Page 1

CONFIDENTIAL DRAFT
INTERIM PRE-ROME
10 JULY 2010
REFLECTING DISCUSSIONS AT 5-6 JULY 2010 PARIS
MEETING OF ICC SUBCONTRACTING TASK FORCE
+
OUTSTANDING QUESTIONS/NOTES/ISSUES

Commission on Commercial Law and Practice

Task Force on Subcontracts for Turnkey Transactions
SUBCONTRACT (Back to Back)
ICC Model Subcontract to a Turnkey Contract for Major Projects where the Subcontract is
back to back to the Main Contract between the Owner and the Contractor employing the
Subcontractor named here.
For Work as described below, on the basis of MAIN CONTRACTORS General Terms and
Conditions of Subcontract and Particular Terms and Conditions of Subcontract (in your
possession). For acceptance the Subcontract confirmation copy should be returned within the
required number of days of receipt of this Subcontract, dated and legally signed.

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FOREWORD: [ASSIGNMENT ROBERT to draft. This is very much a first draft 09 03 14]
The ICC MODEL TURNKEY CONTRACT FOR MAJOR PROJECTS was published in 2007 and
has received some interest and use in the international contracting world. That form was published
by the ICC Commission on Commercial Law and Practice which is, like the ICC, in business for
business, and acts as a focus group for all parties to international transactions.
In recent years the Commission on Commercial Law and Practice has published a number of
model forms of contracts. Although the forms have covered a wide range of international
transactions, including the turnkey supply of an industrial plant, they have all been distinguished by
the imperative that they be fair to all parties to the transaction involved, as the ICC represents all
parties to all transactions.
The Subcontract Group Subcontract has approached this Subcontract with the same philosophy.
As this Subcontract is intended for use as a back to back contract to the Main Contract between
the Owner/Developer and the Main Contractor the interests of three parties the Owner, Main
Contractor and Subcontractor have to be taken into account.
While this Subcontract uses some of the language of its parent Turnkey contract, the Subcontract
Group hope that the form will be flexible enough to be a real option as a subcontract to any other
standard form of contract, such as those used by the World Bank, and has been constructed with
this in mind.

ICC MODEL BACK TO BACK SUBCONTRACT TO TURNKEY CONTRACTS FOR MAJOR

PROJECTS

.....................................
(Main Contractor)

and

.....................................
(Subcontractor)
and
......................................
Third Party

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This Subcontract contains or incorporates an arbitration clause and clauses limiting and/or
excluding the liability one or both of the Parties in certain circumstances.

TABLE OF CONTENTS
[ASSIGNMENT - EOC POST- ROME: TO BE CONFORMED TO FINAL DRAFT]
Art

Page
Foreword
Introduction
Subcontract Form

1
3
CHAPTER 1
GENERAL AND PRELIMINARY ARTICLES

1
2
3
4
5
6
7
8
9
10
11
12

Definitions
Entry into force of the Subcontract/Flowdown
Good faith and fair dealing
Language of the Subcontract
Applicable laws
New or changed laws, standards, regulations etc.
Interpretation of the Subcontract
Assumptions, statements about distances, measures, dimensions and quantities
Obtaining permits, planning and other permissions
Guarantees, bonds or other securities
Demands under guarantees, bonds or other securities
No agency independent contractor

9
14
14
15
15
15
16
16
16
17
17
17

CHAPTER 2
THE PARTIES OBLIGATIONS
13
14
15
16
17
18
19

The Main Contractors obligations

The Subcontractors obligations
Co-operation with other contractors and co-ordination of activities
Quality assurance
Staff and labour
Representatives of the Parties
Each Partys duty to notify

18
18
19
19
19
20
20

CHAPTER 3
THE EXECUTION OF THE PROJECT
20
21
22
23
24
25

Scope of the Subcontract Price and Subcontract Works

Setting out on the Site
Site information for the Subcontractors Design and use
Unexpected artificial or physical conditions or obstructions
Safety
Public convenience

21
21
21
22
23
23

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26
27
28
29
30
31

32
33
34
35

Environmental protection
Services or supplies to be supplied by the Main Contractor, Employer or public
utilities
Main Contractor-supplied Plant, materials or Equipment
Responsibility for shipping and storing goods and materials
Ownership of goods, material, Plant and Equipment/liens, trusts and similar claims
Keeping the Site clear
CHAPTER 4
DESIGN - RESPONSIBILITY AND MANAGEMENT, VARIATIONS

23
23

General allocation of responsibility of the Parties for the Design

The Design review process
Intellectual property rights
Variations and changes to the Subcontract Works

26
26
29
30

24
24
24
25

CHAPTER 5
COMMENCEMENT, THE TIME TO TAKING-OVER, SCHEDULING AND PROGRESS
36
37
38
39

Commencement, Time to Taking-Over and extensions of time

Delay Damages
Schedule of Subcontractual Dates, time schedule and reporting progress
Progress reports

34
36
37
37

CHAPTER 6
SUBCONTRACT PRICE AND PAYMENT
40
41
42
43
44

The Subcontract provides the exclusive remedies for all claims between the
Parties
Payment of the Subcontract Price
Applications and procedure for payment
VAT/GST or equivalent consumption taxes
Financing charges for late recognition of rights between the Parties

39
39
39
41
41

CHAPTER 7
COMPLETION AND TAKING OVER OF THE SUBCONTRACT WORKS BY THE MAIN CONTRACTOR
45
46
47
48

Completion
Commissioning and Performance Tests
Taking-Over/Provisional Acceptance
Assessment procedures after Taking-Over

46
46
47
49

CHAPTER 8
DEFECT CORRECTION PERIOD
49

The Contractors obligation to finish the Subcontract Works and correct Defects

50

CHAPTER 9
ALLOCATION OF RISK AND RESPONSIBILITY AND EXCLUSIONS FROM LIABILITY
50
51
52

General principles of risk allocation and responsibility

Purpose of the limitation and exclusion Articles
Liabilities of the Parties and their reciprocal limitations and exclusions

53
53
53

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53
54
55

Time limit for liability

Extension of limitations and exclusions from liability to certain third parties
Warranty for future purchasers or operators

54
54
55

CHAPTER 10
FORCE MAJEURE AND TERMINATION OF THE CONTRACT
56
57

Force Majeure
Suspension and/or termination of the Subcontract

56
58

CHAPTER 11
INSURANCE
58

Insurance

62
CHAPTER 12
MISCELLANEOUS PROVISIONS

59
60
61
62
63
64
65

Confidentiality
Bribery, gifts, inducements or rewards
Entire agreement, severability and amendments to the Subcontract
Joint and several liability
Subcontractor notification and responsibility and assignment of Subcontractors
obligations
Assignment of the Subcontract by either Party
Communications, including notices and consents

65
65
66
67
67
68
68

CHAPTER 13
CLAIMS, DISPUTE RESOLUTION AND ARBITRATION
66
67

Exclusive remedies - All claims of all types are to be determined by these provisions
Supplemental provisions relating to arbitration

70
71

APPENDICES
1.
Sample Schedule of Subcontractual Amendments
2.
Main Contractors Equipment [NOTE: Term defined but not
used in the Subcontract.]
3.
Main Contractors Requirements
4.
Subcontractors Equipment
5.
Sample Advance Payment Guarantee
6.
Subcontract Works in relation to original points, lines and
levels of reference [NOTE: reference to Appendix related to this appears in
Art. 21.1]
7.
Prices for services supplied by the Main Contractor [NOTE:
reference to Appendix related to this appears in Art. 27.2]
8.
Daywork Schedule
9.
Sample Performance Guarantee [NOTE: Mentioned,
undefined, in Art 36.3. Want to include sample as an Appendix? If so, want
to define term?]

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10.
Notice to Proceed [NOTE: reference to Appendix related to
this appears in Art. 36.3(b)]
11.
Limit on Delay Damages [NOTE: reference to Appendix
related to this appears in Art. 37.2]
12.
Schedule of Subcontractual Dates
13.
Time Schedule
14.
Methonds of Payment [NOTE: reference to Appendix
related to this appears in Art. 43.9]
15.
Payment and Milestone Schedule Guidance Notes and
Sample Schedule of Milestones
16.
Payment Application Format
17.
Commissioning activities [NOTE: reference to Appendix
related to this appears in Art. 46.2]
18.
Guidelines relating to the Performance Tests
19.
Subcontractors Access after Taking-Over
20.
Stepped/Phased Timeline [NOTE: reference to Appendix
related to this appears in Art. 47.5]
21.
Notice of Satisfaction of Taking-Over Conditions [NOTE:
reference to Appendix related to this appears in Art. 47.6]
22.
Assessmen Procedures [NOTE: reference to Appendix
related to this appears in Art. 48.2]
23.
Conditions of Final Acceptance [NOTE: reference to
Appendix related to this appears in Art. 49.13(d)]

Introduction [ASSIGNMENT ROBERT to draft] [***09 09 08 To be written ]

[ASSIGNMENT - ISABELLE to draft discussion of Art 14/20-[state that it is optional] related

Appendix on RASIC-style list. [FN to Subcontract Works: Parties may wish but shall not be
obliged to append a table reflecting their respective responsibilities.. Each company has own
management techniques, below is intended to be sample approach, should not be considered a
contract document, etc. Common practice in industry to use similar lists.]
[ASSIGNMENT - ISABELLE to draft caveat on notification and acceptance of Subcontractor by
Employer.]

TABLE OF CONTENTS
Subcontract Form of Agreement (Agreed 18 May 2010)
THIS SUBCONTRACT is made on [_____ _____, _____]
Between:
[_____ _____ _____ ] (a [_____ _____ _____ ] company with registered number [_____ ]) whose
registered office is at [_____ _____ _____ _____ ] and represented by __________acting through
a duly authorised power of attorney (the Main Contractor, which expression shall include
successors and permitted assigns); and

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[_____ _____ _____ ] (a [_____ _____ _____ ] company with registered number [_____ ]) whose
registered office is at [_____ _____ _____ _____ ] and represented by __________acting through
a duly authorised power of attorney (the Subcontractor, which expression shall include
successors and permitted assigns),
each a Party and collectively the Parties.
Whereas
(a)

the Main Contractor has decided to engage the Subcontractor to design, procure, supply,
execute, install, commission and complete on a turnkey basis the Works as described in
this Subcontract, and to perform the Subcontract Works for payment as provided herein;
and

(B)

the Subcontractor has agreed to such engagement on the terms and subject to the
conditions of this Subcontract as provided herein.

It is agreed as follows:
1.

The Subcontractor will design, procure, supply, execute, install, commission and complete
on a turnkey basis the Subcontract Works as described in this Subcontract, and perform
the Subcontract Works for the compensation provided for herein as more particularly
described in the Conditions of Subcontract and Schedule of Subcontractual Amendments
attached hereto1; and

2.

The Main Contractor will pay the Subcontractor the price of ________________________2
(the Subcontract Price) and perform the other actions required of it on the terms and
subject to the conditions of this Subcontract, as more particularly described here and in the
Conditions of Subcontract and Schedule of Subcontractual Amendments attached hereto.

3.

Except as otherwise provided for in the Subcontract, the Subcontract covers all of the
Parties' obligations with respect to:
a.
the design, procurement, supply, execution, installation, commissioning
and/or completion on a turnkey basis of the Subcontract Works as described in the
Subcontract and its Appendices within the Time to Taking-Over as defined3; and
b.
the remedying of any Defects within the Defect Correction Period thereafter.

4.

Each Party is deemed to have verified, checked and ascertained that all the documentation
listed in this Subcontract is complete and in its possession. Any subsequent revision of
drawings and/or documentation listed in the Subcontract, and any other plan, drawing,
description, specification, standard, calculation sheet or the like issued in connection with the
Subcontract Works after the execution and signature of the Subcontract shall become and
be valued as an integral part of the Subcontract.

5.

Each Party will furnish sufficient and competent supervisor(s), qualified and experienced
labour, materials, equipment, tools, facilities, services and the like, to execute the
Subcontract Works in full accordance with the above mentioned documents and the
documents referred to therein and attached thereto.

1 Parties need to define the scope of work to be governed by the Subcontract and modify this provision accordingly.
22Sometimes the Subcontract Price is set out in an Appendix to assist in keeping it confidential.
3 Parties need to define the scope of work to be governed by the Subcontract and modify this provision accordingly.

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6.

Unless otherwise agreed, the dispute resolution provisions of the Main Contract are fully
incorporated in this Subcontract as if written out in full between the Main Contractor and
Subcontractor and shall apply as if written out here.

Whereas the Parties have executed this Subcontract by duly authorised representatives on
the day and year first above written.4
MAIN CONTRACTOR
NAME
Witness
SUBCONTRACTOR
NAME
Witness

GENERAL TERMS AND CONDITIONS OF SUBCONTRACT

CHAPTER 1
GENERAL AND PRELIMINARY ARTICLES Agreed 18 May 2010
Article 1
Definitions
1.1
As used in this Subcontract, the following terms shall have the meanings set out below.
Words indicating persons or parties include corporations, and other legal entities, as well as
unincorporated joint ventures except where the context requires otherwise. If a word or
phrase is capitalised, it is a Defined Term. Defined Terms have the meanings given to them
by this Article. Where a word or phrase is a Defined Term in the Main Contract, and is also
used in this Subcontract, unless otherwise agreed it will have the meaning in this
Subcontract.
Advance Payment Guarantee means the guarantee (if any) provided under Article 10.1,
and which may form an Appendix hereto.
Appendix or Appendices means the appendix or appendices to the Subcontract
referred to throughout these Conditions of Subcontract, which describe particular aspects
of the Subcontract Works.
Article means any article or sub-article of these Conditions of Subcontract as the context
requires.
Assumptions are statements provided by either Party in writing setting out its
assumptions (if any) in relation to the Subcontract Works, prior to the signature of the
Subcontract Form.
Business Day means, unless otherwise agreed, a Day in the Country or, in the case of a
4

It would normally be a good idea to have a person from each Party witness all signatures. If appropriate, a chop or seal should
be attached from the Parties. A local counsel or notary or may be used to verify the identities of the parties and their capacity to
bind the parties.

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local Business Day, in the country in question, on which banks are open for general
business.
CDB means the Combined Dispute Board appointed under this Subcontract.
[ASSIGNMENT - GROUP: All references to CDB deleted other than that in Art. 66, which is
to be redrafted to provide for alternative to CDB]
Certificate of Completion is a certificate issued for Completion of Construction or
Mechanical Completion, as the case may be.
Certificate of Final Acceptance is the certificate issued according to Article 49.14.
Completion means Completion of Construction or Mechanical Completion.
Completion of Construction or Mechanical Completion unless otherwise defined
herein, is the moment the Subcontract Works have been physically completed to the extent
they are ready to start commissioning.
Conditions of Subcontract means these conditions of subcontract.
Cost includes any element of actual expense plus overheads.
Country means the country where the Site is located.
Day, Days or Date/s mean, unless otherwise agreed, references to a 24-hour
calendar day in the Gregorian calendar with "year" meaning 365 days under that calendar,
unless it is a 366-day leap year. Periods of time are calculated from the day after receipt of
the relevant instruction or other action requiring an activity to commence.
Daywork Schedule means a schedule of the Subcontractors agreed rates and
associated costs to be used in the event of an Instruction being given under Article 35.15
and which forms an Appendix hereto.
Defect means a non-conformity with the Subcontract requirements.
Defect Correction Period means the period for correction of Defects as established
under Article 49.
Delay Damages means the monetary compensation paid under Article 37.
Design includes sketches, schemes, models, plans, drawings, technical criteria or
standards, and descriptions with aesthetic or functional elements for making up a building,
machine, facility or other object or process intended for the Subcontract Works. Design also
includes, without limitation, performance descriptions, specifications or requirements.
Employer means the legal or natural person(s) named as Employer in the Main
Contract, its agents, assignees agreed by the Main Contractor and the legal successors in
title to this or these person(s). If the Employer named in the Main Contract does not have
separate legal personality under the laws governing its status, the Employer includes any
organisation of which it is a part that does have separate legal personality.
Employers Requirements refers to the Employers Requirements in the Main Contract
between the Main Contractor here and the Owner/Developer, to the extent that they relate
to the Subcontract Works.
Equipment means all appliances, machinery, vehicles, tools or other things required by
the Subcontractor for the execution and completion of the Subcontract Works and the
remedying of any Defects. Equipment excludes, however, Temporary Subcontract Works,
Plant, materials and any other things intended to form, or forming, part of the Subcontract
Works.

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Final Acceptance has the meaning set out in Article 49.13.

Force Majeure has the meaning set out in Article 56.
Good Industry Practice means (i) the exercise of that degree of skill, diligence,
prudence and foresight that would reasonably and ordinarily be expected from a skilled and
experienced person engaged in the same type of undertaking under the same or similar
conditions; or, (ii) the practices in similar industries.
Hazardous Materials means any hazardous or toxic substance or hazardous or toxic
waste, contaminant, or pollutant as defined in or regulated by the law governing such
matters.
Instruction is a Main Contractors requirement whether in writing or not, that the
Subcontractor does or refrains from doing something, or performs tasks at a different time.
All non-written Instructions are to be confirmed in writing. An Instruction may or may not be
a Variation.
Invoice Period shall mean, if not otherwise defined, a calendar month commencing on
the first Day of the month and ending on the last Day of the month. The first Invoice Period
shall begin on the Day the Notice to Proceed becomes effective.
Main Contract means the contract (however it is described) entered into, or in the case
to be entered into, between the Main Contractor and the Employer for the engineering,
procurement and design of the Project.
Main Contract Conditions means the Conditions of Contract contained in the Main
Contract.
Main Contract Start Date means the Date determined in accordance with Article 36.3 of
the Main Contract.
Main Contractor means the legal or natural person(s) named as Main Contractor in the
Main Contract, its agents, assignees agreed by the Main Contractor and the legal
successors in title to this or these person(s). If the Main Contractor named in the Main
Contract does not have separate legal personality under the laws governing its status, the
Main Contractor includes any organisation of which it is a part that does have separate
legal personality.
Main Contractors Equipment means any Equipment provided by the Main Contractor
for the Subcontract Works and/or as may be set out in an Appendix. [NOTE: Term not used
in the Subcontract.]
Main Contractors Personnel means physical persons in the employ of or seconded to
the Main Contractor and acting for it, or other persons authorised to act for the Main
Contractor in relation to the Subcontract Works.
Main Contractors Requirements means the document(s) sent to the Subcontractor,
prior to the Reference Date, setting out the Main Contractors requirements for the
Subcontract Works, as included in the Subcontract, and set out in an Appendix (if any),
and any Variations. The Main Contractors Requirements include, without limitation,
documents specifying the purpose, scope, time frame for construction, and/or design
and/or other technical criteria, and/or conceptual elements for the Subcontract Works.
Method Statement means a statement or statements submitted by the Subcontractor
and noted or accepted by the Main Contractor describing how the Subcontractor proposes
to meet the Main Contractors Requirements. The Method Statement may or may not be
described as such but will consist of one or more submissions, normally accepted or known

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by the Main Contractor or its representatives, detailing how the Subcontractor intends to
deploy Plant, personnel, material, Equipment and other resources to accomplish the
Subcontract Works in the Time to Taking-Over.
Minimum Performance means the minimal level of performance of the Subcontract
Works (if any) to be achieved during Performance Tests, as are set out in this Subcontract.
Notice is a written notification [ASSIGNMENT TIM: check throughout whether notify
and notification need to be capitalized] intended to have effect under this Subcontract.
Notice to Proceed means the notice given under Article 36.3, which sets the Start Date
and first Day of the Time to Taking-Over.
Payment Certificate means a certificate issued under Article 42.
Performance Tests means those tests (if any) to be performed, specified as such in the
Subcontract, in accordance with an Appendix (if any).
Plant means any and all apparatus, machinery or devices (if any) intended to form, or
forming, part of the Subcontract Works.
Project means, if the context so requires, the larger project (if any) the Main Contractor
is developing, of which the Subcontract Works are a part.
Punch List has the meaning set out in Article 47.10.
Reference Date means, in the case of a bidding procedure without negotiations, the
Date 28 Days prior to the latest Date for the submission of Tenders, and, in the case of a
negotiated contract, the Date 28 Days prior to the first signature on the Subcontract.
Representative means the physical person(s) appointed from time to time by the
Subcontractor or the Main Contractor under Article 18 to act as such under the
Subcontract.
Rules has the meaning set out in Article 66.2.
Schedule of Milestones means the Schedule set out in Appendix 2.
Schedule of Subcontractual Amendments means the annexure to the Subcontract
Form described as the Schedule of Subcontractual Amendments and referred to
throughout these Conditions of Subcontract, which Schedule describes particular
amendments to this Subcontract and which forms an Appendix hereto.
Schedule of Subcontractual Dates is the schedule (if any) set out in or in accordance
with Article 38.1 and which forms an Appendix hereto.
Schedule of Subcontractual Payments is the schedule set out in or in accordance with
Article 42.1, and which forms Appendix 2.
Section means any part of the Subcontract Works or Site as the context requires.
Site (or Sites as the context requires) means the land or other places made available
to the Subcontractor by or on behalf of the Main Contractor and on, under, in or through
which the Subcontract Works are to be constructed. The Site does not include places the
Subcontractor has taken possession of or has access to for the purposes of the
Subcontract Works, but which were not made available to the Subcontractor by or on
behalf of the Main Contractor.
Start Date means the Date determined in accordance with Article 36.3.
Subcontract means the Subcontract Form, including the Schedule of Subcontractual

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Amendments and these Conditions of Subcontract together with all Appendices and
subsequent alterations and additions agreed in writing, as set out more precisely in Article
7.
Subcontract Date means the Date the Subcontract is signed and enters into force as set
out in Article 2.
Subcontract Form means the subcontract form, including the Schedule of
Subcontractual Amendments, to which these Conditions of Subcontract and Appendices
are supplemental.
Subcontract Price means the price set out in the Subcontract for the provision, on a
turnkey basis, of the Subcontract Works, including the supply of all the goods and services
that are indicated in this Subcontract, subject to such additions thereto or deductions
therefrom as may be made in accordance with the provisions of the Subcontract.
Subcontract Works means the works to be completed by the Subcontractor under this
Subcontract and the associated supplies and services, including software as appropriate.
[ASSIGNMENT - ISABELLE to draft footnote: Parties may wish but shall not be obliged to
append a table reflecting their respective responsibilities.. Each company has own
management techniques, below is intended to be sample approach, should not be
considered a contract document, etc. Common practice in industry to use similar lists]
[[Subcontractor means the legal or natural person(s) named as Subcontractor in the
Subcontract, its agents, assignees agreed by the Main Contractor and the legal successors
in title to this or these person(s).]]
Subcontractors Documents means all physical documents, software and any other
form of recording and transferring of information submitted by the Subcontractor under this
Subcontract to the Main Contractor, including, without limitation, the construction
documents, operation and maintenance manuals and as-built drawings, all as specified in
this Subcontract, or, if there is no such specification, as may be identified by referring to the
requirements of Article 33.
Subcontractors Equipment means the Equipment provided by the Subcontractor for
the Subcontract Works and/or as may be set out in an Appendix.
Subcontractors Personnel means physical persons in the employ of or seconded to
the Subcontractor and acting for it, or other persons authorised to act for the Subcontractor
in relation to the Subcontract Works.
Subcontractors Variation Proposal has the meaning set out in Article 35.9.
Subcontractual Performance means the performance levels of the Subcontract Works
(if any) that are guaranteed by the Subcontractor to be achieved during the Performance
Tests as may be set out in an Appendix to this Subcontract.
Taking-Over or Provisional Acceptance means the moment when the Subcontract
Works are or are deemed to be provisionally accepted by the Main Contractor under Article
47. Taking-Over or Provisional Acceptance can be accomplished by Section, if the Parties
agree, or will occur in fact if the Main Contractor or Employer (or persons acting on eithers
behalf) actually takes possession of Sections of the Subcontract Works.
Taking-Over Certificate means the Certificate(s) issued under Article 47.
Taking-Over Conditions has the meaning set forth in Article 47.2.

