Legal Basis of International Engineering Claims

Posted by hao zhang, community karma 47

Claims are recognized as the most complex and challenging legal issues in the field of international engineering. The legal basis of international engineering claims mainly includes contract text, the legal application of those contractual clauses and the principles of interpretation. Project claim first depends on the principle of risk distribution of the contract text and the risk assigned to the parties, which is particularly critical. Second, the terms of the contract should be valid under the laws of the host country. Invalid contract terms cannot be used as basis for contract claims. Finally, even the same terms of a contract, in different countries, due to the various principles of interpretation, the legal consequences may also be entirely different.

Key words: risk distribution; international engineering; claims; legal application; principle of debt fixation



International engineering claims involved in multi-disciplinary knowledge such as project management, technical economics laws and regulations are recognized as the most complex and challenging legal issues in the field of international engineering. International scholars have made extensive research on engineering claims such as Construction Contract and Claims prepared by Michael S. Simon (1979) and Construction Claim, A Quantitative Approach written by James J. Adrian (1988) which summarize the results of previous claims are of importance. The Civil Engineering Claims, written by Vincent Powell-Smith and Douglas Stephenson (1994), provide theoretical basis for the calculation of claim costs. James (1997) studied how to reduce the claim events before they got evolved into a dispute and divided the project into three stages: before the construction, during the construction, dispute period by putting forward corresponding countermeasures. Abdul-malak (2000) from the perspective of the owners, on how to avoid some of the controversy in the project from being evolved into a claim did a systematically study and presented the proposal claims process, the process identified the main information collection and decision points. Sheikh (2003) has established a database management system to store and analyze data on duration/time and cost claims in the project, which can assist in determining the basis, causes, and other fundamental issues of the claim. Veroncia (2004) investigated the number and size of claims that could reduce the number of claims in the project and found that the probability of occurrence of cooperation and nonconformity claims was 71%. Yates (2006) focused on how to avoid and reduce the duration of the contract claims. In China, the earliest discussion of the project claims is the introduction of Ding Shizhao (1990). Cheng Yu (1993) of Construction Project Contract Management and Claims, Liang Yi (1995) of International Construction Claims, Chen Yongqiang and Zhang Shibo (2008) of International Engineering Claims are more influential monographs on international engineering claims. Through the research, it is found that the research on claims by Chinese and other countries scholars mainly focuses on the factors that cause the claim, the claim principle, the claim basis, the claim procedure, the claim method, the claim skill, the dispute resolution method, the organization construction, the personnel quality constitution, the cost and duration calculation, the construction of the claim model and so on. However, the theoretical legal basis of the claim is insufficient. What is the theoretical legal basis of such claims? For the Anglo-American legal system, it is relatively simple, and mainly based on the agreement and contract. But for civil law countries, it is based on the contract or according to the applicable law? If there is a conflict between the contract agreement and the applicable law, Which one shall prevail? Are the same claim event results identical when different national laws are applied? There are few scholars studied on the basis of legal theory of claims. In China, it is strange that the project claim researchers or project contract managers are basically from non-legal professionals. On the one hand, International engineering contract practitioners do not understand the law and on the other hand legal professionals are not familiar with project contracts, it has become a ubiquitous phenomenon in China. Qualitative and quantitative analysis of mixed claims for a long time is not an effective solution. Engineering claims first need qualitative, and then quantitative analysis, the dichotomy can make complex claims simple. Qualitative analysis mainly refers to the legal analysis to determine whether a claim can be for compensation. Quantitative analysis belongs to the technical analysis to quantify cost or time. The legal basis of international engineering claims mainly studies the following three aspects.


