Use of FIDIC contracts in Americas region profiled at latest online conference

16 May 2022

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The latest Official FIDIC Contract Users’ Conference (Americas time zone event) in the regional series of conferences took place online on 16-17 May 2022, writes FIDIC communications advisor Andy Walker.

The event, sponsored by international law firm CMS, targeted the Americas contract users’ community and offered a key opportunity for attendees to share progress on the application and use of FIDIC contracts internationally and across the region. The event, which was delivered in-house by FIDIC, was attended by a range of stakeholders including MDBs, private sector organisations and clients, government, engineers, contractors, investors, consultants, and other stakeholders who have an interest in FIDIC contracts. 

Opening the first day of the conference, FIDIC vice president, board liaison to the FIDIC Contracts Committee and chief operating officer at Morrison Hershfield Group, Catherine Karakatsanis, welcomed attendees to the event and thanked strategic partner sponsor CMS for their support.

Joining the event from Toronto, Canada, Karakatsanis said that despite the Covid challenges over recent years, the past 12 months had seen the profile of FIDIC contracts grow, with increasing numbers of clients and funding bodies seeing these industry standard documents as their contract of choice in challenging times.

The keynote speaker for the conference was FIDIC legal advisor, Christopher Seppälä, a partner of counsel in the International Arbitration Group of White & Case LLP in Paris. As well as being the legal advisor to the FIDIC Contracts Committee, Seppälä is a former Vice-President Emeritus of the ICC International Court of Arbitration and was legal advisor (and member) of FIDIC's Update Task Group which prepared the three FIDIC conditions of contract for major works (the "Red", "Yellow" and "Silver" Books), published in 1999. “An ideal person to give today’s keynote address and to talk about FIDIC contracts and their place in the global industry,” said Karakatsanis.

Seppälä began by outlining eight key advantages of using FIDIC contracts, as follows: -

  1. They are recognised as representing good contract practice.
  2. They provide for fair risk allocation.
  3. The contracts are drafted by engineers.
  4. They use common terminology, format and structure.
  5. The use of General/Particular Conditions allow for easy adaptation.
  6. They are useable in civil law and common law jurisdictions.
  7. Contracts are available in Spanish and Portuguese, as well as English.
  8. They are endorsed by the World Bank and the Inter-American Development Bank.

He also talked about some of the new contracts that FIDIC had recently introduced, including the Emerald Book Conditions of Contract for Underground Works and the Green Book Short Form of Contract, 2nd edition, 2021.

Referring to the use of the contracts in the region, Seppälä said: “There are no reliable statistics on the use of FIDIC contracts in the Americas region but based on my investigations they have been used for many years in the English common law jurisdictions of the Caribbean e.g. Trinidad & Tobago (Red book, hospital project and Pink book, water project).”

Seppälä also reported that the contracts are also being used increasingly in Latin America. Examples include Argentina (Yellow Book, water project), Brazil (mainly Silver Book for mining, sewage, airports, energy, ports, metro and logistics projects), Chile (Silver Book, two run-of-river hydropower projects, Red Book, construction of the pier, Yellow Book, hydropower plant), Colombia, Ecuador (Pink Book, Quito metro - pictured above), El Salvador (Red Book, highways and bridges, Yellow Book, water plant), Honduras (Red Book, highways and bridges), Panama (Yellow Book, Panama Canal expansion, and a hydroelectric project contract and tunneling contract both based on the Silver Book), Paraguay (Pink Book, highways), Peru (Pink, Silver and Yellow Books for at least nine projects including, among others, an airport, a pavilion, a hydroelectric plant and a hospital).

Seppälä said that often projects in the region are financed by the World Bank, Inter-American Development Bank, the Millennium Challenge Corporation or the Japan International Cooperation Agency and sometimes by commercial banks. “Peru is especially forward-looking in adopting best international construction contract practices and there may be greater use of FIDIC contracts there than elsewhere,” he said. It was significant that Peruvian State entities are expressly authorised to use them for works in Peru, said Seppälä.

According to Seppälä the contracts were rarely used in the United States or Canada, as each has its own well established standard forms, but FIDIC forms continued to satisfy an important need in Latin America.

The first session of the conference, chaired by international construction lawyer at 3PB and member of the FIDIC Contracts Committee Peter Collie, offered attendees an update on FIDIC contracts and their use. Other speakers in the session included Adriana Spassova, a partner at EQE Control OOD in Bulgaria and PS Consulting partner James Perry.

Collie outlined some of the issues that can arise on projects, especially with regards to contractors failing, that led to increased risks. “There are very few standard form contracts that are of international standing and that is where FIDIC comes into its own,” Collie said. “To understand the FIDIC contracts, the starting place for an employer is always the FIDIC Red Book. It is a very good contract to use and it is known in the industry as a fair contract to use, clearly outlining the risk profile and contractors obligations,” he said. Collie went on to outline the other key books in the FIDIC Rainbow Suite and the advantages and benefits of using each of them.

The next speaker, Adriana Spassova, partner at EQE Control OOD and FIDIC Contracts Committee member, spoke about the FIDIC 2017 Suite for Services and the White Book. She outlined the importance of taking into account the whole life cost of projects in the light of the fees being paid to consultants. “The best advice at the beginning of the project is crucial in obtaining a successful outcome,” said Spassova.

Next speaker, James Perry, a partner at PS Consulting, spoke about the FIDIC Green Book Short Form of Contract, 2nd edition, 2021. “One of the reasons why FIDIC contracts are so successful is that the drafting committees are drawn from different jurisdictions around the world. The contracts benefit from this great diversity of approach,” Perry said. He highlighted that the market had asked for a more robust short form of contract and thus the Green Book Second Edition was born.

He outlined the main new features of the second edition and reported that the response from the market had been extremely favourable, with leading lawyers Corbett & Co commenting: “The style is readable, and the provisions are often less detailed than other FIDIC forms, but they are generally clear and precise. Equally importantly it appears to share risk fairly between the parties and does not place unnecessary and onerous obligations on the contractor.”

Following the first conference session, there were three breakout sessions covering – Using the FIDIC Silver Book to deliver EPC projects, chaired by Júlio César Bueno, a partner at Pinheiro Neto Advogados, The Emerald Book: all you need to know, chaired by Zoltán Záhonyi of Z & Partners Consulting Engineers and a past chair of the FIDIC Contracts Committee and Effective claims preparation and resolution on construction projects in the Americas, chaired by Emma Schaafsma, a partner at CMS.

Day two of the Official FIDIC Contract Users’ Conference (Americas time zone event) continues on Tuesday 17 May 2022 starting at 4pm CET.

Click here for details of the conference, including registration information.

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