Privy Council reinforces strict approach to FIDIC variations and claims

The Board held that a contractor cannot recover additional payment for variations where the work falls within the scope of a lump sum design and build contract. The decision also confirms that failure to comply with the contractual claims procedure, including the notice requirements in clause 20.1, will bar recovery.

Why this matters

The decision is significant for parties using FIDIC contracts. It makes clear that courts will prioritise the agreed contractual framework over informal project practices, and that contractors must comply strictly with the notice requirements in clause 20.1 if they wish to recover additional payments. Importantly, the Privy Council confirmed that the time bar in clause 20.1 operates as a strict condition precedent, meaning failure to issue a compliant notice within the required timeframe will prevent recovery altogether. There is a similar time bar provision in NEC4, so this judgment may have wider application beyond FIDIC. The judgment also reinforces the risk allocation inherent in lump sum design and build contracts, where contractors assume the risk of pricing the works.

Background

Uniform Building Contractors Ltd (UBC) entered into a contract with the Water and Sewerage Authority of Trinidad and Tobago (WASA) to design, supply and install approximately 28 km of pipeline.

The contract incorporated the FIDIC YB, together with amended conditions, employer’s requirements and a bill of quantities. As is typical under the FIDIC YB, this was a design and build lump sum contract, meaning the contractor assumed responsibility for both design and execution of the works.

During the project, disputes arose in respect of four categories of work which UBC said had been instructed as variations:

1. laying pipework in the roadway rather than the verge;
2. removal of excavated material said to be unsuitable for backfill;
3. importation of suitable backfill material; and
4. night work.

UBC claimed that these changes increased its costs and sought additional payment.

The High Court rejected the claim in full. However, the Court of Appeal overturned that decision and awarded UBC over TT$13 million, largely based on evidence from the engineer that the contested works had been treated on site as variations.

WASA appealed to the Privy Council.

Were the works variations?

The central issue before the Board was whether the four disputed items constituted variations under the FIDIC YB.  The Board emphasised that this question must be determined primarily by reference to the contract itself, rather than the way the project was administered on site.

Under the FIDIC YB, the contract price is the accepted lump sum contract amount. The contract confirmed that the contractor was deemed to have:

• inspected and examined the site;
• obtained all necessary information regarding ground conditions and risks; and
• satisfied itself as to the sufficiency of the contract price.

The contractor also carried full design responsibility.

In that contractual context, the Board held that none of the disputed items were variations. The judgment reinforced the principle that work already included, expressly or impliedly, within the contractual scope cannot be re-characterised as a variation, because they  prove more costly or difficult than expected.

A key aspect of the Court of Appeal’s decision had been reliance on the evidence of the engineer, who considered the works to be variations.  The Board held that this approach was incorrect. While the engineer’s evidence may be relevant to factual matters, it cannot override the contractual position.  Sir Peter Coulson emphasised that whether work constitutes a variation “is a function of the contract terms”, criticising the Court of Appeal’s failure to analyse the relevant contractual provisions.

Failure to follow the claims procedure

Even if the disputed items had been variations, UBC faced another significant obstacle: it had not complied with the contractual claims procedure.

Clause 20.1 of the FIDIC YB requires the contractor to notify the engineer of any claim:

• as soon as practicable, and
• in any event within 28 days of becoming aware of the relevant event or circumstance.

If notice is not given within that period, the contractor loses any entitlement to additional payment and the employer is discharged from liability.

The Board had little difficulty concluding that clause 20.1 operates as a condition precedent. It described clause 20.1 as being drafted in classic condition precedent terms – effectively an ‘if X, then Y’ structure.

UBC had not complied with that requirement. That failure was fatal to the claim.

Another significant FIDIC decision 

While Uniform emphasised the importance of strict compliance with contractual procedures, the recent Privy Council decision of Gordon Winter Company Ltd v NH International (Caribbean) Ltd [2025] UKPC 52 addressed a different issue: how courts will approach payment for varied works where the contractual valuation mechanism is unclear or incomplete.

The dispute concerned piling works for the construction of a ten-storey Ministry of Education building in Trinidad and Tobago, with NH International (Caribbean) Ltd (NH) as the main contractor, and Gordon Winter Company Ltd (GW) as the piling subcontractor. The piling works proved more difficult than anticipated due to unexpected soil conditions, which required changes to the original specifications. Although these changes were treated as variations, no rates or prices were agreed for the varied works. GW carried out the piling works but was not paid in full, ultimately leaving the site.

GW claimed there was no contract with NH but was entitled to a fair sum on a quantum meruit basis. NH counter-claimed, arguing that a contract had been entered into based on FIDIC standard terms, but that it had been breached by GW entitling NH to damages. The trial judge held that there had been a contract (based on FIDIC 1999 standard terms) therefore rejected GW’s quantum meruit claim. However, they still awarded GW damages on a contractual basis, despite GW having consistently denied that any contract existed. NH appealed to the Privy Council arguing that this was procedurally unfair, as it had not been required to defend a contractual damages claim, as none had been pleaded by GW.

On appeal, the Board upheld the existence of a contract and held GW was entitled to recover payment. Although the claim had been framed as one based on “unjust enrichment” quantum meruit (not in contract), the Board considered it overly formalistic to deny recovery where both parties accepted that work requested by NH had been done by GW.  In those circumstances, GW was entitled to payment on a “contractual” quantum meruit basis.

The Board also emphasised that the FIDIC framework itself provides a mechanism for valuing varied work where no agreed rate exists, allowing valuation by reference to reasonable cost and profit (clause 12.3 of FIDIC 1999).

Practical takeaways

For contractors and employers alike, these decisions highlight the importance of properly documenting variations, payment mechanisms and procedural compliance throughout the life of a project.

While Uniform confirms that FIDIC claims procedures, particularly clause 20.1, operate as a strict condition precedent, Gordon Winter demonstrates that courts may, in limited circumstances, allow recovery where the contractual framework for valuation remains operative despite procedural non-compliance.

Taken together, Uniform and Gordon Winter reinforce that contracts will be enforced as written and serve as a timely reminder that parties using FIDIC should focus closely on contract administration as well as technical delivery.

In terms of the impact for contracts governed by English law, whilst Privy Council judgments are not binding in England and Wales, they are considered as persuasive authority particularly given that the Board is largely composed of senior UK judges.