ICC Model Subcontract ICC Model Back-To-back (

706 couv_Layout 1 18/04/11 11:23 Page1
The latest in the ICC series of successful international model business contracts,
the ICC Model Subcontract provides a complement to the well-received ICC Model
Turnkey Contract for Major Projects, which was published in 2007. The ICC Model
Subcontract is based on a “back-to-back” or “flowdown” contractual technique in relation
ICC Model
to its parent ICC turnkey model, but is intended to be flexible enough to be used as a
subcontract to other standard forms of contract.
Subcontract
ICC Model Subcontract

Like the turnkey model, the ICC Model Subcontract is uniquely balanced, by taking an
equitable approach to both contractors and subcontractors, while providing for price and
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scope certainty, swift and effective dispute resolution and complete, informed and
responsible allocation of risks.
Balance between the parties has been provided for through the inclusion of a good faith
concept, explanation of the purpose of certain provisions to avoid misinterpretation, and
the use, where possible, of equal and mirrored obligations of the parties.
The ICC Model Subcontract is equally intended for use in public and private
projects – whether tendered or individually negotiated, as a part of the “BOT” project
documentation, and in externally financed projects. This model was prepared with the
aim to further the proper functioning of the construction industry, particularly within the
context of international development.
The International Chamber of Commerce, the World Business Organization, based

in Paris, is the global leader in the development of standards, rules and reference guides for
international trade.
ICC’s International Contracts Series

ICC Model Turnkey Contract for Major Projects • ICC Short Form Model Contracts
ICC Model International Franchising Contract • ICC Model Mergers & Acquisitions Contract
ICC Model International Sale Contract • ICC Model Selective Distributorship Contract
ICC Model Confidentiality Agreement • ICC Model International Trademark Licence
ICC Model for Technology Transfer • ICC Model Occasional Intermediary Contract
ICC Model Commercial Agency Contract • ICC Model Distributorship Contract
ICC Model Contract for Turnkey Supply of Industrial Plant • ICC Force Majeure & Hardship Clause
ICC Legal Handbook for Global Sourcing Contracts
ICC Publication No. 706E

ISBN: 978-92-842-0094-8
ICC Business Bookstore
iccbooks.com
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ICC MODEL
SUBCONTRACT
ICC Model Back-to-
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back Subcontract to
ICC Model Turnkey
Contract for Major
Projects
2
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Copyright © 2011
International Chamber of Commerce
All rights reserved. This collective work was initiated by ICC which holds all rights as
defined by the French Code of Intellectual Property. No part of this work may be
reproduced or copied in any form or by any means - graphic, electronic, or
mechanical, including photocopying, scanning, recording, taping, or information
retrieval systems - without written permission of ICC SERVICES, Publications, except
by the purchaser of this ICC Publication No.706, for his own personal use. The
software being part of the publication is subject to this provision.
ICC SERVICES
Publications
33-43 avenue du Président Wilson
75116 Paris
France
store.iccwbo.org
ICC Publication No. 706E

ISBN 978-92-842-0244-7
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foreword
Foreword
International turnkey construction projects are often complex transactions, requiring

correspondingly complex legal documentation. Moreover, many such major
construction projects are an important element in international development, and it
is vital that the arrangements put in place be durable, clear and equitable.
ICC has prepared this model international subcontract for use in major turnkey
projects, in order to provide subcontractors and main contractors with a unique,
balanced platform that is fair to all parties. At the same time, the model
accommodates the desire of all parties for price and scope certainty, the need for swift
and effective dispute resolution, and the need for complete and informed allocation
of risks.
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The form is equally intended for use in public and private contracts whether tendered
or individually negotiated, as a part of the “BOT” project documentation, and in
externally financed projects.
This model contract, one of a successful series produced by ICC’s Commercial Law
and Practice Commission under the chairmanship of Fabio Bortolotti (Italy), has
benefited from the active participation of the following members of the
Subcontracting Task Force, co-chaired by Robert Knutson (UK) and Eric Eggink
(Netherlands): Jane Davies-Evans (France), Francine Gurral (France), José Gutiérrez
Diaz (Germany), Günther Horvath (Austria), Robina Kaye (France), Hans-Volkhard
Lempp (Germany), Andrea Maggipinto (Italy), Gabriela Merla (France), Jens Machoy
(Switzerland), Isabelle Smith Monnerville (France), and Tim Reynolds (UK).
Secretariat oversight was provided by ICC Senior Policy Manager Emily O’Connor.
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ICC MODEL BACK-TO-BACK SUBCONTRACT TO TURNKEY CONTRACTS FOR

MAJOR PROJECTS
.....................................
(Main Contractor)
and
.....................................
(Subcontractor)
This Subcontract contains or incorporates an arbitration clause and clauses limiting

and/or excluding the liability of one or both of the Parties in certain circumstances.
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Table of Contents
Table oF ConTenTs
Foreword ..........................................................................................................................................3
Introduction........................................................................................................................9
Subcontract Form.............................................................................................................10
ChapTer 1
GENERAL AND PRELIMINARY ARTICLES
Art 1 Definitions .......................................................................................................... 13

Art 2 Entry into force of the Subcontract/Flowdown ................................................19
Art 3 Good faith and fair dealing ................................................................................20
Art 4 Language of the Subcontract ..............................................................................20
Art 5 Applicable laws.................................................................................................... 21
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Art 6 New or changed laws, standards, regulations, etc........................................... 21

Art 7 Interpretation of the Subcontract.......................................................................21
Art 8 Assumptions; statements about distances, measures, dimensions and ........ 22
quantities
Art 9 Obtaining permits, planning and other permissions ...................................... 22
Art 10 Guarantees, bonds or other securities .............................................................23
Art 11 Demands under guarantees, bonds or other securities...................................23
Art 12 No agency – independent contractor............................................................... 24
ChapTer 2
THE PARTIES’ OBLIGATIONS
Art 13 The Main Contractor’s obligations....................................................................25
Art 14 The Subcontractor’s obligations........................................................................25
Art 15 Co-operation with other contractors and co-ordination of activities.............26
Art 16 Quality assurance ...............................................................................................27
Art 17 Staff and labour ..................................................................................................27
Art 18 Representatives of the Parties ...........................................................................28
Art 19 Each Party’s duty to notify..................................................................................28
ChapTer 3
THE EXECUTION OF THE SUBCONTRACT
Art 20 Scope of the Subcontract Works and Subcontract Price..................................29

Art 21 Setting out on the Site ........................................................................................29
Art 22 Site information for the Subcontractor’s Design and use................................29
Art 23 Unexpected artificial or physical conditions or obstructions..........................30
Art 24 Safety.....................................................................................................................32
Art 25 Public convenience..............................................................................................32
Art 26 Environmental protection...................................................................................32

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Art 27 Services or supplies to be supplied by the Main Contractor............................33

Art 28 Main Contractor/Employer-supplied Plant, materials or Equipment...............34
Art 29 Responsibility for shipping and storing goods and materials..........................34
Art 30 Ownership of goods, material, Plant and Equipment/liens, trusts and similar
claims .................................................................................................................34
Art 31 Keeping the Site clear .......................................................................................35
ChapTer 4
DESIGN - RESPONSIBILITY AND MANAGEMENT, VARIATIONS
Art 32 General allocation of responsibility of the Parties for the Design...................36

Art 33 The Design review process ................................................................................37
Art 34 Intellectual property rights.................................................................................39
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Art 35 Variations and changes to the Subcontract Works............................................41
ChapTer 5
COMMENCEMENT, THE TIME TO TAKING-OVER, SCHEDULING AND PROGRESS
Art 36 Commencement, Time to Taking-Over and extensions of time.......................45

Art 37 Delay Damages ....................................................................................................47
Art 38 Schedule of Subcontractual Dates, time schedule and reporting progress.....48
Art 39 Progress reports ..................................................................................................49
ChapTer 6
SUBCONTRACT PRICE AND PAYMENT
Art 40 The Subcontract provides the exclusive remedies for all claims between
the Parties......... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Art 41 Payment of the Subcontract Price.......................................................................50
Art 42 Applications and procedure for payment..........................................................50
Art 43 VAT/GST or equivalent consumption taxes........................................................52
Art 44 Financing charges for late recognition of rights between the Parties.............53
ChapTer 7
COMPLETION AND TAKING-OVER OF THE SUBCONTRACT WORKS
BY THE MAIN CONTRACTOR
Art 45 Completion .........................................................................................................54

Art 46 Commissioning and Performance Tests.............................................................55
Art 47 Taking-Over/Provisional Acceptance.................................................................56
Art 48 Assessment procedures after Taking-Over .......................................................58
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ChapTer 8
DEFECT CORRECTION PERIOD
Art 49 The Contractor’s obligation to finish the Subcontract Works and correct
Defects.................................................................................................................59
ChapTer 9
ALLOCATION OF RISK AND RESPONSIBILITY, LIMITATION OF AND EXCLUSIONS
FROM LIABILITY
Art 50 General principles of risk allocation and responsibility.....................................63

Art 51 Purpose of the limitation and exclusion Articles...............................................63
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Art 52 Liabilities of the Parties and their reciprocal limitations and exclusions........63
Art 53 Time limit for liability ..........................................................................................64
Art 54 Extension of limitations to and exclusions from liability to certain third parties...64
Art 55 Additional Warranties..........................................................................................65
ChapTer 10
FORCE MAJEURE AND TERMINATION OF THE SUBCONTRACT
Art 56 Force Majeure ...................................................................................................66

Art 57 Suspension and/or termination of the Subcontract..........................................69
ChapTer 11
INSURANCE
Art 58 Insurance..............................................................................................................74
ChapTer 12
MISCELLANEOUS PROVISIONS
Art 59 Confidentiality.......................................................................................................78
Art 60 Bribery, gifts, inducements or rewards...............................................................79
Art 61 Entire agreement, severability and amendments to the Subcontract.............80
Art 62 Joint and several liability .....................................................................................81
Art 63 Subcontractor notification and responsibility and assignment of
Subcontractor’s obligations................................................................................81
Art 64 Assignment of the Subcontract by either Party ................................................82
Art 65 Communications, including Notices and consents..........................................82
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ChapTer 13
CLAIMS, DISPUTE RESOLUTION AND ARBITRATION
Art 66 Exclusive remedies - All claims of all types are to be determined by these
provisions.............................................................................................................84
Art 67 Supplemental provisions relating to arbitration................................................86
suggesTed appendICes
1. Scope of Subcontract Works

2. Sample Schedule of Subcontractual Amendments
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3. Main Contractor’s Requirements

4. Main Contractor’s Equipment
5. Subcontractor’s Equipment
6. Sample Advance Payment Guarantee (sample appended p. 88)
7. Sample Performance Guarantee (sample appended p. 90)
8. Subcontract Works in Relation to Original Points, Lines and Levels of
Reference
9. Prices for Services Supplied by the Main Contractor
10. Daywork Schedule
11. Notice to Proceed
12. Limit on Delay Damages
13. Schedule of Subcontractual Dates
14. Form of Letter of Credit or similar
15. Sample Schedule of Subcontractual Payments and Milestone Guidance
Notes (sample appended p.92)
16. Payment Application Format (sample appended p.95)
17. Commissioning Activities
18. Guidelines Relating to the Performance Tests (sample appended p.96)
19. Subcontractor’s Access after Taking-Over (sample appended p.98)
20. Form of Taking-Over Certificate
21. Form of Certificate of Final Acceptance
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InTroduCTIon
The ICC MODEL TURNKEY CONTRACT FOR MAJOR PROJECTS was published in 2007
and was well received in the international contracting world. That form was published
by the ICC Commission on Commercial Law and Practice which is, like 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. The forms have covered a wide range of
international transactions, including the turnkey supply of an industrial plant, and
have all been distinguished by the imperative that they be fair to all parties to the
transaction involved, as ICC represents all parties to all transactions.
Globalization and its corollary of increased competition are bringing about changes in
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the ways companies organize themselves, including the outsourcing of non-strategic

activities, the creation of networks and increased recourse to subcontracting.
As a result, subcontracting has become a standard practice in all business

organizations and projects and hence, accounts for a substantial portion of the
economy as a whole in many countries.
This, and the consequences in terms of employment and credit, explains why many
jurisdictions regulate the way subcontracting agreements are structured and/or
financed by public policy rules. For example “pay when paid” clauses are voidable in
a number of countries and payment guarantees for the subcontractor can be
conditions of validity of the subcontract which cannot be contracted out.
Parties to an international subcontracting agreement should accordingly exercise the

highest vigilance in the verification of applicable public policy rules in all jurisdictions
concerned by the project at hand.
This is all the more necessary as there is no internationally accepted common legal
definition and delineation of the concept of subcontracting. The delineation between
subcontract and sale agreements can, in particular, vary considerably from country to
country.
The aim of ICC in producing this form of contract is to meet the need for a fairer and
more balanced contract between the parties to subcontracts in major construction
projects, while recognizing the desire of all parties for price and scope certainty, the
need for swift and effective dispute resolution, the need for complete, responsible
and informed allocation of risks, “like for like” tenders, and true competition
internationally. ICC is of the view that contracts which are unfairly biased in favour of
one party or the other will eventually create more problems than they solve.
The Subcontract Drafting Group has chosen to draft this Model form as a “back-to-
back” contract to the Main Contract between the Employer and the Main Contractor,
such “back-to-back” or “flowdown” contractual technique being one of the common
legal methods of subcontracting. As the concept of subcontract supposes that a main
contract exists, the parties will be well advised to verify, in all circumstances, whether
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or not an approval and/or notification of the Employer should be secured on the

Subcontract or Subcontractor. The Subcontract Drafting Group has given close
attention to possible interfaces between the main and the subcontract in order to take
into account the protection of the interests of the three parties – the Employer, Main
Contractor and Subcontractor.
While this Subcontract uses some of the language of its parent Turnkey contract, the
Subcontract Drafting Group hopes that the form will be flexible enough to be a real
option as a subcontract to any other standard form of contract and has been thought
out with this in mind.
In line with this objective of generality, the Subcontract Drafting Group has
deliberately elected not to recommend one or the other various operational
delineation methods which exist in various industry traditions such as tables of split
of works or RASI (Responsibility, Approval, Support and Inform) distributions of items
of work.
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Parties should in each case ensure that a bespoke delimitation of their respective
responsibilities and a method of resolution of unavoidable delimitation issues are
included in their agreement. The Subcontract Drafting Group has earmarked
suggested Appendix 1 as the place where the parties should include such provisions,
according to the applicable best industry practices.
Subcontract Form of Agreement

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 authorized 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
unless otherwise specified, procure, supply, execute, install, commission
and complete on a turnkey basis the Subcontract 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.
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Introduction
IT IS AGREED as follows:
1. The Subcontractor will design unless otherwise specified, 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 hereto1; and
2. The Main Contractor will pay the Subcontractor the price of
________________________2 (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.
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
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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 3 ; and
(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.
1 Parties need to define the scope of work to be governed by the Subcontract and modify this provision
accordingly.
2 Sometimes the Subcontract Price is set out in an Appendix to assist in keeping it confidential.
3 Parties need to define the scope of work to be governed by the Subcontract and modify this provision
accordingly.

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Whereas the Parties have executed this Subcontract by duly authorized

representatives on the day and year first above written. 4
MAIN CONTRACTOR
NAME
Witness
SUBCONTRACTOR
NAME
Witness
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4 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.
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general Terms and CondITIons oF

subConTraCT
ChapTer 1
general and prelImInary arTICles
article 1 definitions
1.1 As 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
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requires otherwise. If a word or phrase is capitalized, 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 herein below 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.
“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.
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“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 Subcontractor’s 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.
“DB” means the Ad Hoc Dispute Board appointed under this Subcontract.
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“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 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 organization of which it is a part and that has separate legal
personality.
“Employer’s Requirements” refers to the Employer’s Requirements in the

Main Contract between the Main Contractor here and the Employer, 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.
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“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 Contractor’s 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
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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 Works, as defined in the
Main Contract.
“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 Contractor

in the Main Contract, its agents, assignees agreed by the Employer and the legal
successors in title to this or these person(s). If the Contractor named in the
Main Contract does not have separate legal personality under the laws
governing its status, the Main Contractor includes any organization of which it
is a part that does have separate legal personality.
“Main Contractor’s Equipment” means any Equipment provided by the

Main Contractor for the Subcontract Works and/or as may be set out in an
Appendix.
“Main Contractor’s Personnel” means physical persons in the employ of or

seconded to the Main Contractor and acting for it, or other persons authorized
to act for the Main Contractor in relation to the Subcontract Works.
“Main Contractor’s Requirements” means the document(s) sent to the

Subcontractor, prior to the Reference Date, setting out the Main Contractor’s
requirements for the Subcontract Works, as included in the Subcontract, and set
out in an Appendix (if any), and any Variations. The Main Contractor’s
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.
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“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 Contractor’s 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 intended to have effect under this

Subcontract.
“Notice to Proceed” means the notice given under Article 36.3, which sets the
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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
Employer is developing, of which the (Main Contractor’s) 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 66.3.
“Schedule of Milestones” means the sample schedule which forms an

Appendix hereto. “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.
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“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 41.2, and which forms an Appendix hereto.
“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,
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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.5
“Subcontractor” means the legal or natural person(s) named as Subcontractor

in the Subcontract, its agents, its subcontractors, its assignees agreed by the
Main Contractor and the legal successors in title to this or these person(s).
5 The parties can determine the scope of the Subcontract Works of the Subcontractor in RASI form
as set out in an Appendix. This form is normally used in industrial subcontracting but can also be
used in other types of subcontracting. In construction subcontracting, the parties usually use the
form of split of works.

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“Subcontractor’s 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.
“Subcontractor’s Equipment” means the Equipment provided by the

Subcontractor for the Subcontract Works and/or as may be set out in an
Appendix.
“Subcontractor’s Personnel” means physical persons in the employ of or

seconded to the Subcontractor and acting for it, or other persons authorized to
act for the Subcontractor in relation to the Subcontract Works.
“Subcontractor’s Variation Proposal” has the meaning set out in Article

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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 either’s 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 Subcontractor’s tender (Subcontractor’s 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.
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“Variation” includes any change to the 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 2 entry into force of the subcontract/Flowdown
2.1 This 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.6
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Flow Down of the Main Contract

2.2 The Subcontractor expressly confirms that it is bound to follow and give effect
to the Main Contract provisions as if it were the Main Contractor to the extent
the Subcontract Works are concerned, save where expressly stated otherwise in
this Subcontract.
2.3 Unless 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.
Recording Direct Instructions from the Employer or the Employer’s

Representative
2.4 Should the Employer or the Employer’s 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 15 Days from the Subcontractor’s notice,
either confirm, amend or reject such direct instruction in writing. Where the
Main Contractor confirms or amends the Employer’s or the Employer’s
Representative’s direct instruction, such confirmed or amended direct
instruction shall be deemed a Main Contractor’s Instruction. If the Main
Contractor does not confirm or rejects the Employer’s direct instruction, the
Subcontractor shall not follow the instruction. If the Instruction constitutes a
Variation, Article 35 shall apply.
6 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.

