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CONFIDENTIAL DRAFT

INTERIM PRE-ROME 10 JULY 2010

REFLECTING DISCUSSIONS AT 5-6 JULY 2010 PARISMEETING OF ICC SUBCONTRACTING TASK FORCE

+

OUTSTANDING QUESTIONS/NOTES/ISSUES

Commission on Commercial Law and Practice

Task Force on Subcontracts for Turnkey Transactions

SUBCONTRACT (Back to Back)

ICC Model Subcontract to a Turnkey Contract for Major Projects where the Subcontract is back to back to the Main Contract between the Owner and the Contractor employing the Subcontractor named here.

For Work as described below, on the basis of MAIN CONTRACTORS General Terms and Conditions of Subcontract and Particular Terms and Conditions of Subcontract (in your possession). For acceptance the Subcontract confirmation copy should be returned within the required number of days of receipt of this Subcontract, dated and legally signed.

FOREWORD: [ASSIGNMENT ROBERT to draft. This is very much a first draft 09 03 14]The ICC MODEL TURNKEY CONTRACT FOR MAJOR PROJECTS was published in 2007 and has received some interest and use in the international contracting world. That form was published by the ICC Commission on Commercial Law and Practice which is, like the ICC, in business for business, and acts as a focus group for all parties to international transactions. In recent years the Commission on Commercial Law and Practice has published a number of model forms of contracts. Although the forms have covered a wide range of international transactions, including the turnkey supply of an industrial plant, they have all been distinguished by the imperative that they be fair to all parties to the transaction involved, as the ICC represents all parties to all transactions. The Subcontract Group Subcontract has approached this Subcontract with the same philosophy. As this Subcontract is intended for use as a back to back contract to the Main Contract between the Owner/Developer and the Main Contractor the interests of three parties the Owner, Main Contractor and Subcontractor have to be taken into account.While this Subcontract uses some of the language of its parent Turnkey contract, the Subcontract Group hope that the form will be flexible enough to be a real option as a subcontract to any other standard form of contract, such as those used by the World Bank, and has been constructed with this in mind.

ICC MODEL BACK TO BACK SUBCONTRACT TO TURNKEY CONTRACTS FOR MAJOR PROJECTS

.....................................(Main Contractor)

and

.....................................(Subcontractor)and......................................Third Party

This Subcontract contains or incorporates an arbitration clause and clauses limiting and/or excluding the liability one or both of the Parties in certain circumstances.

TABLE OF CONTENTS [ASSIGNMENT - EOC POST- ROME: TO BE CONFORMED TO FINAL DRAFT]

ArtPage

Foreword

Introduction1

Subcontract Form3

CHAPTER 1GENERAL AND PRELIMINARY ARTICLES

1Definitions9

2Entry into force of the Subcontract/Flowdown14

3Good faith and fair dealing14

4Language of the Subcontract15

5Applicable laws15

6New or changed laws, standards, regulations etc.15

7Interpretation of the Subcontract16

8Assumptions, statements about distances, measures, dimensions and quantities16

9Obtaining permits, planning and other permissions 16

10Guarantees, bonds or other securities17

11Demands under guarantees, bonds or other securities 17

12No agency independent contractor17

CHAPTER 2THE PARTIES OBLIGATIONS

13The Main Contractors obligations18

14The Subcontractors obligations18

15Co-operation with other contractors and co-ordination of activities19

16Quality assurance 19

17Staff and labour 19

18Representatives of the Parties 20

19Each Partys duty to notify20

CHAPTER 3THE EXECUTION OF THE PROJECT

20Scope of the Subcontract Price and Subcontract Works 21

21Setting out on the Site 21

22Site information for the Subcontractors Design and use21

23Unexpected artificial or physical conditions or obstructions22

24Safety23

25Public convenience23

26Environmental protection23

27Services or supplies to be supplied by the Main Contractor, Employer or public utilities23

28Main Contractor-supplied Plant, materials or Equipment24

29Responsibility for shipping and storing goods and materials24

30Ownership of goods, material, Plant and Equipment/liens, trusts and similar claims24

31Keeping the Site clear 25

CHAPTER 4 DESIGN - RESPONSIBILITY AND MANAGEMENT, VARIATIONS

32General allocation of responsibility of the Parties for the Design26

33The Design review process 26

34Intellectual property rights29

35Variations and changes to the Subcontract Works30

CHAPTER 5COMMENCEMENT, THE TIME TO TAKING-OVER, SCHEDULING AND PROGRESS

36Commencement, Time to Taking-Over and extensions of time34

37Delay Damages 36

38Schedule of Subcontractual Dates, time schedule and reporting progress37

39Progress reports 37

CHAPTER 6SUBCONTRACT PRICE AND PAYMENT

40The Subcontract provides the exclusive remedies for all claims between the Parties39

41Payment of the Subcontract Price39

42Applications and procedure for payment39

43VAT/GST or equivalent consumption taxes41

44Financing charges for late recognition of rights between the Parties41

CHAPTER 7COMPLETION AND TAKING OVER OF THE SUBCONTRACT WORKS BY THE MAIN CONTRACTOR

45Completion 46

46Commissioning and Performance Tests46

47Taking-Over/Provisional Acceptance47

48Assessment procedures after Taking-Over 49

CHAPTER 8DEFECT CORRECTION PERIOD

49The Contractors obligation to finish the Subcontract Works and correct Defects50

CHAPTER 9ALLOCATION OF RISK AND RESPONSIBILITY AND EXCLUSIONS FROM LIABILITY

50General principles of risk allocation and responsibility53

51Purpose of the limitation and exclusion Articles53

52Liabilities of the Parties and their reciprocal limitations and exclusions53

53Time limit for liability 54

54Extension of limitations and exclusions from liability to certain third parties54

55Warranty for future purchasers or operators55

CHAPTER 10FORCE MAJEURE AND TERMINATION OF THE CONTRACT

56Force Majeure56

57Suspension and/or termination of the Subcontract58

CHAPTER 11 INSURANCE

58Insurance62

CHAPTER 12 MISCELLANEOUS PROVISIONS

59Confidentiality65

60Bribery, gifts, inducements or rewards 65

61Entire agreement, severability and amendments to the Subcontract66

62Joint and several liability 67

63Subcontractor notification and responsibility and assignment of Subcontractors obligations67

64Assignment of the Subcontract by either Party68

65Communications, including notices and consents68

CHAPTER 13CLAIMS, DISPUTE RESOLUTION AND ARBITRATION

66Exclusive remedies - All claims of all types are to be determined by these provisions70

67Supplemental provisions relating to arbitration71

APPENDICES

1. Sample Schedule of Subcontractual Amendments2. Main Contractors Equipment [NOTE: Term defined but not used in the Subcontract.]

3. Main Contractors Requirements4. Subcontractors Equipment5. Sample Advance Payment Guarantee6. Subcontract Works in relation to original points, lines and levels of reference [NOTE: reference to Appendix related to this appears in Art. 21.1]7. Prices for services supplied by the Main Contractor [NOTE: reference to Appendix related to this appears in Art. 27.2]8. Daywork Schedule 9. Sample Performance Guarantee [NOTE: Mentioned, undefined, in Art 36.3. Want to include sample as an Appendix? If so, want to define term?]

10. Notice to Proceed [NOTE: reference to Appendix related to this appears in Art. 36.3(b)]11. Limit on Delay Damages [NOTE: reference to Appendix related to this appears in Art. 37.2]12. Schedule of Subcontractual Dates13. Time Schedule14. Methonds of Payment [NOTE: reference to Appendix related to this appears in Art. 43.9]

15. Payment and Milestone Schedule Guidance Notes and Sample Schedule of Milestones

16. Payment Application Format17. Commissioning activities [NOTE: reference to Appendix related to this appears in Art. 46.2]

18. Guidelines relating to the Performance Tests19. Subcontractors Access after Taking-Over20. Stepped/Phased Timeline [NOTE: reference to Appendix related to this appears in Art. 47.5]21. Notice of Satisfaction of Taking-Over Conditions [NOTE: reference to Appendix related to this appears in Art. 47.6]22. Assessmen Procedures [NOTE: reference to Appendix related to this appears in Art. 48.2]23. Conditions of Final Acceptance [NOTE: reference to Appendix related to this appears in Art. 49.13(d)]

Introduction [ASSIGNMENT ROBERT to draft] [***09 09 08 To be written ]

[ASSIGNMENT - ISABELLE to draft discussion of Art 14/20-[state that it is optional] related Appendix on RASIC-style list. [FN to Subcontract Works: Parties may wish but shall not be obliged to append a table reflecting their respective responsibilities.. Each company has own management techniques, below is intended to be sample approach, should not be considered a contract document, etc. Common practice in industry to use similar lists.][ASSIGNMENT - ISABELLE to draft caveat on notification and acceptance of Subcontractor by Employer.]

