The Clauses limiting the Contractor's liability under the 1999 editions to the Red, Yellow and Silver Books are identical and they are fine for civil works.  As part of the harmonization process across all three Books that was done in 1999, the limitations on liability in the Yellow and Silver Books were made to be the same as those for the Red Book.

However, this is not a satisfactory solution as to Plant which may be especially important, as you know, in a Yellow or Silver Book contract.

FIDIC realized this too late to be able to make appropriate changes to the 1999 Yellow and Silver Book contracts.  However, we were able to address the question in the FIDIC Guide to the 1999 Books which was published subsequently.  In the FIDIC Guide in relation to Sub-Clause 17.6, we stated as follows:

"If the Works include major items of Plant, it is usually appropriate for the Contract to limit the duration of the Contractor's liability for such Plant; for example, to a stated number of years after the completion date stated in the Taking-Over Certificate.  After a few years' operation, it becomes increasingly difficult to establish whether any alleged defects are attributable to the Plant's design, manufacture, manuals, operation, maintenance, or a combination of these and/or other matters."

Accordingly, as far as Plant is concerned, the Contractor's liability needs to be specifically limited as compared to the Contractor's liability for civil works.  An excellent illustration of how the Contractor's liability should be limited is contained in the Yellow Book, 3rd Edition, which AVJ mentioned at the last CC meeting that he had helped prepare.

The different approach to liability taken by the Yellow Book, 3rd Edition, is well illustrated by Clause 30 of that edition entitled "Defects After Taking Over".  The FIDIC Guide to the 3rd Edition (page 100) describes Clause 30 as follows:

"The Clause follows the standard international practice for E&M contracts.  It imposes an obligation on the Contractor to replace defective parts and repair defects and damage to the works caused by such defects during a defined period of time, the Defects Liability Period.  If the defects discovered or damaged caused by such defects during this period are successfully repaired or made good, this constitutes the whole of the Contractor's liability.  If the defects are not successfully repaired, several remedies are open to the Employer, among them termination of the Contract.  The characteristic feature is, however, that the Contractor's liability for defects is limited to, and dependent upon, his being able to repair the defects."  [Emphasis added].

Under the three 1999 Books for major works, the Contractor's liability after the Defects Notification Period is not excluded as was the case under the Yellow Book, 3rd Edition.  Under the 1999 Books, the Contractor remains liable for the relevant period of the statute of limitations or period of prescription (which may be e anything up to 30 years, as in France).

I think we overlooked this special requirement for Plant contracts when we prepared the 1999 Books because all of us (except Hermann Bayerlein, who is not a lawyer) were much more familiar with civil work contracts than with Plant contracts.  Accordingly, at least in my case, until the FIDIC Guide to the 1999 Books was prepared, I had not realized that we needed different provisions limiting the Contractor's liability where Plant or substantial electrical and mechanical works are concerned.

Accordingly, I believe that when we update the Yellow and Silver Books, we should be looking to incorporating the kinds of solutions that were contained in the Yellow Book, 3rd Edition.  It is clear that the authors of the Yellow Book, 3rd Edition, understood very well the particular needs and requirements of a supplier of electrical and mechanical works.

I would be interested to hear if any members of the Contrcats Committee have any comments to make upon the foregoing.

Finally, at the CC meeting, we discussed the idea of possibly including a "hardship clause" in the DBO form given that a DBO contract may be operative with basically the same prices during a 20-year operation period.  To assist thinking on this, I am sending a chapter dealing with "Hardship Clauses" from a recent book entitled "Drafting International Contracts" by Marcel Fontaine and Filip De Ly, which includes numerous examples of such clauses and which is perhaps the best work on this subject.