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2.5 If the Main Contractor receives from the Employer any Notice and particulars of
an Employer’s claim which concerns the Subcontractor, the Main Contractor
shall immediately send a copy to the Subcontractor. The Subcontractor shall
provide all reasonable assistance to the Main Contractor in relation to the
Employer’s claim.
article 3 good faith and fair dealing

3.1 In 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.
3.2 Good 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
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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 other’s activities; and
(e) respond to enquiries in a timely manner, which, if possible, will not

impede the progress of the Subcontract Works.
3.3 Whenever 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 4 language of the subcontract

4.1 Unless 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.
4.2 Unless otherwise agreed, the language and communication provisions of the
Main Contract shall apply.
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article 5 applicable laws
Governing substantive law

5.1 This Subcontract shall be governed by and construed in accordance with the
law(s) agreed by the Parties in Appendix [__], Schedule of Subcontractual
Amendments.7 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.
Laws and regulations of the Country

5.2 The 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.).8
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article 6 new or changed laws, standards, regulations, etc.

6.1 If 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.
6.2 In 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 7 Interpretation of the subcontract

7.1 The 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:
7 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.
8 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.

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(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 Contractor’s Requirements;
(5) The Main Contract Conditions;
(6) The Employer’s Requirements as applicable to the Subcontract Works;
(7) The Tender;
(8) The Assumptions (if any); and
(9) Any other documents forming part of the Subcontract.
7.2 The higher priority interpretation shall be adopted only to the extent required
to deal with an inconsistency. Specific terms agreed take priority over general
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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 8 assumptions; statement about distances, measures,

dimensions and quantities
8.1 If 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.
8.2 It 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 9 obtaining permits, planning and other permissions

9.1 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.9
9 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.
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9.2 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 10 guarantees, bonds or other securities

10.1 The 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.
10.2 Unless 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
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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 11 demands under guarantees, bonds or other securities

11.1 Neither 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 it is entitled under the
Subcontract, or for its breach.
11.2 Each 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 Party’s proper entitlement.
11.3 Unless 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
Certificate of Final Acceptance. 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.
11.4 To 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.
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article 12 no agency - independent contractor

12.1 The 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.
12.2 The Subcontractor shall be an independent contractor with respect to 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.
12.3 Nothing in this Subcontract creates a contractual relationship between the

Subcontractor and the Employer.
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ChapTer 2
The parTIes’ oblIgaTIons
article 13 The main Contractor’s obligations

13.1 This Subcontract is a reciprocal contract with each Party owing obligations to
the other Party.
13.2 The Main Contractor’s 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 Subcontractor’s performance of the
Subcontract Works.
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Providing the Site

13.3 The 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 gives Notice to the Main Contractor they are required.
13.4 Unless 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 give Notice
to the Subcontractor accordingly.
article 14 The subcontractor’s obligations

14.1 The 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.
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14.2 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 the design, procurement, supply,
execution, commissioning, testing and Completion of the Subcontract Works
and dealing with any Defects therein.
Access to the Subcontract Works

14.3 The Subcontractor shall permit the Main Contractor’s 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.
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article 15 Co-operation with other contractors and co-ordination

of activities
15.1 The 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
Employer’s Requirements.
15.2 The 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 Subcontractor’s own work, allow appropriate opportunities for
carrying out work to:
(a) the Main Contractor’s or Employer’s Personnel;
(b) any others contractors employed by the Main Contractor or by the

Employer; 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.
15.3 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 Main Contractor for such Costs.
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article 16 Quality assurance

16.1 The 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.
article 17 staff and labour
Employment of Subcontractor’s staff and labour

17.1 Unless 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.
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17.2 The 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 labour

17.3 The Subcontractor shall provide and maintain the facilities for its own staff and
labour.
Health, welfare of staff and labour

17.4 The 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 Subcontractor’s staff
and labour.
Customs of the Country

17.5 Each Party shall have due regard and respect for religious practices, days of rest
and other recognized customs of the Country.
Disruptive conduct
17.6 Each Party shall be responsible for taking all reasonable measures to prevent
unlawful, riotous or disruptive conduct amongst its staff and labour.
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17.7 All of the main sub-subcontracts involving work on the Site shall contain the
provisions of this Article 17, and each Party shall in any event ensure and be
responsible for observance of the provisions of this Article by its subcontractors.
article 18 representative of the parties

18.1 Each 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.
18.2 The 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.
18.3 The Parties’ Representatives shall, unless parts of their authority are specifically
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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.
18.4 The 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 Party’s 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 Party’s Representative.
article 19 each party’s duty to notify

19.1 Without 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 Party’s
documents and the Main Contractor’s Requirements and the Employer’s
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 Subcontractor’s
Documents or the Subcontract Works, the provisions of Article 35 shall be
applied as necessary.
19.2 Save for the duty to give Notice, the Subcontractor shall not be liable for any
errors, faults or Defects in the Main Contractor’s Requirements and the
Employer’s 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 Subcontractor’s Documents or
work.
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ChapTer 3
The exeCuTIon oF The subConTraCT
article 20 scope of the subcontract works and subcontract price

20.1 Both 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.
20.2 Separate agreements may be made at any time for construction of other works
or matters not covered by the scope of this Subcontract.
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article 21 setting out on the site

21.1 The 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.
21.2 Unless 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 22 site information for the subcontractor’s design and use

22.1 The Subcontractor should have informed itself in an objectively reasonable way
about the risks it will face.
22.2 In 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
Contractor’s 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 Contractor’s possession.
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22.3 The 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.
22.4 The 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 23 unexpected artificial or physical conditions or

obstructions
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23.1 The Subcontractor shall give Notice to 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.
23.2 If 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.
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Use of the Method Statement to determine the time or cost implications

under this Article
23.3 Whenever 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-
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Over sought is directly necessitated by the conditions aforesaid.
23.4 Where, 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

interest
23.5 All 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 Subcontractor’s Personnel or other persons from removing or
damaging any of these finds.
23.6 The Subcontractor shall, upon discovery of any such finding, promptly give
Notice to the Main Contractor, who shall issue Instructions for dealing with it.
If the Subcontractor suffers delay and/or incurs Costs, the Subcontractor shall
give a further Notice to the Main Contractor and shall be entitled to an
extension of the Time to Taking-Over affected by the discovery, and payment for
the additional work in accordance with Articles 35 and 36.
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article 24 safety
24.1 To 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; and
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(d) if they are not provided by the Main Contractor or Employer, then, to the
extent they are necessary, 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 25 public convenience

25.1 The 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, Employer or of others.
25.2 The Subcontractor shall use reasonable efforts to prevent any access route
(including roads, bridges and water routes) from being damaged by the
Subcontractor’s traffic or by the Subcontractor’s personnel, save to the extent
such damage is caused by reasonable fair wear and tear. These efforts shall
include the proper use of appropriate vehicles and routes. Any such damage
caused by the Subcontractor shall be repaired by or on behalf of the
Subcontractor at its own expense.
article 26 environmental protection

26.1 Prior 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
their operations and will comply with the applicable environmental
legislation.10 If such problems seem likely to arise, the Parties will seek
guidance from the local authorities concerned.
10 It is advised that a study be carried out to determine whether or not the soil is polluted (a Phase I
study) before the Subcontractor begins to carry out its activities, or takes possession of the Site.
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26.2 The 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 the Employer or third parties.
26.3 The 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 Subcontract Works. This disposal shall be carried out in accordance with
the applicable regulations and in a fashion that is consistent with international
practices.
26.4 The Subcontractor is obliged to carry out the necessary activities to remove
wastewater generated during the development of the Subcontract Works, in
accordance with the Subcontract and applicable law. The Main Contractor shall
support the Subcontractor so it can comply with the applicable legislation.
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article 27 services or supplies to be supplied by the main

Contractor
27.1 The 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 Subcontractor’s Tender.
Payment for services provided by the Main Contractor

27.2 If 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.
27.3 In 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.
27.4 The 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.
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article 28 main Contractor/employer-supplied plant, materials or

equipment
28.1 The 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.
28.2 The Subcontractor shall visually inspect items upon receipt at such place, and
shall give Notice to the Main Contractor of any shortage, Defect or default; then,
either the Main Contractor shall immediately rectify any shortage, Defect or
default, or the Subcontractor (if the Subcontractor and the Main Contractor so
agree) shall carry out such rectification as a Variation. After visual inspection,
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such items shall come under the care, custody and control of the Subcontractor.
The Subcontractor's obligations of inspection, care, custody and control shall
not relieve the Main Contractor of liability for any undetected shortage, Defect
or default.
28.3 The 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.
article 29 responsibility for shipping and storing goods and

materials
29.1 Unless 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 30 ownership of goods, material, plant and

equipment/liens, trusts and similar claims
30.1 Unless 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. Temporary Subcontract Works and Subcontractor’s Equipment
remain the property of the Subcontractor. This Article 30.1 does not affect the
passing of risk.
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30.2 The 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 as described in Article
30.1 free and clear of any and all liens, claims, charges, security interests,
encumbrances and rights of its other subcontractors. In case of breach of this
warranty, the Subcontractor shall indemnify the Main Contractor against all
claims resulting from such breach. In such case, Articles 34.8 through 34.11
shall apply accordingly, with the necessary changes being made.
30.3 Each 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 Party’s own goods, materials, Plant or Equipment or Main
Contractor’s 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.
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article 31 Keeping the site clear

31.1 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 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.
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ChapTer 4
desIgn - responsIbIlITy and
managemenT, varIaTIons
article 32 general allocation of responsibility of the parties for the

design
32.1 Each Party shall be responsible for the elements of Design allocated to that Party
in the Subcontract.
32.2 The Main Contractor shall provide and be responsible for any information
reasonably required by the Subcontractor for the purposes of the
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Subcontractor’s development of any design allocated to it in the Subcontract

and the Main Contractor’s 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.
32.3 Without 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.
32.4 Unless otherwise agreed or is reasonable in the circumstances, the

Subcontractor shall carry out, and in accordance with the Subcontract 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.
32.5 The 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.
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article 33 The design review process

33.1 The 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 prepare

33.2 The Subcontractor shall prepare all Subcontractor’s Documents. Unless
otherwise stated in the Subcontract or allowed on a case-by-case basis, the
Subcontractor’s Documents shall be written in the ruling language. The
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Subcontractor’s 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.
33.3 The Subcontractor shall also prepare any other documents necessary to instruct
the Subcontractor’s Personnel.
Submission of specified Design documents

33.4 If the Subcontract describes the Subcontractor’s 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 period
33.5 Unless otherwise agreed, each review period shall not exceed 35 Days,
calculated from the Date on which the Main Contractor receives
Subcontractor’s Documents stated to be ready for review in accordance with
this Article 33. If the Subcontractor is not notified of a Subcontractor
Document 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 Design

33.6 If the Subcontractor’s 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 Subcontractor’s Document fails (to the extent stated and
as identified) to comply with the Subcontract. If the Subcontractor receives
such Notice and the Subcontractor’s 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.
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Variations to compliant Design

33.7 The Main Contractor may instruct material changes to the Subcontractor’s
Documents even if the Subcontractor’s Document complies with the
Subcontract. If the Subcontractor considers the change to be a Variation, the
Subcontractor shall give Notice to the Main Contractor and the Variation
provisions of Article 35 will apply.
Work before review

33.8 In 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 Subcontractor’s Documents to which the work applies. If the
Subcontractor chooses to commence work in respect of matters described in
such Subcontractor’s Documents without review, or prior to the end of the
review period, such work is done at the Subcontractor’s own risk.
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Contractor changes to Design

33.9 If the Subcontractor wishes to modify any Subcontractor’s Document that has
previously been submitted for review, the Subcontractor shall immediately give
Notice to the Main Contractor. Thereafter, the Subcontractor shall submit
revised Subcontractor’s Documents to the Main Contractor in accordance with
the review procedure pursuant to this Article 33.
Design errors
33.10 If errors, omissions, ambiguities, inconsistencies, inadequacies or other Defects
are found in the Subcontractor’s Documents at any time by any party, they and
the Subcontract Works shall be corrected by the Subcontractor at the
Subcontractor’s expense, notwithstanding any review under this Article 33.
Where because of errors, omissions, ambiguities, inconsistencies, inadequacies
or other Defects in the Subcontractor’s Documents the Main Contractor’s 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 through 52.6.
Samples
33.11 If 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 Subcontract Works.
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As-built drawings
33.12 The 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.
33.13 In 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 manuals

33.14 The Subcontractor shall carry out the training of Employer’s Personnel or such
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other personnel as specified in the Main Contract in the operation and

maintenance of the Subcontract Works to the extent specified in the
Subcontract.
33.15 Any training in addition to training specified in the Subcontract shall be

considered to be a Variation.
33.16 In sufficient time but in any event not later than 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 Contractor’s Requirements and Employer’s
Requirements.
33.17 Final operation and maintenance manuals will be handed over on a Date to be
agreed between the Parties.
article 34 Intellectual property rights

34.1 As between the Parties, the Subcontractor shall retain the copyright and other
intellectual property rights in the Subcontractor’s Documents and other Design
documents made by (or on behalf of) the Subcontractor.
34.2 Subject 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 Subcontractor’s 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.
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34.3 The 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 Subcontractor’s
Documents for the purposes of completing, operating, maintaining,
adjusting, repairing or demolishing the Subcontract Works; and
(c) in the case of Subcontractor’s 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.
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34.4 The Subcontractor’s Documents and other Design documents made by (or on
behalf of) the Subcontractor shall not, without the Subcontractor’s 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.
34.5 The 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.
34.6 As between the Parties, the Main Contractor shall retain the copyright and other
intellectual property rights in the Main Contractor’s 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
Contractor’s 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 Parties

34.7 The 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;
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(b) was the result of part (or all) of the Works being used in association or
combination with any thing not supplied by the Subcontractor; and/or
(c) was the direct result of the Subcontractor’s compliance with the Design
or Instructions of the Main Contractor.
34.8 Where a claim of infringement of intellectual property rights as referred to in

Article 34.7 is made against either Party and the Subcontractor is not liable to
indemnify the Main Contractor under that Article, then the Main Contractor
shall indemnify the Subcontractor against such claim and the provisions of
Article 34.11 shall apply with the necessary changes being made.
34.9 The obligation to indemnify set out in Articles 34.7 and 34.8 shall be subject to
the indemnifying Party’s right to mitigate the potential loss by acquiring
directly or indirectly the right to use the relevant intellectual property rights, or
by modifying the Design so it no longer infringes such rights or otherwise.
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34.10 The 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 infringement

34.11 Each Party shall promptly give Notice to the other Party of any Subcontract-
related claim of infringement of intellectual property rights made against it by
the Employer or any other third party. The indemnifying Party may, at its
expense, conduct negotiations for the settlement of such claim, and any
litigation or arbitration that may arise from it. The other Party or its
representatives shall not make any admission that might be prejudicial to the
indemnifying Party, unless the indemnifying Party has failed to take over the
conduct of the negotiations, litigation or arbitration within a reasonable time
after having been requested so to do.
article 35 variations and changes to the subcontract works
Variations – general principles

35.1 The 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.
35.2 Except to the extent that the Variation was necessitated by the Subcontractor’s
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.
35.3 The 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.
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Main Contractor’s right to vary the Works

35.4 The 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.
35.5 Variations 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.
Subcontractor’s right to refuse a Variation

35.6 The Subcontractor may refuse to carry out any Variation that:
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(a) is unrelated to the Subcontract Works;
(b) is not technically practicable; or
(c) will reduce the safety of the Subcontract Works.
Subcontractor-proposed Variations
35.7 The Subcontractor may at any time propose to the Main Contractor any
Variation, including any Variation that, in the Subcontractor’s opinion, will
improve the Subcontract Works, including, without limitation, the quality,
efficiency or safety of the Subcontract Works, or should reduce the expense to
the Main Contractor of executing the Subcontract Works. The Subcontractor
shall outline the foreseen benefits of any proposed Variation, including the
financial aspects. Any value of the benefits, unless otherwise agreed, will be
shared equally.
Procedure for Variations