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Temporary Subcontract Works means all temporary works of any type needed at the
Site for the construction and/or completion of the Subcontract Works and the remedying of
any Defects to them.
Tender means the Subcontractors tender (Subcontractors offer to execute the
Subcontract Works) and any additions or modifications to that document or its appendices.
Time Schedule means the schedule provided for under Article 38.4 and which forms an
Appendix hereto.
Time to Taking-Over means the number of Days the Subcontractor has to achieve
Taking-Over of the Subcontract Works or particular Sections of the Subcontract Works, as
this time may be amended in accordance with the Subcontract.
Variation includes any change to the Project or Subcontract Works, or their location, or
the time in which they or any part of them are to be constructed, including, without
limitation, any change to the type, form or composition of materials to be used, sequence(s)
or timing of construction, performance or other specifications, or any changes relating to
the Design.
VAT/GST means the local consumption tax charged on any goods and/or services
(usually described as a percentage of the selling price) howsoever described.

Article 2
2.1

Entry into force of the Subcontract/Flowdown Agreed 18 mai 2010

This Subcontract shall enter into force and be binding on the Parties on the Date it is
signed (the Subcontract Date). The responsibility for, and expense of stamp duties and
similar charges (if any) imposed by law in connection with the signature of this Subcontract
shall be borne by the Main Contractor.5

Incorporation (Flow Down) of the Main Contract

2.2

So the Parties better understand the extent of their obligations, all of the provisions of the
Main Contract, including the dispute resolution provisions 6, unless expressly modified in
this Subcontract, are fully incorporated into this Subcontract as if fully written here. The
Subcontractor expressly confirms that it is bound to follow and give effect to the Main
Contract provisions. Where the context requires it, the description of the Main Contractor in
the Main Contract shall be read as the Subcontractor in this agreement, and the description
of the employer or owner/developer in the Main Contract shall be read as a description of
the Main Contractor in this Subcontract.

Exceptions to Flow-Down
2.3
The following matters as dealt with in the Main Contract are not, unless otherwise agreed,
5 This Article deals with the entry into force of the Subcontract, thus, for some purposes, the Subcontract is in effect the dispute
resolution provisions, for example, will be operative. This Article does not deal with the Start Date, and readers should go to those
provisions at Articles 36.2 and 36.3 to determine the beginning of the Time to Taking-Over.

6 Users should verify with local counsel whether other provisions of Main Contract

need to be explicitly mentioned to be incorporated

under the relevant/applicable law.

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included in this Subcontract:

a.
The price of the Works or price of variations/changes to them at the
Main Contract/Employer level;
b.

Insurance; or

c.

The Time to Taking-Over of the Subcontract Works.

[ASSIGNMENT - JOSE to add to this list but perhaps not yet (18 may 2010). FIDIC
excludes much more query why?]
Recording Direct Instructions from the Employer or the Employers Representative
2.4

Should the Employer or the Employers Representative give an oral or written instruction
directly to the Subcontractor, the Subcontractor shall as soon as reasonably possible
record the instruction in writing and provide a copy of such instruction to the Main
Contractor and Employer. The Main Contractor shall without any delay, but not later than
fifteen (15) Days from the Subcontractors notice, either confirm, amend or reject such
direct instruction in writing. Where the Main Contractor confirms or amends the Employers
or the Employers Representatives direct instruction, such confirmed or amended direct
instruction shall be deemed a Main Contractors Instruction. If the Main Contractor does not
confirm, amend or reject the Employers direct instruction, the Subcontractor shall not
follow the instruction. If the Instruction constitutes a Variation, Article 35 shall apply.

2.5

Unless otherwise agreed, if these Conditions of Subcontract treat subject matter also
treated in a provision of the Main Contract Conditions, the provision of the Conditions of
Subcontract takes precedence over the corresponding Main Contract provision.

Article 3

Good faith and fair dealing Agreed 18 mai 2010

3.1

In carrying out their obligations under this Subcontract the Parties will act in accordance
with the principles of good faith and fair dealing. The provisions of this Subcontract, as well
as any statements made by the Parties in connection with it, shall be interpreted in
accordance with the principles of good faith and fair dealing.

3.2

Good faith and fair dealing in this context includes, without limiting this duty, the duty to cooperate, not to intentionally mislead, and to carry out the Subcontract to the mutual benefit
of both Parties, accepting that each is entitled to achieve its reasonable objectives, and
requires the Parties to:
(a)

share information relevant to the other Party, subject only to obligations of

confidentiality;

(b)

co-operate and consult in such manner as necessary to achieve the completion of the
Subcontract Works;

(c)

warn of the potential consequences, including cost consequences, of proposed

actions;

(d)

avoid unnecessary interference in each others activities; and

(e)

respond to enquiries in a timely manner, which, if possible, will not impede the
progress of the Subcontract Works.

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3.3

Whenever consultation is required by this Subcontract, it means there shall be a direct

exchange of opinions prior to any final decisions being taken about the matter requiring
consultation.

Article 4

Language of the Subcontract Agreed 18 may 2010

4.1

Unless otherwise agreed, the ruling language of this Subcontract and any disputes or
differences decided in relation to it, is the language of the Main Contract.

4.2

Unless otherwise agreed, the language and communication provisions of the Main Contract
shall apply.

Article 5

Applicable laws (Agreed 18 may 2010)

Governing substantive law

5.1

This Subcontract shall be governed by and construed in accordance with the law(s) agreed
by the Parties in Appendix 1, Schedule of Subcontractual Amendments 7. In the absence of
such agreement, this Subcontract shall be governed by and construed in accordance with
the law(s) of the Main Contract. In the absence of a governing law stated in the Main
Contract, the governing law will be the law of the Country. Such choice of law shall refer
only to substantive law and shall not include its procedural or conflict-of-laws rules.

Laws and regulations of the Country

5.2

The Parties shall, in performing the Subcontract, comply with all laws in force in the
Country that must be observed by those who perform activities in the Country (such as, for
instance, safety measures, exchange control limitations, etc.)8.

Article 6

New or changed laws, standards, regulations, etc. Agreed 18 may 2010

6.1

If there is a change of applicable laws, regulations, standards, internal procedures or their

interpretation after the Reference Date, which affects the performance of the Subcontract,
each Party shall give notice to the other.

6.2

In the event that:

(a)

compliance is required, and

(b)

compliance affects the Cost of the Subcontract Works and/or the time of execution of
the Subcontract Works

the Subcontractor shall be entitled to a Variation and the corresponding effect in time and
Cost shall be taken into account in the time and Cost provisions herein, with certification of
any additional or reduced Costs as early as possible.

The laws of another jurisdiction are chosen sometimes for reasons of impartiality and certainty. Before choosing the law of a
given country, parties should check if the provisions of this model contract conform with such law. Many countries have
mandatory laws that apply because of the location of the works.

8 Unless Parties agree that the Main Contractor should provide information about laws that may affect the performance of the
Subcontract Works, the Subcontractor should verify in advance which laws might affect its performance.

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Article 7
7.1

7.2

Interpretation of the Subcontract Agreed 18 may 2010

The documents forming the Subcontract are to be read together and interpreted as
mutually explanatory of one another. If there is a direct inconsistency in specific
obligations, then for the purposes of interpretation, and unless otherwise agreed, the
priority of the Subcontract documents shall be in accordance with the following sequence:
(1)

The Subcontract Form and the Schedule of Subcontractual Amendments;

(2)

The Conditions of Subcontract,

(3)

The Appendices (if any) (excluding the Schedule of Subcontractual Amendments);

(4)

The Main Contractors Requirements;

(5)

The Employers Requirements;

(6)

The Tender;

(7)

The Assumptions (if any); and

(8)

Any other documents forming part of the Subcontract.

The higher priority interpretation shall be adopted only to the extent required to deal with an
inconsistency. Specific terms agreed take priority over general statements, and terms in
Subcontract documents created at a later Date govern over terms in earlier Subcontract
documents. Subject to the foregoing, the terms of the groups of documents set out in
Article 7.1 all have equal importance within their group.

Article 8
Assumptions; statements about distances, measures, dimensions and
quantities Agreed 18 may 2010
8.1

If either Party does not accept an Assumption of the other Party or wishes to have it varied,
it must indicate this in writing to the other Party, specifically identifying which Assumption it
does not accept, prior to signature of the Subcontract. Disagreement notified after the
signature of the Subcontract will not be taken into account (e.g. in relation to Costs or
assessment of extensions of the Time to Taking-Over), unless otherwise agreed.

8.2

It is agreed that when either Party states or has stated distances, dimensions, strengths,
qualities, quantities or volumes, these statements or figures are taken as statements of
fact. Each Party must make reasonable efforts to ensure that the statement is accurate.

Article 9

Obtaining permits, planning and other permissions Agreed 18 mai 2010

Unless otherwise agreed, each Party shall obtain at its own expense all permits,
licences or
approvals from all local, state/provincial or national government authorities
or public service undertakings, which are required to be obtained by it in its name and
which are necessary for the execution of the Subcontract Works9.
2. Each Party shall, at the request of the other Party, assist the other Party in a timely
and effective manner in obtaining permits, licences or approvals, which are required for the
performance of any part of the Subcontract Works.
1.

The Parties may list in an Appendix the permits, licences or approvals from all local, state/provincial or national government
authorities or public services, to be obtained for the execution of the Subcontract Works. The list should specify the Party that will obtain
the permit, licence or approval.

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Article 10Guarantees, bonds or other securities Agreed 18 may 2010

10.1

The purpose of Bonds, bank guarantees, letters of credit and/or Advance Payment
Guarantee(s) (if any) to be provided by the Parties is to guarantee and secure the
obligations of the delivering party. To the extent provided in the Schedule of Subcontractual
Amendments or elsewhere in the Subcontract, each Party shall provide (at its own
expense) the guarantee(s), bonds or other securities required under the Subcontract.

10.2

Unless otherwise agreed, each Party shall deliver any guarantee(s), bonds or other
securities to the other Party within 28 Days after the Subcontract Date. Each such security
shall be issued by an entity and from within a country (or other jurisdiction) acceptable to
the other Party, and shall be in the form set out in an Appendix to this Subcontract (if any),
or as otherwise agreed by the Parties.

Article 11
2010

Demands under guarantees, bonds or other securities Agreed 18 may

11.1

Neither Party shall make a claim under any guarantee, bond or other security, however
described, unless there has been a decision in accordance with Chapter 13 specifying the
amounts to which they are entitled under the Subcontract, or for its breach.

11.2

Each Party hereby indemnifies and holds the other Party harmless for all damages, losses
and expenses (including legal fees and expenses) resulting from a claim under any
guarantee, bond or other security to the extent to which the Party making such claim was
not entitled to make the claim or the value of the claim exceeded the Partys proper
entitlement.

11.3

Unless otherwise agreed, each Party shall return the guarantee(s), bonds or other
securities to the other Party within 21 Days after the security expires, and/or when the
Subcontractor has become entitled to receive the Final Certificate. In any event, all
securities howsoever described will include or be deemed by the Parties to include a term
that they are to become invalid, null and void on the Date that they should have been
returned, whether returned or not.

11.4

To the extent that either Party holds funds or securities to which the other Party or a third
party is or will become beneficially entitled, the Party holding the funds hereby agrees it
does so as trustee, for the benefit of the other Party or the third party.

Article 12

No agency independent contractor Agreed 18 may 2010

12.1

The Parties agree that neither Party will perform any act or make any statement to any
person to the effect that it is acting or has acted under this Subcontract as agent for the
other Party.

12.2

The Subcontractor shall be an independent contractor with respect to the Project, each of
its parts, and the Subcontract Works, and neither the Subcontractor nor its other
subcontractors nor the employees of either shall be deemed to be agents, representatives,
employees or servants of the Main Contractor or Employer in the performance of the
Subcontract Works, or any part thereof, or in any manner dealt with herein.

12.3

Nothing in this Subcontract creates a contractual relationship between the Subcontractor

and the Employer.

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CHAPTER 2
THE PARTIES' OBLIGATIONS
Article 13

The Main Contractors obligations

13.1

This Subcontract is a reciprocal contract with each Party owing obligations to the other
Party.

13.2

The Main Contractors responsibilities include the obligation to pay the Subcontract Price
and to co-operate, in good faith, with the Subcontractor in order to enable it to perform its
duties, as set out in this Subcontract, and not to hinder or delay the Subcontractor in the
Subcontractors performance of the Subcontract Works.

Providing the Site

13.3

The Main Contractor shall be responsible, to the extent necessary for the purposes of the
Subcontract Works, for acquiring and providing legal and physical possession of the Site
(or Sections of it) and access thereto, and providing possession and use of and access to
all areas reasonably required for the proper execution of the Subcontract Works by the
Subcontractor, including all requisite rights of way and access routes in accordance, if
applicable, with the Appendices and other terms of the Subcontract and shall give all rights
of access thereto on or before the Date or Dates set out in this Subcontract, or, if there are
no such Dates, the reasonable Dates upon which the Subcontractor reasonably notifies the
Main Contractor they are required.

13.4

Unless otherwise agreed, the possession is not to be hindered by the Main Contractor or
other contractors associated with the Main Contractor and/or the Project. If the
Subcontractor suffers delay and/or incurs Cost from failure on the part of the Main
Contractor to acquire and provide such legal and physical possession of, and/or right of
access to, the Site or Sections of it and all other areas reasonably required, the
Subcontractor shall give notice to the Main Contractor. The Main Contractor shall proceed
to consult with the Subcontractor to agree an appropriate extension or extensions of the
Time to Taking-Over and/or a fair addition to the Subcontract Price and shall notify the
Subcontractor accordingly.

Article 14
14.1

The Subcontractors obligations (Agreed 18 May 2010)

The Subcontractor shall, with due diligence, perform and complete the Subcontract Works,
and shall remedy any Defects in the Subcontract Works in accordance with the
Subcontract. When completed, the Subcontract Works shall be fit for the purposes for
which the Subcontract Works are intended as specifically defined in the Subcontract.

Access to the Subcontract Works

14.2 The Subcontractor shall permit the Main Contractors Personnel to have access at all
reasonable times to examine, inspect, measure and test the materials and workmanship, and
to check the progress of the Subcontract Works at the Site or elsewhere. The Main
Contractor shall also have access to the places where the materials or Equipment for the
Subcontract Works are located. This access shall not disturb the progress of the Subcontract

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Works. Each party shall bear its own costs.

1.
The Subcontractor shall in accordance with the Subcontract provide all
superintendence, labour, services, Plant, materials, Subcontractor's Equipment, Temporary
Subcontract Works and all other things, whether of a temporary or permanent nature,
required in and for such design, procurement, supply, execution, commissioning, testing and
Completion of the Subcontract Works and dealing with any Defects therein.
2.

Unless otherwise agreed, the possession of its part of the Site is not to be hindered by the
Subcontractor or other contractors associated with the Main Contractor and/or the Project. If
the Main Contractor suffers delay and/or incurs Cost from failure on the part of the Main
Contractor to acquire and provide such legal and physical possession of, and/or right of
access to, the Site or Sections of it and all other areas reasonably required, the Main
Contractor shall give Notice to the Main Contractor. [(TO associate itself with 13.4) NOTE:
EOC question of 8 July: What does this mean?]

Article 15 Co-operation with other contractors and co-ordination of activities

Agreed 18 may 2010
15.1

The Subcontractor shall be responsible for its own [construction activities] on the Site, and
the adequacy and stability of its Site operations, including Temporary Subcontract Works it
constructs. It shall co-ordinate at its own expense its activities with those of other
contractors to the extent (if any) specified in the Employers Requirements.

15.2

The Subcontractor shall, as specified elsewhere in the Subcontract or as reasonably

requested or instructed by the Main Contractor and where it does not disrupt the
Subcontractors own work, allow appropriate opportunities for carrying out work to:
(a)

the Main Contractors or Employers Personnel;

(b)

any other contractors employed by the Main Contractor; and

(c)

the personnel of any public authorities;

who may be employed in the execution on or near the Site of any work not included in the
Subcontract.
1.
Any further request or instruction from the Main Contractor for co-operation shall
give an entitlement to an extension of the Time to Taking-Over and, if additional expense
is involved, a Variation.

To the extent that the Subcontractor obstructs or hinders the activities of other parties on
the Site and such obstruction or hindrance is not in accordance with the Subcontract and
causes the Main Contractor to incur additional Costs, then the Subcontractor shall
indemnify the MC for such Costs.

Article 16
16.1

Quality assurance (Agreed 18 mai 2010)

The Subcontractor shall comply with the quality assurance systems implemented by the
Main Contract and Subcontract. If there are no such systems, the Subcontractor shall
implement a system that is appropriate for the Works and in the Country.

[ASSIGNMENT -: JOSE to look in connection with flowdown inquiry. Problems in, among others?,
13, 15, 24.1]

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Article 17

Staff and labour AGREEDSTART 19 MAY 2010

Employment of Subcontractors staff and labour

17.1

Unless otherwise agreed, the Subcontractor shall be responsible for the employment of all
its staff and labour whether local or otherwise, for the purpose of executing the Subcontract
Works and the performance of the Subcontract and shall be responsible where relevant for
their payment, accommodation, supply of food and transport and any other matters
specified in this Subcontract.

17.2

The Subcontractor shall observe the conditions of labour, comply with all relevant labour
laws, including those relating to employment, working hours, health, safety, social welfare,
immigration and emigration that are relevant and applicable in the Country and shall pay its
staff and labour wages consistent with those established or, if not established, practised for
the trades and industries of the Country.

Facilities for staff and labour

17.4

The Subcontractor shall provide and maintain the facilities for its own staff and labour.

Health, welfare of staff and labour

17.6

The Subcontractor shall provide access to and maintain the health facilities specified in the
Subcontract (if any). Where there are no such facilities specified and no alternative
facilities available, the Subcontractor shall provide suitable facilities. The Parties shall
collaborate with local health authorities and shall take the necessary measures to ensure
the welfare, hygiene and prevention and control of epidemics of and amongst the
Subcontractors staff and labour.

Customs of the Country

17.7

Each Party shall have due regard and respect for religious practices, days of rest and other
recognized customs of the Country.

Disruptive conduct
17.8

Each Party shall be responsible for taking all reasonable measures to prevent unlawful,
riotous or disruptive conduct amongst its staff and labour. [NOTE: Main Contract 17.9 flows
down.]

Article 18

Representatives of the Parties Agreed 19 May 2010

18.1

Each Party shall appoint a Representative within seven Days of the Subcontract Date by
notice to the other Party. Neither Party shall change its Representative without giving
reasonable Notice.

18.2

The Parties Representatives shall each have the appropriate professional qualifications or
experience necessary for each of them to carry out their duties and exercise the authority
specified in or required of them under the Subcontract in a competent and professional
manner.

18.3

The Parties Representatives shall, unless parts of their authority are specifically reserved
in advance in writing by the Party concerned, be deemed to have been given full authority
for all of their actions under the Subcontract and any such actions shall be binding on the

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Party that employs them.

18.4

The Parties Representatives may from time to time assign duties and delegate authority
vested in them under the Subcontract to assistants (including if necessary Site
Representatives) employed by the Party for the purpose of the Subcontract and may at any
time revoke such assignment or delegation. Such assignment, delegation and revocation
shall be confirmed, if requested, by notice to the other Party with a copy to the other Partys
Representative. Unless otherwise stated in advance and in writing, such duties and
authorities carried out and/or exercised by such assistants shall be deemed to have been
carried out and/or exercised by the Partys Representative.

Article 19

Each Partys duty to notify Agreed 19 May 2010

19.1

Without prejudice to the scope of Article 3, each Party shall take reasonable care in the
circumstances to review the scope of its work, the other Partys documents and the Main
Contractors Requirements and the Employers Requirements prior to the Start Date and
thereafter as circumstances require until Taking-Over. Each Party shall give prompt notice
to the other Party of any error, fault or other Defect found in the other Party's documents or
any other items of reference supplied by the other Party. In the event that such error, fault
or other Defect involves a change or modification to the Subcontractors Documents or the
Subcontract Works, the provisions of Article 35 shall be applied as necessary.

19.2

Save for the duty to notify, the Subcontractor shall not be liable for any errors, faults or
Defects in the Main Contractors Requirements and the Employers Requirements or any
other Design or documents supplied or specified by the Main Contractor. Similarly, the
Main Contractor shall not be liable for any errors, faults or Defects in the Subcontractors
Documents or work.

