FIDIC contracts are model contracts from the Fédération Internationale des Ingénieurs-Conseils, the global standard for international construction projects. They offer a proven balance between the interests of the client, contractor, and engineer. In our practice, we work with FIDIC daily. Knowledge of the correct contract type, the notice system, and the DAAB procedure is essential — improper application leads to the loss of rights despite a strong commercial position.
What is the legal problem?
FIDIC publishes various contract models, each with a different division of roles, risk-bearing party, and payment system. A wrong choice leads to an imbalance in which risks lie with the wrong party. Unfamiliarity with FIDIC procedures such as claims notification, dispute boards, and interim payments leads to the loss of rights. International arbitration under FIDIC is specialized and expensive.
What does the law say?
FIDIC models are contractual and apply only by reference. The most widely used are the Red Book (traditional, client-design), Yellow Book (contractor designs and builds), and Silver Book (EPC turnkey, contractor bears virtually all risk). FIDIC 2017 introduced improved claims and dispute board procedures. The 2022 Reprint refines some details.
Additionally, local law applies: in the Netherlands, Articles 7:750-769 of the Dutch Civil Code (contracts for work); in the Middle East, local civil law (UAE Federal Law 5 of 1985); in England Construction Act 1996. Disputes are often subject to ICC or LCIA arbitration under Clause 21.
What risks do companies face?
Under Silver Book, the contractor bears virtually all risks, including those for design errors. Under Red Book, the client bears design risk but receives less budget certainty. FIDIC's notice system is strict: missed deadlines mean lost claims under Clause 20.2 (Claims). DAAB procedures have specific requirements. Non-compliance costs the most claims in arbitration.
Practical example from our practice
We advised a Dutch engineering firm on the choice of FIDIC version for a large project in Africa. The client wanted Silver Book for cost certainty. Due to poor soil investigations (contractor's design risk), claims amounting to many millions later became ineligible for compensation under Silver Book. For the following project, we selected Yellow Book 2017 with the correct risk allocation for unknown subsurface conditions under Clause 4.12. The client obtained €3.2 million in compensation for unexpected rockfalls.
What can you do?
Choose the FIDIC version appropriate to the division of roles and risk appetite. Strictly adhere to notice periods under Clause 20 and document everything. Invest in a strong DAAB. Align with financiers and insurers regarding the chosen model. Train project teams on FIDIC procedures. Carefully adapt Particular Conditions to local law. See also our article on International construction contracts.