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Myths About FIDIC

When the foreign approach to entering into contracts, including construction agreements, (first of all, English) has become a fashion in the territory of the former USSR, many myths have appeared. Whereas English contracts of sale, share purchase agreements or charter parties have been accepted in Russia in a short period of time, the FIDIC model forms which have been initially made mandatory by international lenders (World Bank, IBRD, ADB) have almost been rejected and caused a great number of myths and even jokes.

For example. "A contractor is reading FIDIC book and thinking: "Do I continue to build a road or shall I write a report instead?", or

"Been reading FIDIC. Thought too much whether to start working or wouldn't it have been better to shoot myself dead at once", etc.

The reason for initial disapproval lies in the very nature of FIDIC model forms (as they comply with the British common law and cover all aspects of construction activity) and, also, for what objectives have they been created (for emerging markets of Africa and Asia, which had no legal system or the latter having just started to develop), on the other hand, it is strong regulatory system that exists in Russia and the majority of matters are settled by regulatory documents.

Later, the FIDIC model forms have eventually been accepted and are working quite successfully in a Sixth Part of the World but certain problems and myths still remain:

Myth #1
FIDIC model forms do not comply with the local legislation and cannot be used in our country:

FIDIC has clearly and expressly defined that the model forms are not a rule but a manual. They should be upgraded in accordance with the national legislation should there be a difference. Particular Conditions do exist for this reason. The laws of a country where the construction activity is to be carried out shall be a priority. Certain governments, e.g. that of Kazakhstan, have changed their national legislation to the extent that their respective laws were compatible with FIDIC regulations.

In any event, an experienced consultant who has a good knowledge of FIDIC model forms will be able to assist in bringing certain unclear provisions into compliance with the national legislation.

Myth #2
This is an enslaving agreement for a Contractor:

Whether it is a newcomer who has just been acquainted with a model form or an experienced contractor who does not use every useful problem-solving feature, which is available in these forms, they both might have this wrong impression.

In fact, a contract based upon FIDIC Conditions is a deal, which is equal for either party. An experienced contractor, with consulting assistance, is able to gain many advantages from using these model forms and, first of all, such advantages are financial.

Myth #3
Everything is in English only:

The truth is that the initial version of any model form is prepared in English. At the present there is no official translation into Russian which should have been approved at a conference of FIDIC Russian-speaking members.

There are, however, a number of private translations and the parties are free to choose what language should be a ruling one. It is reasonable to say that such language should the one, which is originally used for national legislation and be convenient for the Employer, the Contractor, their personnel, i.e. Russian.

Myth #4
Too many documents, impossible to work:

Of course, a model forms based contract, which is prepared in accordance with the principles of common law, does include a great deal of information classified in unusual order. The execution of such contract requires a number of reporting documents.

At the same time, this contract is a tool which is easy to use for a professional who has a good command of a system and structure of such document. It is not only easy to deal with but it is always possible to find an answer to any legal or technical matter in question. Our consultants at Trumpel and Partners are always available to provide assistance.

As to reporting process, such approach definitely enables to control both operating activities and financing of a project. A qualified consultant and special reporting templates, which are just to be filled out in time, will help one to handle such an amount of information.

There are other myths concerning the use of FIDIC model forms but they are easily unveiled as above. Using these model forms with knowledge and skills one will be successfully working in construction industry.



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