CHAPTER 3
THE EXECUTION OF THE SUBCONTRACT
Article 20
2010

Scope of the Subcontract Works and Subcontract Price Agreed 19 May

20.1

Both Parties confirm that the Subcontract sets out the whole of the scope of Subcontract
Works of the Subcontractor and the Subcontract Price. Unless otherwise agreed, the
Subcontractor has no role in the financing of the Subcontract Works.

20.2

Separate agreements may be made at any time for construction of other works or matters
not covered by the scope of this Subcontract.

Article 21
21.1

Setting out on the Site Agreed 19 May 2010

The Subcontractor shall set out the Subcontract Works in relation to original points, lines
and levels of reference set out in an Appendix (if any) or, if not so specified, given by the
Main Contractor, or otherwise as agreed in writing as soon as reasonably possible but in
any case not later than within 21 Days of the Start Date.

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21.2

Unless otherwise agreed, errors in setting out or failure to provide accurate set-out data
that affect the performance of the Subcontract Works will be rectified at the cost of the
Party that made the error. If appropriate, the Subcontractor will be entitled to an extension
of the Time to Taking Over.

Article 22
May

Site information for the Subcontractors Design and use Agreed 19

22.1

The Subcontractor should have informed itself in an objectively reasonable way about the
risks it will face.

22.2

In order to allow the Subcontractor to be acquainted with the potential risks for the
executing of the Subcontract Works at the Site, it shall be the Main Contractors
responsibility to pass on all surveys of the Site and its surroundings that it has, including
data on subsurface, hydrological and environmental aspects of the Site and environs, and
the Main Contractor at the time of calling for Tenders, or at least 28 Days prior to the
Reference Date, shall make all such data obtained from the Employer available to the
Subcontractor for its study and use. The Main Contractor shall similarly make available to
the Subcontractor all such data and other information relating to the Site and its
surroundings that is or later comes into the Main Contractors possession.

22.3

The Subcontractor shall be considered to have taken such data as made available to it in
accordance with Article 22.2 into account in pricing the Subcontract Works. The
Subcontractor shall further be considered to have entered into the Subcontract on the basis
of an objectively reasonable examination and interpretation of the data and information
relating to the Subcontract Works provided by the Main Contractor and of information that it
could have obtained from a visual inspection of the Site, if access to it was available.

22.4

The preceding Article 22.3 will not apply to sub-surface conditions except to the extent that
boreholes and similar information can be taken to be indicative of the quality of the subsurface materials and, if applicable, hydrological conditions at the place the borehole was
made.

Article 23
May

Unexpected artificial or physical conditions or obstructions Agreed 19

23.1

The Subcontractor shall notify the Main Contractor if, during the execution of the
Subcontract Works, it encounters on the Site any artificial or physical conditions or
obstructions (whether sub-surface or otherwise) that were not reasonably to be expected
prior to the submission of the Tender on the basis of the examination of data provided by
the Main Contractor under Article 22. If the Subcontractor has provided design or
construction Assumptions prior to or at Tender that include statements of the conditions it
expects, such Assumptions, to the extent they were not contradicted by the Main
Contractor prior to signing the Subcontract, will be presumed to be determinative of the
issue of whether or not the obstruction was expected.

23.2

If as a result of encountering on the Site any artificial or physical conditions or obstructions

(whether sub-surface or otherwise) the Subcontractor considers it will incur or has incurred
unexpected additional Cost or will require additional time to perform its obligations under
the Subcontract, it shall submit proposals to take account of the unexpected artificial or
physical conditions or obstructions encountered. If any re-design arising from such
proposals is such as to require a significant change in:

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(a)

the selected construction methods; and/or

(b)

the Design; and/or

(c)

resources; and/or

(d)

Temporary Subcontract Works;

the Main Contractor shall, after consulting the Subcontractor, by Notice determine the
appropriate Cost and/or time implications arising from changes to the Method Statement,
using the Method Statement and the Assumptions as the basis for such determination, and
provisionally adjust the Subcontract Price and/or revise the Time to Taking-Over
accordingly. These adjustments are binding unless and until the Subcontract Price and/or
the Time to Taking-Over are further revised by agreement or under Chapter 13.
Use of the Method Statement to determine the time or cost implications under this Article
23.3

23.4

Whenever required by the Main Contractor, or if it wishes on its own initiative to do so in

order to ascertain valuations and for assessments of time or cost under this Article 23, the
Subcontractor shall provide details to establish that:
(a)

the selected Design, construction methods, resources and/or Temporary Subcontract

Works and the Time Schedule were appropriate to the conditions envisaged in the
Assumptions (if any);

(b)

the change in the Design, construction methods, resources and/or Temporary

Subcontract Works is/was directly necessitated by the conditions encountered being
significantly different than the Assumptions; and

(c)

any revision to the Time Schedule and extension of the Time to Taking-Over sought is
directly necessitated by the conditions aforesaid.

Where, because of the circumstances surrounding the Subcontract, it is not possible or

practicable to follow the requirements of Articles 23.2 and 23.3, the Parties will endeavour
to agree on another appropriate methodology and decide the time and/or Cost implications
in any event.

Fossils, mineral deposits of economic interest and items of archaeological interest

23.5

All fossils, coins, mineral deposits of economic interest, articles of value or antiquity and
structures and other remains or items of geological or archaeological interest found on the
Site shall be placed under the care and authority of the Main Contractor who shall deal with
them in accordance with the law of the Country. The Subcontractor shall take reasonable
precautions to prevent Subcontractors Personnel or other persons from removing or
damaging any of these finds.

Article 24
24.1

Safety Agreed 19 May

To the extent and because the Subcontractor has possession of Sections of the Site, it has
responsibility for safety in those Sections. Accordingly, the Subcontractor shall:
(a)

comply with all applicable safety regulations, and if none are applicable, Good
Industry Practice;

(b)

take care for the safety of all persons entitled to be on Site, and not knowingly create
hazards for persons not entitled to be on its Section of the Site;

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(c)

use reasonable efforts to keep its Section of the Site and Subcontract Works clear of
unnecessary obstructions so as to avoid danger to all persons;

(d)

if necessary provide reasonable fencing and lighting, for the Subcontract Works until
Taking-Over; and

(e)

provide any Temporary Subcontract Works (including roadways, footways, guards and
fences) that may be necessary, because of the execution of the Subcontract Works,
for the use and protection of the public and of owners and occupiers of areas adjacent
to the Site.

ASSIGNMENT - ROBERT: 19 May 2010 thought of RK: delete (d) and (e) as MC
obligations, and write instead a new (d) that states if they are not provided by the MC
or Employer then to the extent they are necessary the Subcontractor will provide any
Temporary Subcontract Works (including roadways, footways, guards, lighting and
fences) that may be necessary, because of the execution of the Subcontract Works,
for the use and protection of the public and of owners and occupiers of areas adjacent
to the Site.]

Article 25
25.1

Public convenience Agreed 19 May

The Subcontractor shall not interfere unnecessarily or improperly with the convenience of
the public, or the access to and use and occupation of all roads and footpaths, irrespective
of whether they are public or in the possession of the Main Contractor or of others.

Article 26

Environmental protection Agreed 19 May 2010 subject to JD-E assignment

[ASSIGNMENT - JANE to consider hazards, relevance given changed environmental

climate. Sample language to be proposed.]
26.1

Prior to the issuance of the Taking-Over Certificate, the Parties shall take reasonable steps
not to damage the environment (either on or off the Site) or cause a nuisance to people or
property from pollution, noise or other results of its operations and will comply with the
applicable environmental legislation.10 If such problems seem likely to arise, the Parties will
seek guidance from the local authorities concerned. [ASSIGNMENT - JANE to draft
footnote: Parties may prepare a list of permits.]

26.2The Subcontractor shall not be responsible for any damage, nuisance or other effects to
people or property resulting from pollution, noise or any other consequence of pre-existing
conditions of the Site, or the activities of other contractors of the Main Contractor or third
parties.

26.3

The Parties are obliged to finally dispose of all waste, including but not limited to hazardous
waste and wastewater, that is generated during the development of the Works. This
disposal shall be carried out in accordance with the applicable regulations and in a fashion
that is consistent with international practices.

26.4

The Subcontractor is obliged to carry out the necessary activities to remove wastewater

10 It is advised that a study be carried out to determine whether or not the soil is polluted (a Phase I

study) before Subcontractor begins to carry out its activities, or that takes possession of the Site.

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generated during the development of the Works, in accordance with the Subcontract and
applicable law. The Main Contractor shall support, facilitate and support the Subcontractor
so it can comply with the applicable legislation.

Article 27
MAY 2010]
27.1

Services or supplies to be supplied by the Main Contractor [ Agreed 19

The Main Contractor shall be responsible for the provision of all power, water and other
services or supplies to the Site as set out in the Appendices or elsewhere in the
Subcontract. If no such supplies are specified, the Subcontractor will be responsible for
these supplies. Unless otherwise agreed, increases in the Costs to the Subcontractor for
such supplies and services after the Reference Date over and above the rate of inflation in
the Country will not be considered to have been included in the Subcontractors Tender.

Payment for services provided by the Main Contractor

27.2

If there are services supplied by the Main Contractor, the Subcontractor shall pay for these
at the prices set out in an Appendix (if any) and/or as stated elsewhere in the Subcontract.
If no price is stated, the price(s) shall be determined by a method to be agreed by the
Parties prior to the Start Date. The quantities consumed shall be determined by
agreement, and the Main Contractor shall include the amounts due as deductions in
Payment Certificates.

27.3

In the event that the Subcontractor is delayed or suffers extra Cost in its execution of the
Subcontract Works due to a failure or inadequacy in the supply of services from the Main
Contractor referred to in this Article 27, the additional Cost and any delay shall be treated
as a Variation.

27.4

The Subcontractor is not deemed to have included in its Tender the Costs of unusual
disruption to services. Unless otherwise agreed, unusual disruption means interruption of
supply for more than one hour in total per Day during working hours.

Article 28 Main Contractor/Employer-supplied Plant, materials or Equipment

Agreed 19 May 2010
28.1

The Main Contractor undertakes to provide, either by itself or by and on behalf of the
Employer, all goods, materials, Plant and Equipment, buildings and storage facilities
specified in the Subcontract in accordance with the provisions of the Subcontract. The Main
Contractor shall, at its risk and Cost, transport, or procure transport for, such items to the
Subcontractor or the Site, as the case may be, at the time and place specified in the
Subcontract, or upon agreement with the Subcontractor. Main Contractor-supplied goods,
materials or Plant and Equipment are offered as being fit for the purposes for which they
are intended.

28.2

The Parties undertake, as applicable, to operate the items of Plant and Equipment in
accordance with the details, arrangements and charges (if any) given in the Subcontract or
in accordance with Good Industry Practice. [NOTE: MC 28.2 and 28.3 flow down.]

Article 29
May 2010
29.1

Responsibility for shipping and storing goods and materials Agreed 19

Unless otherwise agreed, the Subcontractor shall be responsible for packing, loading,

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transporting, receiving, unloading, storing and protecting all goods and other things to be
supplied by or on its behalf and required for the Subcontract Works, and shall bear all
expenses associated with these activities.

Article 30 Ownership of goods, material, Plant and Equipment / liens, trusts and
similar claims [NOTE: Agreed 19 May as straight flow down of adopt MC language
adapted by EOC for 5-6 July meeting. Lost indemnity obligations elsewhere?]
Unless otherwise agreed and as between the Parties, all goods, materials, Plant and
Equipment supplied for incorporation of the Work by or on behalf of the Subcontractor
belong to the Subcontractor until they are incorporated or are paid for, whichever is earlier.
On incorporation or payment, the title to the goods, materials, Plant or Equipment is
transferred. . Temporary Subcontract Works and Subcontractors Equipment remain the
property of the Subcontractor. This Article 30.1 does not affect the passing of risk.
30.2

To the extent consistent with the laws of the Country, good title to all goods, materials, Plant
and Equipment provided by the Subcontractor hereunder, shall pass and vest free and
clear of any and all liens, claims, charges, security interests, encumbrances and rights of
other subcontractors..

30.3

Each Party warrants that prior to termination or the end of the Subcontract, it will not itself
or through its agents in any way prevent the other Party from dealing with the other Partys
own goods, materials, Plant or Equipment or levy execution against, place liens or trust
declarations on or otherwise encumber the goods, materials, Plant or Equipment or allow
any of their agents to levy execution against, place liens on or otherwise encumber the
goods, materials, Plant or Equipment wherever they may be found.

30.1

Unless otherwise agreed and as between the Parties, all goods, materials, Plant and
Equipment supplied hereunder by or on behalf of the Subcontractor belong to the
Subcontractor until they are incorporated into the Subcontract Works, or are paid for,
whichever is earlier. On incorporation or payment, the title to the goods, materials, Plant or
Equipment is transferred to the Main Contractor [EOC NOTE: or Employer?]. Temporary
Subcontract Works and Subcontractors Equipment remain the property of the
Subcontractor. This Article 30.1 does not affect the passing of risk.

30.2

The Subcontractor warrants good title to all goods, materials, Plant and Equipment
provided by it hereunder, and Subcontractor warrants that title and ownership thereto shall
pass and vest in Main Contractor [EOC NOTE: or Employer?] as described in Article 30.1
free and clear of any and all liens, claims, charges, security interests, encumbrances and
rights of other Subcontractors. In case of breach of this warranty, the Subcontractor shall
indemnify the Main Contractor [EOC NOTE: or Employer?] against all claims resulting from
such breach. In such case, Articles 34.9 through 34.11 shall apply accordingly, with the
necessary changes being made.

30.3

Each Party warrants that prior to termination or the end of the Subcontract, it will not itself
or through its agents in any way prevent the other Party from dealing with the other Partys
own goods, materials, Plant or Equipment [EOC NOTE: Definition of Equipment seems to
be limited to that of Subcontractor] or levy execution against, place liens or trust
declarations on or otherwise encumber the goods, materials, Plant or Equipment or allow
any of their agents to levy execution against, place liens on or otherwise encumber the
goods, materials, Plant or Equipment wherever they may be found.

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Article 31

Keeping the Site clear Agreed 19 May

31.1

During the course of the Subcontract Works, the Subcontractor shall clear away and
remove from the Site any wreckage, rubbish, Temporary Subcontract Works or material no
longer required.

31.2

Upon the issue of any Taking Over Certificate, the Subcontractor shall clear away and
remove from that part of the Site to which such Taking-Over Certificate refers, all
Subcontractor's Equipment, surplus material, wreckage, rubbish and Temporary
Subcontract Works. The Subcontractor shall leave these parts of the Site and the
Subcontract Works in a clean and safe condition.

During the course of the Subcontract Works, the Subcontractor shall clear away and remove from
the Site any wreckage, rubbish, Temporary Subcontract Works or material no longer
required.
31.2

Upon the issue of any Taking-Over Certificate, the Subcontractor shall clear away and
remove from that part of the Site to which such Taking-Over Certificate refers, all
Subcontractors Equipment, surplus material, wreckage, rubbish and Temporary
Subcontract Works. The Subcontractor shall leave these parts of the Site and the Works in
a clean and safe condition.

CHAPTER 4
DESIGN - RESPONSIBILITY AND MANAGEMENT, VARIATIONS
Article 32 General allocation of responsibility of the Parties for the Design Agreed
19 May 2010
32.1

Each Party shall be responsible for the elements of Design allocated to that Party in the
Subcontract.

32.2

The Main Contractor shall provide and be responsible for any information reasonably
required by the Subcontractor for the purposes of the Subcontractors development of any
design allocated to it in the Subcontract and the Main Contractors Requirements, Design
allocated to the Main Contractor, materials or Plant that it specifies or requires, or for which
there is no practical alternative.. The Subcontractor is responsible for the Tender, and all
Design, goods, materials, Plant and Equipment it supplies and uses.

32.3

Without limiting the generality of Article 32.2, each Party shall be responsible for the
correctness of the data and information provided by (or on behalf of) that Party, including,
without limitation:

32.4

(a)

definitions of intended purposes of the Subcontract Works or any Section of them;

(b)

parameters for the testing and performance of the Subcontract Works;

(c)

measurements, data and information that cannot be reasonably verified by the other
Party, having regard to Costs and time; and

(d)

any Design supplied by any other subcontractor of the Party or by the Party itself.

Unless otherwise agreed or is reasonable in the circumstances, the Subcontractor shall

carry out, and in accordance with the Contract be responsible for, the development of the

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Design that is allocated to it. The Main Contractor shall have the right to be informed of the
Design development.
32.5

The Subcontractor holds itself, its designers and design subcontractors as having the
experience and capability necessary for the Design allocated to it. The Subcontractor
undertakes that the designers shall be available to attend discussions with the Main
Contractor at all reasonable times during the Subcontract.

Article 33 The Design review process [Finally agreed 5 July 2010)

ASSIGNMENT FOLLOW-UP - JENS: Remind us why addition of indemnity in 33.10 in
July 2009?
33.1

The purpose of these Design elaboration and review provisions is to ensure that Design
development is orderly and that the Parties rights and responsibilities are clearly set out.
The Main Contractor has an interest in seeing the Subcontract Works performed at the
initially agreed Subcontract Price, and the Subcontractor has an interest in performing the
Subcontract Works in an efficient fashion at a budget within the range originally intended.
The following provisions are to be interpreted with these objectives in mind. They will apply
unless it has been expressly stated in the Subcontract or otherwise agreed that they are
not to apply.

Documents the Subcontractor is to prepare

33.2

The Subcontractor shall prepare all Subcontractors Documents. Unless otherwise stated in
the Subcontract or allowed on a case-by-case basis, the Subcontractors Documents shall
be written in the ruling language. The Subcontractors Documents shall comprise the
technical documents specified in the Subcontract, documents required to satisfy all
regulatory approvals, and the documents described below in the Articles relating to as-built
documents and operation and maintenance manuals.

33.3

The Subcontractor shall also prepare any other documents necessary to instruct the
Subcontractors Personnel.

Submission of specified Design documents

33.4

If the Subcontract describes the Subcontractors Documents that are to be submitted to the
Main Contractor for review, they shall be submitted accordingly. The Subcontractor is
required to submit only those Documents that are specified as requiring review.

Review period
33.5

Unless otherwise agreed, each review period shall not exceed 35 Days, calculated from the
Date on which the Main Contractor receives Subcontractors Documents stated to be ready
for review in accordance with this Article 33. If the Subcontractor is not notified of a
Subcontractor's Document's review status within the review period, such document is
deemed to have been reviewed by the Main Contractor and approved.

Main Contractor notices in respect of alleged non-compliant Design

33.6

If the Subcontractors Documents are acceptable to the Main Contractor, they will be
returned marked Reviewed by the Main Contractor with the Date noted. The Main
Contractor may, within the review period, give Notice to the Subcontractor that a

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Subcontractors Document fails (to the extent stated and as identified) to comply with the
Subcontract. If the Subcontractor receives such Notice and the Subcontractors Document
does in fact fail to comply with the Subcontract, it shall be rectified and resubmitted for
review again in accordance with this Article 33.
Variations to compliant Design
33.7

The Main Contractor may instruct material changes to the Subcontractors Documents
even if the Subcontractors Document complies with the Subcontract. If the Subcontractor
considers the change to be a Variation, the Subcontractor shall notify the Main Contractor
and the Variation provisions of Article 35 will apply.

Work before review

33.8

In principle and unless otherwise agreed between the Parties or instructed by the Main
Contractor, no work should commence before the end of the relevant review period for
Subcontractors Documents to which the work applies. If the Subcontractor chooses to
commence work in respect of matters described in such Subcontractors Documents
without review, or prior to the end of the review period, such work is done at the
Subcontractors own risk.

Contractor changes to Design

33.9

If the Subcontractor wishes to modify any Subcontractors Document that has previously
been submitted for review, the Subcontractor shall immediately give Notice to the Main
Contractor. Thereafter, the Subcontractor shall submit revised Subcontractors Documents
to the Main Contractor in accordance with the review procedure pursuant to this Article 33.

Design errors
33.10 If errors, omissions, ambiguities, inconsistencies, inadequacies or other Defects are found
in the Subcontractors Documents at any time by any party, they and the Subcontract
Works shall be corrected by the Subcontractor at the Subcontractors expense,
notwithstanding any review under this Article 33. Where because of errors, omissions,
ambiguities, inconsistencies, inadequacies or other Defects in the Subcontractors
Documents the Main Contractors other contractors and/or consortium partners have to
rework or correct any of their works, design and/or any other documents, then the
Subcontractor shall further hold the Main Contractor harmless against and indemnify the
Main Contractor from any additional Cost that the Main Contractor incurs or will incur in
connection with such rework or correction by his respective other contractors and/or
consortium partners. Any such liability for any such error, omission, ambiguity,
inconsistency, inadequacy or other Defect shall be subject to the limitations under Articles
52.4 to 52.6.

Samples
33.11 If agreed between the Parties or instructed by the Main Contractor as a Variation, the
Subcontractor shall submit samples and relevant information to the Main Contractor for pre
construction review. Each sample should be labelled with its origin and intended use in the
Works.
As-built drawings

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33.12 The Subcontractor shall prepare, and keep up-to-date, a complete set of records of the
execution of the Subcontract Works, showing the exact as-built locations, sizes and details
of the Subcontract Works as executed. A preliminary copy shall be supplied to the Main
Contractor in sufficient time before Taking-Over.
33.13 In addition, the Subcontractor shall supply to the Main Contractor on a Date as set out in
the Schedule of Subcontractual Amendments (or to be agreed between the Parties) the
final as-built drawings of the Subcontract Works, if they are different from the documents
described in Article 33.12, showing all Subcontract Works as executed.
Training and operation and maintenance manuals
33.14 The Subcontractor shall carry out the training of Employers Personnel or such other
personnel as specified in the Main Contract in the operation and maintenance of the
Subcontract Works to the extent specified in the Subcontract.
33.15 Any training in addition to training specified in the Subcontract shall be considered to be a
Variation.
33.16 In sufficient time but in any event not later thanAt least four months prior to Taking-Over of
the Works (or the respective Section) under the Main Contract, unless otherwise agreed,
the Subcontractor shall supply to the Main Contractor preliminary operation and
maintenance manuals in sufficient detail for the Main Contractor and/or Employer to
operate and maintain the Subcontract Works according to the Main Contractors
Requirements and Employers Requirements.
33.17 Final operation and maintenance manuals will be handed over on a Date to be agreed
between the Parties.

