Olswang LLP is a limited liability partnership in England and Wales that is authorized and regulated by the Solicitors Regulation Authority. The document discusses several key points regarding international construction contracts: (1) common standard form contracts used internationally include FIDIC, ICE, IChemE, CIOB, and NEC contracts; (2) while UK forms can be adapted, it is not recommended as they are too locally specific and international contractors prefer standard international forms; (3) the various FIDIC contracts - Red, Yellow, Silver, Pink, Gold, Blue, White, and subcontract - are introduced along with their key purposes and differences.

1. Olswang LLP is a limited liability partnership registered in England and Wales with registered number OC343050. It is authorised and regulated by the Solicitors Regulation Authority. We use the
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FKHJRBPERSONAL-JRB18709200-1DRAFT 117 NOVEMBER 2014
International Construction Contracts
1. What are the main international standard form contracts?
International professional institutions and trade and umbrella bodies produce their own standard
international form construction and engineering contracts. Although it is not a requirement that
parties procuring an international project must choose a standard form international contract, it is
common practice (except perhaps on the most complex and bespoke of projects) for them to do
so.
That said, parties frequently amend the standard forms, or use them as a starting point when
developing their own contracts and procedures.
There are a number of standard form international construction and engineering contracts that the
parties may choose from. Some of the most common forms are the:
• FIDIC forms of contract
• ICE engineering contracts
• IChemE forms of engineering contract
• CIOB Contract for use with Complex Projects
• NEC Contracts
FIDIC forms of contract
FIDIC is short for the "Fédération Internationale des Ingénieurs – Conseils" (International
Federation of Consulting Engineers). It is an international federation of associations of consulting
engineers representing the profession in their respective countries. FIDIC's Contracts Committee
is responsible for producing the most commonly used standard forms of contract for international
construction projects. These forms of contracts are used throughout the world and are endorsed
by many multilateral development banks (MDBs), such as the World Bank. In the UK, their use is
more limited, but parties may adopt them on engineering, energy or process plant projects (or
they may form the backbone of a substantially amended or bespoke approach to such projects).
FIDIC contracts are generally known by the colour of their cover: the Red Book, Yellow Book,
Silver Book, Green Book, Pink Book, Gold Book, Blue Book and White Book.
ICE engineering contracts
From 1945, the Institution of Civil Engineers (ICE) published a suite of engineering contracts
known as the ICE Conditions of Contract (the ICE contracts).
Historically, the ICE suite had been popular internationally in some states undertaking significant
infrastructure investment, for example in Africa. Although now out of date from an international
lawyer's perspective, the ICE suite may continue to be used in some of those states.

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IChemE forms of engineering contract
The Institution of Chemical Engineers (IChemE) issues a range of forms of contract designed
specifically for use in the chemical and process engineering industries. In 2007, the IChemE
published a series of international contract forms.
When it produced the international forms, the IChemE aimed for the contracts to be used
internationally, including countries developing process industries for the first time, not just in
countries where the process industries have operated for many years.
The IChemE suggests that parties may choose to use an IChemE international form where one or
more of the parties involved in the project is/are operating outside its/their home country or where
major parts of the plant will be imported to the country of the site.
The introduction of the international contracts is seen by IChemE as a natural progression from
the UK forms. The interest in and use of the consultation edition of the International Red Book
suggests that those embarking on major international projects in the future will seriously consider
using one of the international forms. However, to date, these have yet to pose a serious
challenge to the continued popularity of FIDIC forms.
CIOB Contract for use with Complex Projects
The Chartered Institute of Building's (CIOB) Contract for use with Complex Projects, first edition,
2013 (known as CPC 2013), was published in April 2013.
CPC 2013 is suitable for building and engineering projects, both in the UK and internationally. It
focuses on time management, providing for a dynamic programme (called a works schedule) and
a "project time manager", together with requirements for detailed record keeping. It is ready for
use with building information modelling (BIM) and electronic information exchange. Given its
recent publication, more time is needed to assess its popularity in the international construction
and engineering market.
NEC contracts
The New Engineering Contracts (NEC) contracts are in their third edition. Originally published in
the early 1990s, the current edition is the NEC3 April 2013 edition. While NEC3 refers to the
whole suite of contract documents, a reference to NEC3 is often a shorthand reference to the
NEC3 Engineering and Construction Contract (NEC3 ECC).
Use of NEC contracts internationally is expanding, but not at any significant level to yet challenge
the dominance of FIDIC forms.
There is both express and anecdotal evidence of increasing use of NEC contracts internationally.
On the NEC website, specific sections refer to use in New Zealand and South Africa. In New
Zealand, clients include local authorities, utility companies and private sector companies. In
South Africa, users include:
• Transnet, the state owned organisation responsible for ports and harbours, railways (including
rail engineering), multipurpose pipelines, and airports.
• PBMR, the developer of the Pebble Bed Modular Reactor (a nuclear project).
• Sasol, who pioneered the oil from coal process.
• Anglo Platinum and Gold Fields, in the platinum and gold mining sectors respectively.
• ABSA Bank (owned by Barclays).

