Is the Employer’s revocation of the Engineer’s approved variation/claim is valid?

The process of Variation/claim approval in the FIDIC Contract is that if the Employer’s approval is required, then the Engineer will secure approval prior to the issuance of approval to the Contractor.

In this regard, Sub-Clause 3.1 States “The Engineer shall obtain the specific approval of the Employer before taking action under the following Sub-Clauses of these Conditions:

(A) …..

(B) Sub-Clause 13.1: instructing a Variation, except;

(i) …….

(ii) …...

(C) Sub-Clause 13.3: approving a proposal for Variation submitted by the Contractor in accordance with Sub-Clause 13.1 or 13.2.”

Also it states “However, whenever the Engineer exercises a specified authority for which the Employer’s approval is required, then (for the purposes of the Contract) the Employer shall be deemed to have given approval.”

Moreover, the Engineer is the Employer’s personnel as per Sub-Clause 1.1.2.6 which states “ “Employer’s Personnel” means the Engineer, the assistants referred to in Sub-Clause 3.2 [Delegation by the Engineer] and all other staff, labour and other employees of the Engineer and of the Employer; and any other personnel notified to the Contractor, by the Employer or the Engineer, as Employer’s Personnel.” Therefore, the Engineer’s approval means the Employer’s approval and the revocation of the approval Variation/Claim by the Employer after approval of them by the Engineer literally means the Employer is revocating their own approval.

Sub-Clause 3.5 [Determination] states “Whenever these Conditions provide that the Engineer shall proceed in accordance with this Sub-Clause 3.5 to agree or determine any matter, the Engineer shall consult with each Party in an endeavour to reach agreement. If agreement is not achieved, the Engineer shall make a fair determination in accordance with the Contract, taking due regard of all relevant circumstances.”

According to those provisions, there is provision for Employer’s agreement/approval prior to the Engineer’s determination/approval. The Contract does not allow any action from the Employer whether approval or revocation of the Variation/Claim after approval of them by the Engineer.

Moreover, as per literal rules (from English Court) in the interpretation of law which is persuasive and commonly accepted by all the legal system including laws in Bangladesh, Contract should be interpreted according to the plain meaning of the words used, nothing is to be added to or taken from a contract unless there are adequate grounds to justify the interference. Since, there is no provision in the General Conditions or the Particular Conditions of the Contract that grants the Employer the authority to revoke an approval of the claim/variation given by the Engineer, therefore, the Employer’s revocation will be considered invalid as per literal rules in the interpretation of law.

The house of Lords (Highest English Court), the then UK Apex Courts/Supreme Courts, in Schuler AG vs Wickman Machine Tools Ltd. [1973] UKHL 2, held that

“ …the more reasonable the result the more unlikely it is that the parties can have intended it, and if they do intend that the more necessary it is that they shall make intention abundantly clear….”

Had there been any scope of the Employer’s revocation of any approval of variation/claim by the Engineer, they should have been clearly provided in the text of the Contract.

Furthermore, The Contract Act 1872 (Act No IX of 1872) of Bangladesh Section 5 [Revocation of Proposals and Acceptances] states “A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.

Illustrations

A proposes, by a letter sent by post, to sell his house to B.

B accepts the proposal by a letter sent by post.

A may revoke his proposal at any time before or at the moment when B posts

his letter of acceptance, but not afterwards.”

In light of the above, the Employer’s intention for revocation of the Engineer’s approved variation/claim is invalid as per the Contract and at law.