1️⃣ Purpose of Clause 1.13 – Compliance with Laws
(📖 Found in both 1999 and 2017 Yellow Book Editions)
🚀 Why is this clause even here?
Imagine you’re a Contractor building a sophisticated infrastructure project in a foreign country — let’s say, a wastewater treatment plant in India. Now think: Who is responsible for securing environmental approvals? Who needs to pay local taxes? What happens if new safety regulations are enacted midway?
That’s where Clause 1.13 comes into play. This clause is all about making sure that everyone — especially the Contractor — plays by the legal rulebook of the Country where the project is happening.
🎯 What is the core purpose of this clause?
At its heart, Clause 1.13 ensures that the project is executed lawfully and responsibly. It assigns legal compliance duties between the Employer and the Contractor, and this clause does two key things:
- It defines who is responsible for obtaining specific approvals.
- It clearly states that the Contractor is responsible for complying with all applicable laws and regulations.
Let’s break this down a bit further ⤵️
🧱 1999 Edition vs. 2017 Edition – Purpose in Both
✅ 1999 Edition:
- The Contractor is required to comply with the applicable Laws of the Country during performance of the Contract.
- The Employer is to obtain planning and zoning permissions and other approvals listed in the Specification.
- Everything else? That’s on the Contractor — they must obtain the permits, pay the taxes, give the notices.
✅ 2017 Edition:
- Same essential structure — Contractor still holds the primary legal compliance burden.
- But FIDIC tightens the wording to reflect modern best practices:
- Now explicitly includes design obligations (very important under Design-Build arrangements).
- Makes it clearer that the Employer only handles those approvals specifically stated in the Contract or Specification.
📌 This evolution from 1999 to 2017 shows a subtle but important shift:
- ➕ From implied responsibility to explicit allocation.
- ➕ From general “do everything” language to more risk-conscious drafting.
⚖️ Why is this important for everyone involved?
👷 For the Contractor:
- You’re stepping into a country where legal systems may differ dramatically from your home jurisdiction.
- Clause 1.13 ensures you’re not only building something — you’re building it within the boundaries of local law.
- It protects you from assumptions: If it’s not stated as the Employer’s responsibility, it defaults to you.
🧑💼 For the Employer:
- This clause clarifies the approvals you must provide upfront — typically those related to land use or government-level authorizations (e.g., zoning).
- Helps avoid disputes by stating, “This is what I (the Employer) will obtain, and here’s what you (Contractor) are expected to do.”
🏗️ For the Engineer:
- Serves as a reference point for determining whether the Contractor has met compliance obligations.
- Especially useful when assessing claims or disputes related to project delays caused by regulatory issues.
🔄 Historical Context and the Evolution from 1999 ➡️ 2017
Let’s zoom in on the why behind the wording changes in 2017:
- In the 1999 edition, the responsibilities were a bit more open-ended. The Employer “shall have obtained” some permits, but it wasn’t always crystal clear who did what.
- The 2017 edition took feedback from years of use and dispute cases. It clarifies the division of responsibility:
- Now, the Employer is only responsible if the Contract specifically says so.
- Also acknowledges that the Contractor may be involved in design, and thus must comply with laws not just in execution, but in designing the works too.
✅ This aligns perfectly with FIDIC’s overall 2017 approach: more clarity, more balance, fewer assumptions.
🔍 Keywords You Shouldn’t Miss:
- “Applicable Laws” – Not defined here, but broadly interpreted to mean any law in the Country that governs permits, taxes, safety, labor, environment, etc.
- “Unless otherwise stated in the Contract” – This tiny phrase is huge! It means: If the Specification or Particular Conditions don’t shift responsibility to the Employer, then by default, it’s on the Contractor.
- “In relation to the design (to the extent responsibility is allocated)” – Added in 2017 to reflect the Design-Build nature of the Yellow Book.
✨ So, What’s the Takeaway?
Clause 1.13 is not just legal fluff — it’s the backbone of lawful project execution. It forces the parties to talk early about who is responsible for what, and to write it down clearly in the Specification and Particular Conditions.
It promotes:
- 🛡️ Risk clarity
- 📄 Legal traceability
- ⚖️ Fairness in responsibility sharing
This clause may look simple, but it can make or break a Contractor’s experience, especially in countries with complex permitting environments (like India!).
2️⃣ Breakdown of Clause 1.13 – Compliance with Laws
📜 Let’s start with the FIDIC Yellow Book 1999 version:
Here’s the exact text of Clause 1.13 from the 1999 Edition:
“The Contractor shall, in performing the Contract, comply with applicable Laws. Unless otherwise stated in the Particular Conditions:
- the Employer shall have obtained (or shall obtain) the planning, zoning or similar permission for the Permanent Works, and
- the Employer shall have obtained (or shall obtain) any other permissions, licences or approvals described in the Specification as having been (or being) obtained by the Employer;
- the Contractor shall give all notices, pay all taxes, duties and fees, and obtain all permits, licences and approvals, as required by the Laws in relation to the execution and completion of the Works and the remedying of any defects.”
