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Project Contract Management and Legal Aspects
Question 1
The FIDIC is an acronym that represents the International Federation of Consulting Engineers. This national umbrella body represents national associations for consulting engineers and works with approximately one million professionals in the engineering field. It also provides services to around 40,000 companies scattered over 100 countries (International Federation of Consulting Engineers). The organization incepted in 1913 to promote and implement the strategic goals of consultation in the engineering industry in the place of its member organizations and individuals. It is also charged with disseminating relevant information and distributing resources of interest to the individuals and bodies that it represents (International Federation of Consulting Engineers). FIDIC furthers these responsibilities by establishing annual goals, publishing internationally recognized standard contract forms for engineering works, and pre-qualification materials that clients, consultants, representatives, and joint ventures utilize to interpret and complete engineering jobs.
The organization further publishes the standard business practice documents required for engineering contracts. These materials facilitate capacity building and include training manuals and training resource kits. The FIDIC also supplies positioning papers and policy statements. In the field of management systems, the entity provides professional guidelines for quality management, risk projection, integrity management, business sustainability, environmental sustainability, and total quality management (International Federation of Consulting Engineers). In the aspect of business processes, the FIDIC creates guidelines for tendering, procurement, liability, knowledge transfer, technology sharing, insurance, and capacity building.
FIDIC organizes annual conferences and periodic meetings for its members to enhance interaction and networking among engineering professionals. The FIDIC International Infrastructure Conference is a premier gathering in which over 800 delegates and visitors table discussions and share knowledge about running construction projects, leadership roles in project management, leveraging international business opportunities, and the effect of engaging with politicians in the field (International Federation of Consulting Engineers). The organization goes further to organize extensive seminar programs, training conferences, and capacity building courses.
FIDIC has four divisions, which occur along with regional groups. GAMA is the African Members Association, representing the needs and interests of the members of African countries. The member countries include Algeria, Sudan, South Africa, Tanzania, Libya, Malawi, and Nigeria (International Federation of Consulting Engineers). This division supports the activities of the umbrella body at the national and regional levels. It is in charge of organizing the annual GAMA conference to support capacity building and networking activities in the sector of consultation engineering. ASPAC is the Asia-Pacific division, enhancing the profile of consultation engineering by broadening FIDICC’s representation in the region. It adopted a constitution and bylaws, which govern the interaction of member states as well as consultation organizations with their clients (International Federation of Consulting Engineers). The secretariat of the entity is based on the office of the chairman, and the incumbent is from Indonesia. The executive committee members include China, Japan, Indonesia, Sri Lank, Korea, and India (International Federation of Consulting Engineers). EFCA is the representative division of FIDIC in Europe. It comprises 28 member countries and is the only representative federation in the region’s engineering and related service industry. FEPAC is the Pan American division, and it began operations in 1971 (Pan American Federation of Consultants). Its operations cover Latin American countries, including Ecuador, Peru, Mexico, Colombia, Ecuador, Chile, Bolivia, Argentina, Brazil, Honduras, Spain, Paraguay, and El Salvador. The national associations of FIDIC congregate private consulting engineering firms within the member countries to promote the local development of engineering consultancy.
FIDIC has several general administrative conditions of contract clauses that it uses to standardize consultation engineering contracts. One condition is standardization and user-friendliness (Wade 2). This condition states that although the old Books were non-standard, the New Books have to be standardized and made user-friendly. It defines the term “users” as the individuals who will use the documents to prepare for a project and the ones who will rely on them during the construction process. Standardizing the Books requires using similar terminology in all three Books, using the same titles and 20 Clause layouts, using identical words, including diagrams of sequential events, providing an alphabetical list of definitions, and inclusion of the Sub-Clauses.
The second set of administrative requirements are the conditions of contract for construction. This set of rules guides building and engineering projects designed by the employer (Wade 3). First, the FIDIC provides a disclaimer that the New Red Book shares myriad similarities with the Old Red Book, but with some notable new features. While the Old Red Book covered only civil construction works, the New Red Book encompasses all the work that an employer designs. It is most suitable for a project where the most significant responsibility lies with the employer or his engineer. It provides a limited leeway for the contractor to complete some designs. The engineer approves works and quantities, and the acceptable payment method is a lump sum basis. The measurement of payment for the work done is done according to the bill of quantities.