The model of international construction contract is the summary of international engineering practice which reflects the practice of some countries or regions for many years. In the 1990s, EPC contracting has become a common basic contract model of engineering construction. Konchar and Sanvido (1998) collected 351 US projects data which are divided into CM \ DB \ DBB three categories according to the project construction model. A large number of empirical research results confirm the advantages of the general contract. Based on the empirical research, Molenaar (1998), Chan (2001) and Ling (2004) respectively analyzed the key factors for the success of the general contractor project, and developed a model for predicting the success of general contractor project. FIDIC published contract versions in 1999 and most recently in 2017, subsequently many Chinese scholars published monographs or articles, concerning systematic introductions of the new contract conditions or comparison of Silver Book, Yellow Book and Red Book. The typical characters and monographs mainly include: Comparison and Characteristics of New FIDIC conditions published by Liu Wen & He Bosen(2002), Introduction and Parsing of New FIDIC Conditions written by Zhang Shui-bo& He Bosen(2003) , EPC: No Consulting Engineers in the Engineering Projects prepared by Tian Wei (2004).

After long period of engineering practice, there are three major international contract document systems in the world: the International Federation of Consulting Engineers (FIDIC), the British Institution of Civil Engineers (ICE) and the American Institute of Architects (AIA). In general, FIDIC, ICE and AIA contract series basically represent the highest level of research in theory and practice in the current international general contracting field. FIDIC, in the drafting of the contract conditions, not only listened carefully to the views of the members of the Association, but also adopted prudently to views of owners, contractors, lawyers and the World Bank and the Asian Development Bank and other various aspects. FIDIC contract conditions focus on international engineering from the very beginning, worked to lessen the difference of country laws and regulations, give full consideration to the currency selection, exchange rate risk and turmoil, strikes, riots and other social issues. Tian Wei (2004) believes that due to the scientific and complete FIDIC contract condition, it has been respected as a Bible in the field of international engineering field. Given FIDIC EPC contract condition is the most widely used international contracting model, it shall be discussed on the basis of it.

Han Depei (1989) argues that international practice uses the practice of public law and private law. Private international law practice can be divided into two categories, one belongs to the legal category which has legal effect and another category of international practice does not have legal coercion. The international practice of the legal category is divided into normative international practice and contractual international practice, the former does not require the parties to choose the legal effect, latter only through the choice of the parties can produce legal effect. In author’s opinion, FIDIC contract conditions are contractual international practice with selective and arbitrary characteristics. Contractors, international financial organizations and project contractors will regard it as a legal normative document. And once the parties have adopted the FIDIC contract conditions, the relevant provisions of the contract begin to bind both parties. Over the past 50 years, FIDIC has developed a series of contractual conditions that have been modified repeatedly and have formed international practice of highly influential project management. To a large extent, FIDIC contract conditions are the substantive laws that apply directly to international engineering claims, but they have a choice of arbitrary choosing characteristics.


2.1Definition of Claim

Claim is defined in the Black’s Law Dictionary as the assertion of an existing right or any right to payment or to an equitable remedy, even if contingent or provisional and a demand for money, property or a legal remedy to which one asserts a right. As per the above definition, one can understand that the claim aims at obtaining what should belong to its own entitlements, and also is an essential right and qualification requirement, as well as the rights and obligations of the behavior of a person in a process of legal relations, not necessarily at fault but should bear the responsibility of the loss caused by oneself in accordance with the contract provisions and in law practice. The FIDIC condition does not clearly define the claim, except that the content of the claim specified in Clause 20.1, Contractor's claim: " If the Contractor intended himself to be entitled to any extension of the Time for Completion and / or any additional payment, under any Clause of the Conditions or otherwise in connection with the contract, the Contractor shall give notice to the Employer, describing the event or repeals giving rise to the claim. " Clause 4.3, AIA Contract Document A201-1997 defines the claim as a demand or assertion by one of the parties seeking, as a matter of right, payment of money, or other relief with respect to their terms of the Contract. From FIDIC and AIA contract conditions for the description of the project claim, it usually refers to a party to the contract in the performance process, put forward compensation requirements of an act according to the contract, the law or practice, when the loss occurs or the right  is damaged, .