35.8 If the Main Contractor requests a Variation, whether or not the Variation was
first suggested by the Subcontractor, the Main Contractor shall send to the
Subcontractor a Notice describing the Variation. If the Main Contractor so
wishes, the Subcontractor shall first give an estimate of the Cost of preparing a
Subcontractor’s Variation Proposal and time required for its execution.
35.9 After receipt of the Main Contractor’s request for a Variation and unless
otherwise agreed, the Subcontractor shall within 14 Days prepare and submit a
proposal (“Subcontractor’s Variation Proposal”) comprising:
(a) a description of the proposed Design and work to be executed;
(b) a program for the execution of the Variation;
(c) a proposal for any necessary modifications to the Time Schedule and the
Time to Taking-Over;
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(d) a lump sum price for the Variation (including a breakdown of the
elements it comprises, for informational purposes) or, if so requested by
the Main Contractor, a price estimate comprising quantities and either a
list of all-in unit prices or a list of prices per unit subject to the application
of a mark-up for general overheads and profit; and
(e) other elements of the Subcontract likely to be affected by the Variation.
If, however, the Subcontractor objects to the Variation with reference to

its right to refuse under Article 35.6, the Subcontractor shall, within
same period, instead of a Subcontractor’s Variation Proposal, submit a Notice to
the Main Contractor clearly describing the reasons for this refusal and, if
possible, proposing an alternative.
35.10 The Main Contractor shall make its decision on whether or not to proceed
with the Variation within 42 Days from receipt of the Subcontractor’s Variation
Proposal or Notice under Article 35.9 and give Notice to the Subcontractor of
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that decision forthwith. If the Main Contractor instructs the Subcontractor to

proceed with the Variation, but does not accept the Subcontractor’s Variation
Proposal, the Main Contractor shall state how the Subcontractor’s Variation
Proposal shall be amended and the reasons for and Cost consequences of the
changes to the Subcontractor’s Variation Proposal. The Subcontractor shall
then be obliged to carry out the Variation, but may refer the dispute over its
consequences to be settled in accordance with Chapter 13.
35.11 If the Main Contractor decides not to implement the Variation or if it fails to
order the Variation within 42 Days after receipt of the Subcontractor’s Variation
Proposal, then, unless the Variation was suggested in writing by the
Subcontractor, the Main Contractor shall be obligated to pay the Subcontractor
the Cost of preparing the Subcontractor’s Variation Proposal.
35.12 If the Subcontractor has objected to a Variation in accordance with the

requirements under Article 35.6, the Main Contractor shall not have the right to
instruct the Subcontractor to carry out the Variation, but may refer the dispute
to be settled in accordance with Chapter 13.
Disputed Variations
35.13 If the Parties disagree as to whether certain work or delivery of supplies or
materials, which the Main Contractor requires or required to be performed, is
already included in the Subcontractor’s obligations, and consequently whether
such work or deliveries constitutes a Variation, then the following procedure
shall be followed:
(a) The Main Contractor shall in a Notice to the Subcontractor describe the
work or delivery in question and give the reasons why, in the Main
Contractor’s opinion, it is included in the Subcontractor’s obligations.
Alternatively, the Subcontractor may produce a Notice stating why the
work or delivery in question is not within the scope of the Subcontract.
(b) Unless otherwise agreed, the Subcontractor shall then prepare a proposal
containing the information specified in Article 35.9, and, if it has not
already done so, shall give the reasons why, in the Subcontractor’s
opinion, the requested work or supplies constitute a Variation.
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(c) The Main Contractor may then instruct the Subcontractor to perform the
work or supplies in question. Such work or supply shall be regarded as a
disputed Variation.
(d) Either Party may then require the dispute to be settled in accordance with
Chapter 13.
(e) If the Subcontractor refuses to perform the work or supplies in

accordance with the requirements under Article 35.6, the Main
Contractor shall not be entitled to instruct the work or supplies to be
performed.
35.14 Any and all claims to additional payment, however they may arise, will be dealt
with under the provisions of Chapter 13.
Daywork
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35.15 For work of a minor or incidental nature, the Main Contractor may instruct that
a Variation shall be executed on a daywork basis. In this instance, any work so
instructed shall then be valued in accordance with the Daywork Schedule
included in this Subcontract, and the following procedure shall apply. If a
Daywork Schedule is not included in this Subcontract, this Article 35.15 shall
not apply.
Before ordering goods for such work, the Subcontractor shall submit
quotations to the Main Contractor. When applying for payment, the
Subcontractor shall submit invoices, vouchers and accounts or receipts for any
goods.
Subsequent to any work being performed pursuant to an Instruction referred

to above, then the Subcontractor shall deliver each day to the Main Contractor,
accurate statements in duplicate which shall include the following details of the
resources used in executing the previous day's work:
a) the names, occupations and time of Subcontractor’s Personnel;
b) the identification, type and time of Subcontractor’s Equipment and

Temporary Subcontract Works, and
c) the quantities and types of Plant and materials used.
One copy of each statement will, if correct, or when agreed, be signed by the
Main Contractor and returned to the Subcontractor. The Subcontractor shall
then submit priced statements of these resources to the Main Contractor, prior
to their inclusion in the next application for payment under Article 42.
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ChapTer 5
CommenCemenT, The TIme To
TaKIng-over, sChedulIng and
progress
article 36 Commencement, Time to Taking-over and extensions of

time
The purpose of the time provisions

36.1 The purpose of the time provisions is to ensure that the Subcontractor is
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afforded adequate time to complete the Subcontract Works, given the time in
which it originally agreed to complete the original scope of work, and that the
Main Contractor is assured both of a predictable completion Date and retains
the right to impose Delay Damages if the Subcontractor completes the Works
or any Section of them after the Time to Taking-Over as adjusted under the
Subcontract. It is normally preferable to reach contemporary agreement on
extensions of the Time to Taking-Over.
Start Date
36.2 Unless otherwise agreed, the first Day of the Time to Taking-Over is calculated
from the Day after the Start Date.
36.3 Unless otherwise agreed, the Start Date shall be determined as follows:
(a) It is a pre-condition to the commencement of the Subcontract Works

on the Start Date that (i) the Subcontractor has received possession of
such Sections of the Site as are required and the Notice to Proceed, and
(ii) the Main Contract Start Date has occurred.
(b) The Main Contractor shall issue to Subcontractor the Notice to Proceed
in the form set out in an Appendix (if any) or in a letter identifiable as the
Notice to Proceed, once it has received (if applicable) the Subcontractor’s
performance guarantee.
(c) The Day after which the requirements of Articles 36.3(a) and 36.3(b) have
been met shall be referred to herein as the Start Date.
If the conditions of Articles 36.3(a) and 36.3(b) have not been satisfied six
months after the Subcontract Date, each Party shall have the right to terminate
this Subcontract at any time by 14 Days’ notice to the other Party. Where the
termination occurs as a result of a failure on the part of the Subcontractor to
provide the agreed performance security (if any), the termination shall be
deemed for fault of the Subcontractor and the Main Contractor shall have the
entitlements provided for in Articles 57.15 and 57.16.
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Extension of the Time to Taking-Over and additional Costs

36.4 Provided not caused by any wrongful action or omission on the part of the
Subcontractor, the Subcontractor shall be entitled to an extension of the Time
to Taking-Over and, where applicable, additional payment subject to Article 36.5
for the whole of the Subcontract Works or for any Section of them if it is or will
be delayed either before or after the Time to Taking-Over by any of the
following causes:
(a) a cause of delay giving an entitlement to extension of the Time to Taking-

Over, including an event of Force Majeure, and, where applicable,
additional Costs under any Article;
(b) any suspension by the Subcontractor to which it is entitled under the

Subcontract, or any suspension, delay, impediment, default or breach of
the Subcontract by the Main Contractor or its agents or any activity, act or
omission of the Employer or any other contractors employed by the Main
Contractor or the Employer preventing the Subcontractor from
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proceeding efficiently with the Subcontract Works; or
(c) any action or inaction of third parties (including, without limitation,

public authorities) that the Subcontractor has not reasonably been able
and could not reasonably be expected to prevent.
36.5 If the Subcontractor intends to assert an entitlement to an extension of the

Time to Taking-Over under this Article 36, the Subcontractor shall give a Notice
to the Main Contractor of such intention as soon as reasonably practicable after
the Subcontractor has become aware of the event giving rise to the delay and/or
any other likely additional payment claim(s). Repeated Notices are not
necessary where it is reasonably obvious that the event has or may have a
continuing impact.
36.6 Where practicable, the Subcontractor shall keep such contemporary records as
may be necessary to substantiate any assertion of entitlement to an extension of
Time to Taking-Over. The Subcontractor shall permit the Main Contractor to inspect
all such records, and shall provide the Main Contractor with copies as required.
36.7 Within 28 Days of the Subcontractor giving Notice as set out above (or such
other period as may be agreed with the Main Contractor), the Subcontractor
shall submit such further details of its application (if any) it considers necessary
to demonstrate its entitlement.
36.8 The Main Contractor has an obligation to assess or agree appropriate

extensions of time as soon as any Notice has been received and, in any event,
not later than 59 Days after receipt of any Notice (unless a different period of
time is agreed). Alleged failures to give sufficient details or other supporting
information may be grounds for not giving the full extension requested or no
extension at all, where e.g. because of the Subcontractor’s failure the Main
Contractor’s entitlements under the Main Contract have been or are likely to be
jeopardized. If the Main Contractor decides that in fairness no extension
should be granted, it must immediately inform the Subcontractor at the time
the decision is made. In all cases, the Main Contractor must consult with the
Subcontractor about the right to, and/or length of, the extension. In all cases,
the Parties should attempt to agree on the result of the Notice.
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36.9 If practical, the Subcontractor's entitlement to compensation (if any) for Costs
arising from any extension of time shall be negotiated at the same time as the
extension of the Time to Taking-Over.
Direction to reschedule
36.10 Where the Subcontractor’s rate of progress on the Subcontract Works is too
slow to ensure Taking-Over of the whole of the Subcontract Works within the
Time to Taking-Over, the Main Contractor may order the Subcontractor to
revise its Time Schedule or Method Statement to show accelerated activity
and/or resources leading to completion within the Time to Taking-Over as it
then stands. If the Main Contractor is later shown to have been incorrect in its
assessment, the additional Costs incurred by the Subcontractor (if any) will be
payable as a Variation.
36.11 Upon request by the Main Contractor for purpose of reassessment based on
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Article 36.15 of the Main Contract, the Subcontractor shall provide such
information as may reasonably be required by the Main Contractor. If so
required by the Main Contractor, the Subcontractor shall take such part in such
reassessment as is reasonably appropriate. The Main Contractor shall provide to
the Subcontractor details relating to the Subcontract Works of any reassessment
that has taken place under the Main Contract.
36.12 Extensions of time can be agreed, determined or instructed before or after the
Time to Taking-Over as originally scheduled.
article 37 delay damages
37.1 Delay Damages are payable by the Subcontractor if the Taking-Over occurs after
the Time to Taking-Over.
37.2 If the Subcontractor fails to complete the Subcontract Works or any Section
within the Time to Taking-Over as adjusted under the Subcontract, then the
Subcontractor shall pay to the Main Contractor the relevant sum (if any)
calculated in the Subcontract as Delay Damages for such default and not as a
penalty (which sum shall be the only monies due from the Subcontractor for
such default and any other consequences of the delay) for every Day that shall
elapse between the Time to Taking-Over as adjusted and the Date specified in
the relevant Taking-Over Certificate(s), subject to the limit stated in an
Appendix (if any). The Parties agree and acknowledge that the value of the
Delay Damages so to be paid is estimated here by the Parties because of the
difficulty of ascertaining accurately the exact amount of damage prior to the
occurrence of any delay.
37.3 If no rate or rates of Delay Damages are stated otherwise in the Subcontract, the
rate of Delay Damages 11 shall be 0.3% of the Subcontract Price agreed upon
signature of the Subcontract or if there is a delay to a Section or some Sections
only, 0.3% of the value that the Section or Sections delayed bears in proportion
to the value of the whole of the Subcontract Works for each complete seven-
11 These figures normally vary from industry to industry and depending on the type of Project, and
its individual circumstances. These figures are inserted for certainty, but should be subject to
specific negotiation.

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Day period of delay up to a maximum of 10% (ten percent) of the Subcontract

Price agreed upon signature of the Subcontract. Subsequent amendments to
the Subcontract Price will not be taken into account in calculating the rate of
Delay Damages or the maximum amount of the Delay Damages.
37.4 The payment of such Delay Damages shall not relieve the Subcontractor from
its obligation to complete the Subcontract Works or from any other of its
obligations under the Subcontract, but shall be in full discharge of the
Subcontractor's liability for delay in Taking-Over and any other losses related to
that delay. Such Delay Damages shall be the sole and exclusive remedy for late
Taking-Over.
37.5 If so agreed, where the Employer takes over, uses or occupies (whether or not
acknowledged as Taking-Over) Sections of the Subcontract Works, Delay
Damages, if payable, shall be reduced in the proportion that the value of the
Section so taken over, used or occupied bears to the value of the whole of the
Works.
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article 38 schedule of subcontractual dates, time, schedule and

reporting progress
38.1 Agreement on the important stages of performance of the Subcontract Works
and monitoring/reporting progress (and problems) are important aspects of
turnkey projects. However, it is in the Subcontractor’s legitimate interest to
manage progress in the most efficient fashion for its organization. Nonetheless,
the Subcontractor undertakes to perform the Design and the Subcontract
Works in accordance with the Subcontract and also the Schedule of
Subcontractual Dates as set out in an Appendix (if any).
38.2 The Schedule of Subcontractual Dates, if any, shall contain:
(a) the Start Date set out in an Appendix (if any) or otherwise agreed;
(b) the Dates by which each stage of the Design will be provided by the Party
responsible for it;
(c) the Dates by which each of the permits set out in an Appendix (if any) will
be provided by the Party responsible for it;
(d) the Date(s) on which the Subcontractor will be given possession of the
Site or parts thereof;
(e) milestone Dates (if any);
(f) the Date(s) of Completion of the Subcontract Works, or Sections of the

Subcontract Works, including the Dates of any Performance Tests; and
(g) the Date(s) of Taking-Over of Sections of the Subcontract Works in

respect of which a separate Time to Taking-Over has been provided in the
Subcontract (or otherwise agreed) and the Date of Taking-Over of the
whole of the Subcontract Works.
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38.3 The Dates set out in the Schedule of Subcontractual Dates may be amended by
agreement of the Parties or application of the extension of Time to Taking-Over
provisions of this Subcontract.
38.4 The Subcontractor shall normally, unless otherwise agreed, prepare a detailed
program for performance of the Subcontract Works and their interrelationship
by using the critical path method or such other method/schedule as agreed
(the “Time Schedule”). The Subcontractor shall submit the Time Schedule to
the Main Contractor not later than one month after the Start Date. The Time
Schedule shall be updated monthly thereafter as part of a monthly progress
report to reflect any changes to the Time Schedule. The Main Contractor shall
be entitled to comment on the Time Schedule and any update thereof and the
Subcontractor agrees to consider in good faith any and all comments made by
the Main Contractor.
article 39 progress reports

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39.1 Unless otherwise agreed in writing, monthly progress reports shall be prepared
by the Subcontractor and submitted to the Main Contractor. The first report
shall cover the period up to the end of the first month following the Start Date.
Reports shall be submitted monthly thereafter, each within 5 Days after the last
Day of the period to which it relates.
39.2 Reporting shall continue until the issue of the last Taking-Over Certificate for
the Subcontract Works.
39.3 The progress reports should be suitable for monitoring the progress of the
Subcontract Works. Unless otherwise agreed each report shall include:
(a) charts and adequately detailed descriptions of progress, including each

stage of Design, Subcontractor’s Documents, procurement, manufacture,
delivery to Site, construction, erection, testing, commissioning and trial
operation;
(b) photographs showing the status of manufacture and of progress on the

Site;
(c) the details of the deployment of Subcontractor’s Personnel and

Equipment;
(d) safety statistics, including details of any hazardous incidents and activities
relating to environmental aspects and public relations; and
(e) comparisons of actual and planned progress, with details of any events or
circumstances that may jeopardize Taking-Over in accordance with the
Subcontract, and the measures being (or to be) adopted (if any) to
overcome delays.
39.4 The progress reports will be prepared and understood as evidence of the
Subcontractor’s position on the state of actual completion of the Subcontract
Works at the time the report is made. If the Main Contractor disagrees with any
of the contents of a report, this disagreement will be recorded in a Notice to the
Subcontractor within 14 Days of the Date of the report, otherwise it will be
considered for all purposes to be agreed.

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ChapTer 6
subConTraCT prICe and paymenT
article 40 The subcontract provides the exclusive remedies for all

claims between the parties
40.1 All claims to payment or compensation of any kind are to be asserted and
established in accordance with the provisions of this Subcontract. These
Subcontract provisions are a complete system for establishing all and any
entitlements as between the Parties, arising out of or in connection with the
Subcontract, its breach, its alleged termination or execution of the Subcontract
Works.
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40.2 Unless established by the provisions of this Subcontract, no claim by either

Party is enforceable against the other Party.
article 41 payment of the subcontract price

41.1 As payment to the Subcontractor for the full and complete performance of the
Subcontract Works the Main Contractor shall pay and the Subcontractor shall
accept the sum set out as the Subcontract Price in the Subcontract as varied in
accordance with the Subcontract.
41.2 Payments to the Subcontractor are made by instalments calculated by reference

to either the progress of the Subcontract Works in a given period (the “Invoice
Period”) or to the milestones set out in the Schedule of Subcontractual
Payments or otherwise in accordance with the provisions of this Subcontract.
41.3 The Subcontract Price may be varied only in accordance with the Subcontract.
The value of each payment will be established by the rules set out in this
Chapter 6.
article 42 applications and procedure for payment
Invoice Periods
42.1 With respect to any Invoice Period, the Subcontractor shall be entitled to apply
for the payment of the amount corresponding to progress on the Subcontract
Works and/or milestone if it has achieved such milestone, including any
daywork instructed under Article 35.15, within that Invoice Period.
Applications for payment

42.2 The Subcontractor shall submit applications for payment in the currency(ies) of
the Subcontract for the amounts that are associated with the progress of the
Subcontract Works (including claims) and/or milestones achieved in an Invoice
Period after the last Day in that Invoice Period.
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42.3 Applications for payment shall be submitted in the form set out in an Appendix
(if any), or, if there is no such Appendix, in a form established by the
Subcontractor and agreed by the Main Contractor.
Certification of payment
42.4 The Main Contractor shall certify to the Subcontractor the amount due and
payable to the Subcontractor with respect to each application for payment. The
Main Contractor shall certify the entirety of the amount set out in the
Subcontractor’s application for payment other than the following:
(a) an amount included in the application for payment that has been
included fraudulently or in error;
(b) any amount agreed as due from the Subcontractor in accordance with the
terms of the Subcontract;
(c) with respect to any milestone, the amount associated with that milestone,
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if the Subcontractor has not submitted the documentation required to be

submitted for that milestone as set out in the Subcontract;
(d) any amount to be paid by the Subcontractor for the invoice period
covered subject to Article 27.2
(e) subject to Article 30.2, any amounts paid by the Main Contractor in order
to discharge, or reserved for the purposes of discharging, any lien,
encumbrance or third-party right created on or in respect of the
Subcontract Works or any work, materials, supplies or Plant unless, if
necessary, the Subcontractor has provided adequate security for such
amounts to the Main Contractor in form and amount reasonably
satisfactory to the Main Contractor; and
(f) if this Subcontract is terminated by either Party, the Main Contractor shall
not be obligated to make further payments except in accordance with
Articles 56 and 57 and Chapter 13.
Notification of the certified amount

