Clause 3.7 – FIDIC Yellow Book 1999 vs 2017 Explained

🔍 Comparative Clause Analysis: Clause 3.5 (1999) vs Clause 3.7 (2017) – Determinations

1️⃣ Purpose of the Clause

🎯 What’s This Clause All About?

In both editions, this clause is the go-to mechanism for handling situations where the Parties either:

• Disagree on something, or
• Need a formal decision to move forward.

But that’s where the similarity ends. Over time, FIDIC has reimagined the Engineer’s role—from a quasi-agent of the Employer in 1999 to a more neutral facilitator and adjudicator in 2017.

Let’s look at how this transformation plays out.

🔹 FIDIC 1999 – Clause 3.5: Determinations

In the 1999 Yellow Book, Clause 3.5 simply required the Engineer to:

1. Consult with both Parties in an attempt to reach agreement.
2. If no agreement: make a fair determination “in accordance with the Contract.”

📋 Key Characteristics:

• No specific deadlines.
• No procedural steps for consultation.
• No formatting requirements for the determination.
• The Engineer’s neutrality is assumed, but not spelled out.

📌 Bottom line: The clause was lean but vague. It gave the Engineer a lot of discretion, but also created uncertainty — especially for the Contractor who might feel the deck is stacked in the Employer’s favour.

🧠 As the Engineer was appointed (and paid) by the Employer, impartiality was often more theoretical than real.

🔸 FIDIC 2017 – Clause 3.7: Agreement or Determination

Fast forward to 2017, and we get a totally revamped version: Clause 3.7, titled Agreement or Determination. It’s not just a rewording — it’s a philosophical shift in how FIDIC wants parties to handle claims and disagreements.

Here’s the evolution:

💼 A New Ethos: Neutrality and Dialogue

“When carrying out his/her duties under this Sub-Clause, the Engineer shall act neutrally between the Parties and shall not be deemed to act for the Employer.”​

This is big. It’s the first time FIDIC explicitly codifies the Engineer’s neutrality. This helps Contractors trust the process more and shifts the Engineer’s role closer to that of a quasi-adjudicator.

🔧 Why Was This Upgrade Necessary?

📍 Real-world construction projects can be conflict-heavy. Delays, scope creep, and unclear responsibilities can all lead to disagreements. The 1999 model left too much to Engineer discretion without enough structure or safeguards.

✅ The 2017 model adds:

• Time discipline (42-day cycles),
• Procedural transparency, and
• Clear consequences if the Engineer doesn’t act.

For example:

“If the Engineer does not give the Notice of determination within the relevant time limit… in the case of a Claim, the Engineer shall be deemed to have given a determination rejecting the Claim.”​

That means silence isn’t golden—it has real consequences.

🧩 How It Ties Into the Bigger Contract Picture

Clause 3.7 is referenced all over the 2017 edition. It’s triggered in sub-clauses like:

• 1.9 (Errors in Employer’s Requirements),
• 4.7.3 (Rectification measures),
• 13.3.1, 14.4, 15.6, and more.

It also underpins all Claims under Clause 20 — meaning before a Party can escalate to a DAAB (Dispute Avoidance/Adjudication Board), they must go through the Clause 3.7 process.

So if Clause 3.5 in 1999 was a “procedural stop,” then Clause 3.7 in 2017 is more like a checkpoint with a proper tollbooth — you can’t move forward unless you’ve engaged in the process correctly.

🧠 Final Thoughts on Purpose

✅ Clause 3.5 laid the groundwork — a lean, flexible but ambiguous tool.

🚀 Clause 3.7 builds a full framework — emphasizing early resolution, neutrality, and transparency.

2️⃣ Breakdown of Clause 3.7 – Agreement or Determination (FIDIC 2017)

Let’s now break down the engine room of the Engineer’s neutral decision-making process — Clause 3.7. This clause doesn’t just throw the Engineer into the deep end with a “make a decision” mandate. Instead, it offers a thoughtfully layered process that encourages resolution before resorting to rigid determinations.

🔹 Sub-Clause 3.7.1 – Consultation to Reach Agreement

This is the first port of call. The Engineer must:

• Act promptly to kick off consultations between the Parties.
• Engage both Parties, separately or together, to explore mutual resolution.
• Record the consultation — unless agreed otherwise, both Parties must receive a written summary​.

🕰️ Time limit: The consultation should wrap up within 42 days, unless the Parties agree to an alternative timeline.

📜 If agreement is reached:

• The Engineer issues a “Notice of the Parties’ Agreement”, complete with signatures and a copy of the agreed terms.