2.2 Claim Legal Characteristics

There are three major legal features, namely, compensatory, objectivity and legitimacy. Claim refers to risk of a reasonable adjustment or redistribution by contractor or owner in accordance with the agreement. The international common contract is basically limited to extra duration or expense for the scope of claim. The claim is a legitimate right to fulfill the contract and the claim itself, not an economic punitive nature. Objectivity refers to the actual loss or damage that must exist before claims can be filed against each other, no claim without loss, the suffered losses of claimant and the behavior of the claimant does not necessarily exist legal cause and relationship. Legitimacy means that there is a sufficient legal basis for filing a claim, including contract documents signed between the parties, applicable law or international project practice. The three mentioned claim characteristics have their own inherent logic: Compensation is the first attribute of the claim and it is also the most essential reason of claim.  Objectivity is restricted by legitimacy, but the objectivity evaluation criteria is very different in various jurisdictions; Legitimacy means that the claim is based on a full contract or legal basis of law, otherwise, the claim will lose the existence of legal basis.

With regard to the definition of Counterclaim, Chinese basically has two views: one point of view argues that claim was put forward by a contractor and counterclaim was put forward by an employer for economic or duration compensation. National Engineering Consultant Examination Committee (2001) and National Cost Engineer Examination Committee (2001) has adopted and held the point of view. This formulation prevails in China's engineering sector for a long time. For another representative point of view, Yang Deqin (1994) stated that counterclaim is for the other party to rebut back the claimant, or prevent other claims. The Counterclaim in the Black’s Law Dictionary is defined as a claim for relief asserted against an opposing party after an original claim has been made-Also termed counteraction; countersuit; cross-demand. In the interpretation, counterclaim is not only  " refusing " or " refuting ", but rather a relatively independent counter action against the same subject, even if there is no claim appeal. The counterclaim can also exist independently. This is very similar to the provisions of the "counterclaim" in the Chinese Code of Civil Procedure. From the classification of the claim, it has two-way characteristics, that is, the reciprocal right of relief between the two parties. The first view violates the language habit logic for which there is no such reference in the international arena. Such as the Section 2.5, Conditions of FIDIC Silver Book Contract, has shown if the Employer considers himself to be entitled to any payment under any Clause of these Conditions or otherwise in connection with the Contract and / or to any extension of the Defects Notification Period, he shall give notice with particulars to the Contractor. In international engineering practice, employers' claims often don’t have a time-bound and do not require filing of claims reports and information, and even without the consent of the contractor. The employer may deduct from the project payment to be made, or may confiscate retention fee in the loss of compensation, and may also expropriate the performance bond or warranty guarantee, and even leave the contractor's material equipment as a mortgage. Compared with contractor's claim, owner’s claim is much easier, and because the employer's claim is less frequent, we usually see most of claims from contractors. The first popular ideal reason is mainly in some baseless assertion from the mainstream textbooks. The second argument, while revealing the main features of two-way counter claim, it confused the difference between the claim and counterclaim to abandon the context of law.

The essence of contract model is to regulate the relationship between the rights and obligations of both parties to determine the distribution of risk liability and transfer rules. The principles and methods of risk distribution between Contractors and employers vary widely in accordance with different contract models. If the same claim applies for different contract text, the claim results may vary widely due to different risk allocation mechanism. The premise of resolving the claim is to clarify the division and determination of the risk liability in the contract text.

3.1 Three Main Types of Risk Allocation

In the field of international engineering, there are three main types of risk allocation: Fore-see-ability Risk Allocation, Jones (1996) argues that if the risk can be met by an experienced contractor, the risk allocated to the contractor is acceptable, otherwise, it isn’t. Rationality and experience are two important factors to distinguish risk distribution. The core of this doctrine is reasonable and accessible. Manageability Risk Allocation, Smith (1996), a well-known engineering legal scholar, defines a manageability risk allocation as the distribution of identified risks based on a widely accepted risk allocation principle. The theory emphasizes two points: First, the risk should be allocated to the party best equipped to manage and minimize the risk. Second, the risk allocation should be fair to both parties. The NEC contract conditions in the UK are the typical applications of Manageability Risk Allocation. The theory of Economics and Law Risk Allocation says that the advocates of the doctrine were Posner and Rosenfield (1991), professors of Law School of Chicago University, they consider the allocation of risk mainly from the degree of loss, the possibility of cognition, the cost of insurance or relevant elements of insurance market to determine who is the undertaker of the risk.