42.5 The Main Contractor shall notify the amount to which the Subcontractor is
entitled on or before the twenty-first Business Day after the Main Contractor’s
receipt of the Subcontractor’s application for payment. The amount stated in
that Notice shall be the “certified amount”. If the Main Contractor does not
certify the entire amount claimed in the Subcontractor’s application for
payment, the Main Contractor shall give a reasoned explanation for not
certifying the difference at the same time as it certifies the amount
acknowledged as due.
42.6 If the Main Contractor does not certify the entire amount claimed in the
Subcontractor’s application for payment, invoicing by the Subcontractor for a
lesser amount does not signify that the Subcontractor accepts that the Main
Contractor is discharged from the payment of the amount not certified. Such
sums are considered to be the subject of a Notice as sums claimed under
Chapter 13, which may eventually be dealt with by the dispute procedure in that
Chapter.
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Submission of the invoice

42.7 The amount certified shall be a sum due and payable, and the Subcontractor
shall be entitled to issue the corresponding invoice. The invoice shall be
payable by the Main Contractor 35 Days after the Day on which the Main
Contractor receives the Subcontractor’s invoice (and if such Day is not a
Business Day, then on the immediately following Business Day).
No withholding
42.8 The Main Contractor shall not be entitled to unilaterally withhold or deduct
from any invoice any amounts in respect of set-off, abatement or counterclaim
unless and until a decision under Chapter 13 or otherwise has been made that
the Main Contractor may withhold or deduct such amount.
Payments
42.9 All payments made under this Subcontract shall be made by the method set out
in an Appendix (if any), and otherwise by bank transfer to an account or
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accounts nominated by the Subcontractor.
42.10 Any payment that the Main Contractor is not obliged to make under Article 42.4
shall be made, without interest, together with the next payment applied for that
falls due, after satisfaction by the Subcontractor of the conditions described in
that Article and/or the correction of any Defect necessary to enable certification
of such amount. Unless otherwise agreed, there is no right to keep retention
money (in the sense of a percentage of a sum otherwise due for the
performance of the Subcontract Works).
Interim payment does not constitute acceptance of the Subcontract Works

42.11 No payment to the Subcontractor by the Main Contractor, with the exception of
the final payment, shall constitute an acceptance of any of the Subcontract
Works to be performed or furnished by the Subcontractor or shall relieve the
Subcontractor of any of its obligations or liabilities with respect thereto.
Final Payment
42.12 The final payment shall constitute acceptance of the Subcontract Works
performed or furnished by the Subcontractor if the Subcontractor in its
application for the final payment and in the final invoice includes an express
statement that effecting the final payment will have the effect of acceptance of
the Subcontract Works, unless the Main Contractor has reserved its rights.
article 43 vaT/gsT or equivalent consumption taxes

43.1 If under this Subcontract any payment is due to one Party from the other
(including Delay Damages due under Article 37), they shall be paid as they fall
due, along with accrued financing charges at the rate described in Article 44.
Each invoice shall be a VAT/GST (Value Added Tax/Goods and Services Tax)
invoice where VAT/GST is due on such payment, and, to the extent required by
law, each Party shall pay VAT/GST in addition to the amount invoiced.
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article 44 Financing charges for late recognition of rights between

the parties
44.1 The purpose of this payment is to compensate the Party affected for the delay
in receipt of money otherwise due to it. Without prejudice to any other right or
remedy, any payment that becomes due, or should become due, to either Party
under the Subcontract (including claims that have to be established under
Chapter 13) shall bear simple (uncompounded) financing charges (i.e. interest)
from the Date that the payment becomes due or should become due until the
Date of Payment at the rate agreed by the Parties, or, if there has been no such
agreement, three percentage points above the basic lending rate for immediate
money of the central bank of the country or countries of the currency or
currencies of payment.
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ChapTer 7
CompleTIon and TaKIng-over oF
The subConTraCT worKs by The
maIn ConTraCTor
article 45 Completion
45.1 The Subcontractor shall give Notice to the Main Contractor when it considers
that it has achieved Completion of the Subcontract Works. Where the
Subcontract Works are to be completed by Sections, this Article 45 refers to
Completion of each Section as appropriate.
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45.2 The Main Contractor shall, as soon as practicable and in any event within 144
hours following receipt of the Notice referred to in Article 45.1, inspect (as
and if necessary) all work, and either:
(a) deliver to the Subcontractor a Certificate of Completion for the

Subcontract Works or any Section of them; or
(b) if reasonable cause exists for doing so, notify the Subcontractor that
Completion of the Subcontract Works has not been achieved, stating in
detail the reasons therefor and the additional work that it considers still
to be done to achieve Completion of the Subcontract Works.
45.3 In the event that the Main Contractor determines that Completion of the
Subcontract Works has not been achieved, the Subcontractor shall promptly
take such action or perform such additional work as will achieve Completion
of the Subcontract Works and shall issue to the Main Contractor another
Notice pursuant to Article 45.1. To the extent that the action or additional
work requires a Variation, it shall be valued under Article 35. The procedure
described in this Article 45.3 shall be repeated as necessary until Completion
of the Subcontract Works is achieved.
45.4 Subject to Article 45.3, the Main Contractor shall issue the Certificate of
Completion for the Subcontract Works or the Notice under Article 45.2(b) no
later than 10 Business Days following receipt of the Notice under Article 45.1.
45.5 If the Main Contractor fails to issue a Certificate of Completion for the
Subcontract Works or a Notice under Article 45.2(b), then the Main Contractor
shall be deemed to have, and be treated for all purposes as having, issued a
Certificate of Completion for the Subcontract Works, whether it is actually
issued or not, 10 Days after the receipt of the Notice under Article 45.1.
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article 46 Commissioning and performance Tests

46.1 Where the Subcontract Works are to be taken over by Sections, these
provisions will be read as applying to those Sections.
46.2 Any commissioning activities will be set out in an Appendix (if any) or
otherwise agreed by the Parties.
Subcontract Performance Tests

46.3 Insofar as the Subcontract specifies Subcontract Performance Tests, Article 46
of the Main Contract shall apply as if fully written here.
Main Contract Performance Tests

46.4 Insofar as the Subcontract makes reference to Main Contract Performance
Tests, the Subcontractor shall to the extent the Subcontract Works form part
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of the Works under the Main Contract comply with Article 46 of the Main
Contract in the good time as is necessary for the Main Contractor to comply
with his obligations in respect of Performance Tests under the Main Contract.
46.5 If the Main Contractor is entitled under the Main Contract to assert a claim
against the Employer in respect of delay or Cost caused by the Employer’s
material failure to comply with its obligation, if any, under Article 46.8 of the
Main Contract to enable the Main Contractor to Perform a Performance Test,
the Subcontractor shall be entitled to request the Main Contractor to lodge
such claim against the Employer for the benefit of the Subcontractor, to the
extent the Subcontract Works are affected.
46.6 If and to the extent attributable to the Subcontract Works the Works in one or
more respects fail to achieve the Contractual Performance but exceed the
Minimum Performance under the Main Contract and Performance-related
liquidated damages (if any) as may be set out in the Main Contract are payable,
the Subcontractor shall compensate the Main Contractor for the liquidated
damages actually paid, or the respective share thereof, provided however, that
the compensation shall be limited to an amount of 5% of the initial
Subcontract Price. The payment of any such compensation shall not affect the
Main Contractor’s rights to terminate this Subcontract pursuant to Article 57,
should such right exist.
46.7 So long as the performance of the Works is equal to or better than the
Minimum Performance under the Main Contract, the compensation shall in
respect of the relevant performance parameters be the Main Contractor’s sole
and exclusive remedy for the Subcontract Works being responsible for the
Works’ failure to achieve the Contractual Performance under the Main
Contract.
46.8 If and to the extent attributable to the Subcontract Works the performance of
the Subcontract Works is better than Contractual Performance under the Main
Contract and the Main Contractor is entitled to a bonus as may be set out in
the Main Contract (if any), the Main Contractor shall forward the bonus
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actually received, or the respective share thereof, to the Subcontractor,

provided however, that the Subcontractor’s entitlement hereunder shall be
limited to an amount of 5% of the initial Subcontract Price.
46.9 However, if and to the extent Article 48 applies to such Main Contract
Performance Tests, the stipulations set forth therein and the principles and
provisions agreed between the Parties pursuant to Article 48 shall prevail.
article 47 Taking-over/provisional acceptance

47.1 The Taking-Over/Provisional Acceptance12 Date shall be:
(a) the Date on which the Taking-Over Conditions have been met; or
(b) the Date on which the Main Contractor or the Employer, its agent or
designee takes possession and control of the Subcontract Works or any
Section of them; or
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(c) the Date on which the Works or a Section of the Works of which the
Subcontract Works form part are, or are deemed to be, provisionally
accepted by the Employer under the Main Contract.13
47.2 Taking-Over Conditions

Unless otherwise agreed, the following conditions shall be the Taking-Over
Conditions:
(a) the Subcontract Works have been completed in accordance with the
Subcontract, except for minor work which does not affect the safety,
operation and operability of the Subcontract Works and is set out in the
Punch List;
(b) the Subcontract Works are fit for the purpose specifically defined in the
Subcontract and, if applicable, are capable of being put into operation;
(c) the Performance Tests specified in the Subcontract (if any) have been
performed and passed in accordance with Article 46.3 and testing
Equipment has been removed; and
(d) the consumables, spare parts and special tools required by the
Subcontract (if any) are present at the Site and are stored in accordance
with applicable laws and Good Industry Practice.
12 The concepts of Taking-Over and Provisional Acceptance are largely synonymous and are
synonymous in this Subcontract, but people in different industries may be more comfortable with
using one expression or the other.
13 The Main Contractor may wish not to take over the Subcontract Works until the Works are taken
over under the Main Contract. However, as a general rule, this would shift risks to the
Subcontractor which it cannot control, and under certain jurisdictions the validity of such provision
could be contested.

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47.3 On the Date of Taking-Over, the Main Contractor shall take and shall be
deemed to have taken possession and control of the entire Subcontract Works
or Section of them and shall thereafter be solely responsible for the operation
and maintenance thereof and shall have the complete risk of loss or damage
thereto, regardless of cause, provided, however, that this shall not relieve the
Subcontractor of its obligations under Chapter 8, or from its obligation to
perform such other work as remains to be performed after Taking-Over
pursuant to this Subcontract.
47.4 The Subcontractor’s access to the Site and the Subcontract Works after
Taking-Over shall be governed by an Appendix (if any) and otherwise shall be
permitted as needed to fulfil its remaining obligations (if any).
47.5 If the Subcontract Works or any Section are to be completed in more than one
step or phase, then an Appendix (if any), or such other reasonable stepped or
phased schedules as established by agreement, shall apply.
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47.6 When the Subcontractor believes that it has met the Taking-Over Conditions
of the Subcontract Works or any Section in accordance with Articles 47.1 and
47.2, it shall deliver to the Main Contractor a Notice thereof in the form set out
in an Appendix (if any), and otherwise any other reasonable form if none is set
out.
47.7 The Main Contractor shall, as soon as practicable and in any event within 144
hours following receipt of the Notice under Article 47.6, inspect (as and if
necessary) all Subcontract Works and the results of the Performance Tests (if
specified in the Subcontract) and, within the time period stipulated in Article
47.9, either:
(a) deliver to the Subcontractor a Taking-Over Certificate for the Subcontract

Works; or
(b) deliver to the Subcontractor a Taking-Over Certificate for a Section or

Sections of the Subcontract Works; or
(c) if reasonable cause exists for doing so, notify the Subcontractor that the
Taking-Over Conditions of a Section or Sections have not been achieved,
stating in detail the reasons therefor and the additional work that it
considers still to be done to achieve Taking-Over.
47.8 In the event that the Main Contractor determines that the Taking-Over
Conditions have not been achieved, the Subcontractor shall promptly take
such action or perform such additional work as will achieve Taking-Over and
shall issue to the Main Contractor another Notice pursuant to Article 47.6. To
the extent that the action or additional work requires a Variation, it shall be
valued under Article 35. The procedure described in this Article 47 shall be
repeated as necessary until Taking-Over is achieved.
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47.9 The Main Contractor shall issue the Taking-Over Certificate or the Notice
under Article 47.7 no later than 15 Business Days following receipt of the
Notice under Article 47.6. The Taking-Over Certificate will be retroactive to
the Date of Taking-Over under Article 47.1. If the Main Contractor fails to issue
a Taking-Over Certificate or a Notice under Article 47.7, then the Main
Contractor shall be deemed to have, and be treated for all purposes as having,
issued a Taking-Over Certificate, whether it is actually issued or not. The
Taking-Over Certificate shall or shall be deemed to set out the Date of Taking-
Over, which shall be the Date or Dates of fulfilment of the conditions set out
in Article 47.1. The Main Contractor shall not be entitled to withhold
payments claimed by the Subcontractor on the basis that the Taking-Over
Certificate was not issued or properly issued.
47.10 The Taking-Over Certificate, whether deemed to be issued or actually issued,

shall operate as an acknowledgement by the Main Contractor that the
Subcontractor has fulfilled its obligations under this Subcontract to the extent
that this Subcontract called for such obligations to be performed prior to
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Taking-Over, except for such work (whether minor or not) as is mutually

acknowledged to remain outstanding, whether under a punch list, snag list or
other check list of outstanding work to correct Defects (the “Punch List”).
47.11 If the Taking-Over Certificate was deemed to have been issued by the Main
Contractor, then the Main Contractor shall be entitled to require the
Subcontractor to fulfil any Subcontractor obligations left unfulfilled at Taking-
Over. Such work and the work required under Article 47.10 shall be
performed at the Subcontractor’s expense.
47.12 The Main Contractor in its sole discretion may at any time, by giving Notice to
the Subcontractor, elect to waive any of the Taking-Over Conditions, provided
that the Subcontractor expressly acknowledges that the Main Contractor shall,
without prejudice to the Main Contractor’s other remedies under this
Subcontract, be entitled, but not obligated, to make that election in
accordance with this Article 47 on such terms, including a rebate on the
Subcontract Contract Price, as the Parties may agree.
article 48 assessment procedures after Taking-over

48.1 To the extent the Parties have agreed that certain assessment procedures are
to be or permitted to be conducted after Taking-Over, the provisions agreed
between the Parties with respect to such procedures shall apply.
48.2 For all procedures, the principles set out in an Appendix (if any) shall apply. If
there are no such procedures set out in an Appendix, then Article 47.4 shall
apply.
48.3 If for reasons not attributable to the Subcontractor, any tests after Taking-Over
cannot be completed during the Defect Correction Period (or any other
period agreed upon by both Parties) then the Subcontract Works shall be
deemed to have passed the tests after Taking-Over.
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ChapTer 8
deFeCT CorreCTIon perIod
article 49 The subcontractor’s obligation to finish the subcontract

works and correct defects
Defect Correction Period

49.1 The Defect Correction Period is the period after Taking-Over 14 in which the
Subcontractor is obliged to correct Defects in Design, materials or
workmanship of the Subcontract Works attributable to the Subcontractor. In
the absence of an agreement to the contrary, this period is one year in
length.15 If there is sectional Taking-Over, the Defect Correction Period of
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one year starts with the Date of each Taking-Over. If individual items of Plant
which forms part of the Subcontract Works are repaired or completed during
the Defect Correction Period, a new one-year Defect Correction Period for
those items shall start on the Date of repair or completion of the Plant in
question. In no event, unless otherwise agreed, will the Defect Correction
Period continue for more than two years after the Date of the last Taking-Over.
Unless otherwise agreed, all individual Defect Correction Periods will stop at
that Date.
49.2 The Main Contractor shall give Notice to the Subcontractor of any Defects
during the Defect Correction Period as soon as reasonably possible upon such
Defects becoming apparent. Similarly, the Subcontractor shall as soon as
reasonably possible give Notice to the Main Contractor upon becoming aware
of Defects. During the Defect Correction Period the Subcontractor is obliged
to maintain such goods, materials, Equipment and manpower on the Site only
as is necessary to correct known Defects. The Subcontractor is not obliged to
correct Design errors, material choices or workmanship Defects attributable
to third parties (other than its own subcontractors or suppliers) or the Main
Contractor or the Employer, nor is the Subcontractor obliged, without a
Variation, to vary or improve Subcontract Works that comply with the
Subcontract.
49.3 The Main Contractor shall provide the Subcontractor every opportunity and
access to complete any outstanding work and correct any Defects specified in
the Punch List or any Defects in the Subcontract Works not so specified but
which have been notified by the Main Contractor to the Subcontractor or its
Representative during the Defect Correction Period.
14 The Main Contractor may wish to let the Defect Correction Period start not until the Works are
taken over under the Main Contract. However, as a general rule, this would shift risks to the
Subcontractor which it cannot control, and under certain jurisdictions the validity of such provision
could be contested.
15 In order to avoid the Defect Correction Period for the Subcontract Works expiring much earlier
than the Defect Correction Period for the Works under the Main Contract, some in the market have
provided for the Main Contractor to agree with the Subcontractor on a reasonably extended Defect
Correction Period for the Subcontract Works.

