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What time do you call this?

Time limits can prove tricky to stick to in the Middle East, and as Nick Carnell, partner, Kennedys Dubai, explains, there's not a lot of room for argument about non-compliance.

COMMENT, Human Resource

Both the 1987 and 1999 editions of the FIDIC standard form contain a number of requirements that particular things shall be done within a set period of time.

The most important (and best known) are those dealing with the time limits for making claims for additional time and money. Unfortunately, precise adherence to time limits is something which can prove awkward in the Middle East. Sometimes there will be good reasons why something has happened late; sometimes not.

How then is failure treated in the standard forms? Is there scope to argue either that the failure was not so great that it should attract sanction, or that in fact it was not the fault of the late party, or even that the opposing party will have suffered no prejudice as a result of lateness? Alternatively, might an engineer called upon to make a decision, or an arbitrator facing a challenge to that decision be entitled to say that strict compliance with time limits constitutes a condition precedent and failure automatically disqualifies a party from recovering.

Take, for example, the position under cl. 67.1 of the 1987 form. No time limit is stipulated for the reference of the matter to the engineer. His decision is required no later than the 84th day after the reference to him, and the parties then have 70 days in which to serve notice of arbitration, failing which the engineer's decision becomes binding. No indication is given that the time limits are to be regarded as fixed and inflexible, but neither is there any suggestion that the engineer or an arbitrator can exercise discretion and vary those time limits.

Contrast the position under clause 20.1 of the 1999 form. Firstly, the contractor is required to give notice of matters entitling him to an extension of time or additional payment "as soon as practicable and in any event not later than 28 days after the contractor became aware or should have become aware of the event or circumstance".

The following paragraph states that if the contractor does not give notice within the required period of 28 days, his time for completion shall not be extended and he shall not be entitled to additional payment. This clause concludes by stating that failure to comply with this or any other provision of the contract, any award of an extension of time shall take account of the extent to which his failure has prejudiced proper investigation of the claim.

The message is clear - time limits are fixed - non-compliance is a bar to recovery; other requirements may give rise to some flexibility. In this respect, the 1999 form has clearly sought to close a loophole. Interestingly, a number of the region's major developers who operate their own forms of contract (albeit most are based upon either the 1987 or 1999 forms more or less heavily amended) all appear to have made it clear in variants on the 1987 form that time limits are to be strictly observed and in variants on the 1999 form that the requirement for compliance really does mean what it says.

Of course, from a contractor's viewpoint, it might be thought that this is harsh. There may be circumstances where commercially it is thought inappropriate to serve notice which may be regarded as a contractual or legalistic approach. The answer to this may be to make it clear that the service of the notice is a formal requirement - the parties can agree expressly to waive the requirement but unless such an agreement is clearly evidenced it is unwise to do so.

There may also be circumstances where the precise occurrence of the event is uncertain and the employer argues that notice, though provided, is late. This is more difficult and it may be that the employer is wise to ask himself whether the date on which the contractor ought to have been aware of the relevant circumstances falls within a range.

So can the contractor who fails to comply with the time limit find any other argument? The answer looks bleak. Of course, if he can say that he was hoodwinked into failing to comply with a time limit - perhaps because he was in negotiation with the employer who assured him that all would be well and there was no need for notice, and then resigned from this position; the UAE Civil Transactions code (and particularly Articles 185 and 246) may provide grounds for relief.

However, such bad faith would have to be both obvious and extreme and a party seeking to run such an argument would face an uphill struggle. It is also the case that at the heart of the Civil Transactions Code is the notion that a contract means what it says and shall be performed according to its terms (Article 243 (2)). In other words, trying to argue that one should be excused compliance with time limits in a contract to which one has agreed will always be difficult.

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