FIDIC has secured a major agreement with the Asian Infrastructure Investment Bank (AIIB) that will see the international funding organisation include the use of nine FIDIC standard contracts for the next five years.
Under the terms of the agreement, FIDIC has granted the AIIB a non-exclusive licence to refer to the nine major FIDIC contracts (see list in notes below) for projects they finance and the documents may be used as part of the bank’s standard tender documents. The contracts include the latest 2017 Second Edition FIDIC contracts and 1999 editions, which cover a wide range of international construction and infrastructure work and the move by AIIB in signing the agreement represents another significant endorsement for FIDIC contracts from a major international funding organisation, following similar agreements signed with the World Bank, Inter-American Development Bank, Caribbean Development Bank and the European Bank for Reconstruction and Development in recent months.
FIDIC chief executive Dr Nelson Ogunshakin said: “We are delighted to have signed this agreement with the AIIB as it means that FIDIC has now entered into similar agreements with nearly all of the major international funding organisations. This will create more certainty in the market as by adopting the FIDIC contacts on major projects the AIIB is saying that they endorse the fair and balanced approach that these documents offer to parties on major construction contracts.
“The AIIB’s endorsement should provide additional comfort to the financial, institutional and private equity investors operating in the global market to adopt the use of FIDIC standard procurement contracts as an effective tool to mitigate the risks associated with investable infrastructure asset class.”
Commenting on the signing of the agreement Zheng Quan, director general for the strategy, policy and budget department at the AIIB, said: “We are very pleased that in signing this agreement it will allow the AIIB the opportunity to incorporate FIDIC forms of contract into its suite of standard tender documents which are currently under development for use by the bank’s clients. The use of FIDIC forms of contract will ensure that infrastructure contracts financed by the AIIB are fit for purpose and will be implemented in accordance with best international standards. The AIIB looks forward to further productive collaboration with FIDIC.”
FIDIC president Bill Howard said: “I’m really delighted to see this move by the AIIB. Strengthening FIDIC’s relationships with the banks and the international funding institutions will enhance our efforts to coordinate FIDIC’s engagement with the financial institutions that will benefit the whole industry. Such agreements are good for FIDIC and good for the global infrastructure sector and I look forward to a mutually beneficial relationship with AIIB and all the other multilateral development banks over the coming years.”
FIDIC has also published a briefing note to assist members looking to work with the AIIB. The note has been compiled by FIDIC's head of economic and strategic policy Graham Pontin and includes valuable information about the AIIB and its mission, an outline of the bank's project portal, its historical projects and project pipeline, how to access the bank's project information and how to find out about procurement information and get involved.
The nine FIDIC contract documents covered by the FIDIC/AIIB agreement are as follows: -
Conditions of Contract for Construction for Building and Engineering Works Designed by the Employer (“Red book”), First edition 1999;
Conditions of Contract for Construction for Building and Engineering Works Designed by the Employer (“Red book”), Second edition 2017;
Conditions of Contract for Plant & Design-Build for Electrical & Mechanical Plant & for Building & Engineering Works Designed by the Contractor (“Yellow book”), First edition 1999;
Conditions of Contract for Plant & Design-Build for Electrical & Mechanical Plant & for Building & Engineering Works Designed by the Contractor (“Yellow book”), Second edition 2017;
Conditions of Contract for EPC Turnkey Projects (“Silver book”), First Edition, 1999;
Conditions of Contract for EPC Turnkey Projects (“Silver book”), Second Edition, 2017;
Client/Consultant Model Services Agreement (”White book”), Fifth Edition 2017;
Conditions of Contract for Design, Build and Operate Projects (“Gold book”) First Edition 2008; and
The Short Form of Contract (“Green book”), First Edition 1999.