🚨 If no agreement:

• The Engineer must immediately move to the next stage — determination under Sub-Clause 3.7.2.

👉 This phase is all about encouraging consensus and preventing disputes from snowballing. It’s proactive, not reactive.

🔹 Sub-Clause 3.7.2 – Engineer’s Determination

If consultations stall, the Engineer must step in — but not as an overlord. The role here is to make a “fair determination” based on:

• The Contract,
• The specific facts and context,
• And all relevant circumstances​.

The determination isn’t just a conclusion — it must come with:

• ✅ A formal Notice, clearly labeled as the “Notice of the Engineer’s Determination”,
• 📑 Detailed reasons, so both Parties understand the “why”,
• 📎 Supporting particulars, such as calculations, evidence, and references.

This is about transparency and fairness, not just making a call.

🔹 Sub-Clause 3.7.3 – Time Limits

Here’s where Clause 3.7 really flexes its muscles.

There are two key timeframes:

1. Consultation period (from 3.7.1): Engineer must try to achieve agreement within 42 days of a defined trigger point.
2. Determination period (from 3.7.2): If no agreement, the Engineer has another 42 days to issue the determination.

⏱️ Trigger dates vary:

• For clause-based matters (e.g., Clause 13.3.1 or 14.5): the specific clause tells you when the clock starts.
• For Claims under Clause 20:
  • It starts when the Engineer receives either the Notice of Claim or the fully detailed Claim, depending on the type​.

🚨 If the Engineer fails to respond on time:

• For a Claim: it’s deemed rejected.
• For other matters: it becomes a Dispute, eligible for DAAB referral without a NOD.

That’s a big deal — Clause 3.7 doesn’t let things sit in limbo.

🔹 Sub-Clause 3.7.4 – Effect of the Agreement or Determination

So, what happens once an agreement or determination is issued?

✅ It becomes binding unless:

• A Party challenges it under Clause 21 (Dispute Resolution), or
• There’s a typographical or clerical mistake, which can be corrected within 14 days.

The Engineer must issue a revised Notice within 7 days of discovering (or being notified of) the error.

Also:

• If the determination involves money, the Contractor must include it in the next Statement,
• The Engineer must include it in the next Payment Certificate.

➡️ This ensures determinations aren’t just paper exercises — they translate into actual project actions.

🔹 Sub-Clause 3.7.5 – Dissatisfaction with Engineer’s Determination

Here’s the safety valve.

If a Party disagrees with the Engineer’s decision, it must issue a Notice of Dissatisfaction (NOD):

• Clearly labeled as a “Notice of Dissatisfaction with the Engineer’s Determination”,
• Sent to the other Party, with a copy to the Engineer,
• Include reasons for the dissatisfaction.

🕒 Deadline: Must be issued within 28 days of:

• Receiving the Engineer’s determination (3.7.2),
• Receiving a corrected determination (3.7.4), or
• The date a determination was deemed rejected (under 3.7.3).

📌 If no NOD is issued in time — the determination becomes final and binding.

🔍 Partial NODs are allowed:

• You can dispute part of the decision while accepting the rest.
• The undisputed parts become binding; the rest can go to the DAAB.

💣 And here’s a heavy one:

• If a Party ignores a final determination, the other can go straight to arbitration under Clause 21.6 — no DAAB needed.

✅ In Summary

Clause 3.7 isn’t just a flowchart — it’s a well-oiled machine designed to keep projects moving, reduce disputes, and ensure both Parties are treated fairly. Here’s the cadence:

🚪 Doors to dispute are open, but only in a structured, time-bound way.

🤝 Try to agree.

🧑‍⚖️ If not, Engineer decides.

⏱️ Timelines keep it tight.

📜 Outcomes must be reasoned, documented, and shared.

3️⃣ Key Interpretations and Implications of Clause 3.7 (FIDIC 2017)

Clause 3.7 is where the rubber hits the road. This isn’t just a box-ticking procedure for engineers — it’s the front line of contract administration, where delays, payments, and disputes can all pivot based on how it’s applied. Let’s break down the key takeaways.

⚖️ The Engineer’s Role: From Agent to Arbitrator-Lite

Under previous FIDIC editions, the Engineer was perceived as wearing the Employer’s hat. But Clause 3.7 is crystal clear: when performing duties under this clause, the Engineer must act neutrally — not as an Employer’s mouthpiece​.

✅ Implication: This repositions the Engineer as a contractual referee, giving both Parties greater trust in the process. That said, neutrality isn’t just philosophical — it must be practiced in tone, behavior, and documentation.

