Claims & disputes 3.7

FIDIC reference

Sub-Clause 3.7 — Agreement or Determination

The Engineer first seeks agreement and, failing that, makes a fair determination.

Applies in: Red BookYellow BookSilver Book

The 2017 edition introduced a two-step mechanism: for any matter or claim the Engineer first consults the parties to reach agreement (3.7.1) and, failing agreement in time, makes a fair determination (3.7.2). The Engineer must act neutrally, not as the Employer’s agent. A determination is binding until revised through a Notice of Dissatisfaction and the DAAB. In the Silver Book this role is performed by the Employer.

Key points

  • Agreement first (3.7.1), then determination (3.7.2).
  • The Engineer acts neutrally, not as the Employer’s side.
  • The clause sets time limits for consultation and determination.
  • Disagreement goes via NOD and then the DAAB (Clause 21).

How this works in practice

Sub-Clause 3.7 is where the contract requires the Engineer to act neutrally while commercial reality pulls towards the paying party. On projects where the Engineer is funded as technical supervision and sits organisationally under the Employer, determinations either arrive late or simply restate the Employer’s position. The practical consequence for a Contractor is to build its case not around an expectation of a fair determination but around records that will still stand up before the DAAB. A failure to meet the consultation and determination periods is itself grounds to move up the ladder.

Common traps

  • Particular Conditions require the Employer’s approval before a determination is issued — neutrality disappears as a construct.
  • The consultation stage is skipped: a determination is issued with no attempt to reach agreement first.
  • The determination carries no reasons — harder to challenge before the DAAB, so ask for the reasoning in writing.

Versions: 1999 → 2017 → 2022

  1. 1999

    Determinations were made under Sub-Clause 3.5 without an explicit agreement step.

  2. 2017

    A two-step 3.7 mechanism (agreement → determination) and a neutrality duty were introduced.

  3. 2022

    The 2022 reprint clarified the 3.7 timing and procedure.

Clause FAQ

Which FIDIC books use Sub-Clause 3.7?

The clause applies in Red Book, Yellow Book, Silver Book. Particular Conditions may change the standard risk allocation, so always check the project contract.

What happens if the Engineer misses the determination period?

Under the 2017 editions, missing the period is treated as a deemed rejection, and the matter becomes a dispute that can be referred to the DAAB. That is a useful practical lever: the Engineer’s silence does not block the process, it unlocks the next rung. The one condition is that the periods and the absence of a determination must be documented, or the dispute will start with an argument about dates.

Does the Silver Book have a Sub-Clause 3.7?

The Silver Book has no independent Engineer in the classic sense — an Employer’s Representative acts instead, and the agreement-or-determination mechanism is structured differently. This is one reason not to adopt the Silver Book by default: losing the Engineer also removes the neutral filter that sits between the Employer’s position and a dispute.

Glossary terms

Engineer Engineer Determination Determination

Related clauses

20.2 Sub-Clause 20.2 — Claims procedure 21 Clause 21 — Disputes and the DAAB

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Reference material, not legal advice. Always check your contract and the Particular Conditions.