🧠 Let’s break this down, line by line – plain English + practical explanation:
🏗️ “The Contractor shall, in performing the Contract, comply with applicable Laws.”
This is the golden rule. If you’re the Contractor, you are expected to obey every relevant national, local, or industry-specific law in the Country where the Works are being executed. This includes:
- Environmental regulations 🌿
- Labour laws 🧑🏭
- Construction codes 🏢
- Safety standards ⚠️
- Taxation rules 💰
➡️ Practical Meaning: You cannot claim ignorance or say “but in my country, it’s different.” You’re legally bound to local rules — no exceptions.
🗂️ “Unless otherwise stated in the Particular Conditions…”
Aha! This phrase is crucial.
It means:
“The following responsibilities will apply unless the Employer and Contractor agree to change them in the Particular Conditions.”
So if there’s a negotiated arrangement in the Particular Conditions that shifts these duties, that arrangement takes precedence.
🏛️ “the Employer shall have obtained (or shall obtain) the planning, zoning or similar permission for the Permanent Works…”
This clause assigns a core responsibility to the Employer — securing high-level statutory approvals.
These are usually:
- Zoning permissions
- Planning approvals from urban/local authorities
- Land-use permits
- Right to build on the site legally
➡️ Why the Employer? Because these usually relate to the land itself, which the Employer owns or controls.
📌 This is especially relevant in public infrastructure, where the Employer is a government entity and has the necessary authority.
📋 “…and any other permissions, licences or approvals described in the Specification as having been (or being) obtained by the Employer;”
This sentence adds a safety net:
If the Specification specifically says that a particular license/approval will be obtained by the Employer, then that responsibility remains with them.
✅ This prevents confusion later. For example, if the Specification says:
“Environmental clearance from State Pollution Control Board shall be obtained by the Employer,”
…then that’s a contractual obligation on the Employer, and the Contractor can rely on it.
🛠️ “the Contractor shall give all notices, pay all taxes, duties and fees, and obtain all permits, licences and approvals, as required by the Laws…”
Now the big one for the Contractor. This is a catch-all obligation.
You, as Contractor, are responsible for:
- Filing legal notices (e.g., start of work notice to authorities)
- Paying local taxes and duties
- Obtaining:
- Labour licenses
- Equipment permits
- Construction safety approvals
- Waste disposal clearances
- Working hour permits
🚨 Note: This also includes permits that expire and need renewal — not just one-time approvals.
🔧 “…in relation to the execution and completion of the Works and the remedying of any defects.”
It doesn’t stop at just construction.
You’re also on the hook for compliance during:
- Final commissioning ✅
- Handing over 🚧
- Post-handover defect corrections 🔧
➡️ So, even if you’re called back during the Defects Notification Period, you must still comply with applicable laws when you enter the site.
⚖️ Now let’s look at the FIDIC Yellow Book 2017 version of Clause 1.13:
“In performing the Contract, the Contractor shall comply with applicable Laws. Unless otherwise stated in the Contract, the Employer shall have obtained (or shall obtain) the planning, zoning or similar permission for the Permanent Works and other permissions, licences or approvals stated in the Specification to be the responsibility of the Employer.”
“The Contractor shall give all notices, pay all taxes, duties and fees, and obtain all permits, licences and approvals, as required by the Laws in relation to the design (to the extent responsibility is allocated to the Contractor), execution and completion of the Works, and the remedying of any Defects.”
💡 What’s different in 2017? Let’s compare key lines.
✅ Reinforces the Contractor’s duty to comply with Laws
Same message: you must comply with all applicable Laws — no excuses.
📌 “Unless otherwise stated in the Contract”
This broadens the earlier wording (“Particular Conditions”) — now it includes any part of the Contract, not just Particular Conditions. That includes:
- General Conditions
- Specifications
- Employer’s Requirements
➡️ Result: Greater flexibility and clarity.
✏️ “…in relation to the design (to the extent responsibility is allocated to the Contractor)”
🔔 This is a new and critical addition in the 2017 edition!
Why? Because Yellow Book 2017 explicitly integrates Design and Build responsibilities.
So if you’re the Contractor, and you’re doing part of the design (say, structural calculations, electrical layout, etc.), you also have to comply with local design laws, building codes, and professional licensing requirements.
✅ This resolves ambiguity — in 1999, Contractors could argue, “We didn’t know local design rules applied to us.”
📝 Summary Table – Clause 1.13 Key Differences
| Aspect | 1999 Version | 2017 Version |
|---|---|---|
| Basic Compliance Requirement | Contractor must comply with all applicable laws | Same |
| Employer’s Obligation | Obtain planning/zoning & approvals stated in Specification | Same, but now broader reference to entire Contract |
| Design-Related Compliance | Not explicitly mentioned | ✅ Newly added — Contractor must comply with design-related laws if responsible |
| “Unless otherwise stated…” Scope | Limited to Particular Conditions | Broadened to entire Contract |
✅ Real-World Example for Better Context
Imagine you’re the Contractor building a desalination plant near the coast in Tamil Nadu.
- The Employer is expected to obtain coastal regulatory zone clearance (stated in the Specification).