⏱️ Timelines: 42-Day Rhythm, 28-Day Window

Clause 3.7 runs on two key timeframes:

• 42 days to reach agreement or make a determination.
• 28 days for either Party to issue a Notice of Dissatisfaction (NOD) if they disagree with the Engineer’s determination​.

These aren’t just soft suggestions — they’re contractual commitments. If the Engineer fails to issue a determination within the timeframe:

• For Claims: the Claim is deemed rejected.
• For other matters: it’s automatically a Dispute eligible for DAAB referral without needing a NOD​.

🚨 Implication: This built-in escalation mechanism prevents issues from being swept under the rug. The clock keeps ticking — and everyone must stay alert.

📤 Notice of Dissatisfaction (NOD): Your Only Ticket to Dispute

If a Party disagrees with the Engineer’s determination, they can issue a Notice of Dissatisfaction under Sub-Clause 3.7.5. But it must:

• Be clearly labeled as a “Notice of Dissatisfaction with the Engineer’s Determination”.
• Include the reasons for disagreement.
• Be sent within 28 days from the date of the Engineer’s notice (or deemed rejection)​.

📌 Partial dissatisfaction is allowed. So, if you only disagree with some parts of the determination, you can challenge those — and the rest becomes binding.

✅ Implication: This offers flexibility. You’re not stuck with an “all or nothing” situation — a huge win for fair process.

🔁 What if the Engineer’s Determination Involves Money?

Let’s say the Engineer determines that one Party owes money. Then what?

• The Contractor must include the amount in the next Statement.
• The Engineer must include it in the next Payment Certificate​.

✅ Implication: Determinations are not just academic — they trigger actual cash flow changes, making it essential that both Parties review every determination closely.

🚨 Finality and Enforceability

Once a determination is issued:

• If not challenged via NOD within the 28-day window, it becomes final and binding.
• If it involves clerical or typographical errors, those can be corrected within 14 days, with a revised notice issued in 7 days​.

But here’s a critical twist:

If a Party fails to comply with a final determination, the other Party can go directly to arbitration — no DAAB, no further notices required.

⚠️ Implication: Compliance isn’t optional. Ignoring a binding determination could fast-track you to an arbitration you didn’t expect.

🧠 Practical Takeaways

🔹 Engineers: Must document thoroughly, maintain neutrality, and act promptly.
🔹 Contractors and Employers: Must track timelines like hawks — miss a day, lose your leverage.
🔹 Project Managers: Build Clause 3.7 deadlines into your project control system. Use shared calendars, alerts, or dashboards.
🔹 Lawyers/Advisors: Train your teams on what a compliant NOD looks like — poor formatting or missing reasons can sink your dispute.

4️⃣ Cross-Referencing with Other Clauses: How Clause 3.7 Powers the Contract

Clause 3.7 doesn’t exist in a vacuum — it’s the connective tissue of the FIDIC Yellow Book 2017. Anytime the Engineer is asked to mediate, agree, or decide something under the Contract, chances are high that it’s Clause 3.7 doing the heavy lifting behind the scenes.

Let’s walk through where and how this clause gets activated across the contract.

🧩 A. Specific Clauses That Trigger Clause 3.7

The FIDIC contract doesn’t leave this to imagination. Sub-Clause 3.7 opens with a very clear instruction: it shall be used whenever a matter is referred for agreement or determination under these specific clauses:

• 1.9 – Errors in the Employer’s Requirements
• 4.7.3 – Agreement or Determination of rectification measures, delay and/or Cost
• 10.2 – Taking Over of Parts of the Works
• 11.2 – Cost of Remedying Defects
• 13.3.1 – Variation by Instruction
• 13.5 – Daywork
• 14.4 – Schedule of Payments
• 14.5 – Plant and Materials Intended for the Works
• 14.6.3 – Correction or Modification of Interim Payment Certificates
• 15.3 – Valuation after Termination for Contractor’s Default
• 15.6 – Valuation after Employer’s Convenience Termination
• 18.5 – Optional Termination due to Exceptional Events​

📌 Each of these clauses specifies the “date of commencement” for starting the 42-day consultation/determination process defined under Sub-Clause 3.7.3.

🛠️ B. Clause 20 – Claims

Clause 20 is another huge trigger zone for Clause 3.7.

Whenever a Claim is made (for time, money, or relief), and a fully detailed Claim is submitted under Sub-Clause 20.2.4 or 20.2.6:

• The Engineer must activate Clause 3.7,
• Begin with consultation (3.7.1), and if no agreement,
• Move to determination (3.7.2),
• Within a fixed timeframe.