Article 34

Intellectual property rights Agreed 5 July

[ASSIGNMENT: Maya to incorporate FIDIC 2.6 ]

34.1

As between the Parties, the Subcontractor shall retain the copyright and other intellectual
property rights in the Subcontractors Documents and other Design documents made by (or
on behalf of) the Subcontractor.

34.2

Subject to the confidentiality obligations of Article 59, the Subcontractor shall be deemed
(by signing the Subcontract) to give to the Employer, the Main Contractor as well as the
operator employed by or on behalf of the Employer a non-terminable, transferable, nonexclusive and royalty-free right to copy, use and communicate the Subcontractors
Documents for the purposes set out in Article 34.3 but not for any other purpose. The value
of the fee for this right is included in the Subcontract Price.

34.3

The right shall:

(a)

apply throughout the actual or intended working life (whichever is longer) of the
relevant parts of the Subcontract Works;

(b)

entitle any person in proper possession of the relevant part of the Subcontract Works
to copy, use and communicate the Subcontractors Documents for the purposes of
completing, operating, maintaining, adjusting, repairing or demolishing the
Subcontract Works; and

(c)

in the case of Subcontractors Documents that are in the form of computer programs

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and other software, permit their use in object code on any computer on the Site and
other places as envisaged by the Subcontract, up to the maximum number of
computers stated in the Subcontract, including replacements of any computers. The
Employer and the Main Contractor each are entitled to make copies of such software
for back-up purposes.
34.4

The Subcontractors Documents and other Design documents made by (or on behalf of)
the Subcontractor shall not, without the Subcontractors consent, be used, copied or
communicated to a third party by (or on behalf of) the Main Contractor for purposes other
than those permitted under this Article 34.

34.5

The Subcontract Works may contain freeware, shareware or open source software for the
use of which no licence fee is charged to Main Contractor. Regarding such portions of
software, the Main Contractor hereby accepts the specific licence conditions either being
part of the software documentation or accompanying the hardware. Upon request of the
Main Contractor, the Subcontractor is prepared to provide a copy of the source code of the
open source software, if required by the specific licence conditions. To the extent there is a
conflict between this Subcontract and the specific licence conditions, the terms of the
specific licence conditions shall prevail over the terms and conditions of this Subcontract
with regard to the open source software.

34.6

As between the Parties, the Main Contractor shall retain the copyright and other intellectual
property rights in the Main Contractors Requirements and other documents made by (or on
behalf of) the Main Contractor. The Subcontractor may, at its expense, copy, use, and
obtain communication of these documents for the purposes of the Subcontract. They shall
not, without the Main Contractors consent, be copied, used or communicated to a third
party by the Subcontractor, except as necessary for the purposes of the Subcontract.

Intellectual property infringement indemnity by the Parties

34.7

The Subcontractor shall indemnify the Main Contractor against all claims of infringement of
any patent, registered design, copyright, trade mark or trade name, or other intellectual
property right, if the claim or proceedings arose out of the Design, construction,
manufacture or use of the Subcontract Works, unless the infringement (or allegation of
infringement):
(a)

was the result of part (or all) of the Subcontract Works being used for a purpose other
than that indicated by, or reasonably to be inferred from, the Subcontract; and/or

(b) was the direct result of the Subcontractors compliance with the Design or Instructions
of the Main Contractor.

34.8

The obligation to indemnify set out in Article 34.7 shall be subject to the Subcontractors
right to mitigate the potential loss by acquiring directly or indirectly the right to use the
relevant intellectual property rights.

34.9

The Parties remedies under this Article 34 shall be in place of and to the exclusion of any
other remedies in relation to any infringement of any intellectual property rights as
described in this Article.

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Notification and handling of claims for infringement

34.10 The Main Contractor shall promptly notify the Subcontractor of any Subcontract-related
claim of infringement of intellectual property rights made against it by the Employer or any
other third party. The Subcontractor may, at its expense, conduct negotiations for the
settlement of such claim, and any litigation or arbitration that may arise from it. The Main
Contractor or its representatives shall not make any admission that might be prejudicial to
the Subcontractor, unless the Subcontractor has failed to take over the conduct of the
negotiations, litigation or arbitration within a reasonable time after having been requested
so to do. [NOTE: Machoy 22 Sept 2009: provide for termination right in Article 57.10 [5 July
note 57.11 instead] if ip-infringement cannot be settled satisfactorily within reasonable
time but not later than 2 months after the claim against the Subcontractor. 5 July 2010
concern: does giving time-triggered termination right open the door for vexatious [blackmail]
claims where Subcontractor is wholly innocent and may be forced to pay claimant off to
keep K in force?]
34.11 If Notice is given of a violation of an intellectual property right that prevents performance of
the Subcontract Works and one that the Subcontractor is unable to resolve pursuant to this
[clause/article], then [the Parties/S and MC] must meet without delay and make all
reasonable efforts to find a solution satisfactory to both [Parties] within 2 months. If,
however, subsequent to such efforts, (i) the Subcontractor continues to be unable to
perform the Subcontract Works, (ii) the Subcontractor has taken all reasonable steps to
resolve the violation, and (iii) the violation remains unresolved after a period of 2 months
from the Notice, then the Main Contractor shall be obliged to give an Instruction with
respect to the matter. Such Instruction shall be subject to the provisions of Art.[icle] 35.

Article 35

Variations and changes to the Subcontract Works Agreed 5 July 2010

Variations general principles [Variations clause finalized 13 nov 2009]

35.1

The purpose of these Variations provisions is to ensure that the Subcontractor is paid a
reasonable price for any changes in the Subcontract Works and the Main Contractor
preserves its right, within the framework of this Subcontract, to change the Subcontract
Works and maintain its right to Delay Damages as the Subcontract Works progress.
Variations may be instructed by the Main Contractor or proposed by the Subcontractor.

35.2

Except to the extent that the Variation was necessitated by the Subcontractors default, the
fair and reasonable Cost plus profit of all Variations shall be taken into account in
ascertaining the Subcontract Price. Variations that arise from the defaults of the
Subcontractor are to be paid for by the Subcontractor.

35.3

The Subcontractor has no obligation to make a change that is not instructed as a Variation.
Each Variation, and the combined effect of all Variations, shall be taken into consideration
in the assessment of the Time to Taking-Over.

Main Contractors right to vary the Works

35.4

The Main Contractor shall have the right to request and subsequently order Variations to
the Subcontract Works from time to time during the performance of the Subcontract until
the complete Subcontract Works have been taken over, or if the Variation is agreed by the

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Subcontractor, until the end of the last Defect Correction Period.

35.5

Variations may not, without the agreement of the Subcontractor, consist of the omission of
any part of the Subcontract Works in order to have that work executed by parties other than
the Subcontractor. Where there is a Variation resulting in an omission of a part of the
Subcontract Works, the value of the Variation will include compensation for underrecovered
overheads and profit of the Subcontractor.

Subcontractors right to refuse a Variation

35.6

The Subcontractor may refuse to carry out any Variation that:

(a)

is unrelated to the Subcontract Works;

(b)

is not technically practicable; or

(c)

will reduce the safety of the Subcontract Works.

Subcontractor-proposed Variations
35.7

The Subcontractor may at any time propose to the Main Contractor any Variation, including
any Variation that, in the Subcontractors opinion, will improve the Subcontract Works,
including, without limitation, the quality, efficiency or safety of the Works, or should reduce
the expense to the Main Contractor of executing the Subcontract Works. The Subcontractor
shall outline the foreseen benefits of any proposed Variation, including the financial
aspects. Any value of the benefits, unless otherwise agreed, will be shared equally.

Procedure for Variations

35.8

If the Main Contractor requests a Variation, whether or not the Variation was first suggested
by the Subcontractor, the Main Contractor shall send to the Subcontractor a Notice
describing the Variation. If the Main Contractor so wishes, the Subcontractor shall first give
an estimate of the Cost of preparing a Subcontractors Variation Proposal and time required
for its execution.

35.9

After receipt of the Main Contractors request for a Variation and unless otherwise agreed,
the Subcontractor shall within 14 Days prepare and submit a proposal (Subcontractors
Variation Proposal) comprising:
(a)

a description of the proposed Design and work to be executed;

(b)

a program for the execution of the Variation;

(c)

a proposal for any necessary modifications to the Time Schedule and the Time to
Taking-Over;

(d)

a lump sum price for the Variation (including a breakdown of the elements it
comprises, for informational purposes) or, if so requested by the Main Contractor, a
price estimate comprising quantities and either a list of all-in unit prices or a list of
prices per unit subject to the application of a mark-up for general overheads and
profit; and

(e)

other elements of the Subcontract likely to be affected by the Variation.

If, however, the Subcontractor objects to the Variation with reference to its right to refuse
under Article 35.6, the Subcontractor shall, within the same period, instead of a
Subcontractors Variation Proposal, submit a Notice to the Main Contractor clearly
describing the reasons for this refusal and, if possible, proposing an alternative.

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35.10 The Main Contractor shall make its decision on whether or not to proceed with the Variation
within 42 Days from receipt of the Subcontractors Variation Proposal or Notice under
Article 35.9 and notify the Subcontractor of that decision forthwith. If the Main Contractor
instructs the Subcontractor to proceed with the Variation, but does not accept the
Subcontractors Variation Proposal, the Main Contractor shall state how the
Subcontractors Variation Proposal shall be amended and the reasons for and Cost
consequences of the changes to the Subcontractors Variation Proposal. The Subcontractor
shall then be obliged to carry out the Variation, but may refer the dispute over its
consequences to be settled in accordance with Chapter 13.
35.11 If the Main Contractor decides not to implement the Variation or if it fails to order the
Variation within 42 Days after receipt of the Subcontractors Variation Proposal, then,
unless the Variation was suggested in writing by the Subcontractor, the Main Contractor
shall be obligated to pay the Subcontractor the Cost of preparing the Subcontractors
Variation Proposal.
35.12 If the Subcontractor has objected to a Variation in accordance with the requirements under
Article 35.6, the Main Contractor shall not have the right to instruct the Subcontractor to
carry out the Variation, but may refer the dispute to be settled in accordance with Chapter
13.
Disputed Variations
35.13 If the Parties disagree as to whether certain work or delivery of supplies or materials, which
the Main Contractor requires or required to be performed, is already included in the
Subcontractors obligations, and consequently whether such work or deliveries constitutes
a Variation, then the following procedure shall be followed:
(a)

The Main Contractor shall in a Notice to the Subcontractor describe the work or
delivery in question and give the reasons why, in the Main Contractors opinion, it is
included in the Subcontractors obligations. Alternatively, the Subcontractor may
produce a Notice stating why the work or delivery in question is not within the scope
of the Subcontract.

(b)

Unless otherwise agreed, the Subcontractor shall then prepare a proposal containing
the information specified in Article 35.9, and, if it has not already done so, shall give
the reasons why, in the Subcontractors opinion, the requested work or supplies
constitute a Variation.

(c)

The Main Contractor may then instruct the Subcontractor to perform the work or
supplies in question. Such work or supply shall be regarded as a disputed Variation.

(d)

Either Party may then require the dispute to be settled in accordance with Chapter 13.

(e)

If the Subcontractor refuses to perform the work or supplies in accordance with the
requirements under Article 35.6, the Main Contractor shall not be entitled to instruct
the work or supplies to be performed.

35.14 Any and all claims to additional payment, however they may arise, will be dealt with under
the provisions of Chapter 13.
PROPOSAL RECEIVED FROM ROBINA KAYE, MAY 2010
Daywork
35.15 For work of a minor or incidental nature, the Main Contractor may instruct that a Variation

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shall be executed on a daywork basis. In this instance, anythe work so instructed shall then
be valued in accordance with the Ddaywork Sschedule included in this Subcontract, and
the following procedure shall apply. If a Ddaywork Sschedule is not included in this
Subcontract, this Article 35.15 shall not apply.
Before ordering goods for suchthe work, the Subcontractor shall submit quotations to the
Main Contractor. When applying for payment, the Subcontractor shall submit invoices,
vouchers and accounts or receipts for any goods.
Subsequent to any work being performed pursuant to an Instruction referred to above,
Except for any items for which the daywork schedule specifies that payment is not duethen,
the Subcontractor shall deliver each day to the Main Contractor, accurate statements in
duplicate which shall include the following details of the resources used in executing the
previous day's work:
The names, occupations and time of Subcontractor's Personnel,
The identification, type and time of Subcontractor's Equipment and
Temporary Subcontract Works, and
c.
The quantities and types of Plant and materials used.
a.
b.

One copy of each statement will, if correct, or when agreed, be signed by the Main
Contractor and returned to the Subcontractor. The Subcontractor shall then submit priced
statements of these resources to the Main Contractor, prior to their inclusion in the next
application for payment under Article 42.

CHAPTER 5
COMMENCEMENT, THE TIME TO TAKING-OVER, SCHEDULING AND
PROGRESS
Article 36

Commencement, Time to Taking-Over and extensions of time

Agreed 5 July except Assignments in 36.3 and 36.15/36.16

The purpose of the time provisions
36.1

The purpose of the time provisions is to ensure that the Subcontractor is afforded adequate
time to complete the Subcontract Works, given the time in which it originally agreed to
complete the original scope of work, and that the Main Contractor is assured both of a
predictable completion Date and retains the right to impose Delay Damages if the
Subcontractor completes the Works or any Section of them after the Time to Taking-Over
as adjusted under the Subcontract. It is normally preferable to reach contemporary
agreement on extensions of the Time to Taking-Over.

Start Date
36.2

Unless otherwise agreed, the first Day of the Time to Taking-Over is calculated from the
Day after the Start Date.

36.3

Unless otherwise agreed11, the Start Date shall be determined as follows:

(a)It is a pre-condition to the commencement of the Subcontract Works on the Start Date
that (i) the Subcontractor has received possession of such Sections of the Site as are
required and the Notice to Proceed, and (ii) the Main Contract Start Date has

11 In international construction projects there may be very long delays between signature of the
Subcontract and the start of the project.

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occurred.
(b)

The Main Contractor shall issue to Subcontractor the Notice to Proceed in the form
set out in an Appendix (if any) or in a letter identifiable as the Notice to Proceed, once
it has received (if applicable) the Subcontractors performance guarantee.

(c)

The Day after which the requirements of Articles 36.3(a) and 36.3(b) have been met
shall be referred to herein as the "Start Date."

(d)

If the conditions of Articles 36.3(a) and 36.3(b) have not been satisfied six months
after the Subcontract Date, each Party shall have the right to terminate this
Subcontract at any time by 14 Days notice to the other Party. [Machoy 22 Sept: what
are the consequences?] [ASSIGNMENT - UNASSIGNED: Add FN: figure out how not
to allow S to hold MC hostage]

(e)

A pre-condition for commencement of this Subcontract is that the Main Contract Start
Date has occurred.

Extension of the Time to Taking-Over and additional Costs

36.4 Provided not caused by any wrongful action or omission on the part of the
Subcontractor, the Subcontractor shall be entitled to an extension of the Time to
Taking-Over and, where applicable, additional payment subject to Article 36.5 for the
whole of the Subcontract Works or for any Section of them if it is or will be delayed
either before or after the Time to Taking-Over by any of the following causes:
(a)
a cause of delay giving an entitlement to extension of the Time to TakingOver, including an event of Force Majeure, and, where applicable, additional Costs
under any Article;
(b)

any suspension by the Subcontractor to which it is entitled under the Subcontract, or

any suspension, delay, impediment, default or breach of the Subcontract by the Main
Contractor or its agents or any activity, act or omission of any other contractors
employed by the Main Contractor preventing the Subcontractor from proceeding
efficiently with the Subcontract Works ; or

(c)

any action or inaction of third parties (including, without limitation, public authorities)
that the Subcontractor has not reasonably been able and could not reasonably be
expected to prevent, which has the effect of delaying the Taking-Over of the
Subcontract Works [Machoy 27 July: how does this relate to it in first paragraph of
Article 36.4 of the Conditions?]

36.5

If the Subcontractor intends to assert an entitlement to an extension of the Time to TakingOver under this Article 36, the Subcontractor shall give a Notice to the Main Contractor of
such intention as soon as reasonably practicable after the Subcontractor has become
aware of the event giving rise to the delay and/or any other likely additional payment
claim(s). Repeated Notices are not necessary where it is reasonably obvious that the
event has or may have a continuing impact. [Machoy 27 July: does this requirement also
apply to EoTs under 6.2 and 27.3 (both of which seem to channel both time and cost
through Article 35 but not Article 36 of the Conditions)]

36.6

Where practicable, the Subcontractor shall keep such contemporary records as may be
necessary to substantiate any assertion of entitlement to an extension of Time to TakingOver. The Subcontractor shall permit the Main Contractor to inspect all such records, and
shall provide the Main Contractor with copies as required.

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36.7

Within 28 Days of the Subcontractor giving Notice as set out above (or such other period as
may be agreed with the Main Contractor), the Subcontractor shall submit such further
details of its application (if any) it considers necessary to demonstrate its entitlement.

36.8

The Main Contractor has an obligation to assess or agree appropriate extensions of time as
soon as any Notice has been received and, in any event, not later than 59 Days after
receipt of any Notice (unless a different period of time is agreed). Alleged failures to give
sufficient details or other supporting information may be grounds for not giving the full
extension requested or no extension at all, where e.g. because of the Subcontractors
failure the Main Contractors entitlements under the Main Contract have been or are likely
to be jeopardized. If the Main Contractor decides that in fairness no extension should be
granted, it must immediately inform the Subcontractor at the time the decision is made. In
all cases, the Main Contractor must consult with the Subcontractor about the right to,
and/or length of, the extension. In all cases, the Parties should attempt to agree on the
result of the Notice.

36.9

If practical, the Subcontractor's entitlement to compensation (if any) for Costs arising from
any extension of time shall be negotiated at the same time as the extension of the Time to
Taking-Over.

Direction to reschedule
36.13 Where the Subcontractors rate of progress on the Subcontract Works is too slow to ensure
Taking-Over of the whole of the Subcontract Works within the Time to Taking-Over, the
Main Contractor may order the Subcontractor to revise its Time Schedule or Method
Statement to show accelerated activity and/or resources leading to completion within the
Time to Taking-Over as it then stands. If the Main Contractor is later shown to have been
incorrect in its assessment, the additional Costs incurred by the Subcontractor (if any) will
be payable as a Variation.

[Agreement to earlier Taking-Over

NOTE: HOLD FOR TIME TO TAKING OVER DISCUSSION]
36.14 NOTE: Not applicable, Main Contract EOC FORMAT
36.15 Upon request by the Main Contractor for purpose of reassessment, the Subcontractor shall
provide such information as may reasonably be required by the Main Contractor. If so
required by the Main Contractor, the Subcontractor shall take such part in such
reassessment as is reasonably appropriate. The Main Contractor shall provide to the
Subcontractor details relating to the Subcontract Works of any reassessment that has
taken place under the Main Contract. ASSIGNMENT - JENSThe Parties may agree at any
time to an earlier Date of Taking-Over than that foreseen, and the Contractor will upon
agreement to the earlier Date, confirm, if it has not already been agreed, what
compensation it claims (if any) for the earlier Taking-Over].[ [Machoy 27 July: Delete. There
are already Articles 37.6 and 37.7 of the Conditions, which provide for a bonus.] : Machoy
views?

[Obligatory reassessment of extensions of time at the end of the Time to Taking-Over

36.15 The period towards the end of the Time to Taking-Over is important and sometimes
determinative of whether or not contracts stay within budget or lose money for the Parties.
The Parties will often also, as construction activities slow down, be able to undertake a

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retrospective examination of progress. Accordingly, 90 Days prior to the expiry of the Time
to Taking-Over, as adjusted under the Contract, the Employer at its own initiative and within
seven Days shall, in consultation with the Contractor, review all the events and
circumstances of the Works and shall determine whether or not, all things considered, the
Contractor is fairly entitled to any further extension(s) of time. The review shall give full
effect to and apply (and shall not shorten) any extensions that have been previously agreed
between the Parties or ordered in accordance with Article 66 or by an arbitral tribunal.]
[Machoy 27 July: Impracticable. Whole paragraph should be deleted.]
[36.16 For the purposes of these obligatory reassessments the Employer shall not take into
account any failings or alleged failings of the Contractor to submit supporting details or
claims in sufficient detail or in the contractual timeframe, but can take into account only
such details as it has received from the Contractor or is aware of itself. 21 Days after
starting the review, the Employer will send its fully reasoned decision on whether or not the
Contractor is entitled to an extension of time to the Contractor with a copy to the deciding
entity.]
36.1[6] Extensions of time can be agreed, determined or instructed before or after the Time to
Taking-Over as originally scheduled.

Article 37

Delay Damages

Delay Damages Agreed 6 July 2010

37.1

Delay Damages are payable by the Subcontractor if the Taking-Over occurs after the Time
to Taking-Over.

37.2

If the Subcontractor fails to complete the Subcontract Works or any Section within the Time
to Taking-Over as adjusted under the Subcontract, then the Subcontractor shall pay to the
Main Contractor the relevant sum (if any) calculated in the Subcontract as Delay Damages
for such default and not as a penalty (which sum shall be the only monies due from the
Subcontractor for such default and any other consequences of the delay) for every Day that
shall elapse between the Time to Taking-Over as adjusted and the Date specified in the
relevant Taking-Over Certificate(s), subject to the limit stated in an Appendix (if any). The
Parties agree and acknowledge that the value of the Delay Damages so to be paid is
estimated here by the Parties because of the difficulty of ascertaining accurately the exact
amount of damage prior to the occurrence of any delay.

37.3

If no rate or rates of Delay Damages are stated otherwise in the Subcontract, the rate of
Delay Damages12 shall be 0.3% (one half of one percent) of the Subcontract Price agreed
upon signature of the Subcontract or if there is a delay to a Section or some Sections only,
0.3% of the value that the Section or Sections delayed bears in proportion to the value of
the whole of the Subcontract Works for each complete seven-Day periodweek of delay up
to a maximum of 10% (ten percent) of the Subcontract Price agreed upon signature of the
Subcontract. Subsequent amendments to the Subcontract Price will not be taken into
account in calculating the rate of Delay Damages or the maximum amount of the Delay
Damages.