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Normal wear and tear not included

49.4 Normal wear or tear or damage to the Subcontract Works caused by the Main
Contractor’s or the Employer’s occupation and/or use of the Subcontract
Works or any part thereof and/or non-compliance by the Main Contractor,
Employer or third parties with the operation or maintenance manuals
supplied (if any) shall not be the responsibility of the Subcontractor, nor shall
the Subcontractor be obliged to repair such wear, tear or damage.
Consultation
49.5 The Parties shall consult with each other and shall agree the time or times
when the Punch List items and/or Defects are to be completed and/or
remedied, and, subject to the provisions of Article 49.1, the Defect Correction
Period to apply to corrected work. The Parties shall consult on the best
method for remedying any Defect, which can include, at the Subcontractor’s
option, repairing the Defect, replacing defective items, or reperforming
defective work.
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Software issues
49.6 In the case of a software Defect, the remedy may consist of a software patch,
update, upgrade or new software version. If the Cost of remedying the Defect
is disproportionate to the nature of the Defect or its magnitude, the
Subcontractor shall have the option of offering an abatement of the
Subcontract Price.
49.7 The Subcontractor shall not be liable for Defects in software (i) in case of
insignificant deviation of the software from the agreed characteristics; (ii) if
the Defect cannot be reproduced by the Main Contractor in the presence of
the Subcontractor; or (iii) if the Defect is in freeware, shareware or open
source software.
Joint inspection
49.8 The Main Contractor and the Subcontractor shall carry out a joint inspection
of the Subcontract Works at least 14 Days prior to the expiry of the relevant
Defect Correction Period to confirm the condition of the Subcontract Works,
and the Main Contractor shall immediately give Notice to the Subcontractor
of any outstanding Defects required to be made good or work required to be
executed by the Subcontractor in accordance with the Subcontract. If there is
no such Notice given, the Subcontract Works shall be considered to be in
accordance with the Subcontract.
Searches for Defects

49.9 If instructed to do so by the Main Contractor before or during the Defect
Correction Period for the Section of the Subcontract Works being considered,
the Subcontractor shall search for Defects as instructed by the Main
Contractor. If a Defect is found as a result of the search and the Defect is the
liability of the Subcontractor under the Subcontract, the Cost of the work to
remedy such Defect shall be borne by the Subcontractor, including the Cost
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of any searches, tests or trials necessary to determine the existence or extent

of the Defect. In all other cases, the Cost plus profit of such work, including
any searches, tests or trials, shall be ascertained and paid to the Subcontractor
as if it were additional work and instructed as a Variation.
Abatement of the Subcontract Price

49.10 In lieu of remedial work, the Subcontractor may in all cases offer an abatement
of the Subcontract Price.
Failure to remedy Defects

49.11 If the Subcontractor unreasonably neglects or refuses to remedy Defects for
which it is responsible, the Main Contractor may, after agreement from the
Subcontractor or a decision to this effect from the entity rendering a decision
in accordance with Chapter 13 and upon giving the Subcontractor 14 Days’
Notice, engage another subcontractor to remedy such Defects. Subject to the
limitations and exclusions of liability in this Subcontract, the Subcontractor is
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responsible for the reasonable Cost of such remedial work.
Sole remedies
49.12 Without prejudice to Article 57 or Chapter 13, and unless otherwise agreed,
the contractual remedies set out in this Chapter are the sole and exclusive
remedies of the Main Contractor in respect of Defects.
Final Acceptance
49.13 Final Acceptance shall occur when:
(a) the Subcontract Works and Punch List items, (if any) have been
completed in accordance with the Subcontract;
(b) the Defect Correction Period has expired and the Subcontractor’s
obligation under Article 49 has been carried out;
(c) the final as-built drawings and manuals (if any) have been delivered; and
(d) the conditions for Final Acceptance, as set out in an Appendix (if any)
are met.
49.14 The Subcontractor shall be entitled to a Certificate of Final Acceptance when

the conditions under Article 49.13 are met.
49.15 In the event that the Main Contractor determines that the conditions for Final
Acceptance have not been achieved, it will give Notice to the Subcontractor
giving the detailed reason(s) why the Main Contractor believes the conditions
for Final Acceptance have not been met.
49.16 Any remaining performance or warranty bonds in favour of the Main

Contractor are void after Final Acceptance and are to be returned.
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Defect Correction after Final Acceptance

49.17 If and for the time period when Final Acceptance has occurred but the Defect
Correction Period for the Works of which the Subcontract Works form part has
not yet expired pursuant to the Main Contract, the Subcontractor shall upon
written request by the Main Contractor remedy Defects in the Subcontract
Works as is necessary for the Main Contractor to comply with its obligations in
respect of the correction of Defects under the Main Contract, and the Cost
plus profit of such remedial work, including any searches, tests or trials, shall
be ascertained and paid to the Subcontractor as if it were additional work and
instructed as a Variation.
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ChapTer 9
alloCaTIon oF rIsK and
responsIbIlITy, lImITaTIons oF/and
exClusIons From lIabIlITy
article 50 general principles of risk allocation and responsibility
Passing of responsibility for the Subcontract Works

50.1 The Subcontractor shall take full responsibility for the care of the Subcontract
Works or any Section of them from the Start Date until the Date of Taking-
Over, at which time responsibility for the care of the Subcontract Works and
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the risk for loss or damage to the Subcontract Works shall pass to the Main
Contractor, unless otherwise agreed between the Subcontractor and the Main
Contractor.
50.2 If Taking-Over occurs for any Section of the Subcontract Works, responsibility
for the care of the Section shall then pass to the Main Contractor, unless
otherwise agreed between the Subcontractor and the Main Contractor.
article 51 purpose of the limitation and exclusion articles
51.1 The purpose of these limitations-of-liability provisions is primarily to ensure

that neither Party is liable for losses that are difficult to estimate or provide for
or are out of proportion with respect to the value of the Subcontract
obligations, arising from breach of contract or other liability. This approach
should ensure that the Parties can agree on the most reasonable Subcontract
Price for the Subcontract Works.
article 52 liabilities of the parties and their reciprocal limitations

and exclusions
Damage to property other than the Subcontract Works

52.1 A Party shall be liable to the other Party for damage to or loss of any property
other than the Subcontract Works, only to the extent that such damage or loss
arises out of the negligence or intentional misconduct of the Party said to be
liable.
Exclusions from liability
52.2 Notwithstanding any law or practice to the contrary, in no circumstances will
either Party be responsible to the other for treble, exemplary, moral or
punitive damages, or any type of non-compensatory damages no matter how
they are described.
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52.3 Except as provided in Article 35 (Variations), Article 37 (Delay Damages),

Article 42.6 (Failure to certify), Article 44.1 (Delayed Payment) or Article
46.6 (Performance-related liquidated damages), neither Party shall be liable to
the other Party for loss of profit, loss of income, loss of production or wasted
expenditure, or for indirect or consequential damage however described,
including (without limiting the generality of the foregoing) loss of use, loss of
revenue, loss of interest, loss of data or information or similar losses.
Limitation of liability for individual claims

52.4 In all cases (including obligations to indemnify and/or hold harmless the other
Party, if any) a Party’s liability per event giving rise to a claim shall be limited
to an amount of 7.5% of the initial Subcontract Price with the exception of
liability under Article 34 (Intellectual Property Rights) or under Article 49
(Defect Correction Period), including, without limitation, expenditure for the
performance of the Subcontractor’s obligations by a third party pursuant to
Article 49.11 (Failure to remedy Defects), Article 57 (Suspension and/or
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termination of the Subcontract) and Article 58.8 (Failure to take out or

maintain insurance) all of which shall be subject only to the limitation of
liability mentioned in Article 52.5.
Overall limitation of liability

52.5 Notwithstanding any other provision of this Subcontract, neither Party can
claim that the other Party must pay it, by way of damages or any other form of
compensation for breach of its duties, under or in connection with the
Subcontract (including obligations to indemnify and/or hold harmless), in
tort, or for negligence or gross negligence (or any or all of them) sums that
when aggregated with other sums paid under the Subcontract for damages or
compensation for breach of contract or otherwise, amount to more than 30%
(excluding interest) of the initial Subcontract Price.16
52.6 Nothing in this Subcontract excludes or limits liability for fraud.
article 53 Time limit for liability
53.1 Except in the event of fraud; neither Party shall be entitled to claim from the
other Party for any loss or damage howsoever caused more than ten years
after Taking-Over.
article 54 extensions of limitations to and exclusions from liability

to certain third parties
54.1 The foregoing limitations and exclusions of liability are also for the benefit of
and apply to each Party’s personnel, agents, subcontractors, suppliers and
their respective personnel.
16 This is a cap on liability that changes from industry to industry and that could be negotiated from
contract to contract. The 30% figure is less than the traditional figure in civil engineering and more
than the figure normally seen in oil and gas contracts.
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article 55 additional warranties
55.1 In the event of the Main Contractor being requested to give specific additional
warranties to the Employer, and such request concerns the Subcontract Works
in any respect, and the Main Contractor gives Notice of such request to the
Subcontractor, the latter shall in good faith examine whether or not to provide
such additional warranties and, if it decides to so provide, shall also
endeavour to obtain extensions of such warranties from its own
subcontractors and/or suppliers and pass through such additional warranties
to the Main Contractor to the extent obtained from its suppliers.
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ChapTer 10
ForCe majeure and TermInaTIon oF
The subConTraCT
article 56 Force majeure
Purpose of this Article

56.1 This Article sets out the circumstances under which a Party may invoke Force
Majeure to be released from its obligations. The Article also sets out the
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contractual consequences of such a situation.
Definition of Force Majeure

56.2 Unless otherwise agreed in the Subcontract between the Parties expressly or
impliedly, where a Party fails to perform one or more of its contractual duties,
the consequences set out in Articles 56.5 through 56.10 will follow if and to
the extent that that Party proves that:
(a) its failure to perform was caused by an impediment beyond its reasonable
control;
(b) it could not reasonably have been expected to have taken the occurrence
of the impediment into account at the time of the conclusion of the
Subcontract; and
(c) it could not reasonably have avoided or overcome the effects of the
impediment.
56.3 Where a Party fails to perform one or more of its contractual duties because
of default by a third party whom it has engaged to perform the whole or part
of the Subcontract, the consequences set out in Articles 56.5 through 56.10
will apply to the Party only if and to the extent that the Party:
(a) establishes the requirements set out in Article 56.2; and
(b) proves that the same requirements apply to the third party.
56.4 In the absence of proof to the contrary and unless otherwise agreed in the
Subcontract between the Parties expressly or impliedly, a Party invoking this
Article shall be presumed to have established the conditions described in
Articles 56.2(a) and (b) in the case of the occurrence of one or more of the
following impediments:
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(a) war (whether declared or not), armed conflict or the serious threat of the
same (including, without limitation, hostile attack, blockade or military
embargo), hostilities, invasion, act of a foreign enemy, and/or extensive
military mobilization;
(b) civil war, riot, rebellion, revolution, military or usurped power,

insurrection, civil commotion or disorder, mob violence, and/or act of
civil disobedience;
(c) act of terrorism;
(d) act of authority whether lawful or unlawful, compliance with any law or
governmental order, rule, regulation or direction, curfew restriction,
expropriation, compulsory acquisition, seizure of works, requisition,
and/or nationalization;
(e) act of God, plague, epidemic, natural disaster including, without

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limitation, violent storm, cyclone, typhoon, hurricane, tornado, blizzard,

earthquake, volcanic activity, landslide, tidal wave, tsunami, flood, damage
or destruction by lightning, and/or drought;
(f) act of sabotage or piracy;
(g) explosion, fire, destruction of machines, equipment, factories and of any

kind of installation, prolonged breakdown of transport, telecommunication
or electric current; or
(h) general or regional labour disturbance including, but not limited to

boycott, strike and lock-out, go-slow, or occupation of factories and
premises.
Consequences of Force Majeure

56.5 A Party successfully invoking this Article 56 is, subject to Article 56.7, relieved
from its duty to perform its obligations under the Subcontract from the time
at which the impediment causes the failure to perform if Notice thereof is
given without delay or, if Notice thereof is not given without delay, from the
time at which Notice thereof reaches the other Party.
56.6 A Party successfully invoking this Article 56 is, subject to Article 56.7, relieved
from any liability in damages or any other contractual remedy for breach of
contract from the time indicated in Article 56.5.
56.7 Where the effect of the impediment or event invoked is temporary, the
consequences set out under Articles 56.5 and 56.6 shall apply only insofar, to
the extent that and as long as, the impediment or the listed event invoked
impedes performance by the Party invoking this Article 56 of its contractual
duties.
56.8 Where this Article 56 applies, the Party invoking this Article is under an
obligation to notify the other Party as soon as the impediment or listed event
ceases to impede performance of its contractual duties.
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56.9 A Party invoking this Article 56 is under an obligation to take all reasonable
means to limit the effect upon performance of its contractual duties of the
impediment or event invoked. Where the duration of the impediment
invoked under Article 56.2 or of the listed event invoked under Article 56.4
has the effect of substantially depriving either or both of the Parties of what
they were reasonably entitled to expect under the Subcontract, Articles 56.13
and 56.14 shall apply unless otherwise agreed.
Revised Schedule of Subcontractual Dates

56.10 Any time period specified in this Subcontract for the performance of an
obligation shall, upon request of the affected Party, be appropriately extended
by reference to the effect of the Force Majeure event.
Consultation over possible remedial actions

56.11 The Parties shall consult with each other to develop and implement, if
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practicable, a plan of remedial and/or reasonable alternative measures to deal

with the Force Majeure and to minimize the losses of each Party resulting from it.
Increase in the Subcontract Price

56.12 If the Subcontract Works suffer loss or damage prior to transfer of risk and
such loss or damage is due to one or more circumstances listed in Article 56.4
(a) through 56.4 (h) and Subcontractor is not entitled to receive insurance
proceeds under the Marine Cargo or the Construction/Erection All Risk
Insurance, then the Main Contractor shall fully compensate the Subcontractor
for such loss of or damage to the Subcontract Works.
Optional termination, payment and release

56.13 If one or more events of Force Majeure shall impede either Party’s
performance for longer than a total of 150 Days from the Date of the Notice
of such event, the Parties shall decide through consultation the terms upon
which either to continue the performance of this Subcontract or to terminate
this Subcontract by mutual agreement.
56.14 If the Parties are unable to agree on such terms or to terminate this
Subcontract by mutual agreement within 180 Days of the Date of the Notice
of such Force Majeure, either Party may then terminate this Subcontract
immediately by written Notice to the other Party, however, if the
Subcontractor intends to terminate, not until the Main Contract has been
terminated or an additional grace period of 30 Days has elapsed, whichever
occurs earlier. If the Subcontract is terminated under this Article 56, the
provisions of Chapter 6 shall apply and the Main Contractor in consultation
with the Subcontractor shall determine the relevant portion of the
Subcontract Price for the work done, based upon:
(a) the value of any work that has been carried out and for which the
Subcontractor has not been paid;
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(b) the Cost of Plant and materials ordered for the Subcontract Works that
have been delivered to the Subcontractor, or of which the Subcontractor
is liable to accept delivery; such goods, materials and Plant shall become
the property of (and be at the risk of) the Main Contractor when paid for
by the Main Contractor, and the Subcontractor shall place the same at the
Main Contractor's disposal;
(c) any other Cost or liability that in the circumstances was reasonably
incurred by the Subcontractor in the expectation of completing the
Subcontract Works;
(d) the reasonable Cost of removal of Temporary Subcontract Works and

Subcontractor's Equipment from the Site and the return of such items to
the Subcontractor's works in its country (or to any other destination at no
greater Cost); and
(e) the reasonable Cost of repatriation of the Subcontractor's staff and labour
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employed wholly in connection with the Subcontract Works at the Date

of such termination.
issue a Payment Certificate in accordance with Article 42, and pay the Subcontractor
accordingly.
article 57 suspension and/or termination of the subcontract
Suspension of the Subcontract Works or a Section of the Subcontract Works

by the Main Contractor
57.1 The Main Contractor may at any time instruct the Subcontractor to suspend
progress of a Section or all of the Subcontract Works. During suspension, the
Subcontractor shall take all reasonable steps in the circumstances to protect,
store and secure such part or the Subcontract Works against any deterioration,
loss or damage.
Suspension by the Subcontractor

57.2 If suspension is necessary for the protection of the Subcontract Works or
human safety, the Subcontractor may with Notice to the Main Contractor also
suspend all or a Section of the Subcontract Works. During suspension, the
Subcontractor shall take all reasonable steps in the circumstances to protect,
store and secure such part or the Subcontract Works against any deterioration,
loss or damage.
Reimbursement of Cost and payment in the event of suspension

57.3 If the Subcontractor suffers delay and/or incurs Cost as a result of suspension
under Articles 57.1 or 57.2, the Subcontractor shall give Notice to the Main
Contractor and shall be entitled to reimbursement of such Costs, including
any storage expenses resulting from the suspension. It shall also be entitled to
payment for goods and/or materials and/or Plant that have not been delivered
to Site, if the work on Plant or delivery of Plant and/or materials has been
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suspended. This entitlement shall be to payment of the value as at the Date of

Notice to the Main Contractor of such Costs of labour, other subcontractors,
demobilization, Plant and/or materials, if:
(a) the Subcontractor has indicated the Plant and/or materials are the Main
Contractor's property, by marking or otherwise; and
(b) the suspension is not due to a cause attributable to the Subcontractor

and only in the proportion of the Main Contractor’s rights against the
Employer to reimbursement of costs and payment in the event of
suspension.
The Main Contractor shall thereafter, if requested by the Subcontractor, take over the
responsibility for protection, storage, security and insurance of such Plant and/or
materials, and the risk of loss or damage.
Prolonged suspension
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57.4 If suspension under Article 57.1 or Article 57.2 has lasted for a continuous
period of more than 120 Days or, if the period is not continuous, for a total of
more than 180 Days in the aggregate and the suspension is not due primarily
to a cause attributable to the Subcontractor, the Subcontractor may by Notice
to the Main Contractor require agreement to proceed from the Main
Contractor within 35 Days. If agreement is not given within that time, the
Subcontractor may treat the suspension as an omission by Variation under
Article 35 of the affected part of the Subcontract Works. If such suspension
affects the whole of the Subcontract Works, the Subcontractor may terminate
the Subcontract under the termination provisions of Article 57.15.
57.5 If the suspension is due to reasons for which the Subcontractor is responsible,
the provisions of Articles 57.3 through 57.4 do not apply. The Subcontractor
will not be entitled to any extension of the Time to Taking-Over under Article
36.4 or additional payment under the Subcontract.
Resumption of work
57.6 After receipt of permission or of an Instruction to proceed, the Subcontractor
shall, after Notice to the Main Contractor and together with the Main
Contractor, examine the Subcontract Works and the Plant and materials
affected by the suspension. The Subcontractor shall remobilize and thereafter
make good any deterioration or Defect in or loss of the Subcontract Works or
Plant or materials that has occurred during the suspension. The value of such
remobilization and making good shall be a Variation, unless the suspension
was caused by reasons attributable to the Subcontractor.
57.7 If the Main Contractor has taken over risk and responsibility for the
suspended Subcontract Works under Article 57.3, risk and responsibility shall
revert to the Subcontractor 14 Days (or such other period as may be agreed)
after receipt of the agreement or Instruction to proceed.
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Suspension or termination for fault

57.8 Either Party may suspend its performance of the Subcontract or terminate this
Subcontract upon the occurrence of a material breach of contract by the other
Party. Notices of suspension under this Article 57 must be given at least 14
Days prior to the first Day of the suspension. Notice of termination must be
given (whether or not there has been a prior Notice of suspension) at least 63
Days prior to the Date of termination. Any such Notice will become ineffective
if the breach complained of has been cured, or there has been an undertaking
to cure it as soon as possible in the circumstances.
57.9 Material breaches by the Main Contractor include, but are not limited to:
(a) persistent failure or refusal to finalize the Main Contractor’s