Question 2
In engineering, the term specification is a technical standard that refers to documented requirements in terms of materials and labor required to execute the work successfully. Specifications omit information pertaining to the materialization, cost, and quantity of requirements, it is essential to read them in conjunction with the Drawings, schedules, and Bill of Quantities (International Construction Claim Experts). They are the first to be produced because they provide an overview of the basic requirements, making them have the highest contractual priority among all other documents required in the engineering process.
Several types of specifications exist, among them being performance and prescriptive. The stage of project design and the contract conditions determines the more suitable of the two (International Construction Claim Experts). Using the prescriptive specification enables the employer to predict the final product with more certainty, while the performance specification introduces the flexibility to introduce means and methods that foster cost-effectiveness and increase the employer’s value for money. Performance specifications are suitable for engineering, construction, and procurement jobs. An example is stating that a steel plant should produce 50,000 tons of steel annually (International Construction Claim Experts). Conversely, prescriptive specifications are more detailed, thus, suitable for contracts in which the employer provides the designs to a contractor who is performing the construction process. An example of prescriptive specifications for building a mixture of concrete and wooden shelves would be “Mahogany wood is to be smoothed using the sanding method to produce thick strips of wood then left to rest for one hour before cutting into sizeable strips. Waterproof concrete will be mixed to create a mix of workable and medium consistency, represented by a 20 mm slump. It will be vibrated mechanically to create a homogeneous and dense mass to create bold concrete joints with the wood.”
Question 3
An adhesion contract is also known as a standard form or boilerplate contract. It is a contract that is usually created by a party that has stronger bargaining power and signed by another party that usually has weaker bargaining power. Consequently, adhesion contracts are usually signed between businesses and consumers that are in need of goods and services because the second party in such contracts usually lacks the power to modify the specifics and terms of such a contract.
Adhesion contracts are generally drafted for legal matters that involve insurance, mortgages, vehicle purchases, leases, and numerous other forms of consumer credit. Consequently, examples of adhesion contracts include insurance contracts, mortgage contracts, house leasing contracts, vehicle purchase contracts, among many other business-consumer contracts (AlGhafri 33). Adhesion contracts are usually signed between consumers and businesses, and they supply such consumers with the standard terms and conditions that are similar to those offered to other consumers. However, the terms and conditions specified in adhesion contracts usually are non-negotiable.
Adhesion contracts arise when a business, which represents the first and typically stronger party, needs to agree with the second party, which a consumer in need of some form of consumer credit is usually such as mortgages and vehicle purchase loans. In such a situation, the first party will present the second party with an adhesion contract that will stipulate the terms of the agreement. The second party, who has no bargaining powers that they can use to amend terms, can either agree to the contract or sign it or refuse to sign it.
The concept of adhesion contracts originated in France under the French civil law. In the United States, these contracts did not enter the legal system until 1919, when Edwin W. Patterson wrote an influential article published in the Harvard Law Review (AlGhafri 34). After this, a majority of courts in the United States started to adopt adhesion contracts. This was primarily helped by a case in the Supreme Court of California that endorsed the contacts in 1962. The popularity of the adhesion contract in the United States consequently led to the spread of its use to other countries during the 20th and 21st centuries.
Furthermore, adhesion contracts are also known as standard form contracts. This is because such contracts are standardized versions of an organization’s agreement with consumers seeking goods or services from the business. Adhesion contracts are not different from one consumer to another as they present similar terms as well as conditions that have been drafted by a business to agree over the provision of services or sale of goods.
Lastly, in the UAE, adhesion contracts are used in a similar way to how they are used in other countries such as the United States. However, in the UAE, the general rule is that courts should rarely interfere with the parties’ contractual agreement. However, article 248 of the UAE Civil Code offers some form of protection (AlGhafri 36). Parties that contract to the standard terms of another party via the use of an adhesion contract benefit from a level of shelter. These contracts are used by businesses to sign agreements with customers looking for a form of consumer credit such as mortgages, credit cards, and vehicle purchase loans.