37.4

The payment of such Delay Damages shall not relieve the Subcontractor from its obligation
to complete the Subcontract Works or from any other of its obligations under the
Subcontract, but shall be in full discharge of the Subcontractor's liability for delay in Taking-

12

These figures normally vary from industry to industry and depending on the type of Project, and its individual
circumstances. These figures are inserted for certainty, but should be subject to specific negotiation.

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Over and any other losses related to that delay. Such Delay Damages shall be the sole and
exclusive remedy for late Taking-Over.
37.5

If so agreed, where the Employer takes over, uses or occupies (whether or not
acknowledged as Taking-Over) Sections of the Works, then Delay Damages, if payable,
shall be reduced in the proportion that the value of the Section so taken over, used or
occupied bears to the value of the whole of the Works. Similarly, a proportional bonus shall
be payable for partial occupation by the Employer prior to the Time to Taking-Over. Machoy
27 July: Drafting? Why should the Subcontractor be entitled to a reduction in the Delay
Damages only because a Section has been taken over? Delete.]

Article 38 Schedule of Subcontractual Dates, time schedule and reporting

progress
Agreed 6 July 2010
38.1

Agreement on the important stages of performance of the Subcontract Works and

monitoring/reporting progress (and problems) are important aspects of turnkey contracts.
With a turnkey contract, however, the Subcontractor has the responsibility and right to
manage progress in the most efficient fashion for its organisation. Nonetheless, the
Subcontractor undertakes to perform the Design and the Subcontract Works in accordance
with the Subcontract and also the Schedule of Subcontractual Dates as set out in an
Appendix (if any).

38.2

The Schedule of Subcontractual Dates, if any, shall contain: [Machoy 27 July: what if it
does not? It seems that this Article 38.2 of the Conditions is of an instructory nature. It
hence should be deleted and possibly moved into a footnote or some guidance notes]
(a)

the Start Date set out in an Appendix (if any) or otherwise agreed;

(b)

the Dates by which the Subcontractor is obliged to submit to the Main Contractor each
stage of the Design and the Dates by which the Main Contractor's review is required;

(c)

the Dates by which each of the permits set out in an Appendix (if any) will be provided
by the Party responsible for it;

(d)

the Date(s) on which the Subcontractor will be given possession of the Site or parts
thereof;

(e)

milestone Dates (if any);

(f)

the Date(s) of Completion of the Subcontract Works, or Sections of the Subcontract

Works, including the Dates of any Performance Tests; and

(g)

the Date(s) of Taking-Over of Sections of the Subcontract Works in respect of which a

separate Time to Taking-Over has been provided in the Subcontract (or otherwise
agreed) and the Date of Taking-Over of the whole of the Subcontract Works.

38.3

The Dates set out in the Schedule of Subcontractual Dates may be amended by agreement
of the Parties or application of the extension of Time to Taking-Over provisions of this
Subcontract.

38.4

The Subcontractor shall normally, unless otherwise agreed, prepare a detailed program for
performance of the Subcontract Works and their interrelationship by using the "critical path
method" or such other method/schedule as agreed (the Time Schedule). The
Subcontractor shall submit the Time Schedule to the Main Contractor not later than one
month after the Start Date. The Time Schedule shall be updated monthly thereafter as part

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of a monthly progress report to reflect any changes to the Time Schedule. The Main
Contractor shall be entitled to comment on the Time Schedule and any update thereof and
the Subcontractor agrees to consider in good faith any and all comments made by the Main
Contractor.

Article 39

Progress reports Agreed 6 July 2010

39.1

Unless otherwise agreed in writing as unnecessary due to the nature of the Subcontract
Works, monthly progress reports shall be prepared by the Subcontractor and submitted to
the Main Contractor. The first report shall cover the period up to the end of the first month
following the Start Date. Reports shall be submitted monthly thereafter, each within 5 Days
after the last Day of the period to which it relates.

39.2

Reporting shall continue until the issue of the last Taking-Over Certificate for the
Subcontract Works.

39.3

The progress reports should be suitable for monitoring the progress of the Subcontract
Works. Unless otherwise agreed each report shall include:

39.4

(a)

charts and adequately detailed descriptions of progress, including each stage of

Design, Subcontractors Documents, procurement, manufacture, delivery to Site,
construction, erection, testing, commissioning and trial operation;

(b)

photographs showing the status of manufacture and of progress on the Site;

(c)

the details of the deployment of Subcontractors Personnel and Equipment;

(d)

safety statistics, including details of any hazardous incidents and activities relating to
environmental aspects and public relations; and

(e)

comparisons of actual and planned progress, with details of any events or

circumstances that may jeopardize Taking-Over in accordance with the Subcontract,
and the measures being (or to be) adopted (if any) to overcome delays.

The progress reports will be prepared and understood as evidence of the SubCcontractors
position on the state of actual completion of the Works at the time the report is made. If the
Main ContractorEmployer disagrees with any of the contents of a report, this disagreement
will be recorded in a Noticeletter to the SubCcontractor within 14 Days of the Date of the
report, otherwise it will be considered for all purposes to be agreed .[Machoy 27 July:
Delete. May work on the level Employer Main Contractor, but not below].

CHAPTER 6
SUBCONTRACT PRICE AND PAYMENT
Article 40 The Subcontract provides the exclusive remedies for all claims
between the Parties Agreed 6 July 2010
40.1

All claims to payment or compensation of any kind are to be asserted and established in
accordance with the provisions of this Subcontract. These Subcontract provisions are a
complete system for establishing all and any entitlements as between the Parties, arising
out of or in connection with the Subcontract, its breach, its alleged termination or execution
of the Subcontract Works.

40.2

Unless established by the provisions of this Subcontract, no claim by either Party is

enforceable against the other Party.

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Article 41

Payment of the Subcontract Price Agreed 6 July 2010

41.1

As payment to the Subcontractor for the full and complete performance of the Subcontract
Works the Main Contractor shall pay and the Subcontractor shall accept the sum set out as
the Subcontract Price in the Subcontract as varied in accordance with the Subcontract.

41.2

Payments to a Subcontractor are made by instalments calculated by reference to either the

progress of the Subcontract Works in a given period (the Invoice Period) or to the
milestones set out in the The Parties recognise and agree that the Subcontract Price is
payable in instalments according to the progress Schedule of Subcontractual Paymentsof
the Subcontract Works in an Invoice Period and/or milestones as set out in an Appendix (if
any) orand otherwise in accordance with the provisions of this Subcontract.

41.3

The Subcontract Price may be varied only in accordance with the Subcontract. The value of
each payment will be established by the rules set out in this Chapter 6.

Article 42

Applications and procedure for payment Agreed 6 July 2010

Invoice Periods
42.1

With respect to any Invoice Period, the Subcontractor shall be entitled to apply for the
payment of the amount corresponding to progress on the Subcontract Works and/or
milestone if it has achieved such milestone, including any daywork instructed under Article
35.15, within that Invoice Period.

Applications for payment

42.2

The Subcontractor shall submit applications for payment in the currency(ies) of the
Subcontract for the amounts that are associated with the progress of the Subcontract
Works (including claims) and/or milestones achieved in an Invoice Period after the last Day
in that Invoice Period.

42.3

Applications for payment shall be submitted in the form set out in an Appendix (if any), or, if
there is no such Appendix, in a form established by the Subcontractor and agreed by the
Main Contractor.

Certification of payment
42.4

The Main Contractor shall certify to the Subcontractor the amount due and payable to the
Subcontractor with respect to each application for payment. The Main Contractor shall
certify the entirety of the amount set out in the Subcontractors application for payment
other than the following:
a.
an amount included in the application for payment that has been
included fraudulently or in error;
b.
any amount due from the Subcontractor in accordance with the terms
of the Subcontract; [NOTE: To retain? If so; need to renumber. What sums deductible?
Only agreed sums? Link to 42.8]

(b)

with respect to any milestone, the amount associated with that milestone, if the
Subcontractor has not submitted the documentation required to be submitted for that
milestone as set out in the Subcontract;

(c)

any amount to be paid by the Subcontractor for the invoice period covered subject to
Article 27.2

(d)

subject to Article 30.2, any amounts paid by the Main Contractor in order to discharge,

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or reserved for the purposes of discharging, any lien, encumbrance or third-party right
created on or in respect of the Subcontract Works or any work, materials, supplies or
Plant unless, if necessary, the Subcontractor has provided adequate security for such
amounts to the Main Contractor in form and amount reasonably satisfactory to the
Main Contractor; and
(e)

if this Subcontract is terminated by either Party, the Main Contractor shall not be
obligated to make further payments except in accordance with Articles 56 and 57 and
Chapter 13. [NOTE: Check Arts 56 and 57 re this.]

Notification of the certified amount

42.5

The Main Contractor shall notify the amount to which the Subcontractor is entitled on or
before the twenty-first Business Day after the Main Contractors receipt of the
Subcontractors application for payment. The amount stated in that Notice shall be the
certified amount. If the Main Contractor does not certify the entire amount claimed in the
Subcontractors application for payment, the Main Contractor shall give a reasoned
explanation for not certifying the difference at the same time as it certifies the amount
acknowledged as due.

42.67 If the Main Contractor does not certify the entire amount claimed in the Subcontractors
application for payment, invoicing by the Subcontractor for a lesser amount does not signify
that the Subcontractor accepts that the Main Contractor is discharged from the payment of
the amount not certified. Such sums are considered to be notified as sums claimed under
Chapter 13, which may eventually be dealt with by the dispute procedure in that Chapter.
Submission of the invoice
42.76 The amount certified or deemed certified shall be a sum due and payable, and the
Subcontractor shall be entitled to issue the corresponding invoice. The invoice shall be
payable by the Main Contractor 35 Days after the Day on which the Main Contractor
receives the Subcontractors invoice (and if such Day is not a Business Day, then on the
immediately following Business Day).
42.7

If the Main Contractor does not certify the entire amount claimed in the Subcontractors
application for payment, invoicing by the Subcontractor for a lesser amount does not signify
that the Subcontractor accepts that the Main Contractor is discharged from the payment of
the amount not certified. Such sums are considered to be notified as sums claimed under
Chapter 13, which may eventually be dealt with by the dispute procedure in that Chapter.

No withholding
42.8

The Main ContractorEmployer shall not be entitled to unilaterally withhold or deduct from
any invoicepayment any amounts (other than amounts described under Article 42.4) in
respect of set-off, abatement or counterclaim unless and until a decision under Chapter 13
or otherwise has been made that the Main ContractorEmployer may withhold or deduct
such amount. The entity having rendered the decision may be called upon at any time to
determine the validity of the Employers withholding of any kind.

Payments
42.9

All payments made under this Subcontract shall be made by the method set out in an
Appendix (if any), and otherwise by bank transfer to an account or accounts nominated by

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the Subcontractor.
42.10 Any payment that the Main Contractor is not obliged to make under Article 42.4 shall be
made, without interest, together with the next payment applied for that falls due, after
satisfaction by the Subcontractor of the conditions described in that Article and/or the
correction of any Defect necessary to enable certification of such amount. Unless otherwise
agreed, there is no right to keep retention money (in the sense of a percentage of a sum
otherwise due for the performance of the Subcontract Works).
Interim payment does not constitute acceptance of the Subcontract Works
1.
No payment to the Subcontractor by the Main Contractor, with the exception of the
final payment, shall constitute an acceptance of any of the Subcontract Works to be performed
or furnished by the Subcontractor or shall relieve the Subcontractor of any of its obligations or
liabilities with respect thereto.

Final Payment
2.
The final payment shall constitute acceptance of the Works performed or furnished
by the Subcontractor if the Subcontractor in its application for the final payment and in the final
invoice includes an express statement that effecting the final payment will have the effect of
acceptance of the Subcontract Works, unless the Main Contractor has reserved its rights.

Article 43
43.1

VAT/GST or equivalent consumption taxes Agreed 6 July 2010

If under this Subcontract any payment is due to one Party from the other (including Delay
Damages or bonuses due under Article 37), they shall be paid as they fall due, along with
accrued financing charges at the rate described in Article 44. Each invoice shall be a
VAT/GST (Value Added Tax/Goods and Services Tax) invoice where VAT/GST is due on
such payment, and, to the extent required by law, each Party shall pay VAT/GST in addition
to the amount invoiced.

Article 44 Financing charges for late recognition of rights between the Parties
Agreed 6 July 2010
44.1

The purpose of this payment is to compensate the Party affected for the delay in receipt of
money otherwise due to it. Without prejudice to any other right or remedy, any payment that
becomes due, or should become due, to either Party under the Subcontract (including
claims that have to be established under Chapter 13) shall bear simple (uncompounded)
financing charges (i.e. interest) from the Date that the payment becomes due or should
become due until the Date of Payment at the rate agreed by the Parties, or, if there has
been no such agreement, at three the agreed percentage points above the basic lending
rate for immediate money of the central bank of the country or countries of the currency or
currencies of payment. For the avoidance of doubt; the right to this payment is established
automatically on the occurrence of a non-payment of sums due for whatever reason, and
any invoice relating to a claim under this clause is to be submitted directly.

44.2

The purpose of this payment is to compensate the Party affected for the delay in receipt of
money otherwise due to it. The right to this payment is established automatically on the
occurrence of a non-payment of sums due for whatever reason. The Employer shall certify
all such claims at monthly intervals as they arise. [ASSIGNMENT: ISM to think about how
to amend in absence of CDB so we can get by without one.]

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APPENDIX 2
Payment and Milestone Schedule of Subcontractual Payments
and Guidance Notes
General Purpose
The Parties need to agree on a sSchedule of Subcontractual pPayments specifying how the
amount to be paid is to be calculated, the events that will entitle the Subcontractor to claim that
payment, and the documentation the Subcontractor is obliged to present to obtain payment. In the
absence of specific agreement, Chapter 6 applies without modification by reference to this
Appendix 2.
The currencies in which payment is to be made should also be specified here (for multi-currency
contracts). If payments made in a certain currency (e.g. construction costs denominated and paid
in a volatile currency) are to be escalated, this too must be dealt with here.
Security is to be posted for any down payment (and where so agreed amortised pro rata).
A.

Progress payments
Applications for progress payments are to be made based on the volume of work during
any Invoice Period. The application should include any measurements or calculation in
support of the sum applied for together with invoices for material and Plant and similar
items included in such application. In such case the Invoice Period shall be monthly or
any other period agreed between the Parties.

B.

Milestones
The principle of milestones is that payments become due on the occurrence of specific
agreed events. The Schedule of Milestones should set out the event, the particular sum
payable on the event and any documentation needed to substantiate the occurrence of
the event. A specimen Schedule of Milestones is set out below, which the Parties must
adapt to the circumstances of the Subcontract.

1.

Frequency of Milestones
It is up to the Parties to specify the frequency of milestones; the Parties may specify a large
number of milestones, each associated with a minor sum, or a single milestone in an
Invoice Period. Under this Subcontract, an Invoice Period is defined as a month, and an
invoice is rendered once in an Invoice Period for all milestones achieved during the
preceding Invoice Period. The Parties are at liberty to define longer or shorter Invoice
Periods.

2.

Amount of Milestone
It is suggested that this be a specified amount, rather than an amount calculated by
reference to e.g. actual cost of an item. If milestone payment amounts are floating, the
Parties will need to specify a milestone toward the end of the milestone schedule that
reconciles the agreed Subcontract amount and the amounts paid.
The currencies in which payment is to be made should also be specified here (for multi-

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currency contracts). If payments made in a certain currency (e.g. construction costs

denominated and paid in a volatile currency) are to be escalated, this too can be dealt with
here.
3.

Event
Milestone events fall into two broad categories:
-

Percent complete; orare

sSpecific events such as completing Sections of work. Specific events could be

The specific events again fall into broad categories

-

cConstruction events, e.g. first concrete, cable pull complete or enclosure complete

Plant shipping events, e.g. item loaded on vessel cleared for export, item delivered to
the Site

Document delivery events, e.g. detail Design delivered or

Other events

If the invoice amount is specified by reference to the percentage completed, it is likely that
the determination will be made at the end of a month and the invoice amount calculated by
reference to the incremental percentage completed, each percentage point being
equivalent to a money amount.
Milestones defined as events may occur at any time during athe month; but, unless
otherwise agreedstill, as stated, invoicing under this form of contract occurs only once a
month, for all events achieved during the previous month.
4.

Documentation Required
The documentation required primarily depends primarily on the way the event is defined.
For events defined by reference to the percentage completed, the Parties will need to agree
on a procedure that yields agreement as to the percentage completed. This may be done
by a third party, for example Bureau Veritas or another neutral third party.
For milestones specified by reference to events, the documentation required will depend on
the nature of the event and on the source of financing, if any. For example, export-credit
agency financing may be released on the basis of the value of exports, so that the earliest
event that permits invoicing is the loading of the goods on the vessel; the corresponding
documentation is the (on-board) bill of lading.

5.

Advance Payment and Retention

If an advance payment is the advance payment is openly definedagreed as a percentage of
Subcontract Price, then the amortisation, if any, of the down payment must be specifically
addressed in the calculation of the invoice amounts; otherwise,and the milestone payment
amounts can be specified accordingly.
In either case, security should be posted for the down payment (amortised pro rata), and
the unamortised portion of the down payment needs to be taken into account in calculating
the milestonetermination payment (if any).
Similarly, this Subcontract does not specify a retention; however, it is always possible for
the Parties to scale the milestone payments such that an amount remains outstanding up to
the end of the construction period, and is paid against the milestone completion. It is up
to the Parties to specify payments post completion (e.g. retention held against warranty

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claims), though it is suggested that this be accomplished through a warranty bond if

required at all.
Sample Payments and Milestone Schedule [ASSIGNMENT - ERIC to provide alternative
milestone schedule ]
Milestone
Number
1.

Amount and
Currency
1,000,000

2.

1,000,000

3.

1,000,000
per 1%
complete

4.

1,000,000

Event

Documentation

Signature of the
Subcontract and
provision of the
advance payment
bondFinancial Close
Detail Design
Complete

n/a

1.

Six copies of plant layout, P&IDs,

electrical on-line diagrams delivered to
Main Contractor

Incremental
percentage complete
as at last Day of
month
Shipment of 100
widgets

1.

Certificate of incremental percentage

completed

1.
2.
3.

Manufacturers pro-forma invoice

Packing list
Two originals and two copies of the
negotiable clean on-board bill of lading /
waybill
Certification of country of origin / local
content / vessel flag
Quality inspection certificate
Export customs clearance certificate
Export permit
Certification that items are in
conformance with import duty exemption
master list / are not listed on import duty
exemption negative list
Manufacturers pro-forma invoice
Packing list
Subcontractors certification of delivery
received at Site
Certification of country of origin / local
content
Quality inspection certificate / certification
that all items on packing list were
received / certification of absence of
shipping damage
Import customs clearance certificate and
evidence of duty paid / certification that
items are in conformance with import
duty exemption master list / are not listed
on import duty exemption negative list /

4.
5.
6.
7.
8.

5.

1,000,000

Delivery of 100
widgets

1.
2.
3.
4.
5.

6.

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6.

1,000,000

Completion of the
Subcontract Works

1.

2.
3.

customs inspection certificate

Certification by Subcontractor that the
Subcontract Works has been completed
in accordance with Subcontract /
contractually specified manufacturing
tests have been performed and passed
Relevant agency inspectors certificate of
conformance with regulations
Relevant manufacturers certificate that
the Plant has been installed in
accordance with the manufacturers
specifications

End of Appendix 2

Appendix [3]
Payment Application Format
The Subcontractors application for payment shall as a minimum set out:
(a)

the Date;

(b)

the Subcontractors name and address;

(c)

the Main Contractors name and address;

(d)

the Subcontractors tax reference (if any);

(e)

a reference to this Subcontract;

(f)

if applicable, a reference to the mMilestones achieved and the Date on which each
referenced mMilestone was achieved;

(g)

the currency and the amount claimed in respect of each mMilestone achieved;
a.

the total amount claimed for each currency.

CHAPTER 7 [Chapter accepted 5 March 2010]

COMPLETION AND TAKING OVER OF THE SUBCONTRACT-WORKS BY
THE MAIN CONTRACTOR
Article 45 Completion [NOTE: Tim capital N notice not referenced in your list
for 45.2, 45.5, but Ive done anyway as marked below. Need to confirm.]
45.1

The Subcontractor shall give Nnotice tofy the Main Contractor when it considers that it has

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achieved Completion of the Subcontract Works. Where the Subcontract Works are to be
completed by Sections, this Article 45 refers to Completion of each Section as appropriate.
45.2

The Main Contractor shall, as soon as practicable and in any event within 144 hours
following receipt of the Nnotice referred to in Article 45.1, inspect (as and if necessary) all
work, and either:
(a)

deliver to the Subcontractor a Certificate of Completion for the Subcontract Works or

any Section of them; or

(b)

if reasonable cause exists for doing so, notify the Subcontractor that Completion the
Subcontract Works has not been achieved, stating in detail the reasons therefor and
the additional work that it considers still to be done to achieve Completion of the
Subcontract Works.

45.3

In the event that the Main Contractor determines that Completion of the Subcontract Works
has not been achieved, the Subcontractor shall promptly take such action or perform such
additional work as will achieve Completion of the Subcontract Works and shall issue to the
Main Contractor another Notice pursuant to Article 45.1. To the extent that the action or
additional work requires a Variation, it shall be valued under Article 35. The procedure
described in this Article 45.3 shall be repeated as necessary until Completion of the
Subcontract Works is achieved.

45.4

Subject to Article 45.3, the Main Contractor shall issue the Certificate of Completion for the
Subcontract Works or the Notice under Article 45.2(b) no later than 10 Business Days
following receipt of the Notice under Article 45.1.

45.5

If the Main Contractor fails to issue a Certificate of Completion for the Subcontract Works or
a nNotice under Article 45.2(b), then the Main Contractor shall be deemed to have, and be
treated for all purposes as having, issued a Certificate of Completion for the Subcontract
Works, whether it is actually issued or not, five Days after the receipt of the Nnotice under
Article 45.1.

45.6

If there is a requirement that the Subcontract Works be taken over before the Works, then
this will be set out in an Annex to this Subcontract.

Article 46

Commissioning and Performance Tests

46.1

Where the Subcontract Works are to be taken over by Sections, these provisions will be
read as applying to those Sections.

46.2

Any commissioning activities will be set out in an Appendix (if any) or otherwise agreed by
the Parties.