- You, the Contractor, are responsible for:
- Local labour licenses
- Ensuring structural designs follow the Indian National Building Code (NBC)
- Paying local water usage taxes
- Getting permission for heavy vehicle movements on state highways
- Renewing your pollution control certificate for diesel generators during the DLP
Clause 1.13 ensures all of this is covered and responsibilities are clearly split.
3️⃣ Key Interpretations and Implications of Clause 1.13 – Compliance with Laws
👀 First, let’s frame the big picture:
Clause 1.13 may seem short and straightforward, but it carries some of the most critical risk allocation in the whole contract. One line misunderstood here could mean the difference between a Contractor absorbing lakhs (or crores) in unexpected costs — or successfully claiming an extension of time and reimbursement.
Let’s explore this clause like we’re sitting across the table during a contract workshop — and really think through what’s at stake for both sides.
✅ What are the Contractor’s core obligations?
Let’s break it down by responsibility area, using the actual language from the clause as our foundation:
🧾 1. Full Compliance with “Applicable Laws”
- This means every law, regulation, code, ordinance, or by-law in effect in the Country related to the project — not just federal laws but also state, regional, or municipal rules.
- ✅ In 1999: This obligation is placed on the Contractor during execution, completion, and defect correction.
- ✅ In 2017: This is expanded to include design responsibilities if the Contractor is tasked with design.
📘 So, if you’re designing an electrical substation under Yellow Book 2017, you’re also expected to comply with Indian Electricity Rules, National Building Code (NBC), and other design-related codes.
📝 2. Give Notices, Pay Taxes/Duties, Obtain Permits
You are the one — as the Contractor — who must:
- Submit formal notices to government agencies (labour department, pollution control board, etc.)
- Pay taxes like:
- GST 🧾
- Labour cess 👷♂️
- Vehicle entry taxes for equipment 🚧
- Secure permits like:
- Factory Inspector clearance
- Water extraction permissions
- Storage permits for hazardous materials (diesel, chemicals, etc.)
🟨 This list isn’t exhaustive. Anything not expressly stated as the Employer’s duty in the Specification or Particular Conditions will fall to you by default.
🚨 Key Risk: If you miss getting even one of these permits — and your work gets delayed — you may not be entitled to extra time or money.
🏗️ 3. Cover All Phases of the Work
This clause applies not just to the active construction phase but also to:
- 🔧 Commissioning: Are your commissioning activities meeting pollution norms?
- 🔄 Defect Rectification: Do you have the right licenses or insurances to return to site?
- 🧪 Testing: Have all safety certifications been renewed?
FIDIC wants you to be fully compliant throughout the entire lifecycle of the project.
🤝 So, what’s the Employer responsible for?
Under both versions of Clause 1.13:
- The Employer shall obtain:
- Planning and zoning permissions
- Other approvals explicitly listed in the Specification
That’s it. The Employer is not responsible for helping you secure:
- Labour licenses
- DG set emissions approvals
- Road usage permissions
- Entry permits for foreign staff
🟢 Unless the Specification or Contract says otherwise, these are all yours to manage.
🚨 Common Misunderstandings and Grey Areas
Let’s talk about the real-world ambiguities that often show up and how Clause 1.13 can either help or trip people up:
❓ “We thought the Employer would get the water connection approval!”
- 🔍 If the Specification says Employer will get it — then yes.
- ❌ If not mentioned — it’s Contractor’s problem.
❓ “The law changed mid-project and now I need a new fire-safety clearance. Do I get an extension?”
- 🚨 Not automatically.
- You must claim relief under Clause 13.6 (Adjustments for Changes in Legislation).
- Clause 1.13 doesn’t give relief — it just sets the compliance baseline.
❓ “What if I follow the law but it changes after I’ve already gotten permits?”
- Great question. That’s not handled by Clause 1.13 itself.
- You’d have to pursue a claim under:
- Clause 13.6 (1999/2017) – Changes in Law
- Clause 20.1 (2017) – Notice of Claim
📌 So, Clause 1.13 requires compliance — but doesn’t compensate you for law changes. That’s handled elsewhere.
🔗 Interplay with Other Clauses (Cross-Referencing)
Clause 1.13 connects deeply with several other key clauses:
| Clause (1999) | Interaction with 1.13 |
|---|---|
| 1.1.6.5 & 1.1.6.2 | These define “Laws” and “Country” — crucial for understanding what you must comply with. |
| 2.1 (Right of Access) | You may need certain permissions to enter and use the Site — even if the Employer gives access. |
| 4.1 (Contractor’s General Obligations) | Reinforces the duty to comply with the Contract — and by extension, Clause 1.13. |
| 13.6 (Adjustments for Changes in Laws) | Your best friend if new laws make work costlier or slower. |
| 20.1 / 20.2 (Claims) | Use these if non-compliance or law changes result in delay/cost. |
| 4.6 (Co-operation) | In practice, the Employer might help with local agencies — but not obligated under Clause 1.13. |
⚖️ Risk Allocation Snapshot
Let’s summarize the risks that Clause 1.13 places on each party:
| Responsibility | Contractor | Employer |
|---|---|---|
| Compliance with local/national law | ✅ | ❌ |
| Paying local taxes and fees | ✅ | ❌ |
| Getting building permits (unless stated) | ✅ | ❌ |
| Getting zoning/planning permissions | ❌ | ✅ |
| Getting approvals listed in Specification | ❌ | ✅ (if listed) |
| Risk of missing permit → delay | ✅ | ❌ |
| Liability for defects not complying with law | ✅ | ❌ |
🔮 Can this clause be negotiated?