TABLE OF CONTENTSSubcontract Form of Agreement (Agreed 18 May 2010)THIS SUBCONTRACT is made on [_____ _____, _____]Between:[_____ _____ _____ ] (a [_____ _____ _____ ] company with registered number [_____ ]) whose registered office is at [_____ _____ _____ _____ ] and represented by __________acting through a duly authorised power of attorney (the Main Contractor, which expression shall include successors and permitted assigns); and[_____ _____ _____ ] (a [_____ _____ _____ ] company with registered number [_____ ]) whose registered office is at [_____ _____ _____ _____ ] and represented by __________acting through a duly authorised power of attorney (the Subcontractor, which expression shall include successors and permitted assigns),each a Party and collectively the Parties.Whereas(a)the Main Contractor has decided to engage the Subcontractor to design, procure, supply, execute, install, commission and complete on a turnkey basis the Works as described in this Subcontract, and to perform the Subcontract Works for payment as provided herein; and(B)the Subcontractor has agreed to such engagement on the terms and subject to the conditions of this Subcontract as provided herein.It is agreed as follows:1.The Subcontractor will design, procure, supply, execute, install, commission and complete on a turnkey basis the Subcontract Works as described in this Subcontract, and perform the Subcontract Works for the compensation provided for herein as more particularly described in the Conditions of Subcontract and Schedule of Subcontractual Amendments attached hereto[footnoteRef:0]; and [0: Parties need to define the scope of work to be governed by the Subcontract and modify this provision accordingly.]

2.The Main Contractor will pay the Subcontractor the price of ________________________[footnoteRef:1] (the Subcontract Price) and perform the other actions required of it on the terms and subject to the conditions of this Subcontract, as more particularly described here and in the Conditions of Subcontract and Schedule of Subcontractual Amendments attached hereto. [1: 2Sometimes the Subcontract Price is set out in an Appendix to assist in keeping it confidential.]

3.Except as otherwise provided for in the Subcontract, the Subcontract covers all of the Parties' obligations with respect to: a. the design, procurement, supply, execution, installation, commissioning and/or completion on a turnkey basis of the Subcontract Works as described in the Subcontract and its Appendices within the Time to Taking-Over as defined[footnoteRef:2]; and [2: Parties need to define the scope of work to be governed by the Subcontract and modify this provision accordingly.]

b. the remedying of any Defects within the Defect Correction Period thereafter.4.Each Party is deemed to have verified, checked and ascertained that all the documentation listed in this Subcontract is complete and in its possession. Any subsequent revision of drawings and/or documentation listed in the Subcontract, and any other plan, drawing, description, specification, standard, calculation sheet or the like issued in connection with the Subcontract Works after the execution and signature of the Subcontract shall become and be valued as an integral part of the Subcontract.5.Each Party will furnish sufficient and competent supervisor(s), qualified and experienced labour, materials, equipment, tools, facilities, services and the like, to execute the Subcontract Works in full accordance with the above mentioned documents and the documents referred to therein and attached thereto.6.Unless otherwise agreed, the dispute resolution provisions of the Main Contract are fully incorporated in this Subcontract as if written out in full between the Main Contractor and Subcontractor and shall apply as if written out here.

Whereas the Parties have executed this Subcontract by duly authorised representatives on the day and year first above written.[footnoteRef:3] [3: It would normally be a good idea to have a person from each Party witness all signatures. If appropriate, a chop or seal should be attached from the Parties. A local counsel or notary or may be used to verify the identities of the parties and their capacity to bind the parties.]

MAIN CONTRACTORNAMEWitnessSUBCONTRACTORNAMEWitness GENERAL TERMS AND CONDITIONS OF SUBCONTRACT

CHAPTER 1GENERAL AND PRELIMINARY ARTICLES Agreed 18 May 2010

Article 1Definitions1.1As used in this Subcontract, the following terms shall have the meanings set out below. Words indicating persons or parties include corporations, and other legal entities, as well as unincorporated joint ventures except where the context requires otherwise. If a word or phrase is capitalised, it is a Defined Term. Defined Terms have the meanings given to them by this Article. Where a word or phrase is a Defined Term in the Main Contract, and is also used in this Subcontract, unless otherwise agreed it will have the meaning in this Subcontract.Advance Payment Guarantee means the guarantee (if any) provided under Article 10.1, and which may form an Appendix hereto.Appendix or Appendices means the appendix or appendices to the Subcontract referred to throughout these Conditions of Subcontract, which describe particular aspects of the Subcontract Works.Article means any article or sub-article of these Conditions of Subcontract as the context requires.Assumptions are statements provided by either Party in writing setting out its assumptions (if any) in relation to the Subcontract Works, prior to the signature of the Subcontract Form.Business Day means, unless otherwise agreed, a Day in the Country or, in the case of a local Business Day, in the country in question, on which banks are open for general business.CDB means the Combined Dispute Board appointed under this Subcontract. [ASSIGNMENT - GROUP: All references to CDB deleted other than that in Art. 66, which is to be redrafted to provide for alternative to CDB]Certificate of Completion is a certificate issued for Completion of Construction or Mechanical Completion, as the case may be.Certificate of Final Acceptance is the certificate issued according to Article 49.14.Completion means Completion of Construction or Mechanical Completion.Completion of Construction or Mechanical Completion unless otherwise defined herein, is the moment the Subcontract Works have been physically completed to the extent they are ready to start commissioning.Conditions of Subcontract means these conditions of subcontract. Cost includes any element of actual expense plus overheads.Country means the country where the Site is located.Day, Days or Date/s mean, unless otherwise agreed, references to a 24-hour calendar day in the Gregorian calendar with "year" meaning 365 days under that calendar, unless it is a 366-day leap year. Periods of time are calculated from the day after receipt of the relevant instruction or other action requiring an activity to commence.Daywork Schedule means a schedule of the Subcontractors agreed rates and associated costs to be used in the event of an Instruction being given under Article 35.15 and which forms an Appendix hereto.Defect means a non-conformity with the Subcontract requirements.Defect Correction Period means the period for correction of Defects as established under Article 49. Delay Damages means the monetary compensation paid under Article 37.Design includes sketches, schemes, models, plans, drawings, technical criteria or standards, and descriptions with aesthetic or functional elements for making up a building, machine, facility or other object or process intended for the Subcontract Works. Design also includes, without limitation, performance descriptions, specifications or requirements.Employer means the legal or natural person(s) named as Employer in the Main Contract, its agents, assignees agreed by the Main Contractor and the legal successors in title to this or these person(s). If the Employer named in the Main Contract does not have separate legal personality under the laws governing its status, the Employer includes any organisation of which it is a part that does have separate legal personality. Comment by null: Should we decide to have a knock for knock provision on the liability for damage of loss to property or Injury, Illness, or Death of personnell we may have toinsert an additional definition of "Employer's Group".EEgginkEmployers Requirements refers to the Employers Requirements in the Main Contract between the Main Contractor here and the Owner/Developer, to the extent that they relate to the Subcontract Works.Equipment means all appliances, machinery, vehicles, tools or other things required by the Subcontractor for the execution and completion of the Subcontract Works and the remedying of any Defects. Equipment excludes, however, Temporary Subcontract Works, Plant, materials and any other things intended to form, or forming, part of the Subcontract Works.Final Acceptance has the meaning set out in Article 49.13.Force Majeure has the meaning set out in Article 56.Good Industry Practice means (i) the exercise of that degree of skill, diligence, prudence and foresight that would reasonably and ordinarily be expected from a skilled and experienced person engaged in the same type of undertaking under the same or similar conditions; or, (ii) the practices in similar industries. Hazardous Materials means any hazardous or toxic substance or hazardous or toxic waste, contaminant, or pollutant as defined in or regulated by the law governing such matters. Instruction is a Main Contractors requirement whether in writing or not, that the Subcontractor does or refrains from doing something, or performs tasks at a different time. All non-written Instructions are to be confirmed in writing. An Instruction may or may not be a Variation. Invoice Period shall mean, if not otherwise defined, a calendar month commencing on the first Day of the month and ending on the last Day of the month. The first Invoice Period shall begin on the Day the Notice to Proceed becomes effective.Main Contract means the contract (however it is described) entered into, or in the case to be entered into, between the Main Contractor and the Employer for the engineering, procurement and design of the Project.Main Contract Conditions means the Conditions of Contract contained in the Main Contract.Main Contract Start Date means the Date determined in accordance with Article 36.3 of the Main Contract. Main Contractor means the legal or natural person(s) named as Main Contractor in the Main Contract, its agents, assignees agreed by the Main Contractor and the legal successors in title to this or these person(s). If the Main Contractor named in the Main Contract does not have separate legal personality under the laws governing its status, the Main Contractor includes any organisation of which it is a part that does have separate legal personality. Comment by null: Should we decide to have a knock for knock provision on the liability for damage of loss to property or Injury, Illness, or Death of personnell we may have toinsert an additional definition of "Main Contractor's Group".EEgginkMain Contractors Equipment means any Equipment provided by the Main Contractor for the Subcontract Works and/or as may be set out in an Appendix. [NOTE: Term not used in the Subcontract.]Main Contractors Personnel means physical persons in the employ of or seconded to the Main Contractor and acting for it, or other persons authorised to act for the Main Contractor in relation to the Subcontract Works.Main Contractors Requirements means the document(s) sent to the Subcontractor, prior to the Reference Date, setting out the Main Contractors requirements for the Subcontract Works, as included in the Subcontract, and set out in an Appendix (if any), and any Variations. The Main Contractors Requirements include, without limitation, documents specifying the purpose, scope, time frame for construction, and/or design and/or other technical criteria, and/or conceptual elements for the Subcontract Works. Method Statement means a statement or statements submitted by the Subcontractor and noted or accepted by the Main Contractor describing how the Subcontractor proposes to meet the Main Contractors Requirements. The Method Statement may or may not be described as such but will consist of one or more submissions, normally accepted or known by the Main Contractor or its representatives, detailing how the Subcontractor intends to deploy Plant, personnel, material, Equipment and other resources to accomplish the Subcontract Works in the Time to Taking-Over.Minimum Performance means the minimal level of performance of the Subcontract Works (if any) to be achieved during Performance Tests, as are set out in this Subcontract.Notice is a written notification [ASSIGNMENT TIM: check throughout whether notify and notification need to be capitalized] intended to have effect under this Subcontract. Notice to Proceed means the notice given under Article 36.3, which sets the Start Date and first Day of the Time to Taking-Over. Payment Certificate means a certificate issued under Article 42. Performance Tests means those tests (if any) to be performed, specified as such in the Subcontract, in accordance with an Appendix (if any).Plant means any and all apparatus, machinery or devices (if any) intended to form, or forming, part of the Subcontract Works.Project means, if the context so requires, the larger project (if any) the Main Contractor is developing, of which the Subcontract Works are a part.Punch List has the meaning set out in Article 47.10.Reference Date means, in the case of a bidding procedure without negotiations, the Date 28 Days prior to the latest Date for the submission of Tenders, and, in the case of a negotiated contract, the Date 28 Days prior to the first signature on the Subcontract.Representative means the physical person(s) appointed from time to time by the Subcontractor or the Main Contractor under Article 18 to act as such under the Subcontract.Rules has the meaning set out in Article 66.2.Schedule of Milestones means the Schedule set out in Appendix 2. Schedule of Subcontractual Amendments means the annexure to the Subcontract Form described as the Schedule of Subcontractual Amendments and referred to throughout these Conditions of Subcontract, which Schedule describes particular amendments to this Subcontract and which forms an Appendix hereto.Schedule of Subcontractual Dates is the schedule (if any) set out in or in accordance with Article 38.1 and which forms an Appendix hereto.Schedule of Subcontractual Payments is the schedule set out in or in accordance with Article 42.1, and which forms Appendix 2.Section means any part of the Subcontract Works or Site as the context requires.Site (or Sites as the context requires) means the land or other places made available to the Subcontractor by or on behalf of the Main Contractor and on, under, in or through which the Subcontract Works are to be constructed. The Site does not include places the Subcontractor has taken possession of or has access to for the purposes of the Subcontract Works, but which were not made available to the Subcontractor by or on behalf of the Main Contractor. Start Date means the Date determined in accordance with Article 36.3. Subcontract means the Subcontract Form, including the Schedule of Subcontractual Amendments and these Conditions of Subcontract together with all Appendices and subsequent alterations and additions agreed in writing, as set out more precisely in Article 7.Subcontract Date means the Date the Subcontract is signed and enters into force as set out in Article 2.Subcontract Form means the subcontract form, including the Schedule of Subcontractual Amendments, to which these Conditions of Subcontract and Appendices are supplemental. Subcontract Price means the price set out in the Subcontract for the provision, on a turnkey basis, of the Subcontract Works, including the supply of all the goods and services that are indicated in this Subcontract, subject to such additions thereto or deductions therefrom as may be made in accordance with the provisions of the Subcontract.

