Maeda v Bauer – a glimpse into how the FIDIC 2017 Ed notice provisions are to be read?

In order to protect one’s entitlement to claims, it is imperative to fully comply with claim notification requirements which are expressed as conditions precedent to one’s entitlement to claims.

In the Hong Kong Court of Appeal case of Maeda Kensetsu Kogyo Kabushiki Kaisha also known as Maeda Corporation and Another v. Bauer Hong Kong Ltd[2020] HKCA 830 (“Maeda Case”), a further notice to state “the contractual basis together with full and detailed particulars and the evaluation of the claim” was required to be submitted after an initial claim notice of the sub-contractor’s intention to make a claim. Such further notice was stipulated as a condition precedent to the sub-contractor’s entitlement to additional time and/ or money relating to the claim.

The sub-contractor notified the main contractor of the factual basis of its claims (which did not change), but advanced its claims on an additional contractual basis (i.e. unforeseen ground conditions) during arbitration proceedings. The arbitrator was satisfied that the condition precedent claim notification requirements were duly satisfied. However, his decision was overturned by the Hong Kong High Court and the Court of Appeal, which read the condition precedent claim notification requirements strictly. The sub-contractor was denied its claim that was based on the unforeseen ground conditions clause as there was no valid notification of this contractual basis in accordance with the contract.

The FIDIC Red, Yellow and Silver Books, 2017 Edition (“FIDIC 2017 Ed”), contain similar requirements for a “fully detailed Claim” setting out the contractual and/ or legal basis of the contractor’s claim to be submitted within a stipulated timeframe. Note however that such requirements are not expressed as conditions precedent per se. Instead, the extent to which the failure to comply such requirements has prevented or prejudiced proper investigation into the claim will be taken into consideration. Accordingly, the decision in the Maeda case can likely be distinguished from other contracts which are based on the FIDIC 2017 Ed standard contracts.

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