Introduction:
The FIDIC Silver Book (2017 Edition) is widely recognized in international construction contracts for allocating risk and responsibility clearly between Employers and Contractors. Among its many clauses, Clause 20: Employer’s and Contractor’s Claims stands out as one of the most practical, critical, and potentially contentious.
Why? Because claims — whether for additional payment, extension of time, or other entitlements — are at the heart of construction disputes. A minor misstep in claims procedure can escalate into costly arbitration, litigation, or project delays. Clause 20 provides a structured, transparent, and time-bound procedure for resolving such claims before they become disputes.
Unlike earlier editions (notably the 1999 Silver Book, where claims procedures were skewed in favor of the Contractor), the 2017 edition promotes symmetry and fairness, allowing both Employer and Contractor to submit claims under a uniform framework.
This guide will explore Clause 20 in detail, providing actionable insights for legal professionals, contract managers, and project stakeholders.
Purpose of Clause 20 —
Clause 20 is designed with four primary objectives:
- Provide a uniform procedure for submitting, reviewing, and determining claims.
- Encourage timely notice and record-keeping, minimizing surprises and disputes.
- Integrate claims with the Dispute Avoidance/Adjudication Board (DAAB) under Clause 21.
- Promote fairness, ensuring that both parties have equal opportunity to substantiate claims and seek resolution.
Essentially, Clause 20 balances procedural discipline with practical flexibility, fostering proactive communication and collaborative problem-solving.
Structure of Clause 20:
Clause 20, titled “Employer’s and Contractor’s Claims”, comprises three sub-clauses:
- 20.1 – Claims
- 20.2 – Claims by the Employer (and procedural responsibilities)
- 20.3 – Agreement or Determination
Let’s examine each component in detail.
Sub-Clause 20.1 – Claims:
Sub-Clause 20.1 is the core operational provision governing how claims arise, must be notified, and substantiated.
When Clause 20.1 Applies:
A claim arises whenever either party believes they are entitled to:
- Additional payment — e.g., variations, delays, change in law, or unforeseen costs
- Extension of time (EOT) — delays due to events outside the Contractor’s control
- Other entitlements — such as early termination costs, re-measurement adjustments, or consequences of employer-provided information
Importantly, this sub-clause covers claims arising from the contract itself, external events, or applicable law.
Notice of Claim – 28 Days:
The claiming party must submit a Notice of Claim within 28 days after becoming aware of the event giving rise to the claim.
Strict time bar: Failing to issue the notice within 28 days generally precludes the claim, unless both parties agree otherwise.
This requirement enforces early communication, reduces speculation, and allows the project team to evaluate and respond promptly. Many disputes stem from late claims, which are often harder to substantiate.
Fully Detailed Claim – 84 Days:
Within 84 days of the event (or as soon as practicable), the claimant must submit a fully detailed claim including:
- Factual background — what happened and when
- Contractual/legal basis — the specific clauses, laws, or obligations relied upon
- Supporting evidence — correspondence, site diaries, schedules, cost records
- Quantum of claim — additional cost or EOT requested
- Contemporary records — demonstrating cause-and-effect
If full details cannot be provided immediately, the claimant may submit an interim claim, updating it later with full particulars.
Records and Cooperation:
Both parties are obliged to maintain contemporary records that support or respond to claims.
Tip: Accurate site diaries, cost logs, and progress reports are essential. Without documentation, even valid claims may fail.
This sub-clause emphasizes good faith and collaboration, encouraging disputes to be resolved before escalating.
Review and Response – 42 Days:
Upon receiving a detailed claim, the receiving party must:
- Acknowledge receipt promptly
- Respond with agreement, rejection, or request for clarification within 42 days (or an agreed period)
If no response is provided, the claim remains unresolved, triggering Sub-Clause 20.3 for determination.
Sub-Clause 20.2 – Claims by the Employer:
In the Silver Book, there is no Engineer to determine claims (unlike the Red or Yellow Books). Therefore, Employer claims are handled directly.