Subcontract Performance Tests

46.3

Insofar as the Subcontract specifies Subcontract Performance Tests, Article 46 of the Main
Contract shall apply as if fully written here.

Main Contract Performance Tests

46.4

Insofar as the Subcontract makes reference to Main Contract Performance Tests, the
Subcontractor shall to the extent the Subcontract Works form part of the Works under the
Main Contract comply with Article 46 of the Main Contract in the good time as is necessary
for the Main Contractor to comply with his obligations in respect of Performance Tests

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under the Main Contract.

46.5

If the Main Contractor is entitled under the Main Contract to assert a claim against the
Employer in respect of delay or Cost caused by the Employers material failure to comply
with its obligation, if any, under Article 46.8 of the Main Contract to enable the Main
Contractor to Perform a Performance Test, the Subcontractor shall be entitled to request
the Main Contractor to lodge such claim against the Employer for the benefit of the
Subcontractor, to the extent the Subcontract Works are affected.

46.6

If and to the extent attributable to the Subcontract Works the Works in one or more
respects fail to achieve the Contractual Performance but exceed the Minimum Performance
under the Main Contract and Performance-related liquidated damages (if any) as may be
set out in the Main Contract are payable, the Subcontractor shall compensate the Main
Contractor for the liquidated damages actually paid, or the respective share thereof,
provided however, that the compensation shall be limited to an amount of 5% of the initial
Subcontract Price. The payment of any such compensation shall not affect the Main
Contractors rights to terminate this Subcontract pursuant to Article 57, should such right
exist.

46.7

So long as the performance of the Works is equal to or better than the Minimum
Performance under the Main Contract, the compensation shall in respect of the relevant
performance parameters be the Main Contractors sole and exclusive remedy for the
Subcontract Works being responsible for Subcontract Works failure to achieve the
Contractual Performance under the Main Contract.

46.8

If and to the extent attributable to the Subcontract Works the performance of the
Subcontract Works is better than Contractual Performance under the Main Contract and
the Main Contractor is entitled to a bonus as may be set out in the Main Contract (if any),
the Main Contractor shall forward the bonus actually received, or the respective share
thereof, to the Subcontractor, provided however, that the Subcontractors entitlement
hereunder shall be limited to an amount of 5% of the initial Subcontract Price.

46.9 However, if and to the extent Article 48 applies to such Main Contract Performance Tests, the
stipulations set forth therein and the principles and provisions agreed between the Parties
pursuant to Article 48 shall prevail.

Article 47
47.1

Taking-Over/Provisional Acceptance

The Taking-Over/Provisional Acceptance13 Date shall be:

(a)

the Date on which the Taking-Over Conditions have been met; or

(b)

the Date on which the Main Contractor or the Employer, its agent or designee takes
possession and control of the Subcontract Works or any Section of them; or
c.
the Date on which the Works or a Section of the Works of which the
Subcontract Works form part are, or are deemed to be, provisionally accepted by the

13 The concepts of Taking-Over and Provisional Acceptance are largely synonymous and are synonymous in this Subcontract, but
people in different industries may be more comfortable with using one expression or the other.

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Employer under the Main Contract14.

47.2

Taking-Over Conditions
Unless otherwise agreed, the following conditions shall be the Taking-Over Conditions:
(a)
the Subcontract Works have been completed in accordance with the Subcontract,
except for minor work which does not affect the safety, operation and operability of
the Subcontract Works and is set out in the Punch List;
(b)
the Subcontract Works are fit for the purpose specifically defined in the Subcontract
and, if applicable, are capable of being put into operation;
(c)
the Performance Tests specified in the Subcontract (if any) have been performed
and passed in accordance with Article 46.3 and testing Equipment has been
removed; and
(d)

the consumables, spare parts and special tools required by the Subcontract (if any)
are present at the Site and are stored in accordance with applicable laws and Good
Industry Practice.

47.3

On the Date of Taking-Over, the Main Contractor shall take and shall be deemed to have
taken possession and control of the entire Subcontract Works or Section of them and shall
thereafter be solely responsible for the operation and maintenance thereof and shall have
the complete risk of loss or damage thereto, regardless of cause, provided, however, that
this shall not relieve the Subcontractor of its obligations under Chapter 8, or from its
obligation to perform such other work as remains to be performed after Taking-Over
pursuant to this Subcontract.

47.4

The Subcontractors access to the Site and the Subcontract Works after Taking-Over shall
be governed by an Appendix (if any) and otherwise shall be permitted as needed to fulfil its
remaining obligations (if any).

47.5

If the Subcontract Works or any Section are to be completed in more than one step or
phase, then an Appendix (if any), or such other reasonable stepped or phased schedules
as established by agreement, shall apply.

47.6

When the Subcontractor believes that it has met the Taking-Over Conditions of the
Subcontract Works or any Section in accordance with Articles 47.1 and 47.2, it shall deliver
to the Main Contractor a Notice thereof in the form set out in an Appendix (if any), and
otherwise any other reasonable form if none is set out.

47.7

The Main Contractor shall, as soon as practicable and in any event within 72 hours
following receipt of the Notice under Article 47.6, inspect (as and if necessary) all
Subcontract Works and the results of the Performance Tests (if specified in the
Subcontract) and, within the time period stipulated in Article 47.9, either:
(a)

deliver to the Subcontractor a Taking-Over Certificate for the Subcontract Works; or

(b)

deliver to the Subcontractor a Taking-Over Certificate for a Section or Sections of the

Subcontract Works; or

(c)

if reasonable cause exists for doing so, notify the Subcontractor that the Taking-Over
Conditions of a Section or Sections have not been achieved, stating in detail the
reasons therefor and the additional work that it considers still to be done to achieve

14 The Contractor may wish to take over the Subcontract Works not until the Works are taken over under the Main Contract. However,
as a general rule, this would shift risks to the Subcontractor which it cannot control, and under certain jurisdictions the validity of such
provision could be contested.

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Taking-Over.
47.8

In the event that the Main Contractor determines that the Taking-Over Conditions have not
been achieved, the Subcontractor shall promptly take such action or perform such
additional work as will achieve Taking-Over and shall issue to the Main Contractor another
Nnotice [NOTE: Confirm?] pursuant to Article 47.6. To the extent that the action or
additional work requires a Variation, it shall be valued under Article 35. The procedure
described in this Article 47 shall be repeated as necessary until Taking-Over is achieved.

47.9

The Main Contractor shall issue the Taking-Over Certificate or the Notice under Article 47.7
no later than ten Business Days following receipt of the Notice under Article 47.6. The
Taking-Over Certificate will be retroactive to the Date of Taking-Over under Article 47.1. If
the Main Contractor fails to issue a Taking-Over Certificate or a Notice under Article 47.7,
then the Main Contractor shall be deemed to have, and be treated for all purposes as
having, issued a Taking-Over Certificate, whether it is actually issued or not. The TakingOver Certificate shall or shall be deemed to set out the Date of Taking-Over, which shall be
the Date or Dates of fulfilment of the conditions set out in Article 47.1. The Main Contractor
shall not be entitled to withhold payments claimed by the Subcontractor on the basis that
the Taking-Over Certificate was not issued or properly issued.

47.10 The Taking-Over Certificate, whether deemed to be issued or actually issued, shall operate
as an acknowledgement by the Main Contractor that the Subcontractor has fulfilled its
obligations under this Subcontract to the extent that this Subcontract called for such
obligations to be performed prior to Taking-Over, except for such work (whether minor or
not) as is mutually acknowledged to remain outstanding, whether under a punch list, snag
list or other check list of outstanding work to correct Defects (the Punch List).
47.11 If the Taking-Over Certificate was deemed to have been issued by the Main Contractor,
then the Main Contractor shall be entitled to require the Subcontractor to fulfil any
Subcontractor obligations left unfulfilled at Taking-Over. Such work and the work required
under Article 47.10 shall be performed at the Subcontractors expense.
47.12 The Main Contractor in its sole discretion may at any time, by giving Notice to the
Subcontractor, elect to waive any of the Taking-Over Conditions, provided that the
Subcontractor expressly acknowledges that the Main Contractor shall, without prejudice to
the Main Contractors other remedies under this Subcontract, be entitled, but not obligated,
to make that election in accordance with this Article 47 on such terms, including a rebate on
the Subcontract Contract Price, as the Parties may agree.

Article 48

Assessment procedures after Taking-Over

48.1

To the extent the Parties have agreed that certain assessment procedures are to be or
permitted to be conducted after Taking-Over, the provisions agreed between the Parties
with respect to such procedures shall apply.

48.2

For all procedures, the principles set out in an Appendix (if any) shall apply. If there are no
such procedures set out in an Appendix, then Article 47.4 shall apply.

48.3

If for reasons not attributable to the Subcontractor, any tests after Taking-Over cannot be
completed during the Defect Correction Period (or any other period agreed upon by both
Parties) then the Subcontract Works shall be deemed to have passed the tests after
Taking-Over.

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CHAPTER 8
DEFECT CORRECTION PERIOD [Accepted 5 March 2010]
Article 49 The Subcontractors obligation to finish the Subcontract Works and
correct Defects
Defect Correction Period
49.1

The Defect Correction Period is the period after Taking-Over 15 in which the Subcontractor is
obliged to correct Defects in Design, materials or workmanship of the Subcontract Works
attributable to the Subcontractor. In the absence of an agreement to the contrary, this
period is one year in length16. If there is sectional Taking-Over, the Defect Correction Period
of one year starts with the Date of each Taking-Over. If individual items of Plant which
forms part of the Subcontract Works are repaired or completed during the Defect
Correction Period, a new one-year Defect Correction Period for those items shall start on
the Date of repair or completion of the Plant in question. In no event, unless otherwise
agreed, will the Defect Correction Period continue for more than two years after the Date of
the last Taking-Over. Unless otherwise agreed, all individual Defect Correction Periods will
stop at that Date.

49.2

The Main Contractor shall notify the Subcontractor of any Defects during the Defect
Correction Period as soon as reasonably possible upon such Defects becoming apparent.
Similarly, the Subcontractor shall as soon as reasonably possible notify the Main Contractor
upon becoming aware of Defects. During the Defect Correction Period the Subcontractor is
obliged to maintain such goods, materials, Equipment and manpower on the Site only as is
necessary to correct known Defects. The Subcontractor is not obliged to correct Design
errors, material choices or workmanship Defects attributable to third parties (other than its
own Subcontractors or suppliers) or the Main Contractor or the Employer, nor is the
Subcontractor obliged, without a Variation, to vary or improve Subcontract Works that
comply with the Subcontract.

49.3

The Main Contractor shall provide the Subcontractor every opportunity and access to
complete any outstanding work and correct any Defects specified in the Punch List or any
Defects in the Subcontract Works not so specified but which have been notified by the Main
Contractor to the Subcontractor or its Representative during the Defect Correction Period.

Normal wear and tear not included

49.4

Normal wear or tear or damage to the Subcontract Works caused by the Main Contractors
or the Employers occupation and/or use of the Subcontract Works or any part thereof
and/or non-compliance by the Main Contractor, Employer or third parties with the operation
or maintenance manuals supplied (if any) shall not be the responsibility of the
Subcontractor, nor shall the Subcontractor be obliged to repair such wear, tear or damage.

15 The Main Contractor may wish to let the Defect Correction Period start not until the Works are taken over under the Main Contract.
However, as a general rule, this would shift risks to the Subcontractor which it cannot control, and under certain jurisdictions the validity
of such provision could be contested.

16 In order to avoid that the Defect Correction Period for the Subcontract Works expires much earlier than the Defect Correction Period
for the Works under the Main Contract, it might be worth considering for the Main Contractor to agree with the Subcontractor on a
reasonably extended Defect Correction Period for the Subcontract Works.

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Consultation
49.5

The Parties shall consult with each other and shall agree the time or times when the Punch
List items and/or Defects are to be completed and/or remedied, and, subject to the
provisions of Article 49.1, the Defect Correction Period to apply to corrected work. The
Parties shall consult on the best method for remedying any Defect, which can include, at
the Subcontractors option, repairing the Defect, replacing defective items, or reperforming
defective work.

Software issues
49.6

In the case of a software Defect, the remedy may consist of a software patch, update,
upgrade or new software version. If the Cost of remedying the Defect is disproportionate to
the nature of the Defect or its magnitude, the Subcontractor shall have the option of offering
an abatement of the Subcontract Price.

49.7

The Subcontractor shall not be liable for Defects in software (i) in case of insignificant
deviation of the software from the agreed characteristics; (ii) if the Defect cannot be
reproduced by the Main Contractor in the presence of the Subcontractor; or (iii) if the
Defect is in freeware, shareware or open source software.

Joint inspection
49.8

The Main Contractor and the Subcontractor shall carry out a joint inspection of the
Subcontract Works at least 14 Days prior to the expiry of the relevant Defect Correction
Period to confirm the condition of the Subcontract Works, and the Main Contractor shall
immediately notify the Subcontractor of any outstanding Defects required to be made good
or work required to be executed by the Subcontractor in accordance with the Subcontract.
If there is no such notification, the Subcontract Works shall be considered to be in
accordance with the Subcontract.

Searches for Defects

49.9

If instructed to do so by the Main Contractor before or during the Defect Correction Period
for the Section of the Subcontract Works being considered, the Subcontractor shall search
for Defects as instructed by the Main Contractor. If a Defect is found as a result of the
search and the Defect is the liability of the Subcontractor under the Subcontract, the Cost
of the work to remedy such Defect shall be borne by the Subcontractor, including the Cost
of any searches, tests or trials necessary to determine the existence or extent of the
Defect. In all other cases, the Cost plus profit of such work, including any searches, tests or
trials, shall be ascertained and paid to the Subcontractor as if it were additional work and
instructed as a Variation.

Abatement of the Subcontract Price

49.10 In lieu of remedial work, the Subcontractor may in all cases offer an abatement of the
Subcontract Price.
Failure to remedy Defects
49.11 If the Subcontractor unreasonably neglects or refuses to remedy Defects for which it is
responsible, the Main Contractor may, after agreement from the Subcontractor or a
decision to this effect from the entity rendering a decision in accordance with Chapter 13
and upon giving the Subcontractor 14 Days Notice, engage another subcontractor to
remedy such Defects. Subject to the limitations and exclusions of liability in this

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Subcontract, the Subcontractor is responsible for the reasonable Cost of such remedial
work.
Sole remedies
49.12 Without prejudice to Article 57 or Chapter 13, and unless otherwise agreed, the contractual
remedies set out in this Chapter are the sole and exclusive remedies of the Main
Contractor in respect of Defects.
Final Acceptance
49.13 Final Acceptance shall occur when:
(a)

the Subcontract Works and Punch List items, (if any) have been completed in
accordance with the Subcontract;

(b)

the Defect Correction Period has expired and the Subcontractors obligation under
Article 49 has been carried out;

(c)

the final as-built drawings and manuals (if any) have been delivered; and

(d)

the conditions for Final Acceptance, as set out in an Appendix (if any) are met.

49.14 The Subcontractor shall be entitled to a Certificate of Final Acceptance when the conditions
under Article 49.13 are met.
49.15 In the event that the Main Contractor determines that the conditions for Final Acceptance
have not been achieved, it will notify the Subcontractor giving the detailed reason(s) why
the Main Contractor believes the conditions for Final Acceptance have not been met.
49.16 Any remaining performance or warranty bonds in favour of the Main Contractor are void
after Final Acceptance and are to be returned.
Defect Correction after Final Acceptance
49.17 If and for the time period when Final Acceptance has occurred but the Defect Correction
Period for the works of which the Subcontract Works form part has not yet expired pursuant
to the Main Contract, the Subcontractor shall upon written request by the Main Contractor
remedy Defects in the Subcontract Works as is necessary for the Main Contractor to
comply with its obligations in respect of the correction of Defects under the Main Contract,
and the Cost plus profit of such remedial work, including any searches, tests or trials, shall
be ascertained and paid to the Subcontractor as if it were additional work and instructed as
a Variation.

CHAPTER 9
ALLLOCATION OF RISK AND RESPONSIBILITY, LIMITATIONS OF AND
EXCLUSIONS FROM LIABILITY Agreed 6 July 2010
Article 50

General principles of risk allocation and responsibility

Passing of responsibility for the Subcontract Works

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50.1

The Subcontractor shall take full responsibility for the care of the Subcontract Works or any
Section of them from the Start Date until the Date of Taking-Over, at which time
responsibility for the care of the Subcontract Works and the risk for loss or damage to the
Subcontract Works shall pass to the Employer, unless otherwise agreed between the
Subcontractor and the Main Contractor17.

50.2If Taking-Over occurs for any Section of the Subcontract Works, responsibility for the care of
the Section shall then pass to the Employer, unless otherwise agreed between the
Subcontractor and the Main Contractor.

Article 51
51.1

Purpose of the limitation and exclusion Articles

The purpose of these limitations-of-liability provisions is primarily to ensure that neither

Party is liable for losses that are difficult to estimate or provide for or are out of proportion
with respect to the value of the Subcontract obligations, arising from breach of contract or
other liability. This approach should ensure that the Parties can agree on the most
reasonable Subcontract Price for the Subcontract Works.

Article 52

Liabilities of the Parties and their reciprocal limitations and exclusions

[ASSIGNMENT ROBERT to find place to incorporate FIDIC 3.4]

Damage to property other than the Subcontract Works
52.1

General principles of risk allocation are specifically set out in Article 58. A Party shall be
liable to the other Party for damage to or loss of any of the other Partys property, other
than the Subcontract Works, only to the extent that such damage or loss arises out of the
deliberate or reckless negligence or intentional misconduct of the Party said to be liable. 18
[ASSIGNMENT - ERICRKaye to ensure that all FIDIC 7.3-covered elements are covered
somewhere herein]

Exclusions from liability

52.2Notwithstanding any law or practice to the contrary, in no circumstances will either Party be
responsible to the other for treble, exemplary, moral or punitive damages, or any type of
non-compensatory damages no matter how they are described.
52.3

Except as provided in Article 35 (Variations), Article 37 (Delay Damages), Article 42.7

(Failure to certify), Article 44.1 (Delayed Payment) or Articles 46.12 through 46.15 [NOTE:
No such sections - Performance-related liquidated damages in Main Contract], Except
where expressly stated in another Article, nneither Party shall be liable to the other Party for
loss of profit, loss of income, loss of production or wasted expenditure, or for indirect or
consequential damage however described, including (without limiting the generality of the

17 We have considered that the principle is that the Taking-Over under the Subcontract shall occur only when it also occur under the
Main Contract.

18 This clause doesnt seem to answer the purpose of 51.1 in that it would allow excluding the liability for normally expectable
damages to the property of the other/third party, (e.g. leverage accident) where in any event the responsible party would be insured. We
consider that the use of the word negligence and intentional misconduct is too heavily loaded with common law content for a plain
off-shore English model contract. Furthermore, the language appears inconsistent with 52.4.

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foregoing) loss of use, loss of revenue, loss of interest, loss of data or information or similar
losses.
Limitation of liability for individual claims
52.4

In all cases (including obligations to indemnify and/or hold harmless the other Party, if any)
a Partys liability per damaging event giving rise to a claim 19 shall be limited to an amount of
7.5% of the initial Subcontract Price with the exception of liability under Article 34
(Intellectual Property Rights) or under Article 49 (Defect Correction Period), including,
without limitation, expenditure for the performance of the Subcontractors obligations by a
third party pursuant to Article 49.11 (Failure to remedy Defects), Article 57 (Suspension
and/or Termination of the Subcontract) and Article 58.17 (Failure to take out or maintain
insurance) all of which shall be subject only to the limitation of liability mentioned in Article
52.5.

Overall limitation of liability

52.5Notwithstanding any other provision of this Subcontract, neither Party can claim that the other
Party must pay it, by way of damages or any other form of compensation for breach of its
duties, under or in connection with the Subcontract (including obligations to indemnify
and/or hold harmless), in tort, or for negligence or gross negligence (or any or all of them)
sums that when aggregated with other sums paid under the Subcontract for damages or
compensation for breach of contract or otherwise, amount to more than 30% (excluding
interest) of the initial Subcontract Price.20
52.6Nothing in this Subcontract excludes or limits liability for fraud.

Article 53
53.1

Except in the event of fraud; neither Party shall be entitled to claim from the other Party for
any loss or damage howsoever caused more than ten years after Taking-Over.

Article 54
parties
54.1

Time limit for liability

Extensions of limitations to and exclusions from liability to certain third

The foregoing limitations and exclusions of liability are also for the benefit of and apply to
each Partys personnel, agents, subcontractors, suppliers and their respective personnel.

Article 55

Warranties

In the event of the Main Contractor becoming under the obligation to give specific
additional warranties to the Employer, the Subcontractor shall in good faith attempt to
obtainnegotiate extensions of such warranties as it has given or has obtained from its suppliers.
1.

19 Even in our amended provision, the damaging event remains to be defined.

20 This is a cap on liability that changes from industry to industry and that could be negotiated from contract to contract.

The 30%

figure is less than the traditional figure in civil engineering and more than the figure normally seen in oil and gas contracts.

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CHAPTER 10 Agreed 6 July 2010 aside from Notes

FORCE MAJEURE AND TERMINATION OF THE SUBCONTRACT
Article 56 Force Majeure [NOTE: See below for deviations from ICC Model Force
Majeure Clause 2003]
Purpose of this Article
56.1

This Article sets out the circumstances under which a Party may invoke Force Majeure to
be released from its obligations. The Article also sets out the contractual consequences of
such a situation.

Definition of Force Majeure

56.2

56.3

56.4

Unless otherwise agreed in the Subcontract between the Parties expressly or impliedly,
where a Party fails to perform one or more of its contractual duties, the consequences set
out in Articles 56.5 through 56.10 will follow if and to the extent that that Party proves that:
(a)

its failure to perform was caused by an impediment beyond its reasonable control;

(b)

it could not reasonably have been expected to have taken the occurrence of the
impediment into account at the time of the conclusion of the Subcontract; and

(c)

it could not reasonably have avoided or overcome the effects of the impediment.

Where a Party fails to perform one or more of its contractual duties because of default by a
third party whom it has engaged to perform the whole or part of the Subcontract, the
consequences set out in Articles 56.5 through 56.10 will apply to the Party only if and to the
extent that the Party:
(a)

establishes the requirements set out in Article 56.2; and

(b)

proves that the same requirements apply to the third party.

