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NOTES ON FIDIC 4TH EDITION 1987, REPRINTED 1988 & 1992

RESOLUTION OF DIFFERENCES OF OPINION PRIOR TO

REFERRAL TO DISPUTE RESOLUTION PROCEDURE

The Contractor submitted its application for reimbursement of additional costs incurred

as a result of devaluations of the Botswana Pula under its letter of 11 thJanuary 2006. The

application was oriinally made as a formal claim in terms of Clause !" of the #eneral

Conditions of Contract $#CC% but this was subse&uently revised to an approach throuhthe Contract Price 'd(ustment mechanism contained in Clause )0.1 of the Conditions of

Particular 'pplication $CoP'%.

The *nineer responded to this submission in +ay 2006 in a document entitled

,*nineer-s 'd(udication of Contractor-s Claim "' and "B/ in which various alternative

proposals were set out/ and recommendin payment of a sinificantly lower amount thenthe Contractor-s oriinal submission. n turn/ the Contractor responded on th January

200) to the *nineer-s ,'d(udication and set out its various disareements with the*nineer-s recommendations and proposals/ toether with contractual arument and

motivation supportin its point of view.

t has recently been suested by a member of the *mployer-s leal advisory department

that the Contractor-s puttin forward disareements with the *nineer-s ,'d(udicationdocument constitutes the brinin about or declaration of a dispute/ and that the correct

way to proceed should now be by reference of the matter to Clause 6) of the #CC.

The Contractor emphatically disarees with this opinion/ since it is normal custom and

practice within the industry to continue discussion and neotiation on matters of

disareement until areement between the *nineer and Contractor has been reached.eferral of a matter to Clause 6) of the #CC is rearded as a last resort/ to be resorted to

only when all else has failed.

The term ,'d(udication is not used in the Contract3 had the Contractor-s submissionbeen made via Clause !"/ the *nineer-s response could have been referred to as either a

,consideration or as a ,determination by reference to 4ub5Clause !".!. 4ince the

Contractor-s submission was made in terms of Clause )0.1/ and not via Clause !"/however/ the *nineer-s response should be deemed to be in terms of 4ub5Clause !2.2 of

the #CC/ whereby the Contract Price is bein ad(usted due to rates havin become

inappropriate or inapplicable as envisaed therein.

n this instance/ the ,rate or price that has become inappropriate or inapplicable is the

amount enerated by the application of the Contract Price 'd(ustment 4chedule that is set

out in CoP' Clause )0.13 this amount falls to be areed upon between the *nineer andthe Contractor ,after due consultation/ in terms of sub5clause !2.2 of #CC.

That the assessment and areement procedure conducted between the *nineer and theContractor/ of amounts due payable to the Contractor in terms of the Contract is

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envisaed to be a fleible and onoin procedure/ and not restricted to the procedure set

out in Clause 6) of the #CC/ is demonstrated by the provisions of 4ub5Clause 60.7

thereof/ whereby the *nineer may in any nterim Payment Certificate ma8e correctionsor modifications to any previous Certificate which shall have been issued by him.

9urther indications are iven in the #uide to 9:C/ which/ althouh not a contractdocument/ is the official interpretative uide to the 9:C 7 th *dition Conditions of

Contract3 The followin locations have relevance;

o Pae 11!/ first pararaph/ re Clause !2.2; f the nature of the wor8 involved

differs so much from that included in the oriinal Contract that the rates or pricesare rendered inapplicable3 it is the *nineer-s tas8 to aree appropriate rates and

prices with the Contractor.

o Pae 12)/ first pararaph/ re Clause !6.1; This 4ub5Clause lays down the

procedural rules for measurin the

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The correspondin conclusion to be drawn is that no time limit eists with reard to

controllin onoin discussion/ consultation and neotiation between the Contractor andthe *nineer. This is of course a very desirable circumstance that enables the best

possible chances of amicable resolution of disareements or potential disputes between

the *nineer and the Contractor.

17th9ebruary 200)