FIDIC contract engineer must be impartial
Proper exercise of the function of contract engineer is crucial for the success of any construction project. The scope of the engineer’s obligations and the impartial attitude required of the engineer toward issues arising on the construction site are also reflected in the rights of the parties to the contract.
For a construction project to be deemed a success, it must not only be completed on time and in good technical order, but also in a manner acceptable to both parties to the contract. Acceptable means in compliance with the arrangements agreed at the time the contract was signed and also fair under the circumstances that arise during the course of performance. In other words, a successful project is first and foremost one that is completed without any unresolved disputes.
One of the key people for the success of the project is the contract engineer, who plays a vital role in construction contracts based on the contract conditions published by the International Federation of Consulting Engineers (FIDIC). Under the model solution offered by FIDIC, the engineer should undertake a broad range of measures connected with the day-to-day correct administration of the contract, but also should help head off disputes, defuse disputes at an early stage, and also resolve matters when the parties exchange contrary positions and fail to reach consensus.
The engineer therefore must be both a professional supervisor of the work performed by the contractor, a technical and procedural adviser to the investor (or “employer,” to use the FIDIC term), and an impartial and independent mediator between the parties to the contract, capable of objectively evaluating the often-conflicting arguments raised by the parties. The work of the engineer requires tact and subtlety, combining contrasting roles. Potentially the engineer can draw fire from both parties at once.
Contractors most often accuse the engineer of partiality and siding with the employer. The basic facts the contractors rely on in this respect are—it must be admitted—undeniable, because they are expressly provided for in the contract. It is the employer who hires the engineer and pays the engineer’s fee. The engineer is also required to consult with the employer on the determination the engineer will make on certain matters, which may not rule out the engineer’s objectivity but may limit it to a certain degree. Sometimes the engineer is simply an employee of the investor, but such situations should definitely be avoided because then the strongly subordinate relationship will be sure to reflect poorly on the work of the engineer whatever steps the engineer actually takes.
On the other hand, the employer often accuses the engineer of acting to the advantage of the contractor by administering the contract contrary to the employer’s interests, unfairly granting requests by the contractor for additional time to complete the work or additional fees, or sharing with the contractor information obtained by the engineer when consulting with the employer.
The engineer has a tough job, and both parties have legal instruments at their disposal to protect their interests if they believe the engineer is acting improperly.
Because an investor using FIDIC contract conditions is required to employ the engineer, there is a contract between them which may serve as the basis for the employer’s claims against the engineer. Improper exercise of the engineer’s function would thus fall under a typical claim for breach of contract. There are known cases where the project was not completed on time and the employer sued the engineer, alleging that shortcomings by the engineer caused late completion by the contractor.
The basis for claims against the engineer by the contractor is less clear.
For purposes of a construction project organised according to FIDIC procedures, two contracts are concluded: one between the employer and the contractor, and one between the employer and the engineer. The engineer is not a party to the former and the contractor is not a party to the latter.
There is thus no contractual tie between the contractor and the engineer. Nonetheless, these two entities are required to perform obligations with respect to one another arising out of the contract between the employer and the contractor. The engineer’s own contract is in some sense auxiliary to the construction contract, because it always refers to the construction contract and in large measure consists of performing obligations not just between the parties to that contract, i.e. between the employer and the engineer, but also in various configurations between other participants in the construction process covered by the construction contract.
In this context it should be stressed that although the engineer is not a party to the construction contract, when entering into the construction contract both parties—the employer and the contractor—accept the role of the engineer identified in the contract through a specification of the areas of activity of the engineer, the engineer’s specific duties, the engineer’s authority to act, and the instruments at the engineer’s disposal for administering the contract.
Pursuant to clause 3.1 of the FIDIC “Red Book,” “The Employer shall appoint the Engineer who shall carry out the duties assigned to him in the Contract. … The Engineer may exercise the authority attributable to the Engineer as specified in or necessarily to be implied from the Contract.”
Under clause 3.5, when the engineer needs to make a determination of any matter, “the Engineer shall consult with each Party in an endeavour to reach agreement. If agreement is not achieved, the Engineer shall make a fair determination in accordance with the Contract, taking due regard of all relevant circumstances. The Engineer shall give notice to both Parties of each agreement or determination, with supporting particulars. Each Party shall give effect to each agreement or determination unless and until revised under Clause 20 [Claims, Disputes and Arbitration].”
Comparable provisions concerning the rights and duties of the engineer are included in the FIDIC “Yellow Book.”
These provisions clearly establish an obligation on the part of the engineer to both the employer and the contractor to remain independent in performance of the engineer’s tasks, and also to consider in performing those tasks all of the circumstances of the matter and to act in good faith toward both parties to the construction contract. It also follows from these provisions that the actions taken by the engineer are binding on the employer and on the contractor unless disputed by either of the parties.
In the absence of a contractual basis for the engineer’s liability to the contractor, generally applicable provisions of law serve as the basis for the contractor to pursue claims against the engineer. This provides grounds for the engineer’s tort liability pursuant to Art. 415 of the Polish Civil Code, which provides that “any person who through his fault causes injury to another person is obligated to redress the injury.”
Another basis under the law of obligations is Art. 474 of the Civil Code, under which “the obligor is liable as for its own act or omission for the acts and omissions of persons with whose assistance it performs an obligation, as well as of persons to whom it entrusts performance of the obligation.” In such case the employer would be entitled to seek recourse against the engineer.
This should motivate both parties, and particularly the employer, to cooperate with the engineer in a manner that does not raise the objections of the other party to the contract with respect to the impartiality of the engineer. It should be stressed, however, that this does not refer to the wording of the contract itself, where the parties are subject only to limitations on the principle of freedom of contract. The grounds for liability discussed above should apply to the actual performance of the contractual obligation.
Hanna Drynkorn, Infrastructure & Transport and Public Procurement & PPP practices, Wardyński & Partners
