"NEC3 Practical Solutions" navigates the contractual issues faced by users of the NEC3 Engineering and Construction Contract (ECC). Based on real queries posed to the NEC Users’ Group Helpdesk, this concise reference guide is a helpful problem-solving tool, providing hints, tips and answers to 245 common questions.
Letter was not an Engineer's Decision for the Purposes of Clause 67 of the FIDIC Conditions
The dispute between the parties concerned
whether an arbitrator had the jurisdiction to continue with an arbitration, or
whether an engineer’s decision made by DAR Al Handasah, DAR, was a binding
condition precedent and MAN, the claimant, had to wait until the end of the
contractual period before referring the dispute to arbitration. The parties’
contract was the FIDIC Conditions of Contract, 4th edition 1987. DAR had
written to MAN advising it that its contract with Al-Waddan had expired on 31
December 2010 so that it had no authority to perform any duties under the
contract, and had ceased to act as engineer. It told MAN that it would not act
on MAN’s referring the non-payment of the retention and interim certificates to
it for decision and that MAN should not contact it any further.
There was a long line of authority to
support the proposition that if an independent certifier refuses to carry out
that function, then the parties may come to Court to seek relief, or a remedy
they would otherwise have obtained from the appointed independent decision
maker. In the present case, DAR had made it clear that they would not make a
decision. If an engineer clearly and absolutely states they will not perform
their contractual function, then the parties are no longer bound this
contractual requirement. In such circumstances the parties would have a clear
choice of either accepting that or attempting to appoint another engineer;this would be a question of fact to be tested
in the individual case. A high legal test was required because anything less
would permit a party to escape from an agreed condition precedent too easily.
DAR’s letter of 19 June
could not be properly construed as a notice of decision under clause 67.1. A
notice was an important contractual document and should be read objectively.
Reading this letter objectively, it could not be said to be a notice of
decision, and not purport on its face to be a notice for the purposes of clause
67. The letter amounted to a clear and absolute refusal by the named engineer
to give a decision within the required 84 days. Because of Al-Waddan’s
termination of DAR’s retainer, the prevention principle, or lack of
co-operation principle, came into play depriving Al-Waddan of the right to rely
upon the engineer’s notice of decision. It would be wrong for Al-Waddan to
assert that there had to be a continuing period of 84 days for MAN to wait
before going to arbitration, when Al-Waddan must have known as long ago as 31
December 2010 that they had ceased to engage DAR and had no intention of
putting that right either promptly or at all.