Subcontract Works means the works to be completed by the Subcontractor under this Subcontract and the associated supplies and services, including software as appropriate. [ASSIGNMENT - ISABELLE to draft footnote: Parties may wish but shall not be obliged to append a table reflecting their respective responsibilities.. Each company has own management techniques, below is intended to be sample approach, should not be considered a contract document, etc. Common practice in industry to use similar lists]

[[Subcontractor means the legal or natural person(s) named as Subcontractor in the Subcontract, its agents, assignees agreed by the Main Contractor and the legal successors in title to this or these person(s).]]Comment by null: Should we decide to have a knock for knock provision on the liability for damage of loss to property or Injury, Illness, or Death of personnell we may have toinsert an additional definition of "Contractor's Group".EEgginkSubcontractors Documents means all physical documents, software and any other form of recording and transferring of information submitted by the Subcontractor under this Subcontract to the Main Contractor, including, without limitation, the construction documents, operation and maintenance manuals and as-built drawings, all as specified in this Subcontract, or, if there is no such specification, as may be identified by referring to the requirements of Article 33.Subcontractors Equipment means the Equipment provided by the Subcontractor for the Subcontract Works and/or as may be set out in an Appendix.Subcontractors Personnel means physical persons in the employ of or seconded to the Subcontractor and acting for it, or other persons authorised to act for the Subcontractor in relation to the Subcontract Works.Subcontractors Variation Proposal has the meaning set out in Article 35.9.Subcontractual Performance means the performance levels of the Subcontract Works (if any) that are guaranteed by the Subcontractor to be achieved during the Performance Tests as may be set out in an Appendix to this Subcontract. Taking-Over or Provisional Acceptance means the moment when the Subcontract Works are or are deemed to be provisionally accepted by the Main Contractor under Article 47. Taking-Over or Provisional Acceptance can be accomplished by Section, if the Parties agree, or will occur in fact if the Main Contractor or Employer (or persons acting on eithers behalf) actually takes possession of Sections of the Subcontract Works.Taking-Over Certificate means the Certificate(s) issued under Article 47.Taking-Over Conditions has the meaning set forth in Article 47.2.

Temporary Subcontract Works means all temporary works of any type needed at the Site for the construction and/or completion of the Subcontract Works and the remedying of any Defects to them. Tender means the Subcontractors tender (Subcontractors offer to execute the Subcontract Works) and any additions or modifications to that document or its appendices.Time Schedule means the schedule provided for under Article 38.4 and which forms an Appendix hereto.Time to Taking-Over means the number of Days the Subcontractor has to achieve Taking-Over of the Subcontract Works or particular Sections of the Subcontract Works, as this time may be amended in accordance with the Subcontract.Variation includes any change to the Project or Subcontract Works, or their location, or the time in which they or any part of them are to be constructed, including, without limitation, any change to the type, form or composition of materials to be used, sequence(s) or timing of construction, performance or other specifications, or any changes relating to the Design. VAT/GST means the local consumption tax charged on any goods and/or services (usually described as a percentage of the selling price) howsoever described.

Article 2Entry into force of the Subcontract/Flowdown Agreed 18 mai 20102.1This Subcontract shall enter into force and be binding on the Parties on the Date it is signed (the Subcontract Date). The responsibility for, and expense of stamp duties and similar charges (if any) imposed by law in connection with the signature of this Subcontract shall be borne by the Main Contractor.[footnoteRef:4] [4: This Article deals with the entry into force of the Subcontract, thus, for some purposes, the Subcontract is in effect the dispute resolution provisions, for example, will be operative. This Article does not deal with the Start Date, and readers should go to those provisions at Articles 36.2 and 36.3 to determine the beginning of the Time to Taking-Over.]

Incorporation (Flow Down) of the Main Contract2.2So the Parties better understand the extent of their obligations, all of the provisions of the Main Contract, including the dispute resolution provisions[footnoteRef:5], unless expressly modified in this Subcontract, are fully incorporated into this Subcontract as if fully written here. The Subcontractor expressly confirms that it is bound to follow and give effect to the Main Contract provisions. Where the context requires it, the description of the Main Contractor in the Main Contract shall be read as the Subcontractor in this agreement, and the description of the employer or owner/developer in the Main Contract shall be read as a description of the Main Contractor in this Subcontract. [5: Users should verify with local counsel whether other provisions of Main Contract need to be explicitly mentioned to be incorporated under the relevant/applicable law. ]

Exceptions to Flow-Down2.3The following matters as dealt with in the Main Contract are not, unless otherwise agreed, included in this Subcontract:a. The price of the Works or price of variations/changes to them at the Main Contract/Employer level;

b. Insurance; or

c. The Time to Taking-Over of the Subcontract Works.

[ASSIGNMENT - JOSE to add to this list but perhaps not yet (18 may 2010). FIDIC excludes much more query why?]

Recording Direct Instructions from the Employer or the Employers Representative

2.4Should the Employer or the Employers Representative give an oral or written instruction directly to the Subcontractor, the Subcontractor shall as soon as reasonably possible record the instruction in writing and provide a copy of such instruction to the Main Contractor and Employer. The Main Contractor shall without any delay, but not later than fifteen (15) Days from the Subcontractors notice, either confirm, amend or reject such direct instruction in writing. Where the Main Contractor confirms or amends the Employers or the Employers Representatives direct instruction, such confirmed or amended direct instruction shall be deemed a Main Contractors Instruction. If the Main Contractor does not confirm, amend or reject the Employers direct instruction, the Subcontractor shall not follow the instruction. If the Instruction constitutes a Variation, Article 35 shall apply.