3.2 Principles of Risk Allocation in Traditional Contract Texts

Project contract in a sense is the establishment of the rights and obligations, the distribution of responsibility and risk between the owner and a contractor. In the development of general contract strategy, the risk allocation generally follows the principle who can control the risk and who will take the risk. In the traditional contract model, the risk of the owners generally includes: political risk (such as war, military coup, etc.), social risks (such as strikes, civil strife, etc.), economic risks (such as price increases, exchange rate fluctuations, etc.), legal risks, external (including natural events) risks, etc. In the event of a Force Majeure risk, the direct loss to the Contractor generally is borne by Employer and the remaining risk is undertaken by Contractor. FIDIC contract conditions adhere to the principle of which side can control the risk and who will bear the risk. If both sides are not able to control the risk, it will be borne by the owner. It can be seen that the FIDIC contract condition advocates a mixed theory of predictable risk allocation and also takes some of the Manageability Risk Allocation.

3.3 Risk Allocation Rules in the FIDIC EPC Contract Text

Compared with the other contract formats of FIDIC, the terms of the Silver Book break the balance of risk sharing between the two sides of the contract, and the risk sharing is seriously tilted to the contractor. Contractors, on the basis of the original risk, not only bear the economic risks, external (including natural) risks, but also bear some risk of negligence of owners. A comparison of risk assignment between FIDIC Silver Book (1999) and Red Book(1999) is made below:

3.3.1 Paragraph 4.10: The Contractor shall be responsible for verifying and interpreting all such data. The Employer shall have no responsibility for the accuracy, sufficiency or completeness of such data, except as stated in Such-Clause 5.1; To the extent which was practicable (taking into account the cost and time), the Contractor shall be deemed to have obtained all necessary information as to risks, contingencies and other circumstances which may influence or affect the Tender or Works.

3.3.2 Paragraph 5.1: The Contractor shall be deemed to have scrutinized prior to the Base Date the Employer's Requirements. The Contractor shall be responsible for the design of the Works and for the accuracy of such Employer's Requirements .Such responsibilities prescribed in Red Book is entirely borne by employer.

3.3.3 The responsibility for the design shall be borne by the Contractor in Silver Book; the responsibility for the quality of the product shall be borne by the Employer and the Employer shall be liable for breach of contract or Tort Liability in Red Book.

3.3.4 Paragraph 4.12 ,8.4 and 13.8: As for unforeseeable difficulties, in most contractual conditions including Redbook, if the contractor finds unforeseen external conditions during the implementation of the project, the claim in most cases can be made to the owner; Section 4.12 of Silver Book expressly states:(a) The Contractor shall be deemed to have obtained all necessary information as to risks, contingencies and other circumstances which may influence or affect to works ; (b) by signing the contract, the contractor accepts total responsibility for having foreseen all difficulties and costs of successfully completing the works and; (c) the Contract Price shall not be adjusted to take account of any unforeseen difficulties of costs. Correspondingly, the "unusually unfavorable climatic conditions" and "the shortage of unforeseen persons or materials caused by epidemic or government acts" were removed from the Extension of Time for Completion in Section 8.4 of the Silver Book. The risk of these events are assigned to the contractor. In fact, personnel with engineering experience know that unforeseen difficulty are one of the most likely risks in the implementation of the project, while the unusually unfavorable climatic conditions are the most influential factors in the project implementation process. The provisions of Clause (c) of Section 4.12 can be understood in conjunction with Section 13.8 of the Silver Book that adjustment for Changes in costs as follows: "If the Contract Price is to be adjusted for rises in the cost of labor, Goods and other inputs to the works, the adjustments shall be calculated in accordance with the provisions in a Particular Conditions. " Generally, It is not adjusted under the international EPC engineering practice, the price increases and the risk of exchange rate fluctuations are often borne by the contractor. The above comparison can be seen that the risk distribution of different claims may produce fundamental subversions.