Yes — and it should be! That’s what the Particular Conditions are for. You can:
- ✅ Shift responsibility for certain permits (e.g., environmental NOC, state-level tax registration) to the Employer
- ✅ List exact approvals each party must obtain — reduce ambiguity
- ✅ Add a requirement for co-operation in permit applications (e.g., Employer gives letters of authorization)
💡 Pro Tip:
Always align your project’s regulatory landscape with Clause 1.13 during contract drafting.
In India, this means referencing:
- EIA Notification 2006 (MoEF approvals)
- CPCB/SPCB requirements (pollution control)
- Labour Welfare Fund Acts
- Real Estate (Regulation and Development) Act if applicable
4️⃣ Cross-Referencing with Other Clauses
How does Sub-Clause 20.2.1 interact with the rest of the contract? Let’s unpack that like a claims consultant walking through a live project dispute resolution!
🔄 Why Cross-Referencing Matters
Think of Sub-Clause 20.2.1 [Consultation to Resolve Disagreement] as the first stop in the contractual “conflict resolution railway.” Before hopping onto the train of formal dispute resolution (like DAAB or arbitration), you need to stand at this platform and try to talk things out. But where do those rails lead? Let’s follow the connections.
🔗 Connection with Sub-Clause 20.1 [Contractor’s Claims]
📌 Why it matters: Many disagreements arise from claims under Sub-Clause 20.1—maybe the Contractor thinks he deserves more money or time. The Employer’s Representative may disagree. That’s when 20.2.1 kicks in.
🗣️ How they interact:
After the Engineer gives a determination under 20.1, if either party is unhappy and doesn’t accept it, they can initiate 20.2.1 to consult and try resolving things amicably.
✅ Practical Flow:
- Contractor notifies a claim (20.1).
- Engineer responds with a determination.
- Disagreement? → Engage in 20.2.1 consultation within 42 days.
🧠 Smart Tip: This is a classic hand-off moment in FIDIC’s dispute track: the baton passes from claim management to dispute avoidance.
🔄 Connection with Sub-Clause 3.7 [Agreement or Determination]
📌 This clause is a trigger mechanism for 20.2.1.
The Engineer is expected to first encourage agreement under Sub-Clause 3.7, and only then make a fair determination if no agreement is reached. If the determination isn’t accepted, then 20.2.1 becomes the avenue to keep the dialogue going.
✅ Flow Example:
- Engineer makes a determination → One party disagrees → That party has 28 days to give a Notice of Dissatisfaction (NoD) under 20.2.1.
- This NoD activates the consultation period.
🚨 Important Cross-Trigger: The NoD must be served within 28 days, or else the determination becomes final and binding. So, 20.2.1 is time-sensitive and heavily dependent on Clause 3.7 timing.
🔗 Connection with Sub-Clause 21.4 [Obtaining DAAB Decision]
📌 If consultation under 20.2.1 fails, the parties can refer the dispute to the DAAB under 21.4.
🗣️ How they interact:
The consultation period lasts 42 days, and if things aren’t resolved, either party may escalate the issue to the Dispute Avoidance/Adjudication Board (DAAB). FIDIC uses this step-by-step conflict resolution ladder to promote fairness and keep the courts as a last resort.
🧭 Think of 20.2.1 as a gateway:
You can’t skip straight to the DAAB—you must first attempt consultation unless both parties agree to skip it, which FIDIC permits under exceptional situations.
🔄 Connection with Sub-Clause 21.5 [Amicable Settlement] and 21.6 [Arbitration]
🪜 These come into play only after a DAAB decision has been issued and a party is still unhappy. So, 20.2.1 is the pre-pre-step before going all the way up the dispute resolution chain.
✅ Natural Sequence:
- Disagreement → 20.2.1 (Consultation)
- Still unresolved → 21.4 (DAAB)
- Still unresolved → 21.5 (Amicable Settlement)
- Finally → 21.6 (Arbitration)
🧠 Strategic Insight: Using 20.2.1 effectively can avoid time-consuming and costly DAAB or arbitration procedures. It’s not just a formality—it’s a tactical opportunity.
🔁 Interaction with Clause 1.1 [Definitions] – Specifically “Dispute”
📌 The definition of “Dispute” becomes super relevant here. A “dispute” in FIDIC arises when a party expressly disagrees with a determination or with another party’s action or inaction.
⚖️ So, 20.2.1 only applies once a dispute is formally born—not just a misunderstanding or casual grumble.
🧠 Practical Tip: This is where Contractors sometimes misstep. They think a delayed payment or ignored claim is automatically a dispute. It only becomes one when they formally raise an objection.