2.5Unless otherwise agreed, if these Conditions of Subcontract treat subject matter also treated in a provision of the Main Contract Conditions, the provision of the Conditions of Subcontract takes precedence over the corresponding Main Contract provision.

Article 3Good faith and fair dealing Agreed 18 mai 20103.1In carrying out their obligations under this Subcontract the Parties will act in accordance with the principles of good faith and fair dealing. The provisions of this Subcontract, as well as any statements made by the Parties in connection with it, shall be interpreted in accordance with the principles of good faith and fair dealing.3.2Good faith and fair dealing in this context includes, without limiting this duty, the duty to co-operate, not to intentionally mislead, and to carry out the Subcontract to the mutual benefit of both Parties, accepting that each is entitled to achieve its reasonable objectives, and requires the Parties to:(a)share information relevant to the other Party, subject only to obligations of confidentiality;(b)co-operate and consult in such manner as necessary to achieve the completion of the Subcontract Works;(c)warn of the potential consequences, including cost consequences, of proposed actions;(d)avoid unnecessary interference in each others activities; and(e)respond to enquiries in a timely manner, which, if possible, will not impede the progress of the Subcontract Works.3.3Whenever consultation is required by this Subcontract, it means there shall be a direct exchange of opinions prior to any final decisions being taken about the matter requiring consultation.

Article 4Language of the Subcontract Agreed 18 may 20104.1Unless otherwise agreed, the ruling language of this Subcontract and any disputes or differences decided in relation to it, is the language of the Main Contract.4.2Unless otherwise agreed, the language and communication provisions of the Main Contract shall apply.

Article 5Applicable laws (Agreed 18 may 2010)Governing substantive law5.1This Subcontract shall be governed by and construed in accordance with the law(s) agreed by the Parties in Appendix 1, Schedule of Subcontractual Amendments[footnoteRef:6]. In the absence of such agreement, this Subcontract shall be governed by and construed in accordance with the law(s) of the Main Contract. In the absence of a governing law stated in the Main Contract, the governing law will be the law of the Country. Such choice of law shall refer only to substantive law and shall not include its procedural or conflict-of-laws rules. [6: The laws of another jurisdiction are chosen sometimes for reasons of impartiality and certainty. Before choosing the law of a given country, parties should check if the provisions of this model contract conform with such law. Many countries have mandatory laws that apply because of the location of the works.]

Laws and regulations of the Country5.2The Parties shall, in performing the Subcontract, comply with all laws in force in the Country that must be observed by those who perform activities in the Country (such as, for instance, safety measures, exchange control limitations, etc.)[footnoteRef:7]. [7: Unless Parties agree that the Main Contractor should provide information about laws that may affect the performance of the Subcontract Works, the Subcontractor should verify in advance which laws might affect its performance.]

Article 6New or changed laws, standards, regulations, etc. Agreed 18 may 20106.1If there is a change of applicable laws, regulations, standards, internal procedures or their interpretation after the Reference Date, which affects the performance of the Subcontract, each Party shall give notice to the other.6.2In the event that:(a)compliance is required, and(b)compliance affects the Cost of the Subcontract Works and/or the time of execution of the Subcontract Works the Subcontractor shall be entitled to a Variation and the corresponding effect in time and Cost shall be taken into account in the time and Cost provisions herein, with certification of any additional or reduced Costs as early as possible.

Article 7Interpretation of the Subcontract Agreed 18 may 20107.1The documents forming the Subcontract are to be read together and interpreted as mutually explanatory of one another. If there is a direct inconsistency in specific obligations, then for the purposes of interpretation, and unless otherwise agreed, the priority of the Subcontract documents shall be in accordance with the following sequence:(1)The Subcontract Form and the Schedule of Subcontractual Amendments;(2)The Conditions of Subcontract,(3)The Appendices (if any) (excluding the Schedule of Subcontractual Amendments);(4)The Main Contractors Requirements;(5)The Employers Requirements;(6)The Tender; (7)The Assumptions (if any); and(8)Any other documents forming part of the Subcontract.7.2The higher priority interpretation shall be adopted only to the extent required to deal with an inconsistency. Specific terms agreed take priority over general statements, and terms in Subcontract documents created at a later Date govern over terms in earlier Subcontract documents. Subject to the foregoing, the terms of the groups of documents set out in Article 7.1 all have equal importance within their group.

Article 8Assumptions; statements about distances, measures, dimensions and quantities Agreed 18 may 20108.1If either Party does not accept an Assumption of the other Party or wishes to have it varied, it must indicate this in writing to the other Party, specifically identifying which Assumption it does not accept, prior to signature of the Subcontract. Disagreement notified after the signature of the Subcontract will not be taken into account (e.g. in relation to Costs or assessment of extensions of the Time to Taking-Over), unless otherwise agreed.8.2It is agreed that when either Party states or has stated distances, dimensions, strengths, qualities, quantities or volumes, these statements or figures are taken as statements of fact. Each Party must make reasonable efforts to ensure that the statement is accurate.

Article 9Obtaining permits, planning and other permissions Agreed 18 mai 20101. Unless otherwise agreed, each Party shall obtain at its own expense all permits, licences or approvals from all local, state/provincial or national government authorities or public service undertakings, which are required to be obtained by it in its name and which are necessary for the execution of the Subcontract Works[footnoteRef:8]. [8: The Parties may list in an Appendix the permits, licences or approvals from all local, state/provincial or national government authorities or public services, to be obtained for the execution of the Subcontract Works. The list should specify the Party that will obtain the permit, licence or approval.]

2. Each Party shall, at the request of the other Party, assist the other Party in a timely and effective manner in obtaining permits, licences or approvals, which are required for the performance of any part of the Subcontract Works.

Article 10Guarantees, bonds or other securities Agreed 18 may 201010.1The purpose of Bonds, bank guarantees, letters of credit and/or Advance Payment Guarantee(s) (if any) to be provided by the Parties is to guarantee and secure the obligations of the delivering party. To the extent provided in the Schedule of Subcontractual Amendments or elsewhere in the Subcontract, each Party shall provide (at its own expense) the guarantee(s), bonds or other securities required under the Subcontract.10.2Unless otherwise agreed, each Party shall deliver any guarantee(s), bonds or other securities to the other Party within 28 Days after the Subcontract Date. Each such security shall be issued by an entity and from within a country (or other jurisdiction) acceptable to the other Party, and shall be in the form set out in an Appendix to this Subcontract (if any), or as otherwise agreed by the Parties.

Article 11Demands under guarantees, bonds or other securities Agreed 18 may 201011.1Neither Party shall make a claim under any guarantee, bond or other security, however described, unless there has been a decision in accordance with Chapter 13 specifying the amounts to which they are entitled under the Subcontract, or for its breach.11.2Each Party hereby indemnifies and holds the other Party harmless for all damages, losses and expenses (including legal fees and expenses) resulting from a claim under any guarantee, bond or other security to the extent to which the Party making such claim was not entitled to make the claim or the value of the claim exceeded the Partys proper entitlement.11.3Unless otherwise agreed, each Party shall return the guarantee(s), bonds or other securities to the other Party within 21 Days after the security expires, and/or when the Subcontractor has become entitled to receive the Final Certificate. In any event, all securities howsoever described will include or be deemed by the Parties to include a term that they are to become invalid, null and void on the Date that they should have been returned, whether returned or not.11.4To the extent that either Party holds funds or securities to which the other Party or a third party is or will become beneficially entitled, the Party holding the funds hereby agrees it does so as trustee, for the benefit of the other Party or the third party.

Article 12No agency independent contractor Agreed 18 may 201012.1The Parties agree that neither Party will perform any act or make any statement to any person to the effect that it is acting or has acted under this Subcontract as agent for the other Party.12.2The Subcontractor shall be an independent contractor with respect to the Project, each of its parts, and the Subcontract Works, and neither the Subcontractor nor its other subcontractors nor the employees of either shall be deemed to be agents, representatives, employees or servants of the Main Contractor or Employer in the performance of the Subcontract Works, or any part thereof, or in any manner dealt with herein. 12.3Nothing in this Subcontract creates a contractual relationship between the Subcontractor and the Employer.

CHAPTER 2THE PARTIES' OBLIGATIONS

Article 13The Main Contractors obligations13.1This Subcontract is a reciprocal contract with each Party owing obligations to the other Party. 13.2The Main Contractors responsibilities include the obligation to pay the Subcontract Price and to co-operate, in good faith, with the Subcontractor in order to enable it to perform its duties, as set out in this Subcontract, and not to hinder or delay the Subcontractor in the Subcontractors performance of the Subcontract Works.