Zhang Zhongbo (2002) concluded that the interpretation of contract in view of the legal relationship between the two parties in the contract dispute, the (rules?) of the arbitration institution or the court, and the country's substantive law form the basis for dealing with the dispute. The citation of this conflict specification or the substantive law used to determine the obligations of the parties is the applicable law of the contract. The principle of determining the choice of law is based on the autonomy of the parties, and supplemented by objective test or the principle of the jurisdiction with the closest link to the transaction. The contemporary international community, on the basis of sovereignty, has its legal form in every state in all related activities carried out within its territory and are governed by its own jurisdiction, so both the owner and the contractor must abide by the laws of the states or countries where the project is located. The contractor and the owner usually agree on the jurisdiction. Silver Book also provides for this in Clause 1.4: "The Contract shall come into full force and effect on the date stated in the Contract Agreement". Clause 5.3 provides: "The Contractor undertakes that the design, the contract Documents, the execution and the completed works shall be in accordance with the laws in the country". Chinese civil law and contract law have also made a similar provision. International contract conditions are in international contractual practice but not through international treaty, so that the international project contract conditions can be applied only when the Chinese law or international treaties entered into by the Chinese government do not specifically provide for such circumstances. If the applicable law is China law, when the international contract conditions conflict with the existing laws in China, it shall be governed by the law of China. The following is the application of China law, FIDIC conditions have conflicts with them.
4.1 Conflict between FIDIC Engineer System and China Engineering Supervision System

FIDIC contract conditions are largely based on the ICE contract text with the characteristics of Anglo-American law, and they are no fundamental conflicts in Anglo-American countries. However, in the civil law countries, the concept of the civil law provisions and FIDIC conditions are not exactly the same, resulting in some conflicts between some of the mandatory provisions of the Civil Code and FIDIC conditions. For example, the "Engineer System" in the Red Book and the Yellow Book, has formed an engineer-centric expert management system that requires engineer to have a wide range of powers to determine whether the project is completed, to determine whether the contractor's claim is established, and to issue a payment certificate, etc. Concerning the legal status of Engineer, whether it is intermediary, designer, ruler or agent of contractors, has always been the debate focus on civil law scholars. Even the Red Book itself, Engineer status is constantly changing. Anglo-American law system gives the "Engineer" a wide-ranging power, but does not assume any responsibility, the rights and obligations are still borne by employer and contractor. From the legal point of view of civil law, the engineer's law status is very embarrassing, since Engineer in the civil law system can always not become a qualified legal subject. In Germany, its contract does not have an "engineer" role similar to the FIDIC contract condition, and although the employer's claim is often done with the assistance of an "architect", the legal status of the "architect" is only made as an employer’s agent and does not have role of independence and impartiality. China's engineering supervision is the implementation of strict qualification access and qualification system. If the application of the Red Book conditions is carried out in China, the engineer and engineering supervision system will be in conflict, as owners and contractors have no right to exclude the supervision of Engineering system.

4.2 Conflict between Project Claims Limitation and Litigation Limitation

Article 20 of the Silver Book stipulates that if the Contractor fails to give notice of a claim in 28 days  period, the time for completion shall not be extended and the Contractor shall not be entitled to additional payment. Whether the loss of substantial right or procedural right is in conflict with the statute of limitation of China law, is always a hot topic of debate. There are three main views:  Li Jizhong (2014) argues that claims overdue loss of substantive rights is undoubtedly the provision of the limitation of action, so the claim overdue loss  provisions are in violation of the Chinese law on the statute of limitations of the mandatory provisions and are invalid terms. Xu Jiang(2013) suggests that the issue of "expired" arising from the conflict between claims limitation and limitation of action should have legal effect, although the limitation of claim is in conflict with the limitation of action, especially the limitation of claim is shorter than the limitation of action. Song Zhiyong (2014) believes that the duration of the project claims and the limitation of action do not have conflict, and the agreed 28 days claim is not the limitation of action, if beyond this time limit, the contractor of course still have claim right but this right is no longer protected by law. Whether the claim system in international practice conflicts with China's statute of limitations? It requires a legislative or judicial interpretation by the Chinese legislature or the judiciary.