In the absence of proof to the contrary and unless otherwise agreed in the Subcontract
between the Parties expressly or impliedly, a Party invoking this Article shall be presumed
to have established the conditions described in Articles 56.2(a) and (b) in the case of the
occurrence of one or more of the following impediments:
(a)

war (whether declared or not), armed conflict or the serious threat of the same
(including, without limitation, hostile attack, blockade or military embargo), hostilities,
invasion, act of a foreign enemy, and/or extensive military mobilisation;

(b)

civil war, riot, rebellion, revolution, military or usurped power, insurrection, civil
commotion or disorder, mob violence, and/or act of civil disobedience;

(c)

act of terrorism;

(d)

act of authority whether lawful or unlawful, compliance with any law or governmental

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order, rule, regulation or direction, curfew restriction, expropriation, compulsory

acquisition, seizure of works, requisition, and/or nationalisation;
(e)

act of God, plague, epidemic, natural disaster including, without limitation, violent
storm, cyclone, typhoon, hurricane, tornado, blizzard, earthquake, volcanic activity,
landslide, tidal wave, tsunami, flood, damage or destruction by lightning, and/or
drought;

(f)

act of sabotage or piracy;

(g)

explosion, fire, destruction of machines, equipment, factories and of any kind of

installation, prolonged breakdown of transport, telecommunication or electric current;
or

(h)

general or regional [NOTE: this not included in ICC Model Force Majeure Clause
2003] labour disturbance including, but not limited to boycott, strike and lock-out, goslow, or occupation of factories and premises.

Consequences of Force Majeure

56.5

A Party successfully invoking this Article 56 is, subject to Article 56.7, relieved from its duty
to perform its obligations under the Subcontract from the time at which the impediment
causes the failure to perform if Notice thereof is given without delay or, if Notice thereof is
not given without delay, from the time at which Notice thereof reaches the other Party.

56.6

A Party successfully invoking this Article 56 is, subject to Article 56.7, relieved from any
liability in damages or any other contractual remedy for breach of contract from the time
indicated in Article 56.5.

56.7

Where the effect of the impediment or event invoked is temporary, the consequences set
out under Articles 56.5 and 56.6 shall apply only insofar, to the extent that and as long as,
the impediment or the listed event invoked impedes performance by the Party invoking this
Article 56 of its contractual duties.

56.8

Where this Article 56 applies, the Party invoking this Article is under an obligation to notify
the other Party as soon as the impediment or listed event ceases to impede performance of
its contractual duties.

56.9

A Party invoking this Article 56 is under an obligation to take all reasonable means to limit
the effect upon performance of its contractual duties of the impediment or event invoked.
Where the duration of the impediment invoked under Article 56.2 or of the listed event
invoked under Article 56.4 has the effect of substantially depriving either or both of the
Parties of what they were reasonably entitled to expect under the Subcontract, Articles
56.13 and 56.14 shall apply unless otherwise agreed. [NOTE: ICC Model Force Majeure
Clause 2003 does not include the highlighted words, but instead ends with, , either party
has the right to terminate the contract by notification within a reasonable period to the other
party. Also, ICC Model FMC 2003 ends with an article requiring a party who benefits
economically from terminating under this provision to pay to the other party an amount
equal to such benefit. None of the following provisions of the Model Subcontract (Art 56.10
on) are included in the ICC FMC.]

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Revised Schedule of Subcontractual Dates

56.10 Any time period specified in this Subcontract for the performance of an obligation shall,
upon request of the affected Party, be appropriately extended by reference to the effect of
the Force Majeure event.
Consultation over possible remedial actions
56.11 The Parties shall consult with each other to develop and implement, if practicable, a plan of
remedial and/or reasonable alternative measures to deal with the Force Majeure and to
minimise the losses of each Party resulting from it.
Increase in the Subcontract Price
56.12 If the Works suffer loss or damage prior to transfer of risk and such loss or damage is due
to one or more circumstances listed in Article 56.4 (a) through 56.4 (h) and Subcontractor is
not entitled to receive insurance proceeds under the Marine Cargo or the
Construction/Erection All Risk Insurance, then the Main Contractor shall fully compensate
the Subcontractor for such loss of or damage to the Subcontract Works.
Optional termination, payment and release
56.13 If one or more events of Force Majeure shall impede either Partys performance for longer
than a total of 150 Days from the Date of the notice of such event, the Parties shall decide
through consultation the terms upon which either to continue the performance of this
Subcontract or to terminate this Subcontract by mutual agreement.
56.14 If the Parties are unable to agree on such terms or to terminate this Subcontract by mutual
agreement within 180 Days of the Date of the Notice of such Force Majeure, either Party
may then terminate this Subcontract immediately by written Notice to the other Party. If the
Subcontract is terminated under this Article 56, the provisions of Chapter 6 shall apply and
the Main Contractor in consultation with the Subcontractor shall determine the relevant
portion of the Subcontract Price for the work done, based upon:
(a)

the value of any work that has been carried out and for which the Subcontractor has
not been paid;

(b)

the Cost of Plant and materials ordered for the Subcontract Works that have been
delivered to the Subcontractor, or of which the Subcontractor is liable to accept
delivery; such goods, materials and Plant shall become the property of (and be at the
risk of) the Main Contractor when paid for by the Main Contractor, and the
Subcontractor shall place the same at the Main Contractor's disposal;

(c)

any other Cost or liability that in the circumstances was reasonably incurred by the
Subcontractor in the expectation of completing the Subcontract Works;

(d)

the reasonable Cost of removal of Temporary Subcontract Works and Subcontractor's

Equipment from the Site and the return of such items to the Subcontractor's works in
its country (or to any other destination at no greater Cost); and

(e)

the reasonable Cost of repatriation of the Subcontractor's staff and labour employed
wholly in connection with the Subcontract Works at the Date of such termination,

issue a Payment Certificate in accordance with Article 42, and pay the Subcontractor

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acccordingly.

Article 57

Suspension and/or termination of the Subcontract

Suspension of the Subcontract Works or a Section of the Subcontract Works by the Main
Contractor
57.1

The Main Contractor may at any time instruct the Subcontractor to suspend progress of a
Section or all of the Subcontract Works. During suspension, the Subcontractor shall take all
reasonable steps in the circumstances to protect, store and secure such part or the
Subcontract Works against any deterioration, loss or damage.

Suspension by the Subcontractor

57.2

If suspension is necessary for the protection of the Subcontract Works or human safety, the
Subcontractor may with Notice to the Main Contractor also suspend all or a Section of the
Subcontract Works. During suspension, the Subcontractor shall take all reasonable steps in
the circumstances to protect, store and secure such part or the Subcontract Works against
any deterioration, loss or damage.

Reimbursement of Cost and payment in the event of suspension

57.3

If the Subcontractor suffers delay and/or incurs Cost as a result of suspension under
Articles 57.1 or 57.2, the Subcontractor shall give Notice to the Main Contractor and shall
be entitled to reimbursement of the such Costs, including, without limitationany, storage
expenses resulting from the suspension. It shall also be entitled to payment for goods
and/or materials and/or Plant that have not been delivered to Site, if the work on Plant or
delivery of Plant and/or materials has been suspended. This entitlement shall be to
payment of the value as at the Date of Notice to the Main Contractor of such Costs of
labour, other subcontractors, demobilisation, Plant and/or materials, if:
(a)

the Subcontractor has indicated the Plant and/or materials are the Main Contractor's
property, by marking or otherwise; and

(b)

the suspension is not due to a cause attributable to the Subcontractor.

(c)

and in the proportion of the Main Contractors rights against the Employer to
reimbursement of costs and payment in the event of suspension.

The Main Contractor shall thereafter, if requested by the Subcontractor, take over the
responsibility for protection, storage, security and insurance of such Plant and/or materials,
and the risk of loss or damage.
Prolonged suspension
57.4

If suspension under Article 57.1 or Article 57.2 has lasted for a continuous period of more
than 120 Days or, if the period is not continuous, for a total of more than 180 Days in the
aggregate and the suspension is not due primarily to a cause attributable to the
Subcontractor, the Subcontractor may by Notice to the Main Contractor require agreement
to proceed from the Main Contractor within 28 Days. If agreement is not given within that
time, the Subcontractor may treat the suspension as an omission by Variation under Article
35 of the affected part of the Subcontract Works. If such suspension affects the whole of

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the Subcontract Works, the Subcontractor may terminate the Subcontract under the
termination provisions of Article 57.15.
57.5

If the suspension is due to reasons for which the Subcontractor is responsible, the
provisions of Articles 57.3 through 57.4 do not apply. The Subcontractor will not be entitled
to any extension of the Time to Taking-Over under Article 36.4 or additional payment under
the Subcontract.

Resumption of work
57.6

After receipt of permission or of an Instruction to proceed, the Subcontractor shall, after

notice to the Main Contractor and together with the Main Contractor, examine the
Subcontract Works and the Plant and materials affected by the suspension. The
Subcontractor shall remobilise and thereafter make good any deterioration or Defect in or
loss of the Subcontract Works or Plant or materials that has occurred during the
suspension. The value of such remobilisation and making good shall be a Variation, unless
the suspension was caused by reasons attributable to the Subcontractor.

57.7

If the Main Contractor has taken over risk and responsibility for the suspended Subcontract
Works under Article 57.3, risk and responsibility shall revert to the Subcontractor 14 Days
(or such other period as may be agreed) after receipt of the agreement or Instruction to
proceed.

Suspension or termination for fault

57.8

Either Party may suspend its performance of the Subcontract or terminate this Subcontract
upon the occurrence of a material breach of contract by the other Party. Notices of
suspension under this Article 57 must be given at least 14 Days prior to the first Day of the
suspension. Notice of termination must be given (whether or not there has been a prior
Notice of suspension) at least 63 Days prior to the Date of termination. Any such Notice will
become ineffective if the breach complained of has been cured, or there has been an
undertaking to cure it as soon as possible in the circumstances.

57.9

Material breaches by the Main Contractor include, but are not limited to: [NOTE: 6 July TF
participants very concerned about this Art but it is included in MC. How much can we
change?]
(a)

persistent failure or refusal to finalise the Main Contractors Requirements or to issue

a Notice to Proceed pursuant to Article 36.3(b);

(b)

regularly [NOTE: clarify??] instructing Variations or instructing a major Variation

without acknowledging that the change or changes are Variations; [NOTE: This is
concerning esp. since we now have dayworks provision in 35.15. At variance
fundamentally w. Art 35. Presumably intended to address instructing V with intention
of not paying?]

(c)

failing for whatever reason to give possession of the Site or Sections thereof at the
agreed time or times of handover [NOTE: and/or failing thereafter to agree to
extensions of time;]

(d)

failing to have access to the funds necessary to pay sums due under the Subcontract
as they are or become due; or

(e)

persistently or seriously hindering or delaying the Subcontractor.

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57.10 Material breaches by the Subcontractor include, but are not limited to:
(a)

persistently failing to produce Design documents according to the Schedule of

Subcontractual Dates or any agreed revised Schedule;

(b)

a substantial and continuing failure to proceed with the Subcontract Works with
appropriate diligence despite at least two warnings given 30 Days apart that it is
failing to do so in respect of specified areas of the Subcontract Works; or

(c)

failure to achieve Taking-Over/Provisional Acceptance of the Subcontract Works after

the period when the maximum amount of Delay Damages applies and there has been
a continuing failure despite at least two warnings given 30 Days apart.

57.11 Material breaches by either Party include, but are not limited to:
(a)

failing without express or implied agreement from the other Party to pay sums due
under the Subcontract on more than two separate occasions and/or for more than 30
Days from the due Date;

(b)

failing to comply with important elements of decisions of the arbitral tribunal or entity
rendering a decision in accordance with Chapter 13;

(c)

bankruptcy or insolvency or a failure to be able to meet its debts as they fall due
(unless such a position arises from the other Partys failure to pay sums due); [NOTE:
need to discuss in Rome; doesnt (a) already pick this up?]

(d)

failing to produce the guarantees, bonds or other securities required by the

Subcontract within the time specified in the Subcontract or a reasonable time
thereafter.

57.12 In addition to service by any other method, all Notices under this Article must be served by
courier or hand delivery with signed acknowledgement of delivery or receipt, unless such
acknowledgement is refused.
57.13 Any Party served with a Notice of termination shall have the opportunity to cure the breach
complained of within a reasonable time, which under no circumstances shall be less than
21 days.
Consequences of termination
57.14 In all cases of termination of the Subcontract by any method, including under this Article 57,
the limitation- and exclusion-of-liability provisions of this Subcontract shall continue to
apply.
57.15 If the Subcontractor terminates for fault pursuant to Article 57.8, it will be entitled to the
valuation set out in Article 56.14, plus lost profit (if any) on the Costs of the whole
Subcontract as damages. If the Project is a Build Operate Transfer or similar Project, it will
not be entitled to damages for lost profit for operating the Project (or similar rights) for the
concession period.
57.16 If the Main Contractor terminates for fault pursuant to Article 57.8, the Subcontractor will be
entitled to the compensation set out in Articles 56.14 (a) and (b), but not to that set out in
Articles 56.14 (c), (d) or (e). In addition to transfer of title and risk in all goods, materials,
and Plant, the Main Contractor has paid for, the Main Contractor shall be entitled to recover
the reasonable additional Costs incurred in completing the Subcontract Works.

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57.17 Further, if the Main Contractor terminates pursuant to Article 57.8 or Article 57.10, it shall be
entitled to use all the Subcontractors Equipment on Site at the Date of termination, and is
considered by the fact of termination pursuant to this Article 57, to have been granted by
the Subcontractor a transferable royalty-and fee-free licence to use such Equipment until
the Subcontract Works are complete. The Main Contractor is entitled to free use of
consumables and perishable items left on Site and shall not be responsible for fair wear or
tear or depreciation/deterioration to Subcontractors Equipment of which it has thus
temporarily taken use. On completion of the Subcontract Works, all such Subcontractors
Equipment and remaining consumables shall be placed at the disposal of the
Subcontractor.
Chapters surviving termination
57.18 Without affecting the enduring nature of any other term of this Subcontract and
notwithstanding any other provision of this Subcontract or the applicable laws, it is agreed
and understood that Chapters 9, 10, 12 and 13 of the Subcontract survive any termination
or alleged termination or avoidance of this Subcontract on the ground that it was void from
the beginning, however such circumstances may come about. [NOTE: discuss in Rome
how to change this or, failing that, how to amend MC when it is updated.]
57.19 The provisions of this Article 57 shall (to the extent permitted by the mandatory provisions
of the applicable law) be to the exclusion of any suspension and/or termination (including
rescission) rights that would otherwise be available under the applicable law.

CHAPTER 11
INSURANCE
Article 58 Insurance
[ASSIGNMENT ERIC & JOSE/HANS
Query whether S needs yet another layer of insurance? Certainly, what level/risks?
Also to the extent risks, losses or damages are not covered by the MCs insurance,
S should cover]
Language below provided by Mr. Ott of Siemens Jos/Hans please consult him on
the above issues. Eric, please have your Insurance Department look at whole
Chapter.]

Contractors insurance
1.
The Main Contractor shall effect and maintain at its own expense the insurance
cover as specified in Articles 58.2 through 58.5. It shall provide terms and conditions as are
reasonably available in the insurance market and that are customarily purchased by
contractors on similar projects with regard to size, technology and location and the insurance
cover shall be effected with financially responsible insurers or re-insurers reasonably

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acceptable to the other Party. These covers will include the Subcontractor [and any other
subcontractors?] as co-insured parties with insurers waiver of subrogation.
(NOTE by Mr Ott: The unconditioned and unchanged application of the Sub-clauses 58.1
through 58.5 presupposes that the insurance philosophy and handling structure of the Main
Contractor is such that the Main Contractor intends to effect and maintain these Works
Policies to cover the interests of all involved Parties in the Site execution of the Works and
hence will include all the Sub-contractors and their sub-contractors as co-insured parties
with insurers waiver of subrogation. Where the Main Contractor intends to deviate from
these principles with respect to the Marine Cargo this will be for example dependent from
the definition of the applicable INCOTERMS or otherwise risk of loss rule under the Main
Contract, regarding Construction/Erection All Risks insurance some Main Contractors
prefer to insure only their own risks and interests and require their Sub-contractors to effect
and maintain their own insurance in this respect - these Sub-clauses have to be changed
and amended accordingly.)
58.2

Marine Cargo Insurance will be maintained for not less than 110 % of the Incoterms 2000
rule CIF value to cover loss or damage to the Works during transportation with
conveyances of whatsoever kind from any warehouse worldwide until and including
unloading at the Site. This cover shall not be less than the internationally known Institute
Cargo Clauses (A) of the Institute of London Underwriters, provided war risks are available
at base rate and the deductible shall not be higher than the amount per occurrence
specified (if any) in the Schedule of Contractual Amendments.

58.3

Construction/Erection All Risk Insurance shall cover loss or damage to the Works on all
risks basis for not less than the full reinstatement Cost, subject to sub-limits as are
reasonably commercially available and with exclusions customarily required by the
insurance market, such as the exclusion of the terrorism risk. This insurance shall cover
any Site activity after unloading of the Works at the Site, including storage on or near the
Site, construction, erection, assembly, cold and hot commissioning and testing until the
Taking-Over Certificate is issued or deemed to be issued.

58.4

The policy conditions shall comply with good international standards and shall contain all
terms and conditions and endorsements as are customarily available in the insurance
market. Loss or damage to the Works arising from the consequences of faulty Design,
material or workmanship shall also be covered (in accordance with the internationally
known Design Clauses LEG 2/96 or Munich Re Endorsement 200). The general deductible
in such policy shall not exceed the amount per occurrence specified (if any) in the Schedule
of Contractual Amendments.

58.5

The Main Contractor shall maintain the Construction/Erection All Risk Insurance to provide
cover during the Defect Correction Period for loss or damage for which the Main Contractor
or its Subcontractors are liable arising from a cause occurring through Site activities prior to
the Date the Taking-Over Certificate is issued or deemed to be issued, and for Loss or
damage caused by the Main Contractor or Subcontractors in the course of any other
operations in connection with their Defect liability obligations under the Main Contract
(Extended-Maintenance cover).

Subcontractors Insurance
58.9

The Subcontractor shall, further to the Main Contractors Insurance as set out in Articles
58.2 through 58.5, effect and maintain at its own expense, or shall cause its own
subcontractors to effect and maintain at their own expense, the following insurance cover

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with reputable insurance carriers authorised to do business in the Country:

(a)

Employers liability and workmans compensation insurance in accordance with any

applicable law(s). If the law does not provide for any obligations in this respect or
requires only some minimum limits, then the Main Contractor shall arrange this
insurance in a manner and with limits as a prudent and reasonable Subcontractor in
the same circumstances and environment would so do. This insurance shall be
maintained in full force and effect during the whole time that Subcontractors
Personnel are assisting in the execution of the Subcontract Works on Site.

(b)

Automobile liability insurance in the Country in accordance with any applicable law(s).
If the law does not provide for any obligations in this respect or requires only some
minimum limits, then the Subcontractor shall arrange this insurance in a manner and
with limits as a prudent and reasonable Subcontractor in the same circumstances and
environment would so do.

(c)

Comprehensive third-party liability insurance to cover Subcontractors legal liability

with a limit, unless otherwise agreed, of indemnity of not less than 1,000,000 EUR (or
equivalent in other currency) per occurrence and 2,000,000 EUR (or equivalent in
other currency) in the aggregate21.

(d)Subcontractors Equipment insurance to cover loss or damage to Subcontractor's

Equipment on an all risks basis for not less than the full replacement value, during any
activity on the Site and including delivery to Site.
General provisions - compliance with policy conditions
58.15 For all insurance policies that either Party is obliged to effect and maintain, the insuring
Party is responsible for proper and complete disclosure of all information required by
insurers and shall comply with all requirements and policy conditions of such insurance
policies.
Change of policy conditions
58.16 Neither Party shall make any changes or alterations in the policy conditions of the
insurance that the Party is obliged to effect and maintain without having earlier notified the
other Party of such changes or alterations and without having the approval of the other
Party where the other Partys rights and interests could be affected by any such changes or
alterations. The insuring Party shall promptly notify the other Party if any of the insurers of
the insuring Partys insurance policies are cancelling or altering any of the insurance
policies whereby any rights or interests of the other Party could be affected.
Insurance cover no effect on liabilities
58.17 Nothing in this Article 58 limits the obligations, liabilities or responsibilities of the Main
Contractor or the Subcontractor under the other terms of the Subcontract and nothing in
this Article shall be construed to increase the limitations on liability in the Subcontract. Any
amounts not insured or not recovered from the insurers shall be borne by the Main
Contractor and/or the Subcontractor in accordance with their obligations, liabilities or
responsibilities. However, if the insuring Party fails to effect and keep in force an insurance
that is available and that it is required to effect and maintain under the Subcontract and the
21 The figures are very much determined by the nature of the project.

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other Party neither approves the omission nor effects insurance for the coverage relevant
to this default, any moneys that should have been recoverable under this insurance shall
be paid by the insuring Party.
Damage mitigation
58.18 The Main Contractor and the Subcontractor acknowledge that in the event of damage, both
Parties shall exert all reasonable efforts to mitigate the damage accruing from such event.
In the event that the Works sustain damage, notwithstanding the foregoing obligation to
mitigate, Subcontractor shall:
promptly notify Main Contractor;
take all necessary steps to preserve any damaged items, and not
clean, destroy, discard or attempt to modify or unnecessarily move or remove any parts
that are directly a part of the damage (except as is reasonably necessary to mitigate
the damage and/or to ensure the safety of personnel); and
c.
co-operate with, and assist in relation to, any survey carried out by
any insurance loss adjustor as soon as is practically possible following the occurrence
of the damage.
a.
b.

Policy terms take precedence over descriptions

58.19 The coverage referred to in this Article 58 is set forth in full in the respective insurance
policies. The descriptions of such policies in this Subcontract are not intended to be
complete, nor to alter or amend any provisions of the actual policies. In the event of a
conflict between the insurance policies and this Subcontract, the provisions of the
insurance policies shall prevail.