Providing the Site13.3The Main Contractor shall be responsible, to the extent necessary for the purposes of the Subcontract Works, for acquiring and providing legal and physical possession of the Site (or Sections of it) and access thereto, and providing possession and use of and access to all areas reasonably required for the proper execution of the Subcontract Works by the Subcontractor, including all requisite rights of way and access routes in accordance, if applicable, with the Appendices and other terms of the Subcontract and shall give all rights of access thereto on or before the Date or Dates set out in this Subcontract, or, if there are no such Dates, the reasonable Dates upon which the Subcontractor reasonably notifies the Main Contractor they are required.13.4Unless otherwise agreed, the possession is not to be hindered by the Main Contractor or other contractors associated with the Main Contractor and/or the Project. If the Subcontractor suffers delay and/or incurs Cost from failure on the part of the Main Contractor to acquire and provide such legal and physical possession of, and/or right of access to, the Site or Sections of it and all other areas reasonably required, the Subcontractor shall give notice to the Main Contractor. The Main Contractor shall proceed to consult with the Subcontractor to agree an appropriate extension or extensions of the Time to Taking-Over and/or a fair addition to the Subcontract Price and shall notify the Subcontractor accordingly.

Article 14The Subcontractors obligations (Agreed 18 May 2010)14.1The Subcontractor shall, with due diligence, perform and complete the Subcontract Works, and shall remedy any Defects in the Subcontract Works in accordance with the Subcontract. When completed, the Subcontract Works shall be fit for the purposes for which the Subcontract Works are intended as specifically defined in the Subcontract.

Access to the Subcontract Works

14.2The Subcontractor shall permit the Main Contractors Personnel to have access at all reasonable times to examine, inspect, measure and test the materials and workmanship, and to check the progress of the Subcontract Works at the Site or elsewhere. The Main Contractor shall also have access to the places where the materials or Equipment for the Subcontract Works are located. This access shall not disturb the progress of the Subcontract Works. Each party shall bear its own costs.

1. The Subcontractor shall in accordance with the Subcontract provide all superintendence, labour, services, Plant, materials, Subcontractor's Equipment, Temporary Subcontract Works and all other things, whether of a temporary or permanent nature, required in and for such design, procurement, supply, execution, commissioning, testing and Completion of the Subcontract Works and dealing with any Defects therein.2. Unless otherwise agreed, the possession of its part of the Site is not to be hindered by the Subcontractor or other contractors associated with the Main Contractor and/or the Project. If the Main Contractor suffers delay and/or incurs Cost from failure on the part of the Main Contractor to acquire and provide such legal and physical possession of, and/or right of access to, the Site or Sections of it and all other areas reasonably required, the Main Contractor shall give Notice to the Main Contractor. [(TO associate itself with 13.4) NOTE: EOC question of 8 July: What does this mean?]

Article 15Co-operation with other contractors and co-ordination of activities Agreed 18 may 201015.1The Subcontractor shall be responsible for its own [construction activities] on the Site, and the adequacy and stability of its Site operations, including Temporary Subcontract Works it constructs. It shall co-ordinate at its own expense its activities with those of other contractors to the extent (if any) specified in the Employers Requirements.15.2The Subcontractor shall, as specified elsewhere in the Subcontract or as reasonably requested or instructed by the Main Contractor and where it does not disrupt the Subcontractors own work, allow appropriate opportunities for carrying out work to:(a)the Main Contractors or Employers Personnel;(b)any other contractors employed by the Main Contractor; and(c)the personnel of any public authorities;who may be employed in the execution on or near the Site of any work not included in the Subcontract.1. Any further request or instruction from the Main Contractor for co-operation shall give an entitlement to an extension of the Time to Taking-Over and, if additional expense is involved, a Variation.To the extent that the Subcontractor obstructs or hinders the activities of other parties on the Site and such obstruction or hindrance is not in accordance with the Subcontract and causes the Main Contractor to incur additional Costs, then the Subcontractor shall indemnify the MC for such Costs.

Article 16Quality assurance (Agreed 18 mai 2010)16.1The Subcontractor shall comply with the quality assurance systems implemented by the Main Contract and Subcontract. If there are no such systems, the Subcontractor shall implement a system that is appropriate for the Works and in the Country. [ASSIGNMENT -: JOSE to look in connection with flowdown inquiry. Problems in, among others?, 13, 15, 24.1]

Article 17Staff and labour AGREEDSTART 19 MAY 2010

Employment of Subcontractors staff and labour17.1Unless otherwise agreed, the Subcontractor shall be responsible for the employment of all its staff and labour whether local or otherwise, for the purpose of executing the Subcontract Works and the performance of the Subcontract and shall be responsible where relevant for their payment, accommodation, supply of food and transport and any other matters specified in this Subcontract.17.2The Subcontractor shall observe the conditions of labour, comply with all relevant labour laws, including those relating to employment, working hours, health, safety, social welfare, immigration and emigration that are relevant and applicable in the Country and shall pay its staff and labour wages consistent with those established or, if not established, practised for the trades and industries of the Country.

Facilities for staff and labour17.4The Subcontractor shall provide and maintain the facilities for its own staff and labour.

Health, welfare of staff and labour17.6The Subcontractor shall provide access to and maintain the health facilities specified in the Subcontract (if any). Where there are no such facilities specified and no alternative facilities available, the Subcontractor shall provide suitable facilities. The Parties shall collaborate with local health authorities and shall take the necessary measures to ensure the welfare, hygiene and prevention and control of epidemics of and amongst the Subcontractors staff and labour.

Customs of the Country17.7Each Party shall have due regard and respect for religious practices, days of rest and other recognized customs of the Country.

Disruptive conduct17.8Each Party shall be responsible for taking all reasonable measures to prevent unlawful, riotous or disruptive conduct amongst its staff and labour. [NOTE: Main Contract 17.9 flows down.]

Article 18Representatives of the Parties Agreed 19 May 201018.1Each Party shall appoint a Representative within seven Days of the Subcontract Date by notice to the other Party. Neither Party shall change its Representative without giving reasonable Notice.18.2The Parties Representatives shall each have the appropriate professional qualifications or experience necessary for each of them to carry out their duties and exercise the authority specified in or required of them under the Subcontract in a competent and professional manner.18.3The Parties Representatives shall, unless parts of their authority are specifically reserved in advance in writing by the Party concerned, be deemed to have been given full authority for all of their actions under the Subcontract and any such actions shall be binding on the Party that employs them.18.4The Parties Representatives may from time to time assign duties and delegate authority vested in them under the Subcontract to assistants (including if necessary Site Representatives) employed by the Party for the purpose of the Subcontract and may at any time revoke such assignment or delegation. Such assignment, delegation and revocation shall be confirmed, if requested, by notice to the other Party with a copy to the other Partys Representative. Unless otherwise stated in advance and in writing, such duties and authorities carried out and/or exercised by such assistants shall be deemed to have been carried out and/or exercised by the Partys Representative.

Article 19Each Partys duty to notify Agreed 19 May 201019.1Without prejudice to the scope of Article 3, each Party shall take reasonable care in the circumstances to review the scope of its work, the other Partys documents and the Main Contractors Requirements and the Employers Requirements prior to the Start Date and thereafter as circumstances require until Taking-Over. Each Party shall give prompt notice to the other Party of any error, fault or other Defect found in the other Party's documents or any other items of reference supplied by the other Party. In the event that such error, fault or other Defect involves a change or modification to the Subcontractors Documents or the Subcontract Works, the provisions of Article 35 shall be applied as necessary.19.2Save for the duty to notify, the Subcontractor shall not be liable for any errors, faults or Defects in the Main Contractors Requirements and the Employers Requirements or any other Design or documents supplied or specified by the Main Contractor. Similarly, the Main Contractor shall not be liable for any errors, faults or Defects in the Subcontractors Documents or work.

CHAPTER 3THE EXECUTION OF THE SUBCONTRACT

Article 20Scope of the Subcontract Works and Subcontract Price Agreed 19 May 201020.1Both Parties confirm that the Subcontract sets out the whole of the scope of Subcontract Works of the Subcontractor and the Subcontract Price. Unless otherwise agreed, the Subcontractor has no role in the financing of the Subcontract Works.20.2Separate agreements may be made at any time for construction of other works or matters not covered by the scope of this Subcontract.

Article 21Setting out on the Site Agreed 19 May 201021.1The Subcontractor shall set out the Subcontract Works in relation to original points, lines and levels of reference set out in an Appendix (if any) or, if not so specified, given by the Main Contractor, or otherwise as agreed in writing as soon as reasonably possible but in any case not later than within 21 Days of the Start Date. 21.2Unless otherwise agreed, errors in setting out or failure to provide accurate set-out data that affect the performance of the Subcontract Works will be rectified at the cost of the Party that made the error. If appropriate, the Subcontractor will be entitled to an extension of the Time to Taking Over.

