In a week when metal(lica) has been found at Glastonbury, we turn our attention to the surely less surprising discovery of rock on Gibraltar. A civil engineering contractor has tried to argue that rock (along with contaminated groundwater) could be classed as “unforeseen ground conditions”? Not so, ruled the TCC back in April 2014. Anna Wood considers the decision in Obrascon Huarte Lain SA v AG of Gibraltar , and comments on how this could affect those using the FIDIC forms of contract.
This case concerns a FIDIC Yellow Book (1999) contract for the design and construction of a road and tunnel in Gibraltar. At tender stage, Obrascon was given an environmental statement and site investigation report. By clause 4.10 of the contract, the contractor was responsible for interpreting the data in those reports. Within a year of start on site in October 2009, the works were already running almost two years late on a two year contract. Obrascon applied for an extension of time under clause 4.12. However, that clause stated that the ground conditions that were reasonably foreseeable by an experienced contractor at the date of submission of the tender must be considered. The delays were caused by issues with rock, unforeseen contaminated materials, contaminated groundwater and weather. The TCC considered all of these issues, together with further arguments in relation to the right to terminate, the time for an application for an extension of time for weather and the proper service of notices. This article will focus on the site investigation issues only.
The TCC concluded that Obrason was wrong to rely solely on the reports prepared by others and provided to it at tender stage. Instead, said Judge Akenhead, what would be expected of an experience contractor was “some intelligent assessment and analysis of why there was contamination there: given the historical… uses to which the land had been put, there would have been an expectation of a very real risk that there could be extensive… residues in the made ground.”
The point for contractors using FIDIC therefore must be that where they take responsibility for “unforeseen” ground conditions, this does not allow them to blindly rely on reports provided at tender stage but should instead carry out, and then take account of, their own expert reports prior to finally agreeing the price and programme for the works.
Whilst this newsletter does not advocate any one religion over any other (or the choice of none at all for that matter), one cannot help but be reminded of Matthew 7:24-27 and the parable of the man who built his house on sand…..
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These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.