Global Vantage: Subcontracting under the FIDIC Yellow Book

As many of you will know, in December 2019, the International Federation of Consulting Engineers (“FIDIC”) launched the latest update to its suite of standard forms of contract.

Amongst FIDIC’s newest additions to its contractual suite is the “Conditions of Subcontract for Plant and Design (Yellow Book 1999), 1st ed (2019)” (the “Subcontract”), intended for use where the main contract is based on FIDIC’s “Conditions of Contract for Plant & Design-Build (1st Ed, 1999) (the “Yellow Book 1999”).

It is notable that FIDIC has chosen to base the Subcontract on the 1999 edition of the Yellow Book, rather than its more recent 2017 revision. In doing so, FIDIC appears to acknowledge, amongst other things, that the Yellow Book 1999 remains in more widespread use than its successor. Given the industry’s traditionally conservative approach to updating contracts, we expect this to be the reality for many years to come.

In 2011, FIDIC issued a similar subcontract for use with the Red Book 1999, and FIDIC’s latest subcontract is said to share mainly similarities with this 2011 release. In fact, variations between the two contracts appear only where necessary to reflect differences in the two forms of main contract generally.

Unsurprisingly, under the Subcontract, the subcontractor is deemed to have full knowledge of the terms of the main contract (subject to a list of defined exceptions). Therefore, careful consideration of the Subcontract and main contract will be necessary to ensure that the Subcontract’s terms are no more onerous than those of the main contract, and that both contracts can be read together.

We welcome the introduction of FIDIC’s latest subcontract, with the release evidence of the important role that subcontracts play in ensuring a project’s success. We hope to see an equivalent subcontract announced for use in conjunction with the Yellow Book 2017 in due course.