Civil Law Context for Understanding Employer’s Payment Obligations under Common Law FIDIC

Abstract

The Egypt civil law (ECL) is founded upon the French civil law principles as well as Shari’a law. Yet, most of the major construction projects carried out in the Egyptian market are based on the standard conditions of contract for international projects published by the Fédération Internationale des Ingénieurs-Conseils (FIDIC, or International Federation of Consulting Engineers), which is based on legal concepts rooted in the common law system. Thus, the stakeholders engaging in construction projects in Egypt need to understand the interpretation of the FIDIC provisions against a civil law background. This paper uses a multistep interdependent desktop research methodology to study the employer’s payment obligation provisions under the FIDIC Red Book 1999 [FIDIC (1999), Conditions of Contract for Construction] [i.e., FIDIC (CONS)] within the context of the ECL. Consequently, similarities and differences between the relevant provisions under the FIDIC (CONS) and the ECL are recognized in relation to contract price, payment mechanisms, and delayed payment. On the basis of such analysis, it was concluded that the allocation of risks related to the contract price under the FIDIC (CONS) is different from the allocation of risks under Article 657 of the ECL [ECL (1948), “Egyptian Civil Law”], which provides the provisions of remeasured contracts. Further, it was clear that the ECL provides a wider range of remedies than the FIDIC (CONS). However, there are limitations on the application of some of the remedies under the ECL. Accordingly, five recommendations were provided to amend Article 657 of ECL in relation to contract price; four suggestions were introduced as additions to delayed payment management under the Muqawala contract; and an amendment to Clause 16.2 of FIDIC (CONS) was introduced. It is expected that this study would better align the stakeholders who are associated with construction projects in the Egyptian market toward managing the payment risks in their projects.