REUTERS | Mike Segar

Redrafted Infrastructure Conditions of Contract now published

In March 2014, I wrote about the relaunch of the ICC’s Infrastructure Conditions of Contract, which had been discussed at a presentation to the Society of Construction Law (SCL). This post looks at the redrafted main (re-measurement) contract, which has now been published, along with guidance notes.

Infrastructure Conditions of Contract

To recap, ACE and CECA took over the old ICE conditions of contract in 2011 and, at the time, they reissued them in much the same form as the ICC Infrastructure Conditions of Contract. However, a redrafting exercise has now been carried out.

The published version is very much the same as the draft that was provided in March 2014. The guidance notes now assist in identifying the reasoning behind the changes in the ICC form. Simplification and recasting into fewer clauses were significant factors in the redraft. However, the most important change is a switch from a re-measurement to a lump sum basis of payment. As the guidance note says:

“This should encourage accurate and fully developed designs prior to the contract being put out to tender.”

As there have been no substantive changes to the contract terms, the points made in my previous post referring to perceived gaps in the drafting as to sub-contractors, treatment of risk and disputes still apply. In particular, I think it is likely that employers will wish to add a “sweeper” clause to the list of employer’s risks at clause 8.5. Clause 60(1)(18) in the NEC3 may provide a suitable example.

Further issues arising from the drafting

A number of further issues arise from the drafting and commentary in the guidance, including:

  • At clause 4.2, an “entire agreement” position is included. The guidance indicates that this is a new provision in ICC contracts but that “the practice of simply binding all correspondence into the contract may frustrate the purpose of this Clause”. However, the clause appears robust enough to enable such correspondence to be discounted in interpretation of the contract.
  • At clause 4.4, the employer warrants that it has provided all relevant information in its possession in respect of the site information. This provision is intended to resolve debates about what should or should not be provided and the guidance states that “the practice of simply providing borehole logs is no longer sufficient”. It is, however, pointed out that the employer does not warrant the accuracy or interpretation of the data and the contractor must still satisfy itself as to its validity.
  • At clause 8.7, there is a category of “Shared Risks” that will entitle the contractor to additional time but not financial compensation. The last of these is “other special circumstances of any kind whatsoever which may occur”. This appears rather a vague definition and is not further clarified in the guidance.
  • At clause 10.4, substantial completion is defined as a stage “such that all the work required by the contractor has been carried out, save for any omission or defect which does not prevent use of the Works for their intended purpose”. As many contracts are silent on the definition of this concept (otherwise known as practical completion), some definition is welcome. The guidance is slightly difficult to follow at this point but it appears to suggest that substantial completion should not be given if the use of temporary expedients will require the subsequent taking out of use of the Works for such expedients to be removed. A practical example would have been useful here. Perhaps more understandably, the same will apply if the execution of outstanding work is still required.
  • At clause 12.1, the power to order variations is said to be circumscribed by the words “that he [the engineer] considers necessary for the satisfactory completion of the works”. This is said to constitute a rejection of the more traditional approach of allowing the Engineer to “refine” or “improve” the original design. However, might this be something of a fetter on innovative design development?

The contract has also imported one of the significant features of NEC3, which is to be found at clause 6 (and core clause 10.1 in NEC3) where the contractor, employer and engineer are required to collaborate in a spirit of trust and mutual support in the interest of the timely, economic and successful completion of the Works.

It’s a contract for infrastructure works

This contract is, as the name indicates, a contract for infrastructure not building works and, as I said previously, its main rival is the NEC3. It remains to be seen whether the new form will regain the prime position once held by the ICE form in relation to infrastructure works that has, in recent times, been taken over by the NEC form. The new ICC form essentially still comprises a traditional engineering contract as opposed to the more radical innovations that NEC introduced. The market must now decide.

Herbert Smith Freehills LLP Michael Mendelblat

Leave a Reply

Your email address will not be published. Required fields are marked *