FIDIC Contracts and Managing Interface Risk in Queensland
International Federation of Consulting Engineers (FIDIC) contracts are sometimes used in Queensland when managing interface risk for high value construction projects. Although FIDIC contract templates are used globally, there are no guideline principles but rather, the interpretation of FIDIC contracts is usually informed by the laws of the relevant jurisdiction, as Julian Bailey notes in Construction Law. This article will look at how the FIDIC Conditions of Contract for Plant and Design-Build (“Yellow Book”) manages interface risk in Queensland with a particular focus on cl 4.6, “Co-operation”.
The Melbourne Law School conducted a research report looking into the use of standard forms of contract in the construction industry, and the initial findings were published in a report entitled, Standard Forms of Contract in the Australian Construction Industry (Report). The purpose of the Report was to gauge how standard forms of contracts were used and the effectiveness of such standard forms – especially in relation to the ability of such contracts to balance risk, while facilitating efficient project administration.
On 1 July, 2015, new contractual requirements took effect and the new laws have a direct impact on residential building work. It is hoped that the new laws will minimise disputes, while also improving fairness for all parties to the contract. So with that being said, let’s explore some of the changes that were recently introduced.
Following the commencement of the Building and Construction Industry Payments Amendment Act 2014 (BCIPA) on 15 December 2014, a number of key amendments were introduced which parties to construction contracts should have an awareness of in 2015.
The Queensland Supreme Court in Lean Field Developments Pty Ltd v E & I Global Solutions (Aust) Pty Ltd & Anor  QSC 293 had to consider whether conditions can be placed on when a reference date may arise under the Building and Construction Industry Payments Act 2004 (QLD)(BCIPA).
Clauses permitting a builder to a charge over the property for unpaid fees, and to lodge a caveat to protect the charge has become commonplace in relation to building contracts. However, it is important to bear in mind that the wording of charging clauses needs to be clearly drafted as the case of Adrija Pty Ltd v Mohamed, Ahmed and Registrar General ACT Land Titles Office  ACTSC 120 illustrates what could happen when charging clauses are not properly drafted.
Express clauses terminating a contract without cause – also referred to as ‘termination for convenience’ or ‘termination at will’ clauses – have increasingly become a feature within construction contracts. Although gaining in popularity, the validity and operation of such clauses has largely remained unexplored, with the small number of cases suggesting that although such clauses has been generally recognised by the courts, the question of the legitimacy of terminating a contract at will, still largely remains unanswered. So what should parties be mindful of if they wish to include termination for convenience clauses in construction contracts? For contracting parties wanting to rely on termination for convenience clauses, the need to demonstrate that the contract was terminated in good faith is essential.
Arbitration is one of the most commonly used forms of alternative dispute resolution (ADR) within the construction industry, and trying to strike a balance between procedural fairness and finality can impose a number of challenges when relying on a third party to make a determination. Prior to the Commercial Arbitration Bill 2013 (Qld) coming into force, arbitration via the Commercial Arbitration Act 1990 (Qld) was a drawn out and costly process, with the undesirable outcome of having some awards set aside due to insignificant procedural breaches of natural justice. The Hon Chief Justice Spigelman AC remarked in 2009, that the previous legislation was out of date, and that the process had become unwieldy. The introduction of the new regime now brings Queensland’s arbitration laws in line with the world’s best practices by facilitating fair and final resolution of construction disputes, allowing for natural justice to hopefully come to the fore.
In Australia’s building and construction industry there is generally a good standard of workmanship from contractors and subcontractors, however from time to time circumstances occur where the standard of work is questionable, potentially defective or not quite meeting the owner’s expectations. In the 2011-2012 financial year there were 4,726 complaints made to the Queensland Building Services Authority (BSA) for defective or in-complete works.