🔗 Other Notable Interactions:
- Sub-Clause 20.2.3 [Failure to Comply with Sub-Clause 20.2.1]
📌 If a party doesn’t follow the consultation step, the next steps in dispute resolution might be inadmissible. So skipping 20.2.1 isn’t just risky—it can disqualify your DAAB referral! - Sub-Clause 1.3 [Communications]
📌 All consultation-related notices and responses must be in writing and comply with Sub-Clause 1.3 for communication validity. This avoids later challenges on admissibility.
📊 Cross-Reference Map (At a Glance)
| Clause | Relationship with 20.2.1 | Key Takeaway |
|---|---|---|
| 20.1 | Source of most disagreements | Claims under 20.1 often lead to 20.2.1 |
| 3.7 | Engineer’s Determination precedes consultation | NoD must follow within 28 days |
| 21.4 | Next step if consultation fails | Escalate to DAAB |
| 21.5/21.6 | Final steps in dispute resolution | 20.2.1 is the first rung of the ladder |
| 1.1 | “Dispute” must be formalized | You need explicit disagreement |
| 1.3 | Governs how notices are exchanged | Ensures procedural compliance |
🧪 What If Scenario
💡 “What if the Contractor fails to issue a Notice of Dissatisfaction within 28 days after the Engineer’s Determination?”
✅ Then under 20.2.1, the determination becomes final and binding. No consultation. No DAAB. No arbitration. It’s game over unless there’s fraud or mutual agreement to reopen.
5️⃣ What If Scenarios?
🤔 What if the Employer forgets to get zoning approval?
➡️ If it’s stated as the Employer’s responsibility in the Specification, the Contractor is not liable, and delay/cost may be claimable under Clause 20.
🤔 What if the Contractor fails to get a work permit?
➡️ That’s the Contractor’s responsibility. They could face delays and may not be entitled to an extension of time or costs.
🤔 What if a new tax is imposed mid-project?
➡️ May be claimable under Clause 13.6 (Adjustments for Changes in Legislation).
6️⃣ Suggestions for Clarity and Improvement
Let’s sharpen Clause 1.13 to make it contractor-friendly, legally robust, and free from ambiguity — while aligning with FIDIC’s Golden Principles.
🔍 Why Does This Clause Need Improvement?
Clause 1.13 [Compliance with Laws] does its job… but could it do better? Definitely. While both editions (1999 and 2017) broadly achieve the goal of legal compliance, they leave room for:
- ✖️ Ambiguity on who exactly is responsible for what
- ✖️ No definitions of key legal terms like “applicable Laws”
- ✖️ No mention of co-operation between Employer and Contractor in difficult jurisdictions
- ✖️ Silence on timelines for obtaining certain approvals
Let’s fix that with practical, contract-savvy suggestions 🔧
🧠 Step-by-Step Improvements
🔹 1. Define “Applicable Laws” Clearly
📘 The Current Problem:
Neither the 1999 nor the 2017 edition defines what “applicable Laws” include.
➡️ In a country like India, this could involve:
- Central and State laws
- Municipal regulations
- Circulars from regulatory bodies
- Codes (e.g., NBC, IS codes, Labour Laws, GST rules)
🎯 Suggestion: Add a definition in Sub-Clause 1.1 [Definitions], or insert into Particular Conditions:
“Applicable Laws” means all statutes, regulations, ordinances, rules, by-laws, notifications, executive orders, and judicial interpretations (including those from municipal, state, and central authorities) applicable to the Site, the Works, or the performance of the Contract.”
✅ Benefit: This removes uncertainty about whether local labour welfare tax or a state-specific GST interpretation falls under “applicable Laws.” (Spoiler: it does!)
🔹 2. List Employer Responsibilities in a Table Format
📘 The Current Problem:
Clause 1.13 says the Employer shall obtain “planning, zoning or similar permissions” and others “stated in the Specification.”
But if the Specification doesn’t list them clearly? Boom 💥 — grey area.
🎯 Suggestion: Use a tabular list in the Particular Conditions to clarify Employer responsibilities, like:
| Approval/Permit | Responsible Party | Deadline |
|---|---|---|
| Zoning and planning clearance | Employer | Before Commencement Date |
| Pollution NOC from SPCB | Employer | 60 days before site access |
| Water extraction license | Contractor | 30 days before hydro-testing |
✅ Benefit: Zero confusion. Perfect alignment with FIDIC Golden Principle GP2: “Any modification should make clear whether it adds to, deletes, or replaces part of the General Conditions.”
🔹 3. Include Timeframes for Obtaining Permits
📘 The Current Problem:
Clause 1.13 doesn’t state by when permits or licenses need to be obtained.
🎯 Suggestion: Amend the clause in Particular Conditions to say:
“The Contractor shall obtain all required permits and licenses at least 21 days before the relevant activity requiring such permit is commenced.”
✅ Benefit: Brings time management into compliance and prevents “last-minute surprises.”
🔹 4. Add a Mutual Cooperation Clause
📘 The Current Problem:
FIDIC assumes the Contractor is solely responsible for navigating local bureaucracies — which may not always be realistic.