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• Johannesburg Housing Company and Gauteng Housing Department.
• Tshwane (Pretoria) and Ethekwini (Durban) municipalities, each with substantial infrastructure
projects
Where circumstances allow a collaborative approach to the (design and) construction of an
international project, an internationally adapted NEC ECC contract using Option C, a target cost
arrangement, where "gain" and "pain" can be shared by the employer and contractor
(painshare/gainshare), may prove a particularly suitable form to use.
2. Can/should you adapt a UK form, e.g. JCT, ICC, GC/Works?
The popular UK forms of construction contract can be adapted for international use, however, it is
not recommended as they tend to be too locally specific and require extensive amendment (with
the exception of the NEC3, being relatively simple to adapt internationally).
Furthermore, international contractors are not familiar with such UK forms, even those based in
Europe, and will insist on either signing up to their original country’s standard domestic contracts,
or the better-known international standard forms, particularly FIDIC.
3. Brief introduction to the FIDIC forms
The current suite of FIDIC contracts
In 1999, FIDIC produced a new suite of standard forms of contract, comprising three Books for
major works and one for minor works:
• Conditions of Contract for Construction for Building and Engineering Works Designed by the
Employer. Often described as the "Construction Contract", the "1999 Red Book" or the "new Red
Book".
• Conditions of Contract for Plant and Design-Build for Electrical and Mechanical Plant, and for
Building and Engineering Works, Designed by the Contractor. Often described as the "Plant and
Design/Build Contract", the "1999 Yellow Book" or the "new Yellow Book".
• Conditions of Contract for Engineering Procurement and Construction/Turnkey Projects. Often
described as the "EPC/Turnkey Contract" or the "Silver Book".
• Short Form of Contract. Often described as the "Short Form" or the "Green Book".
These four Books in the 1999 suite are all marked "First Edition 1999" as they are not direct
updates of any previous FIDIC Books.
Since the original publication of the 1999 Suite, FIDIC has introduced additional standard form
contracts:
• Conditions of Contract for Construction for Building and Engineering Works Designed by the
Employer, for bank-financed projects only. Often described as the "MDB Construction Contract",
the "MDB Harmonised Edition" or the "Pink Book”.
• Conditions of Contract for Design, Build and Operate Projects, the "Gold Book".
• Dredgers Contract, based on the Short Form of Contract, the "Blue Book".
• Consultant Model Agreements, for appointing a professional consultant, the "White Book".

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• Conditions of Subcontract for Construction for Building and Engineering Works Designed by the
Employer, First Edition 2011 (the 2011 sub-contract), primarily intended for use with the 1999
Red Book or the Pink Book. The 2011 edition followed an earlier, "test" edition of the sub-
contract.
• FIDIC Model Representative Agreement, First Edition, 2013, intended for use where a
professional consultant is appointing a local representative, outside of that professional
consultant's usual (or licensed) geographical operational area, the "Purple Book".
The 1999 Red Book
The Red Book is suitable for all projects where the main design responsibility lies with the
employer (or its engineer).
The work done is measured, and payment is made according to a bill of quantities, although there
is an option for payment on a lump sum basis.
The 1999 Yellow Book
The Yellow Book is suitable for all types of projects where the main design responsibility lies with
the contractor. In practice, the contractor's designs follow the employer's requirements. For that
reason, the testing procedures are usually more complicated than those in the Red Book.
Payment is made on a lump sum basis, usually against a schedule of payments.
The Silver Book
The Silver Book is intended for EPC (Engineering Procurement and Construction) arrangements.
Under an EPC contract, the contractor is responsible for all the processes and design required to
provide a fully equipped facility to the employer that is ready for operation at the "turn of a key": a
turnkey arrangement.
The Silver Book was also originally intended for use in privately funded projects (for example, for
use as a turnkey sub-contract in public private partnerships (PPP) or build operate transfer (BOT)
arrangements), where the employer or special purpose vehicle project company (SPV) takes
responsibility for design, construction, maintenance and operation of the facility for a period of
time. Whether the Silver Book will be used in future for these types of projects will depend on how
PPP and BOT projects are procured around the world. (For example, the Silver Book has not
been adopted in UK PPP projects.)
Under the Silver Book, the contractor assumes time and cost risks that are greater than it would
otherwise assume under the Red or Yellow Books, the upshot being that the contractor will price
these increased risks, leading to an increase in the contract sum, and may well also carry out
extensive due diligence to mitigate risk, which could delay contract execution. Despite this,
sponsors/funders will typically accept the “turn-key” approach, so they can limit their exposure to
additional time/money claims under the contract by the contractor.
The Pink Book
The launch of the Pink Book created much interest amongst users of FIDIC contracts. It is a new
version of the FIDIC Red Book called the "MDB Harmonised Edition". It was originally published
in May 2005 and revised editions were published in March 2006 and June 2010. It is to be used