Article 22Site information for the Subcontractors Design and use Agreed 19 May22.1The Subcontractor should have informed itself in an objectively reasonable way about the risks it will face.22.2In order to allow the Subcontractor to be acquainted with the potential risks for the executing of the Subcontract Works at the Site, it shall be the Main Contractors responsibility to pass on all surveys of the Site and its surroundings that it has, including data on subsurface, hydrological and environmental aspects of the Site and environs, and the Main Contractor at the time of calling for Tenders, or at least 28 Days prior to the Reference Date, shall make all such data obtained from the Employer available to the Subcontractor for its study and use. The Main Contractor shall similarly make available to the Subcontractor all such data and other information relating to the Site and its surroundings that is or later comes into the Main Contractors possession.22.3The Subcontractor shall be considered to have taken such data as made available to it in accordance with Article 22.2 into account in pricing the Subcontract Works. The Subcontractor shall further be considered to have entered into the Subcontract on the basis of an objectively reasonable examination and interpretation of the data and information relating to the Subcontract Works provided by the Main Contractor and of information that it could have obtained from a visual inspection of the Site, if access to it was available.22.4The preceding Article 22.3 will not apply to sub-surface conditions except to the extent that boreholes and similar information can be taken to be indicative of the quality of the sub-surface materials and, if applicable, hydrological conditions at the place the borehole was made.

Article 23Unexpected artificial or physical conditions or obstructions Agreed 19 May23.1The Subcontractor shall notify the Main Contractor if, during the execution of the Subcontract Works, it encounters on the Site any artificial or physical conditions or obstructions (whether sub-surface or otherwise) that were not reasonably to be expected prior to the submission of the Tender on the basis of the examination of data provided by the Main Contractor under Article 22. If the Subcontractor has provided design or construction Assumptions prior to or at Tender that include statements of the conditions it expects, such Assumptions, to the extent they were not contradicted by the Main Contractor prior to signing the Subcontract, will be presumed to be determinative of the issue of whether or not the obstruction was expected.23.2If as a result of encountering on the Site any artificial or physical conditions or obstructions (whether sub-surface or otherwise) the Subcontractor considers it will incur or has incurred unexpected additional Cost or will require additional time to perform its obligations under the Subcontract, it shall submit proposals to take account of the unexpected artificial or physical conditions or obstructions encountered. If any re-design arising from such proposals is such as to require a significant change in:(a)the selected construction methods; and/or(b)the Design; and/or(c)resources; and/or(d)Temporary Subcontract Works;the Main Contractor shall, after consulting the Subcontractor, by Notice determine the appropriate Cost and/or time implications arising from changes to the Method Statement, using the Method Statement and the Assumptions as the basis for such determination, and provisionally adjust the Subcontract Price and/or revise the Time to Taking-Over accordingly. These adjustments are binding unless and until the Subcontract Price and/or the Time to Taking-Over are further revised by agreement or under Chapter 13.

Use of the Method Statement to determine the time or cost implications under this Article23.3Whenever required by the Main Contractor, or if it wishes on its own initiative to do so in order to ascertain valuations and for assessments of time or cost under this Article 23, the Subcontractor shall provide details to establish that:(a)the selected Design, construction methods, resources and/or Temporary Subcontract Works and the Time Schedule were appropriate to the conditions envisaged in the Assumptions (if any); (b)the change in the Design, construction methods, resources and/or Temporary Subcontract Works is/was directly necessitated by the conditions encountered being significantly different than the Assumptions; and(c)any revision to the Time Schedule and extension of the Time to Taking-Over sought is directly necessitated by the conditions aforesaid.23.4Where, because of the circumstances surrounding the Subcontract, it is not possible or practicable to follow the requirements of Articles 23.2 and 23.3, the Parties will endeavour to agree on another appropriate methodology and decide the time and/or Cost implications in any event.

Fossils, mineral deposits of economic interest and items of archaeological interest23.5All fossils, coins, mineral deposits of economic interest, articles of value or antiquity and structures and other remains or items of geological or archaeological interest found on the Site shall be placed under the care and authority of the Main Contractor who shall deal with them in accordance with the law of the Country. The Subcontractor shall take reasonable precautions to prevent Subcontractors Personnel or other persons from removing or damaging any of these finds.

Article 24Safety Agreed 19 May24.1To the extent and because the Subcontractor has possession of Sections of the Site, it has responsibility for safety in those Sections. Accordingly, the Subcontractor shall:(a)comply with all applicable safety regulations, and if none are applicable, Good Industry Practice;(b)take care for the safety of all persons entitled to be on Site, and not knowingly create hazards for persons not entitled to be on its Section of the Site;(c)use reasonable efforts to keep its Section of the Site and Subcontract Works clear of unnecessary obstructions so as to avoid danger to all persons;(d)if necessary provide reasonable fencing and lighting, for the Subcontract Works until Taking-Over; and(e)provide any Temporary Subcontract Works (including roadways, footways, guards and fences) that may be necessary, because of the execution of the Subcontract Works, for the use and protection of the public and of owners and occupiers of areas adjacent to the Site.ASSIGNMENT - ROBERT: 19 May 2010 thought of RK: delete (d) and (e) as MC obligations, and write instead a new (d) that states if they are not provided by the MC or Employer then to the extent they are necessary the Subcontractor will provide any Temporary Subcontract Works (including roadways, footways, guards, lighting and fences) that may be necessary, because of the execution of the Subcontract Works, for the use and protection of the public and of owners and occupiers of areas adjacent to the Site.]

Article 25Public convenience Agreed 19 May25.1The Subcontractor shall not interfere unnecessarily or improperly with the convenience of the public, or the access to and use and occupation of all roads and footpaths, irrespective of whether they are public or in the possession of the Main Contractor or of others.

Article 26Environmental protection Agreed 19 May 2010 subject to JD-E assignment

[ASSIGNMENT - JANE to consider hazards, relevance given changed environmental climate. Sample language to be proposed.]26.1Prior to the issuance of the Taking-Over Certificate, the Parties shall take reasonable steps not to damage the environment (either on or off the Site) or cause a nuisance to people or property from pollution, noise or other results of its operations and will comply with the applicable environmental legislation.[footnoteRef:9] If such problems seem likely to arise, the Parties will seek guidance from the local authorities concerned. [ASSIGNMENT - JANE to draft footnote: Parties may prepare a list of permits.] [9: It is advised that a study be carried out to determine whether or not the soil is polluted (a Phase I study) before Subcontractor begins to carry out its activities, or that takes possession of the Site.]

26.2The Subcontractor shall not be responsible for any damage, nuisance or other effects to people or property resulting from pollution, noise or any other consequence of pre-existing conditions of the Site, or the activities of other contractors of the Main Contractor or third parties.

26.3The Parties are obliged to finally dispose of all waste, including but not limited to hazardous waste and wastewater, that is generated during the development of the Works. This disposal shall be carried out in accordance with the applicable regulations and in a fashion that is consistent with international practices.

26.4The Subcontractor is obliged to carry out the necessary activities to remove wastewater generated during the development of the Works, in accordance with the Subcontract and applicable law. The Main Contractor shall support, facilitate and support the Subcontractor so it can comply with the applicable legislation.

Article 27Services or supplies to be supplied by the Main Contractor [ Agreed 19 MAY 2010]27.1The Main Contractor shall be responsible for the provision of all power, water and other services or supplies to the Site as set out in the Appendices or elsewhere in the Subcontract. If no such supplies are specified, the Subcontractor will be responsible for these supplies. Unless otherwise agreed, increases in the Costs to the Subcontractor for such supplies and services after the Reference Date over and above the rate of inflation in the Country will not be considered to have been included in the Subcontractors Tender.

Payment for services provided by the Main Contractor 27.2If there are services supplied by the Main Contractor, the Subcontractor shall pay for these at the prices set out in an Appendix (if any) and/or as stated elsewhere in the Subcontract. If no price is stated, the price(s) shall be determined by a method to be agreed by the Parties prior to the Start Date. The quantities consumed shall be determined by agreement, and the Main Contractor shall include the amounts due as deductions in Payment Certificates. 27.3In the event that the Subcontractor is delayed or suffers extra Cost in its execution of the Subcontract Works due to a failure or inadequacy in the supply of services from the Main Contractor referred to in this Article 27, the additional Cost and any delay shall be treated as a Variation.27.4The Subcontractor is not deemed to have included in its Tender the Costs of unusual disruption to services. Unless otherwise agreed, unusual disruption means interruption of supply for more than one hour in total per Day during working hours.

Article 28Main Contractor/Employer-supplied Plant, materials or Equipment Agreed 19 May 201028.1The Main Contractor undertakes to provide, either by itself or by and on behalf of the Employer, all goods, materials, Plant and Equipment, buildings and storage facilities specified in the Subcontract in accordance with the provisions of the Subcontract. The Main Contractor shall, at its risk and Cost, transport, or procure transport for, such items to the Subcontractor or the Site, as the case may be, at the time and place specified in the Subcontract, or upon agreement with the Subcontractor. Main Contractor-supplied goods, materials or Plant and Equipment are offered as being fit for the purposes for which they are intended.28.2The Parties undertake, as applicable, to operate the items of Plant and Equipment in accordance with the details, arrangements and charges (if any) given in the Subcontract or in accordance with Good Industry Practice. [NOTE: MC 28.2 and 28.3 flow down.]

Article 29Responsibility for shipping and storing goods and materials Agreed 19 May 201029.1Unless otherwise agreed, the Subcontractor shall be responsible for packing, loading, transporting, receiving, unloading, storing and protecting all goods and other things to be supplied by or on its behalf and required for the Subcontract Works, and shall bear all expenses associated with these activities.

