Background

The recent case of Panther Real Estate Development LLC (Panther) v. Modern Executive Systems Contracting LLC (MESC) [2022] DIFC CA 016 holds a set of facts which are all too familiar on projects across the GCC, including Qatar. The project was delayed, the contractor's applications for extensions of time (EOTs) were rejected, the parties attempted (but failed) to agree an MOU, the employer liquidated the security guarantees, the contractor suspended its works and the employer terminated the contract.

Whilst the court in this case considered matters from a UAE perspective, its view on the impact of implied obligations of good faith and prescription period in the context of reliance on contractual notice provisions will also be of interest to parties with contracts governed by the laws of Qatar.

Summary of the key considerations from the Appeal

The appeal case primarily concerned the court's interpretation of the notification requirements under the contract, and confirmed the following:

• The requirement to give notice of a claim within 28 days after a contractor became aware, or should have become aware, of the event or circumstance under Sub-Clause 20.1 is a condition precedent. If the contractor fails to issue its notice within 28 days, it loses its right to an EOT and/or additional costs.
• The requirement to submit a fully detailed claim within 42 days after a contractor became aware, or should have become aware, of the event or circumstance under Sub-Clause 20.1 is not a condition precedent (unless otherwise expressly stated in the contract) but the Engineer can take any such failure into account when making its determination.
• Where Sub-Clause 3.5 is amended to include wording such as: "Each Party shall give effect to each agreement or determination unless one Party notifies the other of his dissatisfaction with a determination within 14 days of having received it. Either Party may then refer the dispute to be settled in accordance with Clause 20 [Claims and Disputes]." (emphasis added), this amendment is a condition precedent to being able to challenge the Engineer’s decision in court.
• Where the parties willingly agree clear notice provisions within the contract, with no scope for the postulated implied term or obligation of good faith, parties must comply with the terms to which they have agreed.
• The wording of the EOT clause within the 1999 FIDIC Red Book is clear in what the contractor must do to be awarded an EOT and thereby reduces or eliminates the liquidated damages payable by the contractor if there is delay.
• Good faith requirements in law do not prohibit an employer from claiming liquidated damages for the part of the delay that is attributable to the employer’s own actions. This emphasises the importance of a contractor’s project team having a detailed understanding of the contract and putting in place robust project-specific procedures to ensure compliance with the administrative provisions.
• Provisions of the law that deal with limitation or prescription periods which apply to actions for breach of contract do not apply to notice provisions such as those found in Sub-Clause 20.1 of a 1999 FIDIC-based contract.

This case is a stark reminder that contractors should carefully review their contracts and comply with the notice provisions to avoid any unexpected surprises.