Question

3. Under the JCT Standard Building Contract, 2016 edition, the parties have to complete and sign the Agreement to create a contractual relationship. What is the equivalent document applicable to the NEC4 ECC? Comment on the data about the project that must be incorporated by a contract in that form (Word limit: 1000)

Answer 1

The equivalent document to NEC4ECC is the FIDIC contract

FIDIC is usually divided in two parts: Part I consisting of the general conditions and Part II concerning the conditions of particular application (including guidelines for the preparation of Part II clauses). Part I contains the general terms of the contract, such issues as rights and obligations of each party, procedure for payment, variation, certification and dispute resolution.

Part II of the contract is the conditions of particular application and is to be used to introduce project specific clauses, such as language of the contract, choice of law, the name of the person or firm appointed to act as Engineer or Employers representative for the project among other terms. The Appendix usually contains sample of documents to be used for the procurement process.

In most FIDIC forms there is a default hierarchy for the documents forming the contract. The order of priority is as stated below and in the event of inconsistency the first on the list takes precedence:

1. The Contract Agreement
2. The Letter of Acceptance (this is the formal acceptance of the contractor's tender and marks the formation of the contract)
3. The Letter of Tender
4. Part II – the conditions of particular application
5. Part I – general conditions of contract
6. The Specification and Drawings (Red Book), The Employer’s Requirements (Yellow Book), the Schedules (Red and Yellow Books)
7. Further documents (if any), listed in the Contract Agreement or in the Letter of Acceptance.

The parties are allowed to rearrange the priority of documents or stipulate that no priority or order of hierarchy will apply to the contract. This can be done in Part II of the contract.

Dispute Resolution - FIDIC contracts adopt a multi-tier dispute resolution process. The emphasis in recent years has been on the amicable settlement of disputes. The process usually provides as a first step, for disputes to be submitted for adjudication before an Engineer or a Dispute Board. If one (or both) of the parties is dissatisfied, a period is allowed for amicable settlement. If the parties are not able to settle the dispute during the ‘amicable settlement’ period, the final stage is to proceed to arbitration. FIDIC contracts provide as a default position that the arbitration rules of the International Chambers of Commerce should apply in the arbitration of disputes arising from the contract.