4.3 Conflict in Financing or Funding

Financing or funding by contractor in general contracting is the practice of international construction field. FIDIC Silver Book and Yellow Book provide the contractor's financing arrangements in sub-clause 14.15 of the Guidelines for the Use of Special Conditions and give examples of contractor financing. In recent years, with the private capital involved in the construction of public projects continually, the project model has been built from a simple construction into more consideration of financing, the project tends to the depth of resource development and infrastructure, including the cooperative relations with governments to be strengthened constantly, and the public capital, private capital and social capital are closely integrated than ever before. EPC + F (Finance) projects, BOTs and PPP models emerge in an endless stream, the key to these forms of contracting lies in the establishment of financing and innovation. The EPC + F general contracting model, in addition to the EPC content, also entails another core content, commissioned by the owner, to raise funds, usually for commercial or policy concessional bank loans, for the development of the project by the contractor. In recent years, some countries of Central Asia, Southeast Asia, South Asia and Africa with the fiscal revenue tightening that project funding has become the most difficult problem to solve. Some EPC projects, although signed for a long time it does not start up due to fund raising issues. Whether financing or how much the amount of financing is the comprehensive strength of the embodiment for international general contracting enterprises. EPC project management model with financing has been widely welcomed by national owners. China law does not specify whether contractors can be financing. However, in the immature development of China's construction market conditions, the Administrative Departments expressly prohibit the contract with financing, as January 4, 2006, the Ministry of Construction, Development and Reform Commission, Ministry of Finance, the People's Bank of four ministries jointly issued a notice that the government strictly prohibit project with the use of funding. On June 4, 2006, the Ministry of Construction, the State Planning Commission, the Ministry of Finance issued a notice  strictly banning financing in the construction field. If a foreign contractor is engaged in general contracting in China, there will be a problem of financing. Whether should be in compliance with the provisions of the ministry or by virtue of international practice, there must be a blind spot or conflict on the application of the law. For international engineering, you do not simply think that financing is a reasonable means of competition, but it is the embodiment of the strength of the contractor in the general contract competition market. From the perspective of jurisprudence, the contract financing is actually a manifestation of the principle of party autonomy. It fully embodies the true meaning of the parties on the condition that it does not violate the mandatory provisions of laws and administrative regulations and also does not harm the public interest.
4.4 Conflict between Dispute 's Decision and Procedural Law

The FIDIC clause 20 stipulates that the decision of the Dispute Adjudication Committee (DAB) shall be binding on the parties and if one party fails to do so, the other party may apply to the selected arbitration institution and the arbitrator may only proceed with a procedural review but it cannot proceed with Substantive review. If the DAB decision is not found to contain procedural  error, the DAB decision will be determined as final. Dispute Settlement Mechanism in AIA Contract Text is to let the architect first make a decision on the claim between the two parties, if the two sides have no objection to the decision of the architect, the decision should be implemented and executed. If the architect's decision failed to resolve the dispute, it will need to be meditated in accordance with the construction mediation regulations of American Arbitration Associations. Whether for FIDIC or AIA, the dispute resolution mechanism is always submitted to engineers or architects to solve. If the two companies of China, one is the general contractor and the other is the subcontractor, agreed to use the DAB settlement mechanism in the contract and selected Chinese arbitration institution, if one party refused to carry out DAB's decision, does the arbitration institution have an entitlement to an entity review of the DAB's decision? Has DAB institution a conflict with the Chinese arbitration law? As for foreign contracts, do the rules of the international practice allow the parties freely to agree? How to apply the China law is an urgent problem to be solved by a corresponding legislative or judicial interpretation.

 Contract model adapts to a certain political and economic system, and its existence is dependent on a specific market economy and social environment of the rule of law. Even in the United States, the same claim event will have different results in the application of laws of different states. Therefore, in selecting the text of the contract, it is necessary to pay attention to whether the individual provisions in the contract text conflict with the law of the state or government. If the law of the state is mandatory or prohibitive, it must comply with local laws or modify the terms of the contract.