🎯 Suggestion: Insert a sub-clause encouraging Employer support:
“The Employer shall, at the Contractor’s request and cost, provide all reasonable assistance, including letters of authorization or introductions to government bodies, to facilitate the Contractor’s compliance with Laws.”
✅ Benefit: Especially helpful when dealing with government utilities, pollution boards, or licensing authorities.
🔹 5. Clarify Compliance in Design (for 2017 Edition)
The 2017 edition adds this brilliant phrase:
“…in relation to the design (to the extent responsibility is allocated to the Contractor)…”
✅ Great update. But you can make it even clearer in design-heavy projects by adding a Particular Condition like:
“Where the Contractor is responsible for any portion of the design, compliance with all applicable design codes and regulations shall be demonstrated via a compliance matrix submitted as part of the Design Documents under Sub-Clause 5.2.”
🎯 This ties design compliance directly to document submission — reducing chances of non-compliant design slipping through.
🔹 6. Mention the Consequences of Non-Compliance
📘 Current versions of Clause 1.13 don’t explicitly say what happens if a party fails to meet these legal duties.
🎯 Suggestion: Add language like:
“Failure by the Contractor to comply with applicable Laws shall constitute a breach of Contract under Sub-Clause 4.1, entitling the Employer to the remedies provided therein, without prejudice to any other legal remedies available under the Contract or Law.”
✅ Benefit: Draws a clear line between contractual duty and legal risk — reinforces accountability.
🔹 7. Create a Notification Flow for Law Changes
📘 Neither edition accounts for real-time communication when laws change mid-project.
🎯 Suggestion: Add a “compliance alert” mechanism in Particular Conditions:
“Each Party shall notify the other within 7 days of becoming aware of any changes in Laws that may materially affect the execution of the Works.”
🔗 This sets the stage for a Clause 13.6 (Changes in Legislation) claim later on.
✍️ Sample Particular Condition — All Improvements Rolled In
Sub-Clause 1.13 [Compliance with Laws] – Amended
The Contractor shall, in performing the Contract, comply with all Applicable Laws (as defined under Sub-Clause 1.1) in force in the Country, including but not limited to environmental, labour, safety, tax, customs, and building regulations.
The Employer shall obtain the following approvals:
(a) Planning permission from the municipal authority;
(b) Environmental clearance from the State Pollution Control Board;
(c) Zoning approval from the Town Planning Department;
The Contractor shall obtain all other permits, approvals, and clearances at least 21 days before commencement of the relevant activity. The Employer shall assist, where reasonably required, by providing letters of authorization or introductions to authorities.
Failure to comply with this clause shall be deemed a breach of Sub-Clause 4.1.
Both Parties shall notify each other within 7 days of any change in Laws that may affect the execution of the Works.
🔚 Final Thought: It’s Not Just a Legal Clause — It’s a Risk Control Tool!
Improving Clause 1.13 means:
- Fewer disputes over unclear obligations
- Fewer delays due to missing permits
- Better budgeting for compliance costs
- Stronger claims management under Clause 13.6 and Clause 20
7️⃣ Final Takeaways
| Aspect | FIDIC 1999 | FIDIC 2017 |
|---|---|---|
| Legal Compliance | Contractor must comply | Same |
| Employer’s Role | Zoning & specified approvals | Same, but clearer |
| Contractor’s Role | All other permits/taxes | Same + design responsibility |
| Risk Allocation | Based on Specification | More explicit in 2017 |
🎯 Best Practices:
- Be specific in the Specification about who obtains what.
- Use this Clause along with Clause 13.6 and Clause 20 when laws change.
- Ensure your Particular Conditions clarify grey areas.
📋 Sample Compliance Matrix – Clause 1.13 Support Tool
| Serial No. | Item/Activity | Applicable Law/Code/Standard | Responsible Party | Supporting Document/Proof | Submission Timing | Remarks |
|---|---|---|---|---|---|---|
| 1 | Structural Design | National Building Code (NBC) 2016 | Contractor | Design Compliance Statement | With Design Submission (Sub-Clause 5.2) | Include signed structural drawings |
| 2 | Fire Safety Design | IS 2190 / Local Fire Safety Norms | Contractor | Fire Safety Plan, NOC from Fire Dept | Before Start of Interior Works | Contractor to apply, Employer to support with site details |
| 3 | Pollution Control | Water Act, 1974 & Air Act, 1981 | Employer (if stated); else Contractor | Consent to Establish (CTE) & Consent to Operate (CTO) | CTE before starting works; CTO before commissioning | Check if Employer has pre-obtained clearances |
| 4 | Labour Law Compliance | Contract Labour (Regulation & Abolition) Act, 1970 | Contractor | Labour License, Provident Fund Registration | Before mobilization | Employer to issue authorization letter if required |
| 5 | GST & Taxation | CGST Act, 2017 and SGST Acts | Contractor | GST Registration Certificate | At Contract Award | GST invoicing required throughout project |
| 6 | Power Supply Connection | State Electricity Board Regulations | Contractor | Temporary Power Sanction Letter | Before equipment installation | Contractor applies; Employer provides land ownership proof |
| 7 | Environmental Clearance | EIA Notification, 2006 | Employer (typically) | MoEF Clearance Certificate | Before Site Access | Confirm if included in Employer’s responsibilities |
| 8 | Factory Installation License | Factories Act, 1948 | Contractor | Site Registration under Factory Act | Prior to commissioning | Applies if machinery qualifies as a “factory” |
| 9 | Road Access & Transport Permits | Motor Vehicles Act & Local RTO rules | Contractor | Heavy Vehicle Entry Permits | Prior to mobilization | Required for transporting oversized equipment |
| 10 | Design Codes for Electrical Works | IS 3043, IS 732, IE Rules | Contractor | Electrical Load Design, SLD, Compliance Checklists | With Design Submission | Attach with BOQ and layout approvals |
🔧 Tips for Using This Matrix
✅ Attach to your Design Submission Report as an annexure — especially for Sub-Clause 5.2 or 5.3.