CHAPTER 12 Agreed 6 July 2010 subject to any NOTES

MISCELLANEOUS PROVISIONS
Article 59 Confidentiality [NOTE: This is not the ICC Model Confidentiality Clause.
We may therefore amend as needed.]
59.1 Each Party shall use all business and technical information received from the other Party in
connection with this Subcontract, and which the disclosing Party expressly states to be con
fidential or the confidential nature of which can be assumed on the basis of the
circumstances of its disclosure or its contents, solely for the purposes for which it was
provided; and shall treat it in the same way as its own business secrets; and not make it
available to third parties, unless the business or technical information in question:
(a)
is generally available from public sources or in the public domain;
(b) is received at any time from any third party without a nondisclosure obligation to the
disclosing Party;
(c) is shown either to have been developed independently by the receiving Party without
reliance on the disclosing Party's confidential information or to have been known to the
receiving Party prior to its disclosure by the disclosing Party; or
(d) must be disclosed to third parties for the purpose of performing this Subcontract, provided
such third parties are or become subject to an equivalent confidentiality obligation.
59.2 Notwithstanding the provisions of Article 59.1, any Party may disclose any confidential

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information if, and to the extent, it is required to do so by the disclosure requirements of any
law, rule, or regulation or any order, decree, subpoena, or ruling or other similar process of
any court, tribunal, arbitral tribunal or governmental instrumentality or of any regulatory body
having jurisdiction. Prior to making or permitting any Party to make such disclosure the
disclosing Party shall to the extent possible provide the Party that initially provided such
information with written Notice of any such requirement so that that Party may seek a
protective order or other appropriate remedy. The Party required to make such disclosure
shall co-operate with the Party that initially provided the information, in order to minimize and
protect against the disclosure of the confidential information and with any efforts by the Party
seeking to protect the information from disclosure to obtain proprietary or confidential
treatment for such confidential information by the third party to whom the confidential
information is disclosed or to seek protective orders limiting the dissemination and use of the
confidential information. Nothing herein shall prevent any Party from objecting to the rule,
regulation, or order requiring the disclosure.
59.3

The foregoing confidentiality obligation shall also apply to the contents of this Subcontract.

59.4 The confidentiality obligation created by this Article 59 shall continue for a period of four
years after Final Acceptance.
59.5 Publications of any kind on or in any media (including electronic media) by a Party or initiated
by a Party referring to the Works shall require the prior written approval of the other Party,
which approval shall not unreasonably be withheld.

Article 60 Bribery, gifts, inducements or rewards

60.1 The Parties hereby warrant, represent and undertake to each other that at the Date hereof
neither Party or its subcontractors, agents, officers or any third parties on their behalf, has
offered, given, demanded, requested, accepted or agreed to any undue pecuniary or other
advantage of any kind (or implied or inferred that they will or might do any such thing at any
time in the future) in any way connected with the Subcontract or any other contract between
the Parties (or any related parties).
60.2 The Parties agree that at all times throughout the course of the Subcontract and thereafter
they will comply with and ensure that their subcontractors, agents, servants, employees and
officers comply with the most current version of the ICC Rules of Conduct and
Recommendations to Combat Extortion and Bribery in international business transactions,
which are incorporated by reference into this Subcontract as if written out here in full.
60.3 The Parties specifically confirm that the entity rendering a decision in accordance with
Chapter 13 and/or arbitral tribunal, as the case may be, shall have the ability to determine
the civil consequences of any alleged non-observance of this Article 60 to the exclusion of
the (non-criminal) courts.
60.4 Notwithstanding any applicable laws, no fraud or other illegal conduct will discharge either
Party from the Subcontract unless such conduct deprives the other of the whole or
substantially the whole benefit of the Subcontract as a result of the action complained of and
the Party alleging such conduct has terminated the Subcontract under the provisions of the
Main Contract, according to Article 2.2.

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Article 61

Entire agreement, severability and amendments to the Subcontract

Entire agreement
61.1 The Subcontract constitutes the entire agreement between the Parties with respect to the
subject matter of the Subcontract and supersedes all communications, representations,
negotiations and agreements (whether written or oral) of the Parties with respect thereto
made prior to the Date of the Subcontract which are not incorporated by writing into the
Subcontract.
Modifications to the Subcontract
61.2 Any changes to this Subcontract must be evidenced in writing. No written communication or
action by either Party shall be effective to modify or amend the Subcontract, unless the
Parties have expressly agreed or impliedly acknowledged in written communications
between them that the Subcontract should be or has been so modified or amended.
61.3 If any provision or condition of the Subcontract is prohibited or rendered invalid or
unenforceable, such prohibition, invalidity or unenforceability shall not affect the validity or
enforceability of any other provision or condition of the Subcontract or its performance in a
jurisdiction where it is not prohibited or rendered invalid. Further, to the extent possible, the
provision or condition will be replaced through agreement or by the entity rendering a
decision in accordance with Chapter 13 and/or arbitral tribunal, as the case may be, by a
valid and enforceable provision or condition with the same or a similar result.
61.4 Neither Party waives any of its rights under this Subcontract by failing to exercise them.
Individual waivers do not amount to a general waiver.
Alleging lack of capacity
61.5 Each Party warrants that, once work has commenced on Site, it will not allege that the
person or persons who signed the Subcontract on behalf of that Party lacked the capacity or
authority to execute the Subcontract, or that there was some other formal invalidity or
incapacity that affected the validity or enforceability of the Subcontract against that Party. In
particular, actual or alleged lack of governmental or managing board authorisations or
permits shall not excuse non-performance or non-observance of the Subcontract by a Party.
61.6 If a Party named in the Subcontract does not have separate legal personality under the laws
governing its status, the definition of the Party bound by this Subcontract includes any
organisation of which it is a part that does have separate legal personality.
Waiver of sovereign immunity and similar privileges
61.7 Any sovereign immunity or immunity from execution or attachment is hereby waived by both
Parties to this Subcontract. It is agreed that this Subcontract is a commercial transaction
under international law and that governmental or state bodies entering into this Subcontract
do so with the intention of making the Subcontract effective in accordance with its terms and
so hereby waive any and all sovereign immunity, immunity from attachment or administrative
law requirements that otherwise might have applied to them.

Article 62

Joint and several liability

62.1 If either Party constitutes (under applicable laws) a joint venture, consortium, partnership or
other unincorporated grouping of two or more persons, however it is described:

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(a)
those persons shall be deemed to be jointly and severally liable to the other Party
for the performance of the Subcontract; and
(b)
those persons shall notify the other Party of their leader who shall have authority to
bind that Party and each of those persons.
62.2 Neither Party to this Subcontract nor the members of the unincorporated grouping described
in Article 62.1 shall alter its legal status or divest itself of legal responsibility for its obligations
under the Subcontract without the written consent of the other Party.

Article 63 Subcontractor notification and responsibility and assignment of

Subcontractors obligations
63.1 Neither Party shall subcontract the whole of the Subcontract without the knowledge and
express written agreement of the other Party and the Employer. Each Party shall be
responsible for the acts or defaults of its subcontractors, agents, officers or employees while
performing the Subcontract as if they were the acts or defaults of the Party.
63.2 Where agreed by the Parties at the Subcontract Date or where a subcontractor is named in
the Subcontract, the Subcontractor shall give the Main Contractor and the Employer not less
than 28 Days Notice of:
(a)
the intended appointment of a subcontractor, with reasonably detailed particulars of
the category of work, which shall include its relevant experience; and
(b)
the intended commencement of the subcontractors work on the Site.
63.3 Except where otherwise agreed in this Subcontract, neither Party has any other rights in
relation to the appointment, terms of engagement, scope of work or any other aspects of a
subcontractors work.
Assignment of Subcontractor's obligations
63.4 If the Subcontractor or a further subcontractor has undertaken a continuing and assignable
obligation to the Subcontractor for the Subcontract Works designed or executed, or goods,
materials or Plant supplied by them, and if the obligation extends beyond the expiry of the
last Defect Correction Period, the Subcontractor shall, upon the expiry of the last Defect
Correction Period, and if requested so to do by the Main Contractor, assign the benefit of
such obligation to the Employer for its unexpired duration. Any such assignment shall be at
the expense of the Main Contractor or Employer.

Article 64

Assignment of the Subcontract by either Party

64.1 Neither Party shall, without the express written consent of the other Party and the Employer,
which consent shall not be unreasonably withheld, assign NOTE: Can we find a word to
capture notion of novation? Transfer perhaps? to any third party the Subcontract or a part
thereof or any right, benefit, obligation or interest therein, except that each of the Parties
shall be able to assign either absolutely or by way of charge any money payable to it, which
may become payable under the Subcontract.
64.2

Subcontracting is not considered to be assignment.

Article 65

Communications, including Notices and consents

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65.1 Wherever the Conditions of Subcontract provide for the giving or issuing of approvals,
certificates, consents, decisions, Notices, notifications and/or requests, these
communications shall be:
(a)
in writing and delivered by hand (against receipt), sent by mail or courier, or
transmitted by facsimile, electronic mail with confirmation of receipt, or any other system of
electronic transmission or storage of information used by the Parties; and
(b)
delivered, sent or transmitted to the address for the recipients communications as
stated elsewhere in the Subcontract (the Schedule of Subcontractual Amendments) or
otherwise normally used. However, if the recipient:
(i)
gives Notice of another address, communication shall thereafter be delivered
accordingly; and
(ii)
has not stated otherwise when requesting an approval or consent, it may also be
sent to the address from which the request was issued.
65.2 Approvals, certificates, consents, decisions, requests, Notices and/or notifications shall not
be unreasonably withheld or delayed by either Party.
65.3 Any Notice or other communication served by hand, fax, e-mail or post shall be deemed to
have been received:
(a)
in the case of delivery by hand or by courier, when delivered against an
acknowledgement of receipt;
(b)
in the case of fax or e-mail (with confirmation of receipt requested) sent to the
correct delivery address, the next local Business Day following the Day of successful
transmission; or
(c)
in the case of registered mail with a return receipt, at 11:00. on the Date of actual
receipt,
provided that in each case where delivery by hand, courier or by fax occurs after 18:00. on a
Business Day, or on a Day that is not a Business Day, delivery shall be deemed to occur at
9:00. on the next following Business Day. References to time in this Article 20 are to local
time and Business Days in the country of the intended recipient.
65.4

In the Subcontract, except where the context requires otherwise:

(a)
the Subcontract and language are neutral in relation to gender;
(b) words indicating the singular also include the plural and words indicating the plural also
include the singular;
(c) provisions including the word agree, agreed or agreement require the agreement
to be either in writing or recorded in writing (before or after the agreement);
(d) written or in writing means hand-written, type-written, printed or electronically made,
and resulting in a record with an electronic signature or confirmation of receipt;
(e) in understanding this Subcontract, the Chapter, Article and other headings are intended
to be included in the Subcontract and its interpretation; and
(f)
all Notices, notifications, certificates, consents, approvals, decisions and requests
under this Subcontract shall indicate the Article(s) of this SubcContract under which
they are given or made.

CHAPTER 13
CLAIMS, DISPUTE RESOLUTION AND ARBITRATION
[NOTE: TO BE DISCUSSED/DECIDED IN ROME]

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[ASSIGNMENT - ALL: to be redrafted to provide for mechanism other than CDB. See
Tim Reynolds proposed approach below.]

Article 66 Exclusive remedies - All claims of all types are to be determined by

these provisions
IIf a CDB is used it may or may not be that appointed under the Main Contract. NOTE: Need to
find a place to insert.
Claims by either Party
66.1 All claims, differences or disputes (Disputes) arising out of or in connection with the
Subcontract are agreed to be resolved solely by the procedures set out in this Subcontract.
66.2 The Parties hereby agree to establish a Combined Dispute Board (CDB) in accordance with
the ICC Dispute Board Rules in force at the Subcontract Date (the Rules), which are
incorporated herein by reference. The CDB is therefore empowered and expected to decide
all Disputes, including any question or issue regarding its existence, validity or termination.22
Terms used in this Article 66 shall have the meanings given to them in the Rules. The CDB
shall have one or three member(s) appointed in this Contract or appointed pursuant to the
Rules. Where the Parties have not otherwise agreed, there shall be a CDB of three
members23.
66.3All Disputes shall be submitted, in the first instance, to the CDB in accordance with the Rules.
For any given Dispute, the CDB shall issue a recommendation unless this Subcontract
requires a decision or the Parties agree that it shall render a decision or it decides to do so
upon the request of a Party and in accordance with the Rules.
66.4 If any Party fails to comply with a recommendation or a decision when required to do so
pursuant to the Rules, the other Party may refer the failure itself to arbitration under the
Rules of Arbitration of the ICC by one or more arbitrators appointed in accordance with the
said Rules of Arbitration.
66.5 If any Party sends a Notice to the other Party and the CDB expressing its dissatisfaction with
a recommendation or a decision as provided for in the Rules, or if the CDB does not issue
the recommendation or decision within the time limit provided for in the Rules, or if the CDB
is disbanded pursuant to the Rules, the dispute shall be finally settled under the Rules of
Arbitration of the ICC by one or more arbitrators appointed in accordance with the said Rules
of Arbitration.
22 The Parties are advised to name a place from which both the CDB and any arbitral tribunal will be considered to have issued its
decisions, as well as the procedural law governing both the CDB and any arbitral tribunal. Note that the Parties are also advised to
check whether this provision regarding CDB jurisdiction is valid under the applicable law.

23 The Parties may consider appointing a one-member Dispute Board for a small or simple contract or a Dispute Board on an ad hoc
basis, in which case this Article needs to be redrafted accordingly.

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66.6 Until the dispute is finally settled by arbitration or by agreement of the Parties, they shall
remain bound by any decision, whether or not dissatisfaction has been expressed, unless the
Parties themselves agree otherwise. All sums of money agreed or ordered to be paid will be
paid immediately and not held back pending resolution of the Dispute or for any other
reason.
66.7 Each Party hereby indemnifies the other Party for any and all Costs or losses caused by
breach of Articles 66.1 through 66.6.
66.8 The language of the CDB proceeding and the arbitral proceeding shall be the ruling language
of the Subcontract unless otherwise provided for.
PROPOSAL RECEIVED FROM TIM REYNOLDS, APRIL 2010
Article 66 - Exclusive Remedies
66.0
that
the

The intention oft his clause is to provide a system for the resolution of all or any disputes
might arise under the subcontract. The relative size of the parties and the complexicities of
possible dispute have resulted with creation of options for resolution. The party notifying the
dispute in such notice must specify whether it intends to activate the procedures in Option A
or B.

66.1 All claims, differences or disputes ("Disputes") arising out of or in connection with
Subcontract are agreed to be resolved solely by the procedures set out in this Subcontract.
OPTION A
66.2 The Parties hereby agree to establish a Combined Dispute Board ("CDB") in accordance with
the ICC Dispute Board rules in force at the Subcontract Date (the "Rules"), which are
incorporated herein by reference. The CDB is therefore empowered and expected to decide
all Disputes, including any question or issue regarding its existence, validity or termination.
Terms used in this Article 66 shall have the meanings given to them in the Rules. The CDB
shall have one or three member(s) appointed in this Contract or appointed pursuant to the
Rules. Where the Parties have not otherwise agreed, there shall be a CDB of three
members.
66.3 All Disputes shall be submitted, in the first instance, to the CDB in accordance with the
Rules. For any given Dispute, the CDB shall issue a recommendation unless this
Subcontract requires a decision or the Parties agree that it shall render a decision or it
decides to do so
upon the request of a Party and in accordance with the Rules.
66.4 If any Party fails to comply with a recommendation or a decision when required to do so
pursuant to the Rules, the other Party may refer the failure itself to arbitration under the
Rules of Arbitration of the ICC by one or more arbitrators appointed in accordance with the
said Rules of Arbitration.
66.5 If any Party sends a notice to the other Party and the CDB expressing its dissatisfaction with
a recommendation or a decision as provided for in the Rules, or if the CDB does not issue
the recommendation or decision within the time limit provided for in the Rules, or if the CDB
is disbanded pursuant to the Rules, the dispute shall be finally settled under the Rules or
Arbitration of the ICC by one or more arbitrators appointed in accordance with the said Rules
of Arbitration.

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OPTION B
66.6

A party giving a notice of a dispute which it wishes to have resolved under Option B shall
proceed as follows:-

1.

Within 7 days it shall give notice in writing to the other party of the Senior Member of its
organisation whom is empowered to resolve the dispute.
Within 14 days of receipt of such notice the Receiving Party shall likewise nominate a
similar Senior Member.
The respective Senior Member shall meet within 14 days or such longer period if both
agree with a view to resolving the dispute between them. The respective Senior Member
shall conduct such discussions in such names s they may agree subject to the overriding
obligations of good faith and fairness between them.
In the event of such discussions not leading to a resolution of the matter it shall be often but
not a requirement to either party to seek the appointment of an independent person (to be
agreed between the parties to assist in the resolution of the dispute.
In the further event that the procedure in 66.6.1 - 66.6.4 above does not lead to a resolution
of the matter it shall be open to either party to give formal notice that they require Option A
of this Clause to apply for the date of such notice.

2.
3.

4.

5.

66.7 Until the dispute is finally settled by arbitration or by agreement of the Parties, they shall
remain bound by any decision, whether or not dissatisfaction has been expressed, unless the
Parties themselves agree otherwise. All sums of money agreed or ordered to be paid will be
paid immediately and not held back pending resolution of the Dispute or for any other
reason.
66.8

Each Party hereby indemnifies the other Party for any and all Costs or losses caused by
breach of Articles 66.1 through 66.6.

66.9 The language of the CDB proceeding and the arbitral proceeding shall be the ruling language
of the Subcontract unless otherwise provided for.

Article 67

Supplemental provisions relating to arbitration

67.1 No arbitral tribunal can open up review or revise any decision of the CDB which has become
final and binding in accordance with the Rules, but an arbitral tribunal may, if considered
appropriate by the arbitral tribunal and permitted under applicable law, as provided hereafter,
make interim awards for the purpose of enforcement of the CDB Decision.
67.2 Any Notice of dissatisfaction shall be specific as to what part of a decision or
recommendation it refers to and disputes (if there are identifiable elements to the decision)
and what parts of any decision or recommendation are not disputed. Once the time period for
serving notices of dissatisfaction has passed, neither Party may subsequently argue that a
decision or part of a decision is not binding, if neither Party served a notice of dissatisfaction
in respect of the decision or any part of it..
Res judicata, sequential arbitrations and the contractual effects of the CDB
67.3 If and to the extent that they have become final and binding, the dispositive provisions of
earlier decisions (if any) of a CDB constituted under this Subcontract shall be binding on a
later CDB and arbitral tribunals.
67.4 Neither Party shall be limited in arbitration to views, evidence or arguments put to the CDB or
to the reasons for dissatisfaction given in its notice of dissatisfaction with a CDB decision, if

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there was such a notice. Any determination of a CDB shall be admissible in evidence in the
arbitration.
67.5 If an arbitral tribunal has been appointed and the arbitral tribunal has not declared the
proceedings closed, subject to the rules governing the conduct of the arbitral tribunal, any
further disputes in respect of which a CDB decision has not been rendered or has not
become final and binding, as the case may be, may be referred to the arbitral tribunal.
67.6 Following Taking-Over of the Works, the Parties may, entirely in their own discretion, refer
Disputes directly to arbitration under the Rules of Arbitration of the ICC by one or more
arbitrators appointed in accordance with the said Rules of Arbitration.
Subcontractor participation in Main Contract disputes
67.7 If the Main Contractor has a claim or dispute of any kind involving the Employer or a Third
Party which relates to the Subcontractors Work or rights of the Subcontractor, the Main
Contractor may if the dispute concerns the Subcontractors scope of work notify the
Subcontractor and request the assistance of the Subcontractor. In such case, the
Subcontractor may give any and all reasonable assistance for the pursuit of the claim or
dispute, at the Subcontractors choice (provided it agrees [and to the extent it agrees] to be
bound by the result). That assistance may include, with the consent of the CDB or Arbitral
Tribunal, participation as a witness [or a party] to the CDB claim or arbitration. If either party
is involved in additional cost the parties will agree appropriate compensation for that
participation. Failing such agreement, the compensation will be set by the CDB or an Arbitral
Tribunal established in accordance with the ICC Rules of Arbitration.
67.8 [Whenever the Main Contractor makes claims and has received compensation or an
extension of time relating to the Subcontractors work or rights, the Main Contractor will share
in the benefits, to the extent they accrue to the Subcontractor, of any compensation or time
extension with the Subcontractor. Such sharing will be agreed by the Parties or set by a
CDB or Arbitral Tribunal]. OR
[Provided the Subcontractor [has assisted the Main Contractor] [is entitled under Subcontract to
such payment or time extension] and the Main Contractor has received compensation relating to
the Subs work, the Main Contractor and Subcontractor will consider appropriate allocation
between them of the compensation if not dealt w. by the CDB or the Arbitral Tribunal]
PROPOSAL RECEIVED FROM TIM REYNOLDS, APRIL 2010
Draft Sub Contract Conditions
67.8
pay

The Subcontractor shall if so requested, and provided that the Main Contractor agrees to
the Subcontractor the Subcontractors reasonable costs in providing as below:
1.

Provide such documentation relating to the issues in dispute as may be reasonably

requested by the Main Contractor other than documentation of a confidential nature.

2.

Make available such witnesses as may reasonably be required by the Main Contractor

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for any hearing of the Main Contractor claim in Arbitration.

as may reasonably required by the Main Contractor for the pursuit or defence of the claim in such
Arbitration.
67.9 A dispute between the Main Contractor and the Sub Contractor as to any matter arising out
of Article 67.8 above and 67.10 below shall be a matter that either party may refer to such
dispute mechanism as has been agreed by them under Article 66.
67.10 In the event that the Subcontractor does provide any assistance as set out in Article 67.8
above and the Main Contractor recovers by Award, Agreement, Compromise or other sums
in respect of which the Sub Contract has a claim against the Main Contractor then the Main
Contractor shall pay to the Subcontractor within 14 days of receipt for the Employer such
sum as reasonably represent the Subcontractors claim against the Main Contractor.
67.11 The Main Contractor shall inform the Subcontractor within 14 days of any Award, Agreement,
Compromise or other that resolves the dispute between the Main Contractor and Employer
the terms of the same and specify such sum as the Main Contractor intends to pay the
Subcontractor.

[END OF CONDITIONS OF SUBCONTRACT]

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