Wang Limin (2006) concluded that liability attribution is to determine the attribution of responsibility based on legal norms. No matter what kind of legal system a country belongs to, it always reflects its basic values through a particular system design - whether or not it declares its general principle of imputation in the form of legal norms. The principle of imputation is the most direct and fundamental legal basis for engineering claims. Civil liability system involves two aspects of attribution and exemption. The attribution of responsibility includes breach of contract and infringement, and the exemption is mainly of Force Majeure. The same claim event, if the principle of default is different, the result of its claim is not the same.
5.1 Imputation of principle for breach of contract

Liability for breach of contract is the liability of the parties to the contract in the event that one party fails to perform its obligations in full compliance with the contract or fails to perform its obligations properly, and should bear compensation liability to the other party. Under the principle of fault liability, whether breach of contract depend on the existence of certain exemption causes. Exemption clause is to determine whether the breaching party is responsible for breach of contract conditions or not, it mainly refers to Force Majeure. But in exceptional circumstances, minor negligence and site accidents have also resulted in the debtor's actual discharge of liability. However, under the strict liability, minor negligence and site accidents are not generally exempted. Different principles of imputation will have a certain impact on the scope of damages. According to the principle of fault liability, in the case of both parties to the contract are at fault, it will be according to the degree of fault between the two sides to determine the scope of damages. At the same time, the scope of damage is sometimes subject to the breach of contract or loss of the restrictions. In accordance with the principle of strict liability, in determining the scope of responsibility, they do not take into account the degree of fault or default of both sides.

Civil law countries have traditionally adopted the principle of fault liability. The fault liability principle refers to a party in breach of contract obligations that must have a subjective fault to determine the responsibility of the elements. For example, Article 1147 of the current France Civil Code provides that a debtor shall be ordered to pay damages, if there is occasion, either by reason of the non-performance of the obligation, or by reason of delay in performing, whenever he does not prove that the non-performance comes from an external cause which may not be ascribed to him, although there is no bad faith on his part. Article 276 of current German Civil Code provides that the obligor is responsible for intention and negligence, if a higher or lower degree of liability is neither laid down nor to be inferred from the other subject matter of the obligation, including but not limited to the giving of a guarantee or the assumption of a procurement. Anglo-American law countries basically adopt strict liability principle. The principle of strict liability is that after the default occurs, it is necessary to determine the liability of the defaulting party to consider whether there is a breach of contract rather than the subjective state of the defaulting party. Article 7.4.1 of the General Principles of International Commercial Contracts drafted by the International Private Law Association provides that any non-performance give the aggrieved party a right to damages either exclusively or in conjunction with any other remedies except where the non-performance is excused under these Principles. With the two major legal systems in an integration trend, the civil law system to the principle of fault as a basic principle and at the same time, to a certain extent, it absorbs the strict liability; and common law in the adoption of the principle of strict liability, there is no negation of fault factors in determining the meaning of the contract responsibility. In China, it is usually considered Contract Law 1999 has adopted the principle of strict liability with fault liability to supplement. Before the promulgation of Contract law1999, it has adopted the principle of fault liability. International project claims, many events such as the loss caused by natural factors are often mistaken considered for the imputation of liability, in fact, it is a misconception of imputation principle. Since most of the standard contract text originates from the Anglo-American law system, the breach of strict liability does not require the perpetrator to have fault or default subjective state. FIDIC contract conditions are rooted in the ICE contract conditions, for express or implied term, they do not take into account the subjective reasons of the owners or contractors, because the principle of liability for breach of contract is the principle of strict liability.