🚨 Failing to do so? The consequences are contractually defined:

• For Claims: the Claim is deemed rejected.
• For other matters: the issue becomes a Dispute, and can proceed to the DAAB without a Notice of Dissatisfaction​.

⚖️ C. Clause 21 – Disputes and the DAAB

Clause 3.7 is the gatekeeper to formal dispute resolution under Clause 21.

If a Party disagrees with the Engineer’s determination:

• They must issue a Notice of Dissatisfaction (NOD) under Sub-Clause 3.7.5 within 28 days,
• This opens the door to the DAAB via Clause 21.4.

🔁 If the Engineer never issues a determination in time, the process skips ahead — the dispute is automatically eligible for referral.

🧠 Think of Clause 3.7 as a mandatory “first stop” on the way to any formal dispute, helping prevent unnecessary escalation.

💰 D. Impact on Payment and Cash Flow

When Clause 3.7 leads to a financial outcome:

• The Contractor must reflect it in their next Statement under Clause 14.3,
• The Engineer must include it in the next Payment Certificate under Sub-Clause 14.6.3.

💸 This ensures that the decisions made under 3.7 don’t just live in letters — they hit the cashbooks.

🧠 Final Reflections: Why Cross-References Matter

Understanding the full web of references to Clause 3.7 is more than trivia — it’s essential to managing risk, time, and money on a FIDIC project.

✅ If you know when Clause 3.7 is triggered, you can:

• 🕒 Start your stopwatch on the 42-day cycle,
• 📎 Prepare your documentation and arguments,
• 📤 Anticipate the need for a NOD,
• ⚖️ Avoid procedural missteps that can derail a Claim or delay resolution.

📋 A. Cross-Reference Matrix – Where Clause 3.7 Applies

5️⃣ What-If Scenarios: Putting Clause 3.7 into Action

Clause 3.7 isn’t just theory — it gets called into action whenever a real-world bump occurs in a project. Here’s where it gets interesting. Let’s walk through some real-life scenarios to explore how this clause behaves under pressure — and what the consequences are if timelines or obligations are missed.

❓ What if only part of the Engineer’s determination is disputed?

This happens a lot in practice. Maybe the Contractor is happy with the time extension but contests the cost valuation.

✅ The contract allows it:

• The dissatisfied Party must issue a Notice of Dissatisfaction (NOD), clearly identifying the specific part(s) they disagree with.
• The rest of the determination becomes final and binding​.

🧠 Implication: This avoids dragging the entire determination to dispute resolution — streamlining the process and honoring what’s already agreed.

❓ What if the Engineer doesn’t issue a determination within the 42-day deadline?

This clause is beautifully strict here.

• For Claims under Clause 20:
  • The Claim is deemed rejected.
• For other contractual matters:
  • The matter is automatically treated as a Dispute and can go to the DAAB without a NOD​.

✅ That’s right — no silence games allowed. The process moves on, Engineer or not.

❓ What happens if a Party fails to issue a Notice of Dissatisfaction (NOD) within 28 days?

No NOD = full acceptance.

• The determination becomes final and binding on both Parties​.
• This means:
  • The outcome is enforceable.
  • It flows into future Payments (Clause 14.6.3).
  • There’s no going back — the DAAB won’t hear it, and arbitration is out of bounds.

⏰ Time is critical. Missing the deadline is like missing your exit on a one-way highway.

❓ Can a Party challenge a “deemed rejection” of a Claim?

Yes — if the Engineer doesn’t respond in time, the Claim is deemed rejected. But the dissatisfied Party can:

• Treat it as a Dispute,
• Go straight to the DAAB (Clause 21.4),
• No NOD is needed in this case, because there was no “actual” determination to be dissatisfied with​.

📌 This ensures the Contractor isn’t punished for inaction by the Engineer.

❓ What if a Party refuses to comply with a final and binding determination?

🚨 This is where things get serious.

• If one Party ignores the determination, the other can skip straight to arbitration under Clause 21.6.
• There’s no need for a DAAB decision or a NOD — the only prerequisite is that the determination is final and binding​.

💬 In plain terms: Final means enforceable. You don’t negotiate anymore — you litigate.

❓ What if the NOD itself is flawed?

Let’s say a Party issues a NOD, but:

• It doesn’t carry the correct label,
• It lacks reasons,
• Or it’s filed late…

Then that NOD may not qualify under Sub-Clause 3.7.5, and:

• The original determination stands,
• The route to dispute resolution could be blocked,
• Arbitration rights may be lost​.

💡 Pro tip: Always format NODs exactly as required — clarity, timing, and purpose are essential.

