FIDIC in the construction industry

Why should construction companies use FIDIC contracts?

FIDIC contracts are a set of international contract templates that are widely used across borders and jurisdictions. That makes them easy to use for companies that are either involved in large-scale projects with international partners or are contemplating foreign activities themselves. By using FIDIC contracts, a certain degree of uniformity is ensured, as the contract format is based on the same standard with the possibility of customisation to the specific parties and the particular project. 

Solid legal framework and clear contractual basis

Being clear and detailed, the FIDIC contracts offer a solid legal framework and a clear  contractual basis, for instance in relation to payment, alterations, extensions of time limits, quality, allocation of responsibility, etc. 

The favoured  alternative to AB contracts

Foreign contractors having to work under the Danish AB contracts typically find them very burdensome - i.a. because they are to a large extent supported and supplemented by unwritten rules of Danish construction law. This may potentially keep a foreign contractor from bidding on a given project, which is of course regrettable if that contractor would, in fact, have been the best and/or most competitive.

Conversely, if it is a Danish contractor who wants to work abroad, the AB contracts are irrelevant. Instead, alternative contract types will have to be used, and in those cases the FIDIC contracts will often be the solution.

Pitfalls of using FIDIC contracts in the construction industry

1) Remember to adjust to local law

The FIDIC contracts are international templates and, as such, not adjusted to any other local law. As the FIDIC contracts are highly regulated, they often have to be customised to the specific project. As a Danish party accustomed to using the AB system, one should note that FIDIC works with relatively tight procedural deadlines, which may ultimately have a major impact on execution and the likelihood of claims.

2) Technical jargon in English-language versions may lead to misunderstandings

The use of FIDIC contracts that are written in English only can also give rise to challenges if the parties are not entirely familiar with the technical English jargon. It may result in misunderstandings and, ultimately, a dispute. 
Disputes (including dispute resolution) are often overlooked or receive too little attention from the parties when drawing up the contract. It is important to note that FIDIC contracts are international and generally refer to arbitration at the International Chamber of Commerce (ICC) in Paris.

How can we assist your organisation?

We can assist you throughout the FIDIC process, including in taking the initial steps, in clarifying and negotiating the terms (including in relation to the AB system), and in corresponding with other stakeholders, etc.

We have extensive experience with both the FIDIC and the AB system and the “translation” between them. You will therefore find our advice useful, whether it is your first FIDIC contract or you are used to entering into international construction contracts.

Please reach out to us if you have any questions or need advice on how to use FIDIC in construction projects.

FIDIC in other industries