law, one notices a development from the more objective to the more subjective interpretation. In early Roman law, the emphasis was on external form. In the Byzantine era, the emphasis was on a more objective approach. In the early classical period there was something like a happy equilibrium between the two approaches. The authors who influenced the content of the great European codifications placed the emphasis on determining actual will. It still prevails in most civil law countries today. In contrast to this, English law, at least since the beginning of the 19th century, has placed emphasis on the usual, objectively determined content of the words and suppressed attempts to research the actual will (cf. Scottish Law Commission (Reports), Interpretation in Private Law [1997] SLC 160 (Report) (August 1997) URL: http://www.bailii.org/scot/other/SLC/Report/1997/160.html.

Modern German law, for example

“Tries to take a more objective or normative approach; the emphasis is not so much on what one party might have meant, but on what a reasonable third party might have meant by it. There is no room for research into the true will of the parties when the legitimate trust of the addressee deserves protection.

When translating English-language texts, however, Anglo-Saxon rules of interpretation may also have to be observed in order not to distort their original meaning. Some of them are listed below:

Basic rule: When interpreting a document, consideration of circumstances outside of the document is not permitted (extrinsic evdence is inadmissible).

If a contract contains words that can easily have more than one meaning in their context, and it is alleged that the parties used the word in only one sense, then evidence outside the document is exceptionally permissible in order to prove that fact respectively (The "Karen Oltmann" [1976] 2 Ll L R 708 at 713).

General rule: The subjective will of the party using a term is irrelevant if the other party does not know that will or cannot be expected to know it (Muirhead & Turnbull v Dickson (1905) 7F 686 at 694). The approach is to ask what a reasonable person would give the term in its context and, if there is a lack of clarity, taking into account the accompanying circumstances, for a meaning (cf. Glen’s Trs v. Lancashire and Yorkshire Accident Insurance Co Ltd (1906) 8F 915).

Lord Hoffman has summarized the following rules of interpretation (Investors Compensation Scheme v. West Bromwich Building Society [1997] UKHL 28; [1998] 1 All ER 98; [1998] 1 WLR 896 (19.06.1997)):

(1) Interpretation is the determination of the meaning that a document would convey to a reasonable person having all the background knowledge that was reasonably available to the parties at the time the contract was entered into.

(2) The background was referred to as the matrix of facts in Lord Wilberforce's famous testimony, but this phrase is rather an understated description of what the background can include. In accordance with the requirement that it should have been reasonably accessible to the parties, it includes, except for what follows, absolutely anything that could have affected the way in which the language of the document could be understood by a reasonable person.

(3) The law excludes previous negotiations by the parties and their declarations with subjective content from the permissible background. .... .

(4) The meaning a document ... would convey to a sane person is not the same as the meaning of its words. The meaning of the words is a matter of dictionaries and grammar; the meaning of a document is what the parties who used the words would more reasonably have understood it, given the relevant background. The background must not only allow the reasonable person to choose between the possible meanings that are ambiguous, but even allow the conclusion that the parties, for whatever reason, used the wrong words or syntay. (lake Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997] 2 WLR 945).

(5) The rule that “words” should be given their natural and ordinary meaning reflects the common sense suggestion that we should not lightly accept that people have made linguistic errors, especially in documents. On the other hand, if one were to conclude from the background that something must have gone wrong linguistically, the law does not require the judges to impose a will on the parties that they absolutely could not have had. Lord Diplock emphasized this point more forcefully than he did in The Antaios Compania Neviera S.A. v. Salen Rederierna A.B. 19851 A.C. 191, 201 carried out:

    ". . . if detailed semantics and syntactic analysis of words in a commercial contract lead to the conclusion that mocks common sense, it must be done in such a way as to produce economic common sense. "

Falsa demonstration non nocet: A pure fasch name is irrelevant (Stair Memorial Encyclopaedia Vol 25, para 824).

Ejsudem generis rule: If an author or a party to a contract first uses terms that are obviously limited and restricted to a certain type or species of things, and then adds a term with a very broad meaning after such a specific list, the Ejusdem Generis - Rule of this, although it is general and broad in its possible meaning, only include things ejusdem generis, e.g. things of the same kind or species that cover the preceding limited and restricted terms (cf. Vogel v. Cobb, 193 Okl. 64, 141 P.2d 276, 277, 148 ALR 77).

The interpretation "Contra proferentem”(Against the user or creator) is required if contractual clauses are unclear and unambiguous and have not been negotiated.

German-language FIDIC courses can be booked via germanfidicseminare.de. In the future, you will also shed light on the 2017 contractual conditions.

Law firm Dr. Hök, Stieglmeier & colleagues
Contact person: Dr Götz-Sebastian Hök
Otto-Suhr-Allee 115,
10585 Berlin
Tel .: 00 49 (0) 30 3000 760-0
Fax: 00 49 (0) 30 513 03 819
e-mail: [email protected]

Dr. Hök was involved in the processing of all FIDIC contracts in 2017.