🧠 Closing Thoughts

Clause 3.7 is not just legal procedure — it’s strategy. Here’s what you should always remember:

• Track the 42-day Engineer window and 28-day NOD deadline like project milestones.
• Don’t sit on your rights — delay can quietly shut the door on your claims.
• Engineer silence doesn’t stall the process — it triggers escalation.

🚀 In practice, building automated alerts into your contract management system can save you from missing these make-or-break dates.

6️⃣ Suggestions for Clarity and Improvement: Making Clause 3.7 Even Stronger

Clause 3.7 is a cornerstone of project governance, but like any cornerstone, its effectiveness depends on how cleanly it’s shaped and embedded. While the current language in the 2017 Yellow Book is much clearer than its 1999 predecessor, some areas can still benefit from clarification — especially in live project settings.

Let’s walk through some key enhancement opportunities, each backed by examples and suggested wording tweaks.

📌 A. “Neutrality” of the Engineer – Define It Operationally

The clause states that the Engineer “shall act neutrally between the Parties.” But what does neutrality actually look like?

🎯 Current Gap: The term is philosophically admirable but contractually vague. It doesn’t specify whether the Engineer must:

• Disclose potential conflicts of interest?
• Avoid ex parte communication?
• Maintain separate records of engagement?

🛠 Suggested Improvement:

“The Engineer shall act neutrally between the Parties, meaning the Engineer shall not have any undisclosed financial, professional, or personal interests in either Party and shall not engage in unilateral communication during any part of the Clause 3.7 process unless explicitly agreed by both Parties.”

✅ Impact: Adds enforceability and clarity to a critical concept.

📎 B. Format and Consistency of Notices – Standardize Them

FIDIC rightly mandates that:

• A determination must be titled “Notice of the Engineer’s Determination.”
• A NOD must say “Notice of Dissatisfaction with the Engineer’s Determination.”

🎯 Current Challenge: These notices are sometimes inconsistently labeled or inadequately reasoned in real projects.

🛠 Suggested Format Template for a NOD:

Subject: Notice of Dissatisfaction with the Engineer’s Determination
Date of Determination: [Insert date]
Reasons for Dissatisfaction:

• [Clearly outline issue #1]
• [Clearly outline issue #2]
  Relevant Contract Clauses: [Insert Clause numbers]

✅ Impact: Prevents invalid or vague notices that jeopardize dispute rights.

📊 C. Time Limits – Reinforce Them with Built-In Prompts

The Engineer has 42 days to issue a determination; the Parties have 28 days to submit a NOD. These are crucial.

🎯 Current Risk: Parties miss these deadlines, especially when they fall during holidays, site shutdowns, or changeovers.

🛠 Suggested Wording Addition to Sub-Clause 3.7.3:

“The Engineer shall notify both Parties, no less than 7 days before the expiration of each applicable time limit under this Sub-Clause, of the pending deadline.”

✅ Impact: Adds a layer of deadline visibility and reinforces timely action.

📂 D. Clarify “Partial Dissatisfaction” – Add Practical Examples

Clause 3.7.5 supports “partial dissatisfaction,” but it’s buried and abstract.

🎯 Current Gap: It’s not always clear how severability should apply.

🧾 Practical Example:

The Engineer determines that the Contractor is entitled to a 10-day extension and $20,000. The Contractor agrees with the extension but disputes the amount.
✅ The Contractor may issue a NOD only for the $20,000 — and the 10 days becomes binding.

🛠 Suggested Addendum in Sub-Clause 3.7.5:

“Where a Party is dissatisfied with only part of the determination, the NOD shall identify which portion is disputed. The undisputed portion shall be deemed severable and shall become final and binding.”

✅ Impact: Reduces ambiguity and speeds up uncontested project elements.

🧑‍🏫 E. Education and Workflow Tools

🎯 Real-Life Issue: Even experienced teams can mishandle the mechanics of Clause 3.7.

💡 Recommendations:

• Conduct mandatory induction sessions for all stakeholders (especially new project engineers).
• Use automated project dashboards that:
  • Track Clause 3.7 events.
  • Alert Parties as deadlines approach.
  • Store determinations and NODs with metadata.

✍️ F. Suggested Modified Wording (Example)

Here’s a refined version of part of Sub-Clause 3.7.5, incorporating improvements:

“If either Party is dissatisfied with the Engineer’s determination (or a deemed rejection or corrected determination), it shall issue a written notice clearly titled ‘Notice of Dissatisfaction with the Engineer’s Determination’ within 28 days of the relevant trigger date.