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on projects funded by participating Multilateral Development Banks (MDB), such as the World
Bank.
An important feature of the Pink Book is that borrowers are no longer free to alter contract
conditions through the use of "Particular Conditions". Country-specific requirements are now dealt
with through the "Contract Data", a renamed and partially restructured "Appendix to Tender".
The Gold Book
The Gold Book is the most recently published form of the "FIDIC rainbow". The First Edition of the
FIDIC Conditions of Contract for Design, Build and Operate (also called the "Gold Book", the
"FIDIC Design-Build-Operate Contract" or simply the "FIDIC DBO Contract") was published in
September 2008.
The Gold Book combines design, construction, operation and maintenance of a plant in a single
contract, and is drafted to be used in DBO (Design, Build and Operate) scenarios.
The Gold Book adopts a similar approach to the Yellow Book in respect of the design and build
phase. Following commissioning testing, a 20 year operation and maintenance period
commences, during which the contractor is required to achieve various operational targets and
then return the plant to the employer in an agreed condition.
The Blue Book
The Blue Book is designed to be used for all types of dredging and reclamation work and ancillary
construction, with a variety of administrative arrangements. As drafted, the employer designs the
project. However, the parties may adapt this form so that it is suitable for contracts that include, or
wholly comprise, contractor-designed works.
The White Book
FIDIC also produces contracts or agreements for use between an employer and its professional
consultant (such as an architect or engineer), and for use between consulting firms. The "White
Book", first published in 1998, was updated in 2006 (4th Edition). However, it is often amended by
employer and funder parties from its standard form, which is felt to be too “consultant-friendly” for
non-amended use.
FIDIC Conditions of Subcontract for Construction
In 2009, FIDIC published a "test" edition of a sub-contract, the Conditions of Subcontract for
Construction for Building and Engineering Works Designed by the Employer, which was primarily
intended for use with the 1999 Red Book or the Pink Book. FIDIC then followed that test sub-
contract with the "Conditions of Subcontract for Construction for Building and Engineering Works
Designed by the Employer, First Edition 2011" (the 2011 sub-contract).
Under the 2011 sub-contract:
• The sub-contractor assumes the duties and obligations of the contractor under the main contract
for the sub-contract works.
• The payment terms include pay-when-paid clauses. FIDIC has included guidance notes and
sample particular conditions, to assist the parties in jurisdictions, like the UK, where pay-when-
paid clauses are unenforceable.

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• The parties can refer disputes that are specific to the sub-contracting relationship to an ad hoc
dispute adjudication board (DAB).
• The sub-contractor must provide programme details that are not required under 1999 Red Book's
programming requirements. That is, the sub-contract has more detailed programme requirements
than the 1999 Red Book.
The Purple Book
The Purple Book is for use by a professional consultant when appointing a second professional
consultant as its representative. FIDIC states that it has drafted the Purple Book to be consistent
with its existing documents, including the White Book, which has itself previously incorporated a
form of Model Representative Agreement.
Although FIDIC's own description of the Purple Book does not say so, we understand it is
intended for use where a professional consultant is appointing a local representative outside of
that professional consultant's usual (or licensed) geographical operational area.
FIDIC's December 2013 newsletter highlighted that a professional consultant may:
• Face "risks in operating overseas", including having to "confront corrupt activities".
• Need to respond to "new legislation introduced in markets such as the UK and USA", which may
refer to the UK's Bribery Act 2010 and similar legislation in other jurisdictions.
The newsletter suggested that this edition of the Purple Book was published, in part, to help a
professional consultant address those sorts of risks.
Buying a FIDIC contract
FIDIC's own website (www.fidic.org) allows users to purchase paper or electronic copies of its
contracts.
4. Things to consider when dealing internationally:
a. Local law/English law
b. Local market standards/cultural differences
c. Payment
d. Performance security
e. Interest and liquidated damages
f. Dispute resolution/enforcement of awards
g. Procurement strategies
h. Caps of contractor liability

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Authors: Francis Ho (Head of Construction); e-mail: Francis.Ho@Olswang.com
Julian Booth (Associate); e-mail: Julian.Booth@Olswang.com
Tel Contact: 0207 067 3000
Produced: 17
th
November 2014