In response to industry demand, FIDIC is currently preparing a subcontract for work developed by the employer for subcontracting, which will be supported by the 1999 FIDIC books Red1 and Pink2. In November 2009, FIDIC published a test issue of the sub-contract for comments. The test edition is largely well worded, but some pass-down provisions could be linked to a revision in the final version to be published this year. The dispute resolution clauses in the trial number attempt to address the three issues mentioned above, but unfortunately they are somewhat absent and pose significant risks to both the principal contractor and the subcontractor. Here, too, it is hoped that these issues will be resolved in the final version. For a more detailed comment on the FIDIC test sub-contract, click here. In the case of a back-to-back system, a dispute between the employment master and the employer should have a significant impact on the relationship between the principal contractor and the subcontractor, and vice versa. Back-back agreements, where a principal contractor attempts to entrust obligations and commitments to the employer to his subcontractors, are becoming more common in construction projects. While they may be a convenient way to transfer risks and commitments down the chain of responsibility, inadequate wording can lead to particularly complex and difficult-to-resolve disputes. There are therefore clear benefits for contractors in the implementation of return agreements. However, in practice, it can be difficult to conclude back-to-back agreements. The first approach is often seen by contractors as the simplest and therefore most cost-effective way to reduce debt. But without careful attention, such an approach can often create difficulties.
Particular caution should be exercised when developing back-to-back provisions. For example, a general provision that all references to the main contract to the “employer” and “principal contractor” in the subcontract must be read as references to the “primary contractor” or “subcontractor” cannot be adapted to any obligation and lead to the cancellation or interpretation of a substantial duration of the contract.