Article 30Ownership of goods, material, Plant and Equipment / liens, trusts and similar claims [NOTE: Agreed 19 May as straight flow down of adopt MC language adapted by EOC for 5-6 July meeting. Lost indemnity obligations elsewhere?] Unless otherwise agreed and as between the Parties, all goods, materials, Plant and Equipment supplied for incorporation of the Work by or on behalf of the Subcontractor belong to the Subcontractor until they are incorporated or are paid for, whichever is earlier. On incorporation or payment, the title to the goods, materials, Plant or Equipment is transferred. . Temporary Subcontract Works and Subcontractors Equipment remain the property of the Subcontractor. This Article 30.1 does not affect the passing of risk.30.2To the extent consistent with the laws of the Country, good title to all goods, materials, Plant and Equipment provided by the Subcontractor hereunder, shall pass and vest free and clear of any and all liens, claims, charges, security interests, encumbrances and rights of other subcontractors.. 30.3Each Party warrants that prior to termination or the end of the Subcontract, it will not itself or through its agents in any way prevent the other Party from dealing with the other Partys own goods, materials, Plant or Equipment or levy execution against, place liens or trust declarations on or otherwise encumber the goods, materials, Plant or Equipment or allow any of their agents to levy execution against, place liens on or otherwise encumber the goods, materials, Plant or Equipment wherever they may be found.30.1Unless otherwise agreed and as between the Parties, all goods, materials, Plant and Equipment supplied hereunder by or on behalf of the Subcontractor belong to the Subcontractor until they are incorporated into the Subcontract Works, or are paid for, whichever is earlier. On incorporation or payment, the title to the goods, materials, Plant or Equipment is transferred to the Main Contractor [EOC NOTE: or Employer?]. Temporary Subcontract Works and Subcontractors Equipment remain the property of the Subcontractor. This Article 30.1 does not affect the passing of risk.30.2The Subcontractor warrants good title to all goods, materials, Plant and Equipment provided by it hereunder, and Subcontractor warrants that title and ownership thereto shall pass and vest in Main Contractor [EOC NOTE: or Employer?] as described in Article 30.1 free and clear of any and all liens, claims, charges, security interests, encumbrances and rights of other Subcontractors. In case of breach of this warranty, the Subcontractor shall indemnify the Main Contractor [EOC NOTE: or Employer?] against all claims resulting from such breach. In such case, Articles 34.9 through 34.11 shall apply accordingly, with the necessary changes being made. 30.3Each Party warrants that prior to termination or the end of the Subcontract, it will not itself or through its agents in any way prevent the other Party from dealing with the other Partys own goods, materials, Plant or Equipment [EOC NOTE: Definition of Equipment seems to be limited to that of Subcontractor] or levy execution against, place liens or trust declarations on or otherwise encumber the goods, materials, Plant or Equipment or allow any of their agents to levy execution against, place liens on or otherwise encumber the goods, materials, Plant or Equipment wherever they may be found.

Article 31Keeping the Site clear Agreed 19 May 31.1During the course of the Subcontract Works, the Subcontractor shall clear away and remove from the Site any wreckage, rubbish, Temporary Subcontract Works or material no longer required.31.2Upon the issue of any Taking Over Certificate, the Subcontractor shall clear away and remove from that part of the Site to which such Taking-Over Certificate refers, all Subcontractor's Equipment, surplus material, wreckage, rubbish and Temporary Subcontract Works. The Subcontractor shall leave these parts of the Site and the Subcontract Works in a clean and safe condition.During the course of the Subcontract Works, the Subcontractor shall clear away and remove from the Site any wreckage, rubbish, Temporary Subcontract Works or material no longer required. 31.2 Upon the issue of any Taking-Over Certificate, the Subcontractor shall clear away and remove from that part of the Site to which such Taking-Over Certificate refers, all Subcontractors Equipment, surplus material, wreckage, rubbish and Temporary Subcontract Works. The Subcontractor shall leave these parts of the Site and the Works in a clean and safe condition.

CHAPTER 4DESIGN - RESPONSIBILITY AND MANAGEMENT, VARIATIONS

Article 32General allocation of responsibility of the Parties for the Design Agreed 19 May 201032.1Each Party shall be responsible for the elements of Design allocated to that Party in the Subcontract. 32.2The Main Contractor shall provide and be responsible for any information reasonably required by the Subcontractor for the purposes of the Subcontractors development of any design allocated to it in the Subcontract and the Main Contractors Requirements, Design allocated to the Main Contractor, materials or Plant that it specifies or requires, or for which there is no practical alternative.. The Subcontractor is responsible for the Tender, and all Design, goods, materials, Plant and Equipment it supplies and uses.32.3Without limiting the generality of Article 32.2, each Party shall be responsible for the correctness of the data and information provided by (or on behalf of) that Party, including, without limitation: (a)definitions of intended purposes of the Subcontract Works or any Section of them;(b)parameters for the testing and performance of the Subcontract Works;(c)measurements, data and information that cannot be reasonably verified by the other Party, having regard to Costs and time; and(d)any Design supplied by any other subcontractor of the Party or by the Party itself.32.4Unless otherwise agreed or is reasonable in the circumstances, the Subcontractor shall carry out, and in accordance with the Contract be responsible for, the development of the Design that is allocated to it. The Main Contractor shall have the right to be informed of the Design development.32.5The Subcontractor holds itself, its designers and design subcontractors as having the experience and capability necessary for the Design allocated to it. The Subcontractor undertakes that the designers shall be available to attend discussions with the Main Contractor at all reasonable times during the Subcontract.

Article 33The Design review process [Finally agreed 5 July 2010)ASSIGNMENT FOLLOW-UP - JENS: Remind us why addition of indemnity in 33.10 in July 2009?

33.1The purpose of these Design elaboration and review provisions is to ensure that Design development is orderly and that the Parties rights and responsibilities are clearly set out. The Main Contractor has an interest in seeing the Subcontract Works performed at the initially agreed Subcontract Price, and the Subcontractor has an interest in performing the Subcontract Works in an efficient fashion at a budget within the range originally intended. The following provisions are to be interpreted with these objectives in mind. They will apply unless it has been expressly stated in the Subcontract or otherwise agreed that they are not to apply.

Documents the Subcontractor is to prepare33.2The Subcontractor shall prepare all Subcontractors Documents. Unless otherwise stated in the Subcontract or allowed on a case-by-case basis, the Subcontractors Documents shall be written in the ruling language. The Subcontractors Documents shall comprise the technical documents specified in the Subcontract, documents required to satisfy all regulatory approvals, and the documents described below in the Articles relating to as-built documents and operation and maintenance manuals.33.3The Subcontractor shall also prepare any other documents necessary to instruct the Subcontractors Personnel.

Submission of specified Design documents33.4If the Subcontract describes the Subcontractors Documents that are to be submitted to the Main Contractor for review, they shall be submitted accordingly. The Subcontractor is required to submit only those Documents that are specified as requiring review.

Review period33.5Unless otherwise agreed, each review period shall not exceed 35 Days, calculated from the Date on which the Main Contractor receives Subcontractors Documents stated to be ready for review in accordance with this Article 33. If the Subcontractor is not notified of a Subcontractor's Document's review status within the review period, such document is deemed to have been reviewed by the Main Contractor and approved.

Main Contractor notices in respect of alleged non-compliant Design33.6If the Subcontractors Documents are acceptable to the Main Contractor, they will be returned marked Reviewed by the Main Contractor with the Date noted. The Main Contractor may, within the review period, give Notice to the Subcontractor that a Subcontractors Document fails (to the extent stated and as identified) to comply with the Subcontract. If the Subcontractor receives such Notice and the Subcontractors Document does in fact fail to comply with the Subcontract, it shall be rectified and resubmitted for review again in accordance with this Article 33.

Variations to compliant Design33.7The Main Contractor may instruct material changes to the Subcontractors Documents even if the Subcontractors Document complies with the Subcontract. If the Subcontractor considers the change to be a Variation, the Subcontractor shall notify the Main Contractor and the Variation provisions of Article 35 will apply.

Work before review33.8In principle and unless otherwise agreed between the Parties or instructed by the Main Contractor, no work should commence before the end of the relevant review period for Subcontractors Documents to which the work applies. If the Subcontractor chooses to commence work in respect of matters described in such Subcontractors Documents without review, or prior to the end of the review period, such work is done at the Subcontractors own risk.

Contractor changes to Design33.9If the Subcontractor wishes to modify any Subcontractors Document that has previously been submitted for review, the Subcontractor shall immediately give Notice to the Main Contractor. Thereafter, the Subcontractor shall submit revised Subcontractors Documents to the Main Contractor in accordance with the review procedure pursuant to this Article 33.