5.2 Imputation of principle for infringement

Claims may also be caused by infringement. The Law on infringement in Continental Law is represented by French and German law. The French Civil Code is adopted by a single fault liability principle with a high degree of generalization and abstraction. The principle of attribution of the German Civil Code takes the principle of fault liability as the main principle with supplemental principle of special infringement. Anglo-American law countries do not abstract their infringing practices into statutes and only categorize them from specific patterns of infringement. Anglo-American common laws take the "facts themselves proved" principle in order to avoid to prove difficulties for the plaintiff and reduce the burden of proof of the victim. In China, the principle of imputation of infringement is of great controversy. It is usually in the form of fault liability and with supplemental principles, such as the principle of strict liability and fair liability. Tort liability comes from the laws and regulations of the concerned country that cannot be agreed by parties, otherwise is invalid.

5.3 Concurrence for Breach of Contract and Infringement

In same claim incidents, there may be a concurrence of breach of contract and infringement. In international engineering practice, they are mainly concentrated in damage liabilities caused by design product defects. Infringement and breach of contract in various countries are very different ways to deal with, For example, Under common law, there are different ways of dealing with defaults.  The non-defaulting party can repudiate the contract (that is, claim that there is a right to terminate the contract because of the breach of the other party) and claim damages for breach.  Damages for repudiation aim to put the aggrieved party in a position it would have been had the contract been properly completed.  In such circumstances, the amount of damages is normally that caused by the default.  There are other ways of claiming breach and substantiating damages under common law.  however, In accordance with Chinese law, for the responsibility of concurrence, the compliance party has freely choice to sue, the amount of compensation on the infringement cause is sometimes higher than the cause on breach of contract.

5.4 Force Majeure in Infringement or Breach of Contract

Force Majeure is a common exemption cause of legal liability for breach of contract or infringement, and the liability of the defaulting party or the infringing party may be discharged in whole or in part. Adnan Amkhan (1991) found that Force Majeure derived from Article 1148, French Civil Code of 1804 which provides there is no occasion for any damages where a debtor was prevented from transfer or from doing that which he was bound, or did what was forbidden to him, by reason of Force Majeure or of a fortuitous event. Unless there is a special agreement, the "who lost, who bear" principle will be carried out when Force Majeure occurs. The irresistible force in the Anglo-American law is similar to the meaning of "act of God" or "frustration", which constitutes the reason for the exemption in Anglo-American law. In the United Kingdom, Force Majeure is only the concept of "agreement", and similar systems are the principles of the "frustration", "hardship", "inconvenience" and "money loss". In the United States law, the conditions that constitute Force Majeure must also meet two conditions that objective performance has become extremely difficult to implement and the subjective contract in the contract cannot be expected. Provisions of the Force Majeure in China's contract Law and tort law must also meet the three elements, namely, "cannot meet", "cannot be avoided "and "cannot overcome" for the person, in theory, a compromise of subjective and objective combination. The laws of most country do not have the same design for the Force Majeure, but provide protection to the parties when the contract cannot be exercised or cannot be exercised with due diligence. In the range of Force Majeure, natural causes such as earthquakes, floods, debris flows, typhoons and other factors, they are generally prescribed by law as Force Majeure in the international community, but for social causes of war, turmoil, strikes, epidemics, embargo, Market changes, government intervention, national legislation, people differ in their opinions. Clause19, Sliver Book adopts a compromise doctrine that break the rules "who lost, who bear" in the risk allocation that the majority of the risk assigned to the employer. In the event of Force Majeure, Contractor may not only be exempted from liability, but may also launch a claim to owner for compensation.


To sum up, the legal basis of engineering claims mainly includes the contract text, the legal application of those contractual clauses, the principle of interpretation: a) first of all ,it depends on the principle of risk distribution of the contract text that the risk assigned to whom ,who shall take the risk. FIDIC Silver Book breaks the traditional balance of distribution risk principle and transfers more risks to the contractor. If you ignore the risk distribution of the contract text, the claim launched may have no legal basis as a support. b) The terms of the contract should be subjected to the applicable law of the host country and invalid contract terms cannot be used as a basis for contract claims. There are no major problems in Anglo-American countries, and the legal conflict mainly occurs in civil law countries. c) Even if the same terms of a contract and the same legal event is applicable in different countries, the legal consequences may be quite different due to the principle of risk  allocation