Jurisdiction - Korea
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Korea – Notification Of Claims Under The Major FIDIC Books.

24 November, 2014


Legal News & Analysis – Asia Pacific – Korea – Construction & Real Estate



A failure to notify a claim when notice is essential can be fatal to a Contractor’s claim under the major FIDIC Books. All of the FIDIC Books include the following clear-cut statement:

If the Contractor fails to give notice of a claim within such period of 28 days, the Time for Completion shall not be extended, the Contractor shall not be entitled to additional payment, and the Employer shall be discharged from all liability in connection with the claim.


In view of the popularity of the major FIDIC Books in building and engineering projects in most of your contracting markets, Contractors will benefit if their project staff possess a strong working knowledge of the requirements of Sub-Clause 20.1. Although it is not the most complicated provision in the FIDIC Book, there is more to it than meets the eye.
This CLGN contains practical observations based on the experience of specialist lawyers who frequently have to argue for the Contractor’s right to make a claim in circumstances where it is said that the Contractor failed has not made the required notification.

General Observations 

Sub-Clause 20.1 is one of several provisions of the major FIDIC Books requiring claim-related notification. Other provisions also require notices to be served under them (see e.g. Red & Pink Books, Sub-Clause 1.9 (Delayed Drawings or Instructions) and Red, Yellow, Pink & Gold Books, Sub-Clause 4.12 (Unforeseeable Physical Conditions)).

Sub-Clause 20.1, third paragraph, confirms that the Contractor must also submit all other notices required by the Contract.It should be noted that these obligations to notify arise at different times. This observation is important to any proper understanding of the role of the Sub-Clause 20.1 Notice, since it is not intended to operate in isolation from the other Conditions. The basic sequence of notification may be illustrated as follows:


Click to enlarge:




The giving of notice under the first paragraph of Sub-Clause 20.1 is not an isolated step. It is the first of several steps to be taken by the Contractor and the Engineer/Employer’s Representative in order to properly dispose of a duly notified claim. 

Sub-Clause 20.1 divides into nine sub-paragraphs that lay out these individual steps. This is a multi-step process that specifies the initial Contractor’s notice of claim, the obligation to provide supporting materials and the initial manner in which the Engineer is to determine the claim. 

FIDIC Sub-Clause 20.1, The First To Third Paragraphs 

Sub-Clause 20.1 starts in the first paragraph by requiring the Contractor to give a notice to the Engineer of its claim in the following situation:




Once these three things have occurred, the notice should be submitted as soon as practicable and in any event not later than 28 days after the Contractor became aware or should have been aware of the event or circumstance. 

Questions Arising 

These requirements raise four commercially important questions:

Q1: For any given claim, do the events or circumstances share a common starting point?

Q2: Does the Contractor have to give notice for every event or circumstance?

Q3: To what extent can the Contractor rely on his not actually being aware of the event or circumstance?

Q4: In this setting, who exactly is ‘the Contractor’?

Each of these four vital questions is considered in turn below, before we close with basic recommendations on how a Contractor should draft a suitable notice.

Q.1 – The Entitlement Trigger

The event or circumstance is one ‘giving rise to’ the claim. As a matter of dictionary meaning, this expression denotes an event or circumstance that is actually causing the claim to happen. Since the first sentence appears to equate a ‘claim’ with the Contractor’s belief in an entitlement to an extension of the Time for Completion and/or an additional payment, the intention appears to be that the relevant event or circumstance is one that causes the entitlement to happen.

In order for the event or circumstance (or both) to cause the entitlement to happen it must activate all the elements of the Contract (and/or applicable general laws) that are essential for the creation of the entitlement. If the event or circumstance does not activate all of those essential elements of the entitlement the Contractor will have no entitlement. 

The constituent elements of each of the entitlements are specified individually in the Conditions. Notably, for all entitlements to an extension of the Time for Completion or additional payment it is essential that the Contractor have suffered delay or incurred Cost, respectively. On one view, the extent of the entitlement increases as the delay or Cost increases such that the effect of the event or the lingering circumstance can give rise to increased entitlement. On the other hand, there is ample support for the view that such a situation actually gives rise to consecutive entitlements rather than a single growing entitlement. 

So the simple answer to Q.1 is ‘no’; for any given claim, the events or circumstances do not share a common starting point. It all depends on the essential elements of the particular claim; however the suffering of delay or incurring of Cost is a very common precondition.

Q.2 – A Moment To Consider?

It is sometimes argued that the use of the word ‘if’ at the outset of the first paragraph indicates that the obligation to notify does not arise until the Contractor considers (i.e., believes) that it is entitled to time or money for the relevant event or circumstance. 

This interpretation is argued to be appropriate because, in practice, a Contractor cannot always be aware of material events or circumstances until they reveal themselves. Due to the Contractor’s own normal administrative processes, particularly those involving sub-contractors, it may be impossible to notice that expenditure has been incurred or if it is to be incurred that it was due to the relevant event or circumstance. 

Similarly, in a situation of multiple causes of delay, a Contractor cannot always know whether, and if so exactly when, a particular event or circumstances is the effective cause of the delay.


It is often argued that the Contractor ought to have some time to determine whether it will require an extension of the Time for Completion and/or any additional payment whilst the event is ongoing, before it must issue the notice.

This interpretation of Sub-Clause 20.1 in our opinion matches the practical, even-handed outcome that FIDIC intended; however it is not the way that FIDIC intends the clause to work. 

The fact that the suffering of delay or incurring of Cost is a common precondition to a notifiable claim means that one or both of these consequences must have occurred. Whilst the obligation to notify is not immediate, the time for doing so runs off the date of the occurrence of the event or circumstance. The trigger for the obligation to notify however is linked to reasonable awareness, about which Q.3 is concerned.