This notice shall:

• Specify whether the dissatisfaction is partial or total,
• Clearly identify the disputed element(s) of the determination,
• Provide the contractual and factual grounds for dissatisfaction,
• Be sent to the other Party and copied to the Engineer.

If no such notice is issued within the applicable time limit, the determination shall become final and binding, and enforceable under Sub-Clause 21.7.”

✅ This version:

Adds clarity and enforceability.

Follows FIDIC’s logical sequence,

Preserves the 3.7.5 structure,

7️⃣ Final Takeaways: Why Clause 3.7 Matters More Than You Think

Clause 3.7 is often referred to as the “engine room” of dispute avoidance and claim resolution in FIDIC 2017. It’s structured, it’s time-bound, and it’s packed with obligations for all parties — not just the Engineer.

🧠 Clause 3.7 in 2017 is one of the most robust process enhancements in modern FIDIC—it actively supports early resolution, time discipline, and fair decision-making, reducing the risk of prolonged disputes.

If used well, it can:

• 🚫 Prevent minor disagreements from escalating into disputes.
• 🧭 Guide the project through complex claim or variation issues.
• ⚖️ Promote fairness, especially now that the Engineer must act neutrally.
• 📆 Keep everyone accountable through enforceable deadlines.

Let’s break this down into a few key dimensions:

🔧 1. Clause 3.7 = Built-in Early Resolution Mechanism

Before you run off to a Dispute Board or an arbitrator, Clause 3.7 forces a structured pause:

• “Can we talk this through?” ➡️ That’s 3.7.1 – Consultation.
• “Okay, we can’t agree. Please decide.” ➡️ That’s 3.7.2 – Determination.

This isn’t just bureaucracy — it’s intentional. FIDIC wants parties to solve problems early, with professional guidance from the Engineer before the lawyers are called in.

✅ Good practice: Approach 3.7 consultations like formal negotiations — prepare your position, back it up with evidence, and aim to resolve at this stage.

⏱ 2. Timelines Aren’t Suggestions — They’re Contractual Triggers

The clause introduces strict 42-day and 28-day windows. And the consequences of missing those are serious:

• Engineer doesn’t act in time? Claim = deemed rejected, matter = Dispute.
• Party doesn’t issue a NOD in time? Determination = final and binding.

These timelines function like contractual clocks. The entire claim-and-dispute machinery operates based on them.

📌 Best practice: Use digital contract trackers or shared dashboards to monitor and alert teams to every 3.7 milestone.

⚖️ 3. Neutrality of the Engineer — No Longer Just the Employer’s Agent

The 2017 edition formally repositions the Engineer as a neutral actor under Clause 3.7 — a massive step forward in procedural fairness.

🧠 This helps Contractors trust the process more and gives both Parties a better shot at impartial treatment.

🚨 But neutrality must also be demonstrated. Avoid informal, one-sided discussions with the Engineer during 3.7 phases.

📋 4. NODs = Your Legal Safety Valve — But Only If Done Right

A Notice of Dissatisfaction is the only way to preserve the right to challenge a determination. But it’s not enough to just say “we’re not happy.”

✅ It must:

• Be titled correctly (“Notice of Dissatisfaction with the Engineer’s Determination”),
• Be sent on time (28 days),
• Include reasons for dissatisfaction.

🔍 Failing to format or explain it properly = procedural knockout. Your dispute could be rejected before it even begins.

🔀 5. Partial Disagreement? You’re Not Trapped

Clause 3.7.5 smartly allows partial dissatisfaction. This means:

• You can accept the part you agree with,
• And escalate only the disputed portion.

This leads to faster implementation of uncontested determinations while focusing only on what matters.

📌 Example: You agree to a 12-day extension, but contest the $40,000 valuation? Fine — only the valuation goes to the DAAB.

🔄 6. Cross-Linking Makes Clause 3.7 Inescapable

You’ll find 3.7 referenced in over a dozen other clauses — from variation instructions (13.3.1) to taking-over parts of the Works (10.2) and valuation after termination (15.3, 15.6).

So even if you never open Clause 3.7 directly, you’re already using it every time there’s a claim, instruction, or cost assessment that needs agreement.

📚 Strategy tip: Use a clause tracker that flags when 3.7 is activated by cross-referenced clauses.

🔚 Final Word: Treat Clause 3.7 as a Project Process — Not Just Legal Fine Print

Clause 3.7 is a live process, not a dormant clause. If used diligently, it:

• Facilitates quicker decisions,
• Improves transparency,
• Enhances trust between Parties,
• Reduces arbitration referrals,
• Protects your rights — if timelines and formats are followed.

✅ Key Reminders:

• Track every deadline.
• Document every step.
• Label every notice.
• Train every stakeholder.

