General conditions of EDF contracts

by Ole SCOTT - LARSEN

When the ACP - EEC Council of Ministers met in Fiji in March of this year, an important instrument of new comparative international law was created. This legislation concerns the complex of conditions which will govern the way in which future contracts are awarded and implemented in EDF - financed projects. Its aim is to provide a single set of rules which will be applied uniformly to all contracts and projects carried out within the framework of the EDF.

The decision to adopt this legislation follows more than 10 years of drafting and negotiation on the part of the Commission and the ACP States - a length of time which is understandable, considering the ultimate goal: to combine the features of two major and distinctly different legal systems and traditions, i.e., Common law and Roman law, into one regulatory framework governing this area of activity.

At present, contracts are governed by various conditions, which depend largely upon where in the world the project is executed although the FIDIC rules in one form or another have been the predominant basic rules. This situation has led to a plethora of rules which have not always been easy to administer and which, over the years, have given rise to numerous disputes.

Furthermore, the uncertainty of the tenderer as to what his precise rights and obligations might be under any contract has had to be borne by the EDF in the form of the safety margin which the tenderer naturally has to build into his price.

It was therefore very much in the interests of all parties, administrators, contractors, suppliers and consultants alike, to have conditions which would be uniformly applied.

The new contract rules, known as the General Conditions of Contract, will apply in all ACP States when contracts are to be awarded for EDF - financed projects. For the tenderer this means greater legal certainty. Regardless of the geographical location of his potential project, the tenderer may be assured that when he tenders, the rules applicable will be the same wherever he goes. For the administration - both in the ACP States and in the EDF - only one set of rules will have to be applied, and the various difficulties of a contractual nature which may arise during the implementation of a project can now be dealt with in an uniform way.

The General Conditions of Contract are divided into five parts. The first document the General Regulations - sets out the rules for the tendering, selection and award of contracts. It regulates the relationship between the ACP State and the Commission and its Delegates, as well as the relationship between the ACP State and the tenderers for the contract in question. These General Regulations apply to all contracts regardless of their nature (Works, Supplies and Services), and derogations from these regulations are not permitted. In this way, openness is assured at a vital stage in a project, namely when a contract still does not exist.

Three more specific documents establish the rules for the implementation of Works, Supplies and Service contracts, respectively. They apply to the life cycle of a project, from the award of contract stage until the completion of the contract. These documents can, to a certain extent, be amended and modified through the Special Conditions of Contract, which are drawn up individually for each project and which reflect the special needs and nature of the project.

Finally, the fifth document governs conciliation and arbitration and sets out the procedures for the parties to follow in the event of a dispute arising between the contracting parties during the implementation of the project. The rules in this document are based on the internationally recognised UNCITRAL (United Nations Commission for International Trade Law) uniform rules for arbitration.

Although the General Conditions of Contract were adopted in March of this year, the actual entering into force still has to be decided. This decision is expected to be taken soon by the Article 193 Committee of Ambassadors, which was mandated to do so by the Council of Ministers.

O. S - L.