Key points:
- The Employer must follow the same procedure as the Contractor: 28-day notice, 84-day detailed claim, and 42-day response period.
- Typical Employer claims include delay damages, defective work, or cost recovery.
- The Contractor has the right to review, respond, and request clarification before the Employer makes a determination.
This symmetry ensures procedural fairness and mitigates one-sided decision-making.
Sub-Clause 20.3 – Agreement or Determination:
Once a claim is fully documented and reviewed:
- The parties should first attempt to reach agreement through negotiation.
- If no agreement is reached, the Employer makes a fair determination based on contractual terms and facts.
A proper determination must be:
- Prompt and in writing
- Reasoned — showing the basis for the decision
- Binding — unless challenged under Clause 21
This ensures that even in the absence of an Engineer, claims are progressed without undue delay, maintaining project momentum.
Integration with Clause 21 – Dispute Avoidance and Resolution:
If a claim remains unresolved, it escalates to Clause 21:
- First, to the Dispute Avoidance/Adjudication Board (DAAB)
- If needed, to arbitration
This creates a clear escalation pathway, balancing timely resolution with legal safeguards.
Practical Implications —
For Contractors:
- Always issue timely notices, even if full entitlement is unclear.
- Maintain accurate contemporaneous records — e.g., site diaries, cost logs, delay reports.
- Submit substantiated detailed claims with facts, contractual basis, and calculations.
- Avoid losing claims due to time-bar under Sub-Clause 20.1.
For Employers:
- Apply the same diligence for Employer claims.
- Make fair and transparent determinations; biased decisions risk being overturned by DAAB or arbitration.
- Keep comprehensive records to support recovery or deductions.
Key Differences from FIDIC 1999 Silver Book:
| Aspect | 1999 Silver Book | 2017 Silver Book |
|---|---|---|
| Who can make claims | Only Contractor (Clause 20) | Both Employer and Contractor |
| Time-bar | 28 days (Contractor only) | 28 days (both parties) |
| Determination authority | Employer | Employer (fairly) |
| Dispute process | DAB (Clause 20) | DAAB (Clause 21) |
| Detailed claim timeline | Not defined | 84 days clearly defined |
| Symmetry and fairness | One-sided | Balanced and transparent |
Example Scenario —
Situation: A Contractor faces unforeseen delay in equipment delivery due to new import regulations.
Contractor’s steps under Clause 20:
- Notice within 28 days: “We may be entitled to an EOT and additional costs due to the new import regulations.”
- Detailed claim within 84 days: Include cause-effect analysis, new duties, revised schedule, and cost data.
- Employer review (42 days): Approves, rejects, or requests more info.
- If unresolved: Escalate to Sub-Clause 20.3 for determination, then Clause 21 (DAAB) if necessary.
This demonstrates structured, proactive claim management, reducing potential disputes.
Key Takeaways:
- Clause 20 establishes a mutual, disciplined claim process.
- Time management is critical — 28-day notice, 84-day detailed claim, 42-day response.
- Documentation and contemporaneous records underpin claim validity.
- Fairness in determination is both contractual and legal.
- Failure to comply with notice requirements can entirely bar entitlement.
- Acts as a gateway to dispute resolution under Clause 21.
Conclusion:
Clause 20 of the FIDIC Silver Book 2017 is far more than a procedural formality — it is the lifeblood of contractual fairness, transparency, and discipline.
By understanding and applying Clause 20:
- Contractors can safeguard entitlement to time and cost extensions.
- Employers can assert legitimate claims without bias or unfairness.
- Both parties create a culture of early communication, record-keeping, and dispute avoidance.
Understanding Clause 20 is not just about following rules; it’s about embracing good faith, structured collaboration, and timely problem-solving in complex construction projects.
(The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the official policy or position of any organisation or entity.)
Disclaimer: This article is for general informational purposes only and does not constitute legal, technological, or professional advice. Laws and regulations vary by jurisdiction; readers should consult a qualified professional for advice specific to their situation.
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