Islamic Development Bank signs five-year agreement to use FIDIC standard contracts

16 Oct 2020

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FIDIC has secured a major agreement with the Islamic Development Bank (IsDB) that will see the international funding organisation include the use of seven FIDIC standard contracts for the next five years.

Under the terms of the agreement, FIDIC has granted the IsDB a non-exclusive licence to refer to seven major FIDIC contracts (see list below) for projects they finance and the documents may be used as part of the bank’s standard tender documents. The contracts include the latest 2017 Second Edition FIDIC contracts and 1999 editions, which cover a wide range of international construction and infrastructure work and the move by IsDB in signing the agreement represents another significant endorsement for FIDIC contracts from a major international funding organisation, following similar agreements signed with the World Bank, Inter-American Development Bank, Caribbean Development Bank, Asian Infrastructure Investment Bank, and the European Bank for Reconstruction and Development in recent months.

FIDIC chief executive Dr Nelson Ogunshakin said: “We are delighted to have signed this agreement with the IsDB as it means that FIDIC has now entered into similar agreements with nearly all of the major international funding organisations. This will create more certainty in the market as by adopting the FIDIC contacts on major projects the IsDB is saying that they endorse the fair and balanced approach that these documents offer to parties on major construction contracts.

“The IsDB’s endorsement should provide additional comfort to the financial, institutional and private equity investors operating in the global market to adopt the use of FIDIC standard procurement contracts as an effective tool to mitigate the risks associated with investable infrastructure asset class.”

Commenting on the signing of the agreement Dr Mansur Muhtar, vice-president, country programmes at the IsDB, said: “IsDB is pleased to sign this license agreement with FIDIC, as it will enable the bank and our member countries to adopt best practices in procurement and contract management. The FIDIC standard conditions of contract are widely used in IsDB member countries, who will be the main beneficiary of this partnership.

“The FIDIC conditions of contract come with a set of explanatory guides, training modules and regular regional and international contracts users’ conferences, which will enable our member countries to fully benefit from this upgradation. I am certain that the adoption of the updated suite of FIDIC documents along with the bank’s new procurement framework will significantly enhance the quality of procurement in IsDB financed projects.”

FIDIC president Bill Howard said: “I’m delighted to see this move by the IsDB. Strengthening FIDIC’s relationships with the banks and international funding institutions will enhance our efforts to coordinate our engagement with the financial institutions that will benefit the whole industry. Such agreements are good for FIDIC and good for the global infrastructure sector and I look forward to a mutually beneficial relationship with IsDB and all the other multilateral development banks over the coming years.”

The seven FIDIC contract documents covered by the FIDIC/IsDB agreement are as follows: -

- Conditions of Contract for Construction for Building and Engineering Works Designed by the Employer (“Red book”), Second edition 2017;
- Conditions of Contract for Plant & Design-Build for Electrical & Mechanical Plant & for Building & Engineering Works Designed by the Contractor (“Yellow book”), Second edition 2017;
- Conditions of Contract for EPC Turnkey Projects (Silver book), Second Edition, 2017);
- Client/Consultant Model Services Agreement (“White book”), Fifth Edition 2017;
- Conditions of Contract for Design, Build and Operate Projects (“Gold book”) First Edition 2008;
- The Short Form of Contract (“Green book”), First Edition 1999;
- Conditions of Contract for Underground Works (Emerald book), 2019 Edition.

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