Checklists

Below are four practical checklists in tabular format for Clause 3.7 (FIDIC Yellow Book 2017), organized by stakeholder actions and timing. Each row includes a checkbox for tracking during live contract management.

✅ 1. Engineer’s Checklist – Clause 3.7.1 & 3.7.2 (Agreement or Determination)

✅ 2. Party Checklist – Responding to Determination (Clause 3.7.5)

✅ 3. Deemed Rejection or Dispute Escalation Checklist

✅ 4. Final & Binding Determination Enforcement Checklist

Sample Letters

Below are four sample letters you can use under Clause 3.7 of the FIDIC Yellow Book 2017 — tailored to different scenarios a Party or the Engineer may encounter. Each is compliant with the contract and includes essential elements.

✉️ 1. Engineer’s Notice of the Parties’ Agreement (Sub-Clause 3.7.1)

Subject: Notice of Agreement Between the Parties – Clause 3.7.1
Date: [Insert Date]
Project: [Insert Project Name and Contract Number]
To: [Employer Name] / [Contractor Name]

Dear [Party Name],

Pursuant to Sub-Clause 3.7.1 of the Contract, I confirm that the Parties have reached agreement on the matter referenced below:

Matter: [e.g., EOT for Event XYZ / Evaluation of Variation under Clause 13.3.1]
Agreed Outcome: [Summarize agreement terms, e.g., 12-day extension, or USD 45,000 payment]
Date of Agreement: [Insert Date]

This agreement is now binding in accordance with the provisions of the Contract. Please sign below to acknowledge receipt and acceptance.

Yours sincerely,
[Engineer’s Name]
[Engineer’s Title]

Acknowledged by Contractor: _____________________
Acknowledged by Employer: _____________________

✉️ 2. Engineer’s Notice of Determination (Sub-Clause 3.7.2)

Subject: Notice of the Engineer’s Determination – Clause 3.7.2
Date: [Insert Date]
Project: [Insert Project Name and Contract Number]
To: [Employer and Contractor]

Dear Sirs,

In accordance with Sub-Clause 3.7.2 of the Contract, and following the consultation period under Sub-Clause 3.7.1, I hereby issue my determination regarding the following matter:

Reference: [e.g., Contractor’s Claim dated DD/MM/YYYY]
Background: [Summarize facts and reference clauses invoked]
Determination:

• Entitlement: [Yes/No]
• Extension of Time: [e.g., 10 calendar days granted]
• Payment: [e.g., USD 20,000 payable under Clause 14.6]

Reasoning:
[Provide brief explanation of how determination was made — contractual basis, supporting documentation, etc.]

Please note that under Sub-Clause 3.7.5, either Party may issue a Notice of Dissatisfaction within 28 days of receipt of this Notice should they wish to challenge this determination.

Yours faithfully,
[Engineer’s Name]
[Engineer’s Firm]

✉️ 3. Contractor’s Notice of Dissatisfaction (NOD) – Clause 3.7.5

Subject: Notice of Dissatisfaction with the Engineer’s Determination – Clause 3.7.5
Date: [Insert Date]
To: [Employer Name], cc: [Engineer Name]

Dear Sirs,

This is a Notice of Dissatisfaction with the Engineer’s Determination, issued in accordance with Sub-Clause 3.7.5 of the Contract.

Reference: Engineer’s Determination dated [Insert Date]
Matter: [e.g., Claim for Extension of Time related to XYZ Event]

Grounds for Dissatisfaction:

• The Engineer has failed to account for delays attributable to [Event].
• The monetary entitlement assessed does not reflect actual incurred costs supported by submitted records.

This notice is issued within the 28-day time limit. We consider this matter a Dispute and intend to proceed under Sub-Clause 21.4.

Yours sincerely,
[Contractor’s Representative]
[Position / Company Name]

✉️ 4. Notification of Deemed Rejection – Engineer’s Inaction (Clause 3.7.3)

Subject: Notification of Deemed Rejection under Sub-Clause 3.7.3
Date: [Insert Date]
To: [Engineer Name], cc: [Employer Name]

Dear [Engineer],

We refer to our fully detailed Claim dated [Insert Date], submitted in accordance with Sub-Clause 20.2.4. As of today, we note that the Engineer has not issued a determination within the time limit set out under Sub-Clause 3.7.3.

In accordance with the Contract, the Claim is therefore deemed rejected, and the matter shall now be treated as a Dispute under Sub-Clause 21.4.

We reserve our right to refer the matter to the Dispute Avoidance/Adjudication Board without further notice.