Question 4
The legal framework for secure online contracts is detailed in a few countries, such as the U.K. and the U.S.A. These countries outline the obligations, rules, and rights of both individuals and organizations in aspects concerning the security of e-Commerce contracts (Benita). They have documents, such as legislation policies, contracts, and the constitution, which constitute the legal framework. The policy and existing laws are more powerful than any contract, although in limited cases, the contract may override the policy and laws. In the UAE, the legal documents that contain broad principles, for example, the constitution, are rigid and hard to change, whereas specific documents, such as contracts that cover more specific details are easy to amend. Furthermore, the lack of details and laws on online contracts lower the stability and ability to forecast the legal framework because there is a lot of space for negotiation in individual contracts.
e-Commerce contracts, commonly known as electronic contracts, refer to the legally binding agreement that individuals and organizations sign online. The contemporary business environment has shifted to the online space, and all the agreements that they have with suppliers, clients, partners, and customers are conducted over the internet. There are five basic requirements covered in the legal issues of e-commerce contracts: confidentiality, writing and signature, offer, authenticity, and non-repudiation.
Confidentiality in business is the intentional act of keeping private information related to the nature of business private unless the contract terms accommodate the option to divulge information on a need-to-know-basis (Benita). Restrictive covenants mostly shore up protection for the contract/contractor after terminating the contractual relationship. Each of the parties can restrict the actions of the other after the termination of the relationship, such as the limitation to solicit with prospective customers or working for a competitor.
Writing and signature issues involve proving that e-commerce contracts contain digitally authentic signatures that have similar effects as handwritten signatures (Benita). Nonetheless, the contract and contracting parties have to prove that the contract document is authentic. The court holds that a digital signature is the act of the person, and this process can be proved systematically. If the binding effect of the signature is contested, the court demands a display of proof sufficient security and privacy precautions were used to protect the document using user ID and password.
Offer refers to the intentional willingness to act in a specific way or abstain from a certain action with an intention to obtain assent from a separate party. The law considers this as a proposal. An advertisement on a website or digital media platform is considered an invitation to treat, and by itself is not a contract because the offer is made to an unspecified person (Benita). The test for offer focuses on whether the intention is to supply information or enter into a legally binding contract. Therefore, a response made through an email or filling a form on the internet constitutes an offer. The other party can expressly confirm acceptance or use conduct to enter willingly into a binding contract.
Authenticity refers to the process of identifying the contracting parties. The contract and contracting parties must be deemed competent before entering into a valid contract. The parties must be identified properly in a contractual clause that contains uniquely identifying information. Such information may include the full legal name of the business or individual, the current address, passport or ID number, registration number, and country of incorporation. Businesses should also disclose the nature of the organization, whether it is a limited liability company, a sole proprietorship, or a partnership.
Non-repudiation is a legal requirement that ensures that none of the parties change the terms of the contract after signing it. The purpose of this provision is to ensure that none of the parties can deny the validity of the agreement. In online contracts, each party must take the due procedures to provide proof of the original data, along with its integrity. Digital signatures, along with other measures, provide substantial security in online contracts. Email tracking in email transmission ensures that a sender does not deny sending the said message later. It is, therefore, important to have tangible evidence connecting the contract and contractor to a specific action or communication.
An example of an online contract is an ATM transaction. The personal identification number (ATM) acts as the electronic signature that is a crucial aspect of online contracts (Benita). It qualifies for the key objectives for a signature, which is authentication and identification. Other methods used to indicate electronic signatures include signing an “I agree” button for the terms and conditions before an individual can access online services, such as LinkedIn. Under the user agreement terms and conditions page, LinkedIn users in a formal employment environment consent that the user is always the owner of the account. Accordingly, the employer is unable to access the username and password of the employee or transfer the account to their account unless the employee gives consent.
Question 5
In the United Arab Emirates and its surroundings, arbitration is the most popular technique of conflict resolution. The technique rose to prominence due to the rise of institutions that offer commercial arbitration services to the public. The introduction of Federal Law No. 6/2018 contributes to the country’s existing Arbitration Law. It builds a robust and streamlined process that supports arbitration of domestic cases through recognition, enforcement, and regular implementation of arbitral awards. Commercial dispute resolution services are also emerging in the real estate sector and general commerce industry, which indicates that the service is moving away from exclusive arbitration of specialist disputes.