Requirements;
(b) regularly instructing Variations or instructing a major Variation without

acknowledging that the change or changes are Variations;
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(c) failing for whatever reason to give possession of the Site or Sections
thereof at the agreed time or times of handover and/or failing thereafter
to agree to extensions of time;
(d) failing to have access to the funds necessary to pay sums due under the
Subcontract as they are or become due; or
(e) persistently or seriously hindering or delaying the Subcontractor.
57.10 Material breaches by the Subcontractor include, but are not limited to:
(a) a substantial and continuing failure to proceed with the Subcontract

Works with appropriate diligence despite at least two warnings given 30
Days apart that it is failing to do so in respect of specified areas of the
Subcontract Works; or
(b) failure to achieve Taking-Over/Provisional Acceptance of the Subcontract

Works after the period when the maximum amount of Delay Damages
applies and there has been a continuing failure despite at least two
warnings given 30 Days apart.
57.11 Material breaches by either Party include, but are not limited to:
(a) persistently failing to produce Design documents allocated to it pursuant

to Article 32.1 according to the Schedule of Subcontractual Dates or any
agreed revision thereof;
(b) failing without express or implied agreement from the other Party to pay
sums due under the Subcontract on more than two separate occasions
and/or for more than 30 Days from the due Date;
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(c) failing to comply with important elements of decisions of the arbitral

tribunal or entity rendering a decision in accordance with Chapter 13;
(d) bankruptcy or insolvency or a failure to be able to meet its debts as they

fall due (unless such a position arises from the other Party’s failure to pay
sums due);
(e) failing to produce the guarantees, bonds or other securities required by

the Subcontract within the time specified in the Subcontract or a
reasonable time thereafter.
57.12 In addition to service by any other method, all Notices under this Article must
be served by courier or hand delivery with signed acknowledgement of
delivery or receipt, unless such acknowledgement is refused.
57.13 Any Party served with a Notice of termination shall have the opportunity to
cure the breach complained of within a reasonable time, which under no
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circumstances shall be less than 21 Days.
Consequences of termination
57.14 In all cases of termination of the Subcontract by any method, including under
this Article 57, the limitation- and exclusion-of-liability provisions of this
Subcontract shall continue to apply.
57.15 If the Subcontractor terminates pursuant to Article 57.8, it will be entitled to

the valuation set out in Article 56.14, plus lost profit (if any) on the Costs of
the whole Subcontract as damages. If the Project is a Build Operate Transfer
or similar project, it will not be entitled to damages for lost profit for operating
the Project, or parts thereof, (or similar rights) for the concession period.
57.16 If the Main Contractor terminates pursuant to Article 57.8, the Subcontractor
will be entitled to the compensation set out in Articles 56.14 (a) and (b), but
not to that set out in Articles 56.14 (c), (d) or (e). In addition to transfer of
title and risk in all goods, materials, and Plant, the Main Contractor has paid
for, the Main Contractor shall be entitled to recover the reasonable additional
Costs incurred in completing the Subcontract Works. Further, the Main
Contractor shall be entitled to use all the Subcontractor’s Equipment on Site
at the Date of termination, and is considered by the fact of termination
pursuant to this Article 57, to have been granted by the Subcontractor a
transferable royalty- and fee-free licence to use such Equipment until the
Subcontract Works are complete. The Main Contractor is entitled to free use
of consumables and perishable items left on Site and shall not be responsible
for fair wear or tear or depreciation/deterioration to Subcontractor’s
Equipment of which it has thus temporarily taken use. On completion of the
Subcontract Works, all such Subcontractor’s Equipment and remaining
consumables shall be placed at the disposal of the Subcontractor.
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Chapters surviving termination

57.18 Without affecting the enduring nature of any other term of this Subcontract
and notwithstanding any other provision of this Subcontract or the applicable
laws, it is agreed and understood that Chapters 9, 10, 12 and 13 of the
Subcontract survive any termination or alleged termination or avoidance of
this Subcontract, however such circumstances may come about.
57.19 The provisions of this Article 57 shall (to the extent permitted by the
mandatory provisions of the applicable law) be to the exclusion of any
suspension and/or termination (including rescission) rights that would
otherwise be available under the applicable law.
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ChapTer 11
InsuranCe
article 58 Insurance
Main Contractor’s Insurance

58.1 The Main Contractor shall effect and maintain at its own expense the
insurance cover as specified in Articles 58.2 through 58.5. It shall provide
terms and conditions as are reasonably available in the insurance market and
that are customarily purchased by contractors on similar projects with regard
to size, technology, location and the insurance cover. These covers will
include the Subcontractor and its subcontractors as co-insured parties and the
insurers shall waive their rights of subrogation to that extent. The Main
Contractor will provide the Subcontractor with a summary of the terms and
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conditions and deductibles of the Main Contractor’s Insurances as per Articles

58.2 through 58.5 no later than 30 Days before any of the risks of the
Subcontractor which are insured under the policies as per Articles 58.2
through 58.5 will attach.
58.2 If not determined otherwise17 in the Schedule of Subcontractual

Amendments to this Subcontract, the Main Contractor will effect and maintain
Marine Cargo Insurance for not less than 100 % of the value of the goods
being conveyed as part of the Subcontract Works during transportation with
conveyances of whatsoever kind from any warehouse worldwide until and
including unloading at the Site. This cover shall not be less than the
internationally known Institute Cargo Clauses (A) of the Institute of London
Underwriters, provided war risks are available at base rate and the deductible
shall not be higher than the amount per occurrence specified in the Schedule
of Subcontractual Amendments.
58.3 Construction/Erection All Risk Insurance shall cover loss or damage to the
Works on all risks basis for not less than the full reinstatement Cost, subject to
sub-limits as are reasonably commercially available and with exclusions
customarily required by the insurance market, such as the exclusion of the
terrorism risk. This insurance shall cover any Site activity after unloading of
the Works at the Site, including storage on or near the Site, construction,
erection, assembly, cold and hot commissioning and testing until the Taking-
Over Certificate is issued or deemed to be issued. This cover acts as primary
cover for the Subcontractor in respect of the Subcontract Works. With regard
to loss or damage to any of the Works not being Subcontract Works, cover
hereunder is subsidiary to any Subcontractor’s Third Party Liability Insurance.
17 The Main Contractor, depending on the respective allocation of risk pursuant to Article 50.1, may
alternatively also decide that the Marine Cargo Insurance has to be effected and maintained by the
Subcontractor (see also Article 58.6 (e)).
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58.4 The policy conditions shall comply with good international standards and
shall contain all terms and conditions and endorsements as are customarily
available in the insurance market. The Construction/Erection All Risk
Insurance shall also cover loss or damage to the Works arising from the
consequences of faulty Design, material or workmanship (in accordance with
the internationally known Design Clauses LEG 2/96 or Munich Re
Endorsement 200). The general deductible in such policies shall not exceed
the amount per occurrence specified in the Schedule of Subcontractual
Amendments.
58.5 The Main Contractor shall maintain the Construction/Erection All Risk
Insurance to provide cover during the Defect Correction Period for a period
as is indicated in the Schedule of Subcontractual Amendments for loss or
damage for which the Subcontractor is liable arising from a cause occurring
through Site activities prior to the Date the Taking-Over Certificate is issued
or deemed to be issued, and for Loss or damage caused by the Subcontractor
in the course of any other operations in connection with its Defect liability
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obligations under the Subcontract (“Extended-Maintenance cover”).
Subcontractor’s Insurance
58.6 The Subcontractor shall effect and maintain at its own expense the following
insurance cover with reputable insurance carriers authorised to do business in
the Country:
(a) Employer’s liability and workman’s compensation insurance in
accordance with any applicable law(s). If the law does not provide for any
obligations in this respect or requires only some minimum limits, then
the Subcontractor shall arrange this insurance in a manner and with limits
as a prudent and reasonable subcontractor in the same circumstances
and environment would so do. This insurance shall be maintained in full
force and effect during the whole time that Subcontractor’s Personnel are
assisting in the execution of the Works on Site.
(b) Automobile liability insurance in the Country in accordance with any

applicable law(s). If the law does not provide for any obligations in this
respect or requires only some minimum limits, then the Subcontractor
shall arrange this insurance in a manner and with limits as a prudent and
reasonable subcontractor in the same circumstances and environment
would so do.
(c) Comprehensive Third Party Liability Insurance to cover Subcontractor’s

legal liability with a limit as required in the Schedule of Subcontractual
Amendments, or, if nothing is mentioned thereunder, with a limit of
indemnity of not less than 1,000,000 EUR (or equivalent in other
currency) per occurrence and 2,000,000 EUR (or equivalent in other
currency) in the aggregate.18
18 The figures are very much determined by the nature of the Project.
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(d) Subcontractor’s Equipment insurance to cover loss or damage to

Subcontractor's Equipment on an all risks basis for not less than the full
replacement value, during any activity on the Site and including delivery
to Site.
(e) If so determined in the Schedule of Subcontractual Amendments to this

Subcontract, the Subcontractor will effect and maintain Marine Cargo
Insurance for not less than 100% of the value of the goods being
conveyed as part of the Subcontract Works during transportation with
conveyances of whatsoever kind from any warehouse worldwide until
and including unloading at the Site. This cover shall not be less than the
internationally known Institute Cargo Clauses (A) of the Institute of
London Underwriters, provided war risks are available at base rate and
the deductible shall not be higher than the amount per occurrence
specified (if any) in the Schedule of Subcontractual Amendments.
The Subcontractor’s Insurances as per Articles 58.6 (d) and (e) shall include
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the Main Contractor as a co-insured party and the insurers shall waive their
rights of subrogation to that extent.
On request of the Main Contractor, the Subcontractor shall without undue

delay provide to the Main Contractor insurance certificates of the
Subcontractor’s Insurance.
The Subcontractor shall cause its subcontractors to effect and maintain at

their own expense the insurance cover pursuant to Articles 58.6(a) through
(e) as applied mutatis mutandis in relation to its personnel, automobiles,
equipment and works subcontracted to it. The Subcontractor’s Insurances as
per Articles 58.6(d) and (e) shall include the Main Contractor and
Subcontractor as co-insured parties and the insurers shall waive their rights of
subrogation to that extent.
Change of policy conditions

58.7 Neither Party shall make any changes or alterations in the policy conditions of
the insurance that the Party is obliged to effect and maintain without having
earlier notified the other Party of such changes or alterations and without
having the approval of the other Party where the other Party’s rights and
interests could be affected by any such changes or alterations. The insuring
Party shall promptly notify the other Party if any of the insurers of the insuring
Party’s insurance policies are cancelling or altering any of the insurance
policies whereby any rights or interests of the other Party could be affected.
Insurance cover no effect on liabilities

58.8 Nothing in this Article 58 limits the obligations, liabilities or responsibilities of
the Main Contractor or the Subcontractor under the other terms of the
Subcontract and nothing in this Article shall be construed to increase the
limitations on liability in the Subcontract. Any amounts not insured or not
recovered from the insurers shall be borne by the Main Contractor and/or the
Subcontractor in accordance with their obligations, liabilities or
responsibilities. However, if the insuring Party fails to effect and keep in force
an insurance that is available and that it is required to effect and maintain
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under the Subcontract and the other Party neither approves the omission nor
effects insurance for the coverage relevant to this default, any monies that
should have been recoverable under this insurance shall be paid by the
insuring Party.
Damage mitigation
58.9 The Main Contractor and the Subcontractor acknowledge that in the event of
damage, both Parties shall exert all reasonable efforts to mitigate the damage
accruing from such event. In the event that the Subcontract Works sustain
damage, notwithstanding the foregoing obligation to mitigate, the
Subcontractor shall:
(a) promptly notify Main Contractor;
(b) take all necessary steps to preserve any damaged items, and not clean,
destroy, discard or attempt to modify or unnecessarily move or remove
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any parts that are directly a part of the damage (except as is reasonably
necessary to mitigate the damage and/or to ensure the safety of
personnel); and
(c) co-operate with, and assist in relation to, any survey carried out by any
insurance loss adjustor as soon as is practically possible following the
occurrence of the damage.
Policy terms take precedence over descriptions 19
58.10 The coverage referred to in this Article 58 is set forth in full in the respective
insurance policies. The descriptions of such policies in this Subcontract are
not intended to be complete, nor to alter or amend any provisions of the
actual policies. In the event of a conflict between the insurance policies and
this Subcontract, the provisions of the insurance policies shall prevail.
19 Article 58.10 is the mirror of Article 58.19 in the Main Contract; in the course of its discussions, the
instant Drafting Group believed it desirable to retain this provision.
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ChapTer 12
mIsCellaneous provIsIons
article 59 Confidentiality
59.1 This Article 59 relates to information that a Party wishes to have treated as
confidential. While this Article 59 sets out general guidelines for such
treatment, the Party wishing to have the information treated as confidential
may wish to enter into a more detailed confidentiality agreement such as the
ICC Model Confidentiality Agreement. In the event that the Parties do enter
such an agreement the provisions of Articles 59.2 through 59.6 below shall not
apply.
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59.2 Each Party shall use all business and technical information received from the
other Party in connection with this Subcontract, and which the disclosing
Party expressly states to be confidential or the confidential nature of which
can be assumed on the basis of the circumstances of its disclosure or its
contents, solely for the purposes for which it was provided; and shall treat it
in the same way as its own business secrets; and not make it available to third
parties, unless the business or technical information in question:
(a) is generally available from public sources or in the public domain;
(b) is received at any time from any third party without a nondisclosure
obligation to the disclosing Party;
(c) is shown either to have been developed independently by the receiving

Party without reliance on the disclosing Party’s confidential information
or to have been known to the receiving Party prior to its disclosure by the
disclosing Party; or
(d) must be disclosed to third parties for the purpose of performing this
Subcontract, provided such third parties are or become subject to an
equivalent confidentiality obligation.
59.3 Notwithstanding the provisions of Article 59.2, any Party may disclose any
confidential information if, and to the extent, it is required to do so by the
disclosure requirements of any law, rule, or regulation or any order, decree,
subpoena, or ruling or other similar process of any court, tribunal, arbitral
tribunal or governmental instrumentality or of any regulatory body having
jurisdiction. Prior to making or permitting any Party to make such disclosure
the disclosing Party shall – to the extent possible – provide the Party that
initially provided such information with written Notice of any such
requirement so that that Party may seek a protective order or other
appropriate remedy. The Party required to make such disclosure shall co-
operate with the Party that initially provided the information, in order to
minimize and protect against the disclosure of the confidential information
and with any efforts by the Party seeking to protect the information from
disclosure to obtain proprietary or confidential treatment for such

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confidential information by the third party to whom the confidential

information is disclosed or to seek protective orders limiting the
dissemination and use of the confidential information. Nothing herein shall
prevent any Party from objecting to the rule, regulation, or order requiring the
disclosure.
59.4 The foregoing confidentiality obligation shall also apply to the contents of this
Subcontract.
59.5 The confidentiality obligation created by this Article 59 shall continue for a
period of four years after Final Acceptance.
59.6 Publications of any kind on or in any media (including electronic media) by a

Party or initiated by a Party referring to the Subcontract Works shall require
the prior written approval of the other Party, which approval shall not
unreasonably be withheld.
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article 60 bribery, gifts, inducements or rewards

60.1 The Parties hereby warrant, represent and undertake to each other that at the
Date hereof neither Party or its subcontractors, agents, officers or any third
parties on their behalf, has offered, given, demanded, requested, accepted or
agreed to any undue pecuniary or other advantage of any kind (or implied or
inferred that they will or might do any such thing at any time in the future) in
any way connected with the Subcontract or any other contract between the
Parties (or any related parties).
60.2 The Parties agree that at all times throughout the course of the Subcontract
and thereafter they will comply with and ensure that their subcontractors,
agents, servants, employees and officers comply with the most current version
of the ICC Rules of Conduct and Recommendations to Combat Extortion and
Bribery in international business transactions, which are incorporated by
reference into this Subcontract as if written out here in full.
60.3 The Parties specifically confirm that the entity rendering a decision in
accordance with Chapter 13 and/or arbitral tribunal, as the case may be, shall
have the ability to determine the civil consequences of any alleged non-
observance of this Article 60 to the exclusion of the (non-criminal) courts.
60.4 Notwithstanding any applicable laws, no fraud or other illegal conduct will
discharge either Party from the Subcontract unless such conduct deprives the
other of the whole or substantially the whole benefit of the Subcontract as a
result of the action complained of and the Party alleging such conduct has
terminated the Subcontract under the provisions of the Main Contract,
according to Article 2.2.
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article 61 entire agreement, severability and amendments to the

subcontract
Entire agreement
61.1 The Subcontract constitutes the entire agreement between the Parties with
respect to the subject matter of the Subcontract and supersedes all
communications, representations, negotiations and agreements (whether
written or oral) of the Parties with respect thereto made prior to the Date of
the Subcontract which are not incorporated by writing into the Subcontract.
Modifications to the Subcontract

61.2 Any changes to this Subcontract must be evidenced in writing. No written
communication or action by either Party shall be effective to modify or amend
the Subcontract, unless the Parties have expressly agreed or impliedly
acknowledged in written communications between them that the Subcontract
should be or has been so modified or amended.
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61.3 If any provision or condition of the Subcontract is prohibited or rendered

invalid or unenforceable, such prohibition, invalidity or unenforceability shall
not affect the validity or enforceability of any other provision or condition of
the Subcontract or its performance in a jurisdiction where it is not prohibited
or rendered invalid. Further, to the extent possible, the provision or condition
will be replaced through agreement or by the entity rendering a decision in
accordance with Chapter 13 and/or an arbitral tribunal, as the case may be, by
a valid and enforceable provision or condition with the same or a similar
result.
61.4 Neither Party waives any of its rights under this Subcontract by failing to
exercise them. Individual waivers do not amount to a general waiver.
Alleging lack of capacity

61.5 Each Party warrants that, once the Subcontract Works have commenced on
Site, it will not allege that the person or persons who signed the Subcontract
on behalf of that Party lacked the capacity or authority to execute the
Subcontract, or that there was some other formal invalidity or incapacity that
affected the validity or enforceability of the Subcontract against that Party. In
particular, actual or alleged lack of governmental or managing board
authorizations or permits shall not excuse non-performance or non-
observance of the Subcontract by a Party.
61.6 If a Party named in the Subcontract does not have separate legal personality
under the laws governing its status, the definition of the Party bound by this
Subcontract includes any organization of which it is a part that does have
separate legal personality.
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Waiver of sovereign immunity and similar privileges