✅ Update it regularly as laws or scope changes — particularly useful for managing claims under Clause 13.6 (Changes in Legislation).
✅ Use this to facilitate better communication with the Engineer, Employer, and regulatory bodies.
📋 Clause 1.13 – Compliance with Laws: Contractor’s Internal Compliance Checklist
| # | Item | Description / Action Required | Who is Responsible | Timeframe | ✅ |
|---|---|---|---|---|---|
| 1 | Understand “Applicable Laws” | Review all local, state, and national laws applicable to the Works (incl. design, construction, tax, safety) | Contractor’s Legal/Contracts Team | Before Mobilization | ⬜ |
| 2 | List Required Approvals & Permits | Create a register of all permits/licenses needed for the project (e.g. Pollution NOC, Labour License, etc.) | Contractor’s Compliance Lead | Before Mobilization | ⬜ |
| 3 | Check Specification for Employer Obligations | Confirm which permits/approvals are stated as Employer’s responsibility | Contractor’s Contracts Manager | Before Commencement Date | ⬜ |
| 4 | Confirm Zoning & Planning Clearance | Verify whether Employer has obtained required zoning/planning approvals | Employer (support: Contractor) | Before Site Handover | ⬜ |
| 5 | Obtain Labour License | Apply for labour license under Contract Labour Act if manpower > threshold | Contractor (HR/Legal) | Prior to deployment | ⬜ |
| 6 | GST & PAN Registration | Ensure valid tax registration numbers are in place | Contractor’s Accounts | Prior to invoicing | ⬜ |
| 7 | Secure Pollution Control Approvals | Apply for CTE (Consent to Establish) and CTO (Consent to Operate) from SPCB | Contractor or Employer (as agreed) | Prior to construction / commissioning | ⬜ |
| 8 | Identify Design-Specific Codes | List all technical codes and safety norms for design compliance | Contractor’s Design Lead | Before Design Submission | ⬜ |
| 9 | Include Compliance Matrix in Design | Submit a compliance matrix with design documents under Sub-Clause 5.2 | Contractor’s Design Manager | With each design package | ⬜ |
| 10 | File Statutory Notices | Notify local authorities as required (start of work, completion notices, etc.) | Contractor’s Site Admin | Before and during execution | ⬜ |
| 11 | Pay All Duties and Fees | Ensure timely payment of construction taxes, fees, cess, and local charges | Contractor’s Finance Team | Ongoing | ⬜ |
| 12 | Record All Approvals and Expiry Dates | Maintain a live log of all obtained permits with renewal reminders | Contractor’s Document Control | Continuous | ⬜ |
| 13 | Obtain Necessary Factory Licenses (if applicable) | Register site as factory if applicable under Factories Act | Contractor | Prior to commissioning | ⬜ |
| 14 | Employer Assistance Letters | Request letters of support or introduction from Employer, if needed | Contractor | As required | ⬜ |
| 15 | Monitor Changes in Laws | Set up legal updates tracking to detect any new laws affecting the Works | Contractor’s Legal Dept. | Monthly | ⬜ |
| 16 | Notify Employer of Law Changes | If laws change mid-project, notify Employer as required under PC | Contractor | Within 7 days of awareness | ⬜ |
| 17 | Train Project Staff on Local Law | Conduct induction training on applicable legal and permit obligations | Contractor’s HR/Safety | During mobilization | ⬜ |
| 18 | Document Non-Compliance Risks | Keep records of non-compliance and corrective actions taken | Contractor’s HSE/Legal | Ongoing | ⬜ |
| 19 | Plan for DLP Re-entry Approvals | Ensure permit validity for site re-entry during defect rectification | Contractor’s Site Lead | Before DLP works | ⬜ |
| 20 | Final Legal Compliance Audit | Conduct final check before Taking-Over Certificate to ensure all laws complied with | Contractor + Legal + QA | Before Sub-Clause 10.1 | ⬜ |
🧠 Pro Tip:
You can integrate this checklist into your project’s Contract Compliance Plan, or include it as an annexure to the Project Execution Plan. It also makes an excellent audit tool for internal reviews or Engineer’s inspections.