Below is a list of commercial dispute resolution centers in the UAE:
- Ras Al-Khaimah Centre for Reconciliation and Commercial Arbitration
- Abu Dhabi Conciliation and Arbitration Centre (ADCCAC)
- The Emirates Maritime Arbitration Centre (EMAC).
- DIFC-LCIA Arbitration Centre
- International Islamic Centre for Reconciliation and Arbitration (IICRA)
- Dubai International Arbitration Centre (DIAC)
- Sharjah International Commercial Arbitration Centre (Tahkeem)
- DIFC London Court of International Arbitration (DIFC-LCIA)
Abu Dhabi Conciliation and Arbitration Centre (ADCCAC)
The Abu Dhabi Chamber incepted the conciliation and arbitration center, whose main aim is to settle disputes using mediation techniques, such as conciliation and arbitration. It was established in 1993 to settle commercial disputes that arise from the rapid development that is linked to the globalization of the world’s economy (Abu Dhabi Conciliation and Arbitration Centre). Its vision is to offer an alternative judicial podium for resolving investment and commercial conflict to support the best international practices that are free from any partiality. Its fundamental guiding principle is the legally approved Autonomy of Will. The procedures used by this organization render its judicial ruling to contain technical meaning that fulfills the executive power, burden of proof, stability, and enforcement requirements that characterize a speedy and effective arbitration solution. The organization’s mission is to build a structure of conciliation that offers clients with independence, effectiveness, and justice, enabling them to serve the local and international community effectively. The core values of absolute independence, impartiality, and honesty guide every arbitration process undertaken by the organization. These values facilitate the affiliation, responsibility, timeliness, teamwork, preservation of rights of defense, secrecy, and confidentiality of each arbitration process.
The Dubai International Arbitration Centre (DIAC)
DIAC is a permanent, non-profit making, and autonomous institution incepted in 1994 by the Dubai Chamber of Commerce and Industry to provide just and efficient arbitration services for commercial disputes. It provides the UAE, regional, and international commercial communities with arbitration services. These services are independent of the influence of the Dubai chamber and the government (Dubai International Arbitration Center). The services provided are high caliber yet affordable. It has an associate membership service that offers its members the opportunity to enhance experience and information in commercial arbitration. It improves their mediation competencies through international conferences, seminars, and training workshops. The proceedings of the arbitration services provided by DIAC are confidential, unlike in litigation, unless the two parties mutually agree to publicize the dispute. The company has been in operation for over three decades, which means that its arbitrators possess the requisite expertise to resolve technical, commercial subject matters. Furthermore, the company offers flexible arbitrations with the option to conduct the process in English or any language preferred by the parties, which is a considerable advantage over court litigation cases that are normally done in the Arabic language.
Works Cited
Abu Dhabi Conciliation and Arbitration Centre. “About Us” ADCCAC, 2020. http://www.adccac.ae/English/Pages/Default.aspx
AlGhafri, Abdulla. The Inadequacy of Consumer Protection in the UAE: The Need for Reform. Diss. 2013.
Benita, Ezeigbo. E-contracts. Essentials, variety, and legal issues, Grin Law, 2020. https://www.grin.com/document/427203
Dubai International Arbitration Center, “About Us” DIAC, 2020. http://www.diac.ae/idias/aboutus/.
International Construction Claim Experts. “Specification as Per FIDIC Conditions of the Contract.” Construction Claim, 2019, https://construction-claim.com/specification-definition-fidic/.
International Federation of Consulting Engineers. “About Us.” Fidic.Org, https://fidic.org/about-us.
International Federation of Consulting Engineers. “FIDIC ASPAC.” Fidic.Org, https://fidic.org/node/830.
International Federation of Consulting Engineers. “Regional Groups.” FIDIC, https://fidic.org/node/834.
Pan American Federation of Consultants. “About Us.” FEPAC, 2020, http://fepac.org/?q=quienes-somos.
Wade, Christopher. “FIDIC Conditions of Contract: Overview of the New Major Contracts.” FIDIC, 2003, https://www.fidic.org/sites/default/files/Wade_dec_03_27feb04_0.pdf.