61.7 Any sovereign immunity or immunity from execution or attachment is hereby
waived by both Parties to this Subcontract. It is agreed that this Subcontract
is a commercial transaction under international law and that governmental or
state bodies entering into this Subcontract do so with the intention of making
the Subcontract effective in accordance with its terms and so hereby waive any
and all sovereign immunity, immunity from attachment or administrative law
requirements that otherwise might have applied to them.
article 62 joint and several liability

62.1 If either Party constitutes (under applicable laws) a joint venture, consortium,
partnership or other unincorporated grouping of two or more persons,
however it is described:
(a) those persons shall be deemed to be jointly and severally liable to the
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other Party for the performance of the Subcontract; and
(b) those persons shall notify the other Party of their leader who shall have
authority to bind that Party and each of those persons.
62.2 Neither Party to this Subcontract nor the members of the unincorporated
grouping described in Article 62.1 shall alter its legal status or divest itself of
legal responsibility for its obligations under the Subcontract without the
written consent of the other Party.
article 63 subcontractor notification and responsibility and

assignment of subcontractor’s obligations
63.1 The Subcontractor shall not subcontract the whole of the Subcontract without
the knowledge and express written agreement of the Main Contractor. Each
Party shall be responsible for the acts or defaults of its subcontractors, agents,
officers or employees while performing the Subcontract as if they were the
acts or defaults of the Party.
63.2 Where agreed by the Parties at the Subcontract Date or where a subcontractor
is named in the Subcontract, the Subcontractor shall give the Main Contractor
and the Employer not less than 28 Days’ Notice of:
(a) the intended appointment of a subcontractor, with reasonably

detailed particulars of the category of work, which shall include its
relevant experience; and
(b) the intended commencement of the subcontractor’s work on the Site.
63.3 Except where otherwise agreed in this Subcontract, neither Party has any
other rights in relation to the appointment, terms of engagement, scope of
work or any other aspects of a subcontractor’s work.
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Assignment of Subcontractor's obligations

63.4 If a Subcontractor’s subcontractor has undertaken a continuing and
assignable obligation to the Subcontractor for the Subcontract Works
designed or executed, or goods, materials or Plant supplied by them, and if
the obligation extends beyond the expiry of the last Defect Correction Period,
the Subcontractor shall, upon the expiry of the last Defect Correction Period,
and if requested so to do by the Main Contractor, assign the benefit of such
obligation to the Main Contractor for its unexpired duration. Any such
assignment shall be at the expense of the Main Contractor.
article 64 assignment of the subcontract by either party
64.1 Neither Party shall, without the express written consent of the other Party,
which consent shall not be unreasonably withheld, novate, assign or
otherwise transfer to any third party the Subcontract or a part thereof or
assign any right, benefit, obligation or interest therein, except that each of the
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Parties shall be able to assign either absolutely or by way of charge any money
payable to it, which may become payable under the Subcontract.
64.2 Subcontracting is not considered to be assignment.
article 65 Communications, including notices and consents

65.1 Wherever the Conditions of Subcontract provide for the giving or issuing of
approvals, certificates, consents, decisions, Notices, notifications and/or
requests, these communications shall be:
(a) in writing and delivered by hand (against receipt), sent by mail or courier,
or transmitted by facsimile, electronic mail with confirmation of receipt,
or any other system of electronic transmission or storage of information
used by the Parties; and
(b) delivered, sent or transmitted to the address for the recipient’s

communications as stated elsewhere in the Subcontract (the Schedule of
Subcontractual Amendments) or otherwise normally used. However, if
the recipient:
(i) gives Notice of another address, communication shall thereafter be

delivered accordingly; and
(ii) has not stated otherwise when requesting an approval or consent,
it may also be sent to the address from which the request was
issued.
65.2 Approvals, certificates, consents, decisions, requests, Notices and/or

notifications shall not be unreasonably withheld or delayed by either Party.
65.3 Any Notice or other communication served by hand, fax, e-mail or post shall
be deemed to have been received:
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(a) in the case of delivery by hand or by courier, when delivered against an

acknowledgement of receipt;
(b) in the case of fax or e-mail (with confirmation of receipt requested) sent
to the correct delivery address, the next local Business Day following the
Day of successful transmission; or
(c) in the case of registered mail with a return receipt, at 11:00. on the Date
of actual receipt,
provided in each case where delivery by hand, courier or by fax occurs

after 18:00 on a Business Day, or on a Day that is not a Business Day, delivery
shall be deemed to occur at 9:00 on the following Business Day.
References to time in this Article 65 are to local time and Business Days in the
country of the intended recipient.
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65.4 In the Subcontract, except where the context requires otherwise:
(a) the Subcontract and language are neutral in relation to gender;
(b) words indicating the singular also include the plural and words indicating
the plural also include the singular;
(c) provisions including the word “agree”, “agreed” or “agreement” require

the agreement to be either in writing or recorded in writing (before or
after the agreement);
(d) “written” or “in writing” means hand-written, type-written, printed or

electronically made, and resulting in a record with an electronic signature
or confirmation of receipt;
(e) in understanding this Subcontract, the Chapter, Article and other

headings are intended to be included in the Subcontract and its
interpretation; and
(f) all Notices, notifications, certificates, consents, approvals, decisions

and requests under this Subcontract shall indicate the Article(s) of this
Subcontract under which they are given or made.
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ChapTer 13
ClaIms, dIspuTe resoluTIon and
arbITraTIon
article 66 exclusive remedies - all claims of all types are to be

determined by these provisions
Claims by either Party

Article 66 - Exclusive Remedies
66.1 The intention of this Article is to provide a system for the resolution of all or
any disputes that might arise under the Subcontract. The ICC ADR Rules
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provide for the appointment and administration of an amicable dispute

resolution mechanism and the Parties are encouraged to consider their use.
The Party notifying the dispute in such notice must specify whether or not it
intends to activate the procedures of the ICC ADR Rules. In the event that it
does not, it must specify whether it wishes to activate Option A or B
hereunder.
66.2 All claims, differences or disputes (“Disputes”) arising out of or in connection

with this Subcontract are agreed to be resolved solely by the procedures set
out in this Subcontract.
OPTION A
66.3 Where a Party gives a notice that it wishes to have a Dispute resolved under
Option A, then the following provisions shall apply:
66.3.1 The Parties establish an Ad Hoc Dispute Board (“DB”) in accordance
with the ICC Dispute Board rules in force at the Subcontract Date (the
“Rules”), which are incorporated herein by reference save that rules
[insert] shall not apply. The DB is therefore empowered and expected
to decide the Dispute referred to it, including any question or issue
regarding the Subcontract’s existence, validity or termination. Terms
used in Article 66.3 shall – where the context so requires - have the
meanings given to them in the Rules. The DB shall have three
member(s). Each Party shall nominate one DB member. The Party
requiring that the Dispute be solved by the DB shall nominate a DB
member in writing when submitting its statement of case. The other
Party shall nominate its DB member in writing within a period of
thirty (30) days after it has been notified of the nomination of the first
DB member. In respect of the third DB member who shall become the
chairman of the DB Article 7 paragraph 5 of the Rules shall apply.
Should a Party not nominate a DB member within the time limits
mentioned before, the respective DB member shall be appointed by
the Dispute Board Centre of the ICC pursuant to the Rules upon the
request by the other Party.
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66.3.2 Any Disputes shall be submitted to the DB in accordance with the

Rules. For any given Dispute, the DB shall issue a recommendation
unless this Subcontract requires a decision or the Parties agree that it
shall render a decision or it decides to do so upon the request of a
Party and in accordance with the Rules.
66.3.3 If any Party fails to comply with a recommendation or a decision when

required to do so pursuant to the Rules, the other Party may refer the
failure itself to arbitration under the Rules of Arbitration of the ICC by
one or more arbitrators appointed in accordance with the said Rules
of Arbitration.
66.3.4 If any Party sends a notice to the other Party and the DB expressing its
dissatisfaction with a recommendation or a decision as provided for in
the Rules, or if the DB does not issue the recommendation or decision
within the time limit provided for in the Rules, or if the DB is
disbanded pursuant to the Rules, the Dispute shall be finally settled
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under the Rules or Arbitration of the ICC by one or more arbitrators

appointed in accordance with the said Rules of Arbitration.
OPTION B
66.4 A Party giving a notice of a Dispute which it wishes to have resolved under
Option B shall proceed as follows:
66.4.1 Within seven Days it shall give notice in writing to the other Party of
the representative of its organisation who is empowered to resolve the
Dispute.
66.4.2 Within 14 Days of receipt of such notice the receiving Party shall
likewise nominate a similar representative.
66.4.3 The respective representatives shall meet within 14 Days or such

longer period if both agree with a view to resolving the Dispute
between them. The respective representatives shall conduct such
discussions in such names as they may agree subject to the overriding
obligations of good faith and fairness between them.
66.4.4 In the event of such discussions not leading to a resolution of the

matter it shall be open but not a requirement to either Party within 35
Days to seek the appointment of an independent person (to be agreed
between the Parties) to assist in the amicable resolution of the Dispute.
66.4.5 In the further event that the procedure in Articles 66.4.1 through
66.4.4 above does not lead to any form of amicable resolution of the
Dispute it shall be open but not a requirement to either Party to give
formal notice that they require the Dispute to be referred to
Arbitration under the ICC Rules of Arbitration at that time in force.
66.5 When Option A applies, until the Dispute is finally settled by arbitration or by
agreement of the Parties, they shall remain bound by any decision, whether or not
dissatisfaction has been expressed, unless the Parties themselves agree otherwise.
All sums of money agreed or ordered to be paid will be paiimmediately and not
held back pending resolution of the Dispute or for any other reason.
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66.6 Each Party hereby indemnifies the other Party for any and all Costs or losses
caused by breach of Articles 66.2 through 66.4.
66.7 The language of the DB proceeding and the arbitral proceeding shall be the
ruling language of the Subcontract unless otherwise provided for.
article 67 supplemental provisions relating to arbitration
67.1 No arbitral tribunal can open up review or revise any decision of the DB which
has become final and binding in accordance with the Rules, but an arbitral
tribunal may, if considered appropriate by the arbitral tribunal and permitted
under applicable law, as provided hereafter, make interim awards for the
purpose of enforcement of the DB decision.
67.2 Any Notice of dissatisfaction shall be specific as to what part of a decision or

recommendation it refers to and disputes (if there are identifiable elements to
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the decision) and what parts of any decision or recommendation are not
disputed. Once the time period for serving notices of dissatisfaction has
passed, neither Party may subsequently argue that a decision or part of a
decision is not binding, if neither Party served a notice of dissatisfaction in
respect of the decision or any part of it.
Res judicata, sequential arbitrations and the contractual effects of the DB

67.3 If and to the extent that they have become final and binding, the dispositive
provisions of earlier decisions (if any) of a DB constituted under this
Subcontract shall be binding on a later DB and arbitral tribunals.
67.4 Neither Party shall be limited in arbitration to views, evidence or arguments

put to the DB or to the reasons for dissatisfaction given in its notice of
dissatisfaction with a DB decision, if there was such a notice. Any
determination of a DB shall be admissible in evidence in the arbitration.
67.5 Earlier decisions (if any) of a DB constituted under the Main Contract shall not
be binding on a later DB and arbitral tribunals constituted under this
Subcontract. However, any argument or submission by the Subcontractor, that
the Main Contractor’s liability towards the Employer or a third party could
have been avoided had it conducted the defence with due diligence, may be
disregarded by the DB or arbitral tribunal constituted under this Subcontract,
if the Subcontractor was requested by the Main Contractor to assist pursuant
to Article 67.8 and omitted or declined such assistance.
67.6 If an arbitral tribunal has been appointed and the arbitral tribunal has not
declared the proceedings closed, subject to the rules governing the conduct
of the arbitral tribunal, any further disputes in respect of which a DB decision
has not been rendered or has not become final and binding, as the case may
be, may be referred to the arbitral tribunal.
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67.7 Following Taking-Over of the Subcontract Works, the Parties may, entirely in
their own discretion, refer Disputes directly to arbitration under the Rules of
Arbitration of the ICC by one or more arbitrators appointed in accordance
with the said Rules of Arbitration.
Subcontractor participation in Main Contract disputes

67.8 If the Main Contractor has a claim or dispute of any kind involving the
Employer or a third party which relates to the Subcontract Works or rights of
the Subcontractor, the Main Contractor may notify the Subcontractor and
request the assistance of the Subcontractor. In such case,
(a) the Subcontractor shall give any and all reasonable assistance for the
pursuit of the claim or dispute, at the Subcontractor’s choice. That
assistance may include, with the consent of the DB or arbitral tribunal,
participation as a witness to the DB claim or arbitration; and
(b) the Main Contractor, if it has received compensation or an extension

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of time relating to the Subcontract Works or the Subcontractor’s

rights, shall inform the Subcontractor thereof within 14 days and shall
share the benefits, to the extent they accrue to the Subcontractor, of
any compensation or time extension with the Subcontractor. Such
sharing will be agreed by the Parties or established by a DB or arbitral
tribunal considering all the relevant circumstances; however, unless
otherwise agreed, any agreement or decision on such sharing shall
not prejudice or limit the Subcontractor’s rights under this
Subcontract.
67.9 Where the Subcontractor agrees pursuant to Article 67.8, or is otherwise

obliged, to
(a) provide such documentation relating to the issues in dispute as may

be reasonably requested by the Main Contractor other than
documentation of a confidential nature; or
(b) make available such witnesses as may reasonably be required by the

Main Contractor for any hearing of the Main Contractor in connection
with the issues in dispute,
the Main Contractor shall pay the Subcontractor the Subcontractor’s
reasonable costs in providing such assistance for the pursuit or defence of the
instant claim or dispute.
67.10 A dispute between the Main Contractor and the Subcontractor as to any
matter arising out of Articles 67.8 or 67.9 above shall be a matter that either
Party may refer to such dispute mechanism as has been agreed by them under
Article 66.
[END OF CONDITIONS OF SUBCONTRACT]
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APPENDIX [ ]
Sample Advance Payment Guarantee 20
This is a sample that may provide useful guidance, but the exact wording is subject
to the agreement of the Parties and that made with the issuing bank.
ADVANCE PAYMENT GUARANTEE
We refer to the Subcontract signed on .................. between you and ..................

(hereinafter referred to as the “Subcontractor”) related to ....................... (hereinafter
referred to as the “Subcontract”) and the provisions of the Subcontract, ... under
which the Subcontractor has agreed to provide an Advance Payment Guarantee in
your favour as a condition for making an advance payment of the same amount.
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Therefore, we Bank ................ the undersigned issue this Advance Payment Guarantee
in your favour for a maximum amount of ......... (the “Guarantee Amount”) and
undertake, if the Subcontractor fails substantially to fulfil its obligations under the
Subcontract, to pay you all or part of the Guarantee Amount within .... calendar Days
from your written demand by registered mail stating that the Subcontractor has failed
to fulfil its obligations under the Subcontract. Such demand shall be accompanied by
a copy of your notice to the Subcontractor stating that the Subcontractor is in breach
of its obligations under the Subcontract, detailing such breach, and requiring the
Subcontractor to take the necessary steps to remedy such breach, failing which, the
Advance Payment Guarantee may be called.
This Advance Payment Guarantee comes into force upon receipt of the down
payment by the Subcontractor.
The value of this Advance Payment Guarantee shall be automatically reduced by the
amount(s) stated in invoices issued by the Subcontractor which are to be credited
against the advance payment.
No variation of the Subcontract vitiates or otherwise affects this Guarantee.
This Advance Payment Guarantee shall expire when reduced to zero but in any case
not later than the earlier of the date of the last Taking-Over according to the
Subcontract or [fixed calendar date].
Any written demand under this Advance Payment Guarantee must be received by us
on or before the said date of expiry.
Upon its expiry this Advance Payment Guarantee shall be returned to us. It will
become automatically null and void whether or not returned to us.
This Advance Payment Guarantee is not assignable or transferable.
20 Parties are advised always to obtain legal advice as to the enforceability of bonds or guarantees of
any type, as requirements may differ from jurisdiction to jurisdiction. In addition to the conditions
set forth in the guarantee, the Main Contractor’s right to make a claim under the guarantee is – as
between Main Contractor and Subcontractor – subject to the conditions set forth in Article 11 of
the Conditions of Subcontract.

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This Advance Payment Guarantee is subject to the current Uniform Rules for Demand
Guarantees published by the International Chamber of Commerce (ICC).
This Advance Payment Guarantee shall be governed by the law of ………
All disputes arising out of or in connection with the present contract shall be finally
settled under the Rules of Arbitration of the International Chamber of Commerce by
one or more arbitrators appointed in accordance with the said Rules (the ‘ICC Rules’).
Good notice under this Guarantee may be made by [this should be the person
responsible for the guarantee at the bank …………]
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APPENDIX [ ]
Sample Performance Guarantee 21
This is a sample that may provide useful guidance, but the exact wording is subject
to the agreement of the Parties and that made with the issuing bank.
PERFORMANCE GUARANTEE
We refer to the Subcontract signed on .................. between you and ..................