📨 Sample Letters for Clause 1.13 – Compliance with Laws
📄 Letter 1: Request for Assistance from Employer (Authorization Letter for Government Liaison)
📌 Scenario: Contractor needs Employer’s support for dealing with government authority.
[Contractor's Letterhead]
Date: [DD/MM/YYYY]
To,
The Employer
[Name of Employer Company]
[Address]
Subject: Request for Employer Support for Government Liaison – Compliance with Laws (Sub-Clause 1.13)
Dear [Employer’s Representative],
In accordance with Sub-Clause 1.13 of the Contract, we are in the process of obtaining statutory approvals and permits necessary for the execution of the Works.
We kindly request your support in issuing an authorization letter addressed to [Name of Authority, e.g., State Pollution Control Board], enabling us to proceed with the application for [Permit Type – e.g., Consent to Establish for the Project Site].
We appreciate your cooperation to ensure compliance with applicable Laws and a smooth project execution.
Thank you.
Yours faithfully,
For [Contractor's Company Name]
[Authorized Signatory Name]
[Designation]
📄 Letter 2: Notification of Change in Law (Triggering Clause 13.6 & 1.13)
📌 Scenario: Contractor informs Employer about a new tax or legal requirement affecting performance.
[Contractor’s Letterhead]
Date: [DD/MM/YYYY]
To,
The Employer
[Name of Employer Company]
[Address]
Subject: Notification of Change in Applicable Laws – Impact on Execution (Ref: Sub-Clause 1.13 and 13.6)
Dear [Employer’s Representative],
We wish to notify you, as per Sub-Clause 1.13 and in conjunction with Sub-Clause 13.6 of the Contract, that a change in applicable Laws has recently occurred which may impact the execution and cost of the Works.
Specifically, [describe the change – e.g., “the GST rate applicable to construction services has been increased from 12% to 18% effective from [date]”].
We are currently assessing the impact of this change and shall, if applicable, submit a formal claim under Sub-Clause 20.1 in due course.
We request your acknowledgement of this notice and look forward to discussing mitigation options.
Yours faithfully,
For [Contractor's Company Name]
[Authorized Signatory Name]
[Designation]
📄 Letter 3: Contractor’s Confirmation of Legal Compliance (At Key Milestone)
📌 Scenario: Contractor confirms compliance status before site access or commissioning.
[Contractor’s Letterhead]
Date: [DD/MM/YYYY]
To,
The Engineer
[Name of Engineer/Consultant]
[Address]
Subject: Confirmation of Statutory Compliance – As per Clause 1.13
Dear [Engineer’s Name],
We hereby confirm that, to date, all permits, approvals, licenses, and statutory clearances required under Sub-Clause 1.13 of the Contract for the execution of the Works up to this stage have been duly obtained.
A summary compliance matrix and copies of approvals are attached herewith for your reference. Should you require any further documentation or clarification, please let us know.
Thank you for your continued cooperation.
Yours faithfully,
For [Contractor's Company Name]
[Authorized Signatory Name]
[Designation]
📄 Letter 4: Employer Confirmation of Pre-Obtained Approvals
📌 Scenario: Employer confirms zoning/environmental clearances as per Specification.
[Employer’s Letterhead]
Date: [DD/MM/YYYY]
To,
The Contractor
[Contractor’s Name]
[Address]
Subject: Confirmation of Statutory Approvals Obtained – Sub-Clause 1.13 Compliance
Dear [Contractor's Representative],
This is to confirm that, as per the Specification and Sub-Clause 1.13 of the Contract, the following statutory approvals have been duly obtained by the Employer:
1. Environmental Clearance from [Authority Name] – Ref. No. [XXX], dated [Date]
2. Zoning and Land Use Approval from [Town Planning Authority] – Ref. No. [XXX], dated [Date]
3. [Any other applicable approvals]
You may proceed with the mobilization and application of any Contractor-responsible permits accordingly.
Yours faithfully,
For [Employer Company Name]
[Authorized Signatory Name]
[Designation]
📄 Letter 5: Request for Time Extension Due to Delayed Government Approval (Clause 1.13 + 20.1)
📌 Scenario: Contractor faces delay in obtaining an approval despite efforts.
[Contractor’s Letterhead]
Date: [DD/MM/YYYY]
To,
The Engineer
[Engineer’s Company Name]
[Address]
Subject: Request for Extension of Time Due to Delay in Governmental Approval (Clause 1.13 and 20.1)
Dear [Engineer’s Name],
We write to inform you that the anticipated permit for [e.g., Temporary Electrical Connection] required under Sub-Clause 1.13 has been delayed due to procedural holdups at the [Authority Name], despite our timely application.
We hereby submit this notice pursuant to Sub-Clause 20.1 and reserve our right to submit a fully detailed claim for an extension of time and/or additional cost once the delay and its effects are quantified.
We seek your kind understanding and request that this matter be recorded accordingly.
Yours faithfully,
For [Contractor's Company Name]
[Authorized Signatory Name]
[Designation]
🧠 Bonus Tip:
You can attach the compliance matrix and checklist (which we created earlier) as enclosures to many of these letters. It adds credibility and proof of diligence.