Yours sincerely,
[Party Representative Name]
[Title / Company]

📋 Clause 3.7 Decision Log Template

🛠 How to Use It

• Triggering Clause: From Sub-Clauses like 1.9, 4.7.3, 13.3.1, 20.2.4, etc.
• Consultation Start Date: Date the Engineer formally initiated 3.7.1 consultation.
• Determination Due Date: 42 days after end of consultation.
• NOD Deadline: 28 days after determination issuance or deemed rejection.
• Final Outcome: Note whether the issue was agreed, bound, escalated to DAAB, or moved to arbitration.

🧾 Clause 3.7 Cheat Sheet – Agreement or Determination (FIDIC Yellow Book 2017)

🔁 Standard Process Flow

⏱️ Key Deadlines

🚨 What-If Triggers & Remedies

📌 NOD Must-Haves (Sub-Clause 3.7.5)

✅ Clearly titled: “Notice of Dissatisfaction with the Engineer’s Determination”
✅ Includes specific reasons for dissatisfaction
✅ Issued within 28 days to both the other Party and the Engineer
✅ Can be partial, but must clearly state the disputed parts

📚 Cross-References to Watch

• Clause 20.2.5 – Triggers 3.7 for Claims
• Clause 21.4 – Referral to DAAB after valid NOD
• Clause 21.6 – Direct path to arbitration for ignored binding determinations

🔧 Suggested Redline of Clause 3.7 – Agreement or Determination (FIDIC 2017)

📍 Sub-Clause 3.7.1 – Consultation to Reach Agreement

Unchanged (already clear and functional).

📍 Sub-Clause 3.7.2 – Engineer’s Determination

Suggested Add-on at the end:

The Engineer shall ensure the Determination includes:

• A clear title: “Notice of the Engineer’s Determination”
• Reasoned analysis,
• Supporting contract references and factual evidence.

📍 Sub-Clause 3.7.3 – Time Limits

Suggested addition at the end of the existing text:

To support compliance, the Engineer shall notify both Parties no less than 7 days before the expiration of any time limit under this Sub-Clause, including consultation and determination periods.

📍 Sub-Clause 3.7.4 – Effect of Agreement or Determination

Suggested addition:

Where only part of a matter or Claim is agreed or determined, the binding effect shall apply only to the agreed or undisputed portion, provided that the Notice of Dissatisfaction (if any) clearly identifies the disputed element(s). Any uncontested elements shall be treated as severable and final.

📍 Sub-Clause 3.7.5 – Dissatisfaction with Engineer’s Determination

Original:

If either Party is dissatisfied with the Engineer’s determination, or with a deemed rejection or a corrected determination, then the dissatisfied Party shall give a Notice of Dissatisfaction setting out the matter in dispute and the reason(s) for dissatisfaction. The Notice of Dissatisfaction shall be given to the other Party, with a copy to the Engineer, within 28 days after receiving the determination, or the corrected determination, or the expiry of the time limit stated in Sub-Clause 3.7.3, as applicable. If the dissatisfied Party fails to give the Notice of Dissatisfaction within such period of 28 days, then the determination shall become final and binding.

🔁 Suggested Reworded Version (Redlined):

If either Party is dissatisfied with:

• the Engineer’s determination under Sub-Clause 3.7.2,
• a corrected determination under Sub-Clause 3.7.4, or
• a deemed rejection as per Sub-Clause 3.7.3,
  then such Party shall give a written Notice clearly titled “Notice of Dissatisfaction with the Engineer’s Determination.”

The Notice shall be issued within 28 days from the date of receipt (or deemed issuance) and:

• Specify whether the dissatisfaction is partial or total,
• Clearly identify the disputed element(s),
• Include the contractual and factual basis for dissatisfaction,
• Be copied to both the other Party and the Engineer.

✅ Any part of the determination not expressly contested shall become final and binding.

❌ Failure to issue a valid Notice within the above time limit shall result in the entire determination becoming final, binding, and enforceable.

✍️ Optional Addition to Sub-Clause 3.7 Preamble:

To clarify neutrality and procedural transparency, consider this enhancement:

When performing duties under this Sub-Clause, the Engineer shall act neutrally, meaning:

• Avoiding any actual or perceived conflict of interest,
• Disclosing any prior engagements or relationships that could impair impartiality,
• Ensuring equal opportunity for both Parties to present facts or arguments during consultation.

💡 Bonus: Add Cross-Reference Notes (Footnote Style)

Include practical reminders like:

Refer to Sub-Clause 20.2.5 for Claim-based triggers and Sub-Clause 21.6 for enforcement of final determinations.