(hereinafter referred to as the “Subcontractor” related to ....................... (hereinafter
referred to as the “Subcontract”) and the provisions of the Subcontract, ... under
which the Subcontractor has agreed to provide a Performance Guarantee in your
favour in order to guarantee the performance of its contractual obligations.
Therefore, we Bank ................ the undersigned issue this Performance Guarantee in

your favour for a maximum amount of ......... (the “Guarantee Amount”) and
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undertake, if the Subcontractor fails substantially to fulfil its obligations under the
Subcontract, to pay you all or part of the Guarantee Amount within .... calendar Days
from your written demand by registered mail stating that the Subcontractor has failed
to fulfil its obligations under the Subcontract. Such demand shall be accompanied by
a copy of your notice to the Subcontractor stating that the Subcontractor is in breach
of its obligations under the Subcontract, detailing such breach, and requiring the
Subcontractor to take the necessary steps to remedy such breach, failing which, the
Performance Guarantee may be called.
This Performance Guarantee comes into force on the Start Date according to the
Subcontract.
No variation of the Subcontract vitiates or otherwise affects this Guarantee.
Its actual amount shall be reduced by half on Taking-Over/Provisional Acceptance and

at the latest on ............. and will expire upon Final Acceptance and at the latest on
......... 22
Consequently, any written demand under this guarantee must be received by us on or

before the said date of expiry.
On its expiry, it will become automatically null and void, whether or not returned to
us.
21 Parties are advised always to obtain legal advice as to the enforceability of bonds or guarantees of
any type, as requirements may differ from jurisdiction to jurisdiction. In addition to the conditions
set forth in the guarantee, the Main Contractor’s right to make a claim under the guarantee is – as
between Main Contractor and Subcontractor – subject to the conditions set forth in Article 11 of
the Conditions of Subcontract.
22 It is preferable that this be an agreed calendar date. The basis upon which there will be any
extensions of validity of the Guarantee should be agreed and set out in the Subcontract.
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This Performance Guarantee is not assignable or transferable.
This Performance Guarantee is subject to the current Uniform Rules for Demand
Guarantees published by the International Chamber of Commerce (ICC).
This Performance Guarantee shall be governed by the law of ………
All disputes arising out of or in connection with the present contract shall be finally
settled under the Rules of Arbitration of the International Chamber of Commerce by
one or more arbitrators appointed in accordance with the said Rules (the ‘ICC Rules’).
Good notice under this Guarantee may be made by [this should be the person
responsible for the guarantee at the bank …………]
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APPENDIX [__]
Schedule of Subcontractual Payments
and Milestone Guidance Notes
General Purpose
The Parties need to agree on a Schedule of Subcontractual Payments specifying how
the amount to be paid is to be calculated, the events that will entitle the Subcontractor
to claim that payment, and the documentation the Subcontractor is obliged to
present to obtain payment. In the absence of specific agreement, Chapter 6 applies
without modification by reference to this Appendix [ ].
Security is to be posted for any down payment (and where so agreed amortized pro rata).
A. Progress payments
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Applications for progress payments are to be made based on the volume of

work during any Invoice Period. The application should include any
measurements or calculation in support of the sum applied for together with
invoices for material and Plant and similar items included in such application.
In such case the Invoice Period shall be monthly or any other period agreed
between the Parties.
B. Milestones
The principle of milestones is that payments become due on the occurrence
of specific agreed events. The Schedule of Milestones should set out the
event, the particular sum payable on the event and any documentation
needed to substantiate the occurrence of the event. A specimen Schedule of
Milestones is set out below, which the Parties must adapt to the circumstances
of the Subcontract.
1. Frequency of Milestones
It is up to the Parties to specify the frequency of milestones; the Parties may
specify a large number of milestones, each associated with a minor sum, or a
single milestone in an Invoice Period. Under this Subcontract, an Invoice
Period is defined as a month, and an invoice is rendered once in an Invoice
Period for all milestones achieved during the preceding Invoice Period. The
Parties are at liberty to define longer or shorter Invoice Periods.
2. Amount of Milestone
It is suggested that this be a specified amount, rather than an amount
calculated by reference to e.g. actual cost of an item. If milestone payment
amounts are floating, the Parties will need to specify a milestone toward the
end of the milestone schedule that reconciles the agreed Subcontract amount
and the amounts paid.
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3. Event
Milestone events are
- specific events such as completing Sections of work. Specific events could be
construction events, e.g. first concrete, cable pull complete or enclosure
complete
- Plant shipping events, e.g. item loaded on vessel cleared for export, item
delivered to the Site
- Document delivery events, e.g. detail Design delivered or
- Other events.
Milestones defined as events may occur at any time during a month; but,
unless otherwise agreed, invoicing occurs only once a month, for all events
achieved during the previous month.
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4. Documentation Required
The documentation required depends primarily on the way the event is
defined.
For milestone events, the documentation required will depend on the nature
of the event and on the source of financing, if any. For example, export-credit
agency financing may be released on the basis of the value of exports, so that
the earliest event that permits invoicing is the loading of the goods on the
vessel; the corresponding documentation is the (on-board) bill of lading.
5. Advance Payment and Retention

If an advance payment is agreed as a percentage of Subcontract Price, then the
amortization, if any, of the down payment must be specifically addressed in
the calculation of the invoice amounts and the milestone payment amounts
can be specified accordingly.
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Milestone Amount Events Documentation

Number and Currency
1. Provision of the
Quality Assurance
System
2. Start of Detailed
Engineering
3. Submission of
Specified Design
Documents for
Review by Main
Contractor
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4. Order
Commitment of
Subcontractor’s
Equipment
5. Order
Commitment of
Materials
6. Last Delivery of
Subcontractor’s
Equipment
7. Last Delivery of
Materials
8. Commencement
of Construction
Activites on Site
9. Mechanical
Completion
10. Preliminary Taking-

Over
11. Final Taking-Over
End of Appendix [ ]
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APPENDIX [ ]
Payment Application Format
The Subcontractor’s application for payment shall as a minimum set out:
(a) the Date;
(b) the Subcontractor’s name and address;
(c) the Main Contractor’s name and address;
(d) the Subcontractor’s tax reference (if any);

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(e) a reference to this Subcontract;
(f) if applicable, a reference to the milestones achieved and the Date on which
each referenced milestone was achieved;
(g) the currency and the amount claimed in respect of each milestone achieved;
(h) the total amount claimed for each currency.
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APPENDIX [ ]
Guidelines relating to Performance Tests
1. Principle
The Performance Test or Tests are intended to provide the Parties with an opportunity
to review the condition and performance of the Subcontract Works prior to Taking-
Over and allow the Main Contractor to satisfy itself that the Subcontract Works have
been executed in accordance with the Subcontract. Note that there may be situations
in which the Performance Test or Tests are undertaken after Taking-Over, or in which
there are no Performance Tests at all.
2. Methodology for Performance Tests

If not otherwise specified by the Parties, the Subcontractor shall provide the Main
Contractor with the methodology for conducting the Performance Test no later than
90 Days before the first stage of the Performance Tests is scheduled to commence.
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Unless otherwise agreed by the Parties, the methodology shall describe:
(a) the procedures to be performed;
(b) the purpose of each procedure to be performed;
(c) the Date and time each procedure is anticipated to be performed and the
sequencing of all procedures;
(d) if results are to be measured:

(i) the Subcontractor’s Equipment to be used for measuring;
(ii) the industry standard or protocol in accordance with which the results
are established; and
(iii) any tolerances, corrections or adjustments (e.g. for ambient
conditions, season, etc.) to be applied;
(e) if the Main Contractor is obliged to fulfil any obligation in order to enable the
Subcontractor to perform the procedure, the Subcontractor shall specify the
actual timing, extent and nature of the Main Contractor’s obligation to the
extent that it is not otherwise set out in the Subcontract; and
(f) the reports and protocols to be established with respect to each procedure.
3. Agreement as to methodology
If no methodology is otherwise agreed between the Parties, then the methodology
proposed by the Subcontractor shall apply. In such cases the Main Contractor shall
be entitled to object to the methodology proposed by the Subcontractor only on the
basis that the Subcontractor’s proposed methodology:
(a) does not conform to standards for the methodology set out in the
Subcontract (if any); or
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(b) does not provide a methodology for assessing the properties of the
Subcontract Works which the Subcontract requires to be assessed (if any); or
(c) are otherwise not in conformity with the Subcontract; or
(d) are not in conformity with Good Industry Practice.
The Main Contractor shall raise its objections within 30 Days of its receipt of the
Subcontractor’s proposed methodology, proposing a reasonable alternative
methodology or amendments to the Subcontractor’s proposed methodology.
If the Subcontractor and the Main Contractor cannot agree on a methodology within
a further 30 Days, the Parties shall refer the dispute to the CDB.
4. Time for delivery of Performance Test report(s)

Unless otherwise specified or agreed between the Parties, the Subcontractor shall
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provide the Main Contractor with the report of each completed Performance Test
forthwith upon the Subcontractor’s completion or receipt of such report. If the
nature of the procedure was to assess whether the Subcontract Works or a part
thereof attained a certain level of performance, the report shall clearly state the level
of performance attained as well as whether or not the required level of performance
was attained.
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APPENDIX [ ]
Subcontractor’s Access after Taking-Over
Guidelines for compiling an Appendix on Subcontractor’s access after

Taking-Over
Purpose of this Appendix

Taking-Over marks the point in time where control over the Site and the Subcontract
Works, and the risk of loss and damage to the Subcontract Works, pass to the Main
Contractor. While prior to Taking-Over, the Subcontractor may have had full control
of the Site, after Taking-Over control and responsibility pass to the Main Contractor.
Consequently, the Subcontractor must now look to the Main Contractor to co-
ordinate the Subcontractor’s access to the Site.
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The Subcontractor may, amongst other things, require access to:
(a) Complete Punch List items;
(b) Remedy warranty Defects;
(c) Re-perform tests and measurements not passed prior to Taking-Over or in

order to obtain a better result and so reclaim performance liquidated
damages; or
(d) Perform tests that are specified to be performed after Taking-Over.
The complexity of the issues should not be underestimated. At this point in time, the
Subcontract Works may be in operation, yet the Subcontractor may reasonably require
that the Subcontract Works (or a part of it) be shut down for potentially prolonged
and uncertain periods in order to enable it to execute the remedial works. Therefore
unless otherwise agreed the following provisions shall apply:
1. Subcontractor’s right of access after Taking-Over

Notwithstanding that Taking-Over shall have occurred and the care of the Site passed
to the Main Contractor, the Subcontractor shall be entitled to be granted such access
to the Site and to the Subcontract Works as the Subcontractor may reasonably require
in order to fulfil its obligations, or to exercise its rights, under this Subcontract, all in
accordance with the procedures set out in this Appendix 4 and notwithstanding that
the Parties may be in dispute.
2. Mutual acknowledgements
The Subcontractor appreciates and acknowledges that the Subcontract Works are in
operation and that any access by the Subcontractor which prevents or delays
operation of the Subcontract Works is onerous to the Main Contractor. The Main
Contractor appreciates and acknowledges that the Subcontractor requires access to
the Subcontract Works in order to perform its obligations or exercise its rights under
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this Subcontract and to prevent the Subcontractor from doing so is onerous to the
Subcontractor.
3. Subcontractor’s obligation to notify

At any time the Subcontractor determines that it requires access to the Subcontract
Works, it shall notify the Main Contractor, stating:
(a) The purpose for which access is required;
(b) The work to be performed;
(c) The number of personnel for whom access is sought and the machinery, tools
and Subcontractor’s Equipment to be brought on Site;
(d) Whether or not the shut-down of the Project or Subcontract Works or any part
of them will be required and, if a shut-down is required, then a detailed
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description of the nature and duration of the shut-down; and
(e) The Date or Dates for which such access is sought, which shall other than in
emergencies be no earlier than 15 Days after the Date of the Subcontractor’s
request.
4. Access requiring shut-down of the Project or Subcontract Works or

any part of them
The Subcontractor’s right of access shall include the right to require a shut-down or
reduction in the operation of the Subcontract Works. Any modifications or repairs the
Subcontractor is required to perform will be accomplished by the Subcontractor with
minimal interference with operation of the Subcontract Works and reductions in and
shut-downs of the Subcontract Works will be required only when necessary. The Main
Contractor will give access within 30 Days of any such request.
5. Access required for Defects correction

If the Subcontractor is required to perform correction of Defects pursuant to Article
49, the Main Contractor shall, unless otherwise agreed, grant such access within 15
Days.
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ICC aT a glanCe
ICC is the world business organization, a representative body that speaks with authority
on behalf of enterprises from all sectors in every part of the world.
The fundamental mission of ICC is to promote open international trade and investment and
help business meet the challenges and opportunities of globalization. Its conviction that trade
is a powerful force for peace and prosperity dates from the organization’s origins early in the
20th century. The small group of far-sighted business leaders who founded ICC called themselves
“the merchants of peace”.
ICC has three main activities: rule setting, dispute resolution, and policy advocacy. Because
its member companies and associations are themselves engaged in international business,
ICC has unrivalled authority in making rules that govern the conduct of business across borders.
Although these rules are voluntary, they are observed in countless thousands of transactions
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every day and have become part of the fabric of international trade.
ICC also provides essential services, foremost among them the ICC International Court of
Arbitration, the world’s leading arbitral institution. Another service is the World Chambers
Federation, ICC’s worldwide network of chambers of commerce, fostering interaction and
exchange of chamber best practice. ICC also offers specialized training and seminars and is
an industry-leading publisher of practicaland educational reference tools for international
business, banking and arbitration.
Business leaders and experts drawn from the ICC membership establish the business stance
on broad issues of trade and investment policy as well as on relevant technical subjects.
These include anti-corruption, banking, the digital economy, marketing ethics, environment
and energy, competition policy and intellectual property, among others.
ICC works closely with the United Nations, the World Trade Organization and intergovernmental
forums including the G20.
ICC was founded in 1919. Today its global network comprises over 6 million companies, chambers
of commerce and business associations in more than 130 countries. National committees work
with ICC members in their countries to address their concerns and convey to their governments
the business views formulated by ICC.
For information on how to join ICC, visit the ICC website (iccwbo.org) or contact the ICC
Membership Department in Paris.
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some ICC speCIalIzed dIvIsIons
l ICC International Court of Arbitration (Paris)

l ICC International Centre for Expertise (Paris)
l ICC World Chambers Federation (Paris)
l ICC Institute of World Business Law (Paris)
l ICC Centre for Maritime Co-operation (London)
l ICC Commercial Crime Services (London)
l ICC Services (Paris)
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l Publications
ICC Publications Department is committed to offering the best resources on business
and trade for the international community.
The content of ICC publications is derived from the work of ICC commissions,
institutions and individual international experts. The specialized list covers a range of
topics including international banking, international trade reference and terms
(Incoterms), law and arbitration, counterfeiting and fraud, model commercial
contracts and environmental issues.
Publications are available in both traditional paper and electronic formats from the
ICC Business Bookstore.
l Events
ICC’s programme of conferences and seminars is the essential channel for passing on
the world business organization’s expertise to a wider audience.
ICC Events, a Department of ICC Services, spotlights policy issues of direct concern
to business such as banking techniques and practices, e-business, IT and telecoms,
piracy and counterfeiting.
ICC Events also runs training courses on international arbitration and negotiating
international contracts for business people, corporate counsel, lawyers and legal
practitioners involved in international trade.
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102 ICC Model Subcontract
sourCe produCTs For global busIness
ICC’s specialized list of publications covers a range of topics including international

banking, international trade reference and terms (Incoterms), law and arbitration,
counterfeiting and fraud, model commercial contracts and environmental issues.
ICC products are available from ICC national committees, which exist in over 80
countries around the world. Contact details for a national committee in your country
are available at iccwbo.org
You may also order ICC products online from the ICC Business Bookstore at
store.iccwbo.org
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ICC Publications
33-43 avenue du Président Wilson
75116 Paris
France
Tel. +33 (0) 1 49 53 28 28
Fax +33 (0) 1 49 53 28 59
e-mail publications@iccwbo.org
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706 couv_Layout 1 18/04/11 11:23 Page1

ICC Model Subcontract

The International Chamber of Commerce, the World Business Organization, based

ICC’s International Contracts Series

ICC Publication No. 706E

ICC Publication No. 706E

International turnkey construction projects are often complex transactions, requiring

ICC MODEL BACK-TO-BACK SUBCONTRACT TO TURNKEY CONTRACTS FOR

This Subcontract contains or incorporates an arbitration clause and clauses limiting

Art 1 Definitions .......................................................................................................... 13

Art 6 New or changed laws, standards, regulations, etc........................................... 21

Art 20 Scope of the Subcontract Works and Subcontract Price..................................29

Art 27 Services or supplies to be supplied by the Main Contractor............................33

Art 32 General allocation of responsibility of the Parties for the Design...................36

Art 35 Variations and changes to the Subcontract Works............................................41

Art 36 Commencement, Time to Taking-Over and extensions of time.......................45

Art 45 Completion .........................................................................................................54

Art 50 General principles of risk allocation and responsibility.....................................63

Art 56 Force Majeure ...................................................................................................66

1. Scope of Subcontract Works

3. Main Contractor’s Requirements

the ways companies organize themselves, including the outsourcing of non-strategic

As a result, subcontracting has become a standard practice in all business

Parties to an international subcontracting agreement should accordingly exercise the

or not an approval and/or notification of the Employer should be secured on the

Subcontract Form of Agreement

and/or completion on a turnkey basis of the Subcontract Works as

Whereas the Parties have executed this Subcontract by duly authorized

general Terms and CondITIons oF

requires otherwise. If a word or phrase is capitalized, it is a Defined Term.

“Appendix” or “Appendices” means the appendix or appendices to the

“Article” means any article or sub-article of these Conditions of Subcontract as

“Assumptions” are statements provided by either Party in writing setting out

“Certificate of Completion” is a certificate issued for Completion of

“Certificate of Final Acceptance” is the certificate issued according to Article

“Completion” means Completion of Construction or Mechanical Completion.

“Completion of Construction” or “Mechanical Completion” unless

“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-

“Daywork Schedule” means a schedule of the Subcontractor’s agreed rates

“Defect” means a non-conformity with the Subcontract requirements.

“Defect Correction Period” means the period for correction of Defects as

“Design” includes sketches, schemes, models, plans, drawings, technical

“Employer” means the legal or natural person(s) named as Employer in the

“Employer’s Requirements” refers to the Employer’s Requirements in the

“Equipment” means all appliances, machinery, vehicles, tools or other things

“Final Acceptance” has the meaning set out in Article 49.13.

“Force Majeure” has the meaning set out in Article 56.

“Hazardous Materials” means any hazardous or toxic substance or hazardous

“Instruction” is a Main Contractor’s requirement whether in writing or not,

“Invoice Period” shall mean, if not otherwise defined, a calendar month

“Main Contract” means the contract (however it is described) entered into, or

“Main Contract Conditions” means the Conditions of Contract contained in

“Main Contractor” means the legal or natural person(s) named as Contractor

“Main Contractor’s Equipment” means any Equipment provided by the

“Main Contractor’s Personnel” means physical persons in the employ of or

“Main Contractor’s Requirements” means the document(s) sent to the

“Method Statement” means a statement or statements submitted by the

“Minimum Performance” means the minimal level of performance of the

“Notice” is a written notification intended to have effect under this

Start Date and first Day of the Time to Taking-Over.

“Payment Certificate” means a certificate issued under Article 42.