Design errors33.10If errors, omissions, ambiguities, inconsistencies, inadequacies or other Defects are found in the Subcontractors Documents at any time by any party, they and the Subcontract Works shall be corrected by the Subcontractor at the Subcontractors expense, notwithstanding any review under this Article 33. Where because of errors, omissions, ambiguities, inconsistencies, inadequacies or other Defects in the Subcontractors Documents the Main Contractors other contractors and/or consortium partners have to rework or correct any of their works, design and/or any other documents, then the Subcontractor shall further hold the Main Contractor harmless against and indemnify the Main Contractor from any additional Cost that the Main Contractor incurs or will incur in connection with such rework or correction by his respective other contractors and/or consortium partners. Any such liability for any such error, omission, ambiguity, inconsistency, inadequacy or other Defect shall be subject to the limitations under Articles 52.4 to 52.6.

Samples33.11If agreed between the Parties or instructed by the Main Contractor as a Variation, the Subcontractor shall submit samples and relevant information to the Main Contractor for pre construction review. Each sample should be labelled with its origin and intended use in the Works.

As-built drawings33.12The Subcontractor shall prepare, and keep up-to-date, a complete set of records of the execution of the Subcontract Works, showing the exact as-built locations, sizes and details of the Subcontract Works as executed. A preliminary copy shall be supplied to the Main Contractor in sufficient time before Taking-Over.33.13In addition, the Subcontractor shall supply to the Main Contractor on a Date as set out in the Schedule of Subcontractual Amendments (or to be agreed between the Parties) the final as-built drawings of the Subcontract Works, if they are different from the documents described in Article 33.12, showing all Subcontract Works as executed.

Training and operation and maintenance manuals33.14The Subcontractor shall carry out the training of Employers Personnel or such other personnel as specified in the Main Contract in the operation and maintenance of the Subcontract Works to the extent specified in the Subcontract.33.15Any training in addition to training specified in the Subcontract shall be considered to be a Variation.33.16In sufficient time but in any event not later thanAt least four months prior to Taking-Over of the Works (or the respective Section) under the Main Contract, unless otherwise agreed, the Subcontractor shall supply to the Main Contractor preliminary operation and maintenance manuals in sufficient detail for the Main Contractor and/or Employer to operate and maintain the Subcontract Works according to the Main Contractors Requirements and Employers Requirements.33.17Final operation and maintenance manuals will be handed over on a Date to be agreed between the Parties.

Article 34Intellectual property rights Agreed 5 July

[ASSIGNMENT: Maya to incorporate FIDIC 2.6 ]34.1As between the Parties, the Subcontractor shall retain the copyright and other intellectual property rights in the Subcontractors Documents and other Design documents made by (or on behalf of) the Subcontractor.

34.2Subject to the confidentiality obligations of Article 59, the Subcontractor shall be deemed (by signing the Subcontract) to give to the Employer, the Main Contractor as well as the operator employed by or on behalf of the Employer a non-terminable, transferable, non-exclusive and royalty-free right to copy, use and communicate the Subcontractors Documents for the purposes set out in Article 34.3 but not for any other purpose. The value of the fee for this right is included in the Subcontract Price.34.3The right shall:(a)apply throughout the actual or intended working life (whichever is longer) of the relevant parts of the Subcontract Works;(b)entitle any person in proper possession of the relevant part of the Subcontract Works to copy, use and communicate the Subcontractors Documents for the purposes of completing, operating, maintaining, adjusting, repairing or demolishing the Subcontract Works; and(c)in the case of Subcontractors Documents that are in the form of computer programs and other software, permit their use in object code on any computer on the Site and other places as envisaged by the Subcontract, up to the maximum number of computers stated in the Subcontract, including replacements of any computers. The Employer and the Main Contractor each are entitled to make copies of such software for back-up purposes.34.4The Subcontractors Documents and other Design documents made by (or on behalf of) the Subcontractor shall not, without the Subcontractors consent, be used, copied or communicated to a third party by (or on behalf of) the Main Contractor for purposes other than those permitted under this Article 34.34.5The Subcontract Works may contain freeware, shareware or open source software for the use of which no licence fee is charged to Main Contractor. Regarding such portions of software, the Main Contractor hereby accepts the specific licence conditions either being part of the software documentation or accompanying the hardware. Upon request of the Main Contractor, the Subcontractor is prepared to provide a copy of the source code of the open source software, if required by the specific licence conditions. To the extent there is a conflict between this Subcontract and the specific licence conditions, the terms of the specific licence conditions shall prevail over the terms and conditions of this Subcontract with regard to the open source software.34.6As between the Parties, the Main Contractor shall retain the copyright and other intellectual property rights in the Main Contractors Requirements and other documents made by (or on behalf of) the Main Contractor. The Subcontractor may, at its expense, copy, use, and obtain communication of these documents for the purposes of the Subcontract. They shall not, without the Main Contractors consent, be copied, used or communicated to a third party by the Subcontractor, except as necessary for the purposes of the Subcontract.

Intellectual property infringement indemnity by the Parties34.7The Subcontractor shall indemnify the Main Contractor against all claims of infringement of any patent, registered design, copyright, trade mark or trade name, or other intellectual property right, if the claim or proceedings arose out of the Design, construction, manufacture or use of the Subcontract Works, unless the infringement (or allegation of infringement):(a)was the result of part (or all) of the Subcontract Works being used for a purpose other than that indicated by, or reasonably to be inferred from, the Subcontract; and/or (b)was the direct result of the Subcontractors compliance with the Design or Instructions of the Main Contractor.

34.8The obligation to indemnify set out in Article 34.7 shall be subject to the Subcontractors right to mitigate the potential loss by acquiring directly or indirectly the right to use the relevant intellectual property rights.34.9The Parties remedies under this Article 34 shall be in place of and to the exclusion of any other remedies in relation to any infringement of any intellectual property rights as described in this Article.

Notification and handling of claims for infringement34.10The Main Contractor shall promptly notify the Subcontractor of any Subcontract-related claim of infringement of intellectual property rights made against it by the Employer or any other third party. The Subcontractor may, at its expense, conduct negotiations for the settlement of such claim, and any litigation or arbitration that may arise from it. The Main Contractor or its representatives shall not make any admission that might be prejudicial to the Subcontractor, unless the Subcontractor has failed to take over the conduct of the negotiations, litigation or arbitration within a reasonable time after having been requested so to do. [NOTE: Machoy 22 Sept 2009: provide for termination right in Article 57.10 [5 July note 57.11 instead] if ip-infringement cannot be settled satisfactorily within reasonable time but not later than 2 months after the claim against the Subcontractor. 5 July 2010 concern: does giving time-triggered termination right open the door for vexatious [blackmail] claims where Subcontractor is wholly innocent and may be forced to pay claimant off to keep K in force?]

34.11If Notice is given of a violation of an intellectual property right that prevents performance of the Subcontract Works and one that the Subcontractor is unable to resolve pursuant to this [clause/article], then [the Parties/S and MC] must meet without delay and make all reasonable efforts to find a solution satisfactory to both [Parties] within 2 months. If, however, subsequent to such efforts, (i) the Subcontractor continues to be unable to perform the Subcontract Works, (ii) the Subcontractor has taken all reasonable steps to resolve the violation, and (iii) the violation remains unresolved after a period of 2 months from the Notice, then the Main Contractor shall be obliged to give an Instruction with respect to the matter. Such Instruction shall be subject to the provisions of Art.[icle] 35.

Article 35Variations and changes to the Subcontract Works Agreed 5 July 2010

Variations general principles [Variations clause finalized 13 nov 2009]35.1The purpose of these Variations provisions is to ensure that the Subcontractor is paid a reasonable price for any changes in the Subcontract Works and the Main Contractor preserves its right, within the framework of this Subcontract, to change the Subcontract Works and maintain its right to Delay Damages as the Subcontract Works progress. Variations may be instructed by the Main Contractor or proposed by the Subcontractor.35.2Except to the extent that the Variation was necessitated by the Subcontractors default, the fair and reasonable Cost plus profit of all Variations shall be taken into account in ascertaining the Subcontract Price. Variations that arise from the defaults of the Subcontractor are to be paid for by the Subcontractor.35.3The Subcontractor has no obligation to make a change that is not instructed as a Variation. Each Variation, and the combined effect of all Variations, shall be taken into consideration in the assessment of the Time to Taking-Over.

Main Contractors right to vary the Works35.4The Main Contractor shall have the right to request and subsequently order Variations to the Subcontract Works from time to time during the performance of the Subcontract until the complete Subcontract Works have been taken over, or if the Variation is agreed by the Subcontractor, until the end of the last Defect Correction Period.35.5Variations may not, without the agreement of the Subcontractor, consist of the omission of any part of the Subcontract Works in order to have that work executed by parties other than the Subcontractor. Where there is a Variation resulting in an omission of a part of the Subcontract Works, the value of the Variation will include compensation for underrecovered overheads and profit of the Subcontractor.

Subcontractors right to refuse a Variation35.6The Subcontractor may refuse to carry out any Variation that:(a)is unrelated to the Subcontract Works; (b)is not technically practicable; or(c)will reduce the safety of the Subcontract Works.

Subcontractor-proposed Variations35.7The Subcontractor may at any time propose to the Main Contractor any Variation, including any Variation that, in the Subcontractors opinion, will improve the Subcontract Works, including, without limitation, the quality, efficiency or safety of the Works, or should reduce the expense to the Main Contractor of executing the Subcontract Works. The Subcontractor shal