Q.3 – The ‘Three Wise Monkeys’

The FIDIC Contracts Guide states that the phrase ‘when he should have become aware of the event or circumstance’ was incorporated to prevent a contractor claiming that he was not aware of an event when he was or should have been. Whether the Contractor ‘should have become aware’ will be interpreted based on an objective standard of what a reasonable contractor in the Contractor’s position, having regard to all the circumstances, would have been aware of. 

Due to FIDIC’s choice of wording, it is a question of fact to be determined by what can be inferred from the information available at any time. The members of FIDIC’s Contract Committee doubtless had the best of intentions here but as a result of this phrase, determining when the reasonable time for awareness begins is not easy. 

Perhaps the bigger point however is that the device of reasonable awareness allows a Contractor more time to issue a notice in certain situations such as latent delay and Cost or where causal links are masked by the apparent effects of other events or circumstances that do not support a claim.

Q.4 – Who Am I?

Applying legal authorities that define a company by reference to those persons who are its directing mind and will, and who control what it does, it can be argued that the ‘Contractor’ has not become aware of the impact of the event until financial reports tabled at meetings of the board of directors indicate losses and specialist legal advice has been obtained which identifies those events as compensable events. This seems impracticable in the context of a construction project. 

More specifically, the provisions must be interpreted against the Contract as a whole. And Sub-Clause 4.3 requires the Contractor to appoint a Contractor’s Representative who has the authority necessary to act on the Contractor’s behalf under the Contract. As a result, it is likely that the Contractor’s Representative will be deemed to be the relevant person whose awareness of the event or circumstance giving rise to the claim will be attributed to the Contractor. 

As such, in terms of when the Contractor should be deemed to be aware, time may need to be given for information to percolate up through the Contractor’s site team to the members of the Project Administration/Management team.

Drafting And Issuing Notices

The Sub-Clause 20.1 notice of claim must be written in the language for communication (Sub-Clause 1.4) and delivered, sent or transmitted to the Engineer (or Contractor’s Representative in the case of the Silver & Gold Books) by one of the specific agreed modes of communication (Sub-Clause 1.3). It must be copied to the Employer (Sub-Clause 1.3).

The particular form of the notice can vary provided it satisfies the above manner and form requirements. It might form part of correspondence and/or a routine report and/or a formal notice. It must describe what has happened or is happening and how that satisfies the elements of the claim. 

It need not state that it is given under Sub-Clause 20.1 (unless Sub-Clause 1.3, paragraph (f) of the Gold Book applies) and it may – but need not – be combined with other due notices. We can of course recommend particular notice forms for use under the major FIDIC Books.

Lastly, it is very important to watch carefully for contractual terms that seek to alter the requirements of Sub-Clauses 1.3, 1.4 and 20.1. For example, one often sees the reference to ‘the Contractor became aware’ being changed to ‘the Contractor first became aware’, the 28-day period being reduced and the addition of a requirement that the notice expressly refer to Sub-Clause 20.1. These various amendments have variable impacts on the intended operation of Sub-Clause 20.1 and must be considered in the particular context of the other contractual provisions. 

These kinds of amendment are however a clear signal to the Contractor to be on guard.



Sub-Clause 20.1, first paragraph


Red, Yellow, Silver and Pink Books Gold Book
If the Contractor considers himself to be entitled to any extension of the Time for Completion and/or any additional payment, under any Clause of these Conditions or otherwise in connection with the Contract, the Contractor shall give notice to the Employer, describing the event or circumstance giving rise to the claim. The notice shall be given as soon as practicable, and not later than 28 days after the Contractor became aware, or should have become aware, of the event or circumstance. 


If the Contractor fails to give notice of a claim within such period of 28 days, the Time for Completion shall not be extended, the Contractor shall not be entitled to additional payment, and the Employer shall be discharged from all liability in connection with the claim. Otherwise, the following provisions of this Sub-Clause shall apply

If the Contractor considers himself to be entitled to any extension of the Time for Completion of Design-Build and/or any additional payment, under any Clause of these Conditions or otherwise in connection with the Contract, he must comply with the following procedures: 


(a) Notices



The Contractor shall give Notice to the Employer’s Representative, describing the event or circumstance giving rise to the claim as soon as practicable, and not later than 28 days after the Contractor became aware, or should have become aware, of the event or circumstance. The Notice shall state that it is given under this Sub-Clause.



If the Contractor fails to give Notice of a claim within such period of 28 days, the Time for Completion of Design-Build shall not be extended, the Contractor shall not be entitled to additional payment, and the Employer shall be discharged from all liability in connection with the claim. However, if the Contractor considers there are circumstances which justify the late submission, he may submit the details to the DAB for a ruling. If the DAB considers that, in all the circumstances, it is fair and reasonable that the late submission be accepted, the DAB shall have the authority to overrule the relevant 28-day limit and, if it so decides, it shall advise the Parties accordingly.



If the Contractor has submitted his Notice of claim within the 28-day limit or the DAB has ruled that the late Notice was acceptable, then the Contractor shall proceed in accordance with the provisions of this Sub-Clause


Pinsent Masons


For further information, please contact:


Vincent Connor, Partner, Pinsent Masons
[email protected] 

Andrew Denton, Partner, Pinsent Masons
[email protected]

Jon Howes, Partner, Pinsent Masons
[email protected]s.com


Mark Raymont, Partner, Pinsent Masons
[email protected]

Nicholas Turner, Pinsent Masons
[email protected]


Mohammed Talib, Pinsent Masons
[email protected]


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