You are here: Home > News > Joint Federation Letter to FIDIC
26 Jan 2017

Joint Federation Letter to FIDIC

In a joint effort initiated by EIC, the global construction umbrella federation, CICA, and the three international contractors' associations from Europe, Japan and Korea, EIC, ICAK and OCAJI, have called upon FIDIC to maintain an equitable FIDIC standard and to enter into a more elaborate dialogue before proceeding with the updates of the major FIDIC standard forms of contract.

In their joint letter, the undersigned federations highlighted that the risk profile of the traditional FIDIC forms of contract has gradually changed to the detriment of contractors since FIDIC decided in the year 1987 to no longer seek the consent of contractors' organisations before publication of their standard forms. In 1999, FIDIC even decided with the publication of its "Silver Book" to publish a new standard form of contract which intentionally departs from FIDIC's traditional risk-sharing philosophy, placing the design and execution risk almost entirely on the contractor.

The four federations are particularly concerned that the FIDIC 2017 updates will again impose additional risks upon contractors, e.g. for design errors, that may prove uninsurable and thus may lead to significant losses and even insolvencies. Furthermore, the revised contract administration appears overly bureaucratic and includes the risk that the parties are drawn into time-consuming, costly and labour-intensive dispute settlement alongside the ongoing project.

CICA, EIC, ICAK and OCAJI recall in their letter that international clients and their legal advisers hardly ever use a "pure" FIDIC standard and will always twist the risk allocation at the expense of contractors and that FIDIC should keep in mind such misuse of their documents in the final drafting process.