Adjustments for Changes in Legislation – Clause Analysis of FIDIC 13.7 (1999) vs 13.6 (2017)

1️⃣ Purpose of Sub-Clause 13.7 (1999) and Sub-Clause 13.6 (2017)

🎯 Objective in Both Editions:

These clauses provide a mechanism to adjust the Contract Price (and in 2017, also Time for Completion) if there are changes in applicable laws after the Base Date that affect the Contractor’s performance. The intent is to ensure that the Contractor is not unfairly penalized due to external legal developments.

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4️⃣ Cross-Referencing with Other Clauses

(Let’s see how Sub-Clause 13.7 (1999) and 13.6 (2017) are connected with the rest of the contract! We’re going beyond the surface here — let’s unpack the hidden wiring of this clause.)

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🧩 A. Definition of “Laws” — the Foundation of this Clause

Before you even begin to apply Sub-Clause 13.7 (1999) or 13.6 (2017), you need to ask: what exactly qualifies as a “change in law”?

• 📘 1999 – Sub-Clause 1.1.6.5: “Laws” means all national (or state) legislation, statutes, ordinances and other laws, and regulations and by-laws of any legally constituted public authority​1. FIDIC Yellow Book 19….
• 📕 2017 – Sub-Clause 1.1.49: “Laws” includes treaties, decrees, orders, international law, and provincial laws, in addition to what was already covered in 1999​1. FIDIC Yellow Book 20….

📌 Why it matters:
The 2017 definition is more inclusive. It anticipates multinational infrastructure projects and cross-border regulations (think WTO, Basel norms, environmental treaties). This wider net expands Employer liability in a subtle but significant way.

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📜 B. Clause 1.13 – Compliance with Laws

This clause is the Contractor’s baseline duty to follow the law of the land.

• In both 1999 and 2017, it says the Contractor must comply with all applicable laws, licenses, permits, and approvals.

📕 In 2017, Sub-Clause 1.13(b)-(d) goes deeper:

• The Contractor must pay fees, obtain permits, and help the Employer get required licenses.
• If the Contractor suffers delay or cost due to Employer’s failure to obtain a required permit, the Contractor can claim under Sub-Clause 20.2 for cost and EOT​1. FIDIC Yellow Book 20….

📌 Connection to Clause 13.6:
So while Clause 1.13 says “you must comply,” Clause 13.6 steps in and says, “but if the law changes after the Base Date, and it hurts you — you’ll be compensated.”

Think of Clause 1.13 as the duty, and 13.6 as the relief valve when that duty becomes unexpectedly more expensive.

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📬 C. Sub-Clause 20.1 / 20.2 – Claims Process: The Engine Room of Enforcement

This is where things get procedural, and also a little risky for the Contractor.

🧭 FIDIC 1999 – Sub-Clause 20.1:

• Mentions a 28-day window to notify the Engineer of a claim.
• But here’s the issue — Clause 13.7 is silent on how it ties into Clause 20.1.
• That leads to arguments like, “Should the time bar apply or not?”

🛡️ FIDIC 2017 – Sub-Clause 20.2:

Crystal clear. If the Contractor wants cost or time due to a law change under 13.6, they must:

• ⏱️ Give notice within 28 days under 20.2.1.
• 📄 Submit a Fully Detailed Claim within 84 days under 20.2.4, which includes:
  • Legal basis of the claim
  • All records and documents
  • Specific amount or time requested​1. FIDIC Yellow Book 20…

🛠️ 20.2.6 even covers ongoing impacts — imagine a law that requires costly emissions monitoring every month. You’ll need to file interim claims monthly until the cost stops.

📌 Bottom Line:
If the Contractor doesn’t follow 20.2’s process, even a genuine legal change claim under 13.6 can fail. That’s why this linkage is absolutely crucial.

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⚖️ D. Sub-Clause 3.7 – Engineer’s Agreement or Determination

Once a claim is submitted under 13.6 and processed via 20.2, it moves to the Engineer for evaluation under Sub-Clause 3.7.

Here’s the twist — under 3.7, the Engineer must act neutrally (not on the Employer’s side!)​1. FIDIC Yellow Book 20….

Here’s how it works:

1. 👥 Sub-Clause 3.7.1 – The Engineer first tries to facilitate agreement between the parties.
2. 📩 If no agreement, then under 3.7.2, the Engineer issues a formal Determination.
3. ⏳ 3.7.3 sets a hard limit — the Engineer must issue a determination within 42 days after receiving the claim, unless a longer time is agreed.

📌 Why this matters:
Without this mechanism, Sub-Clause 13.6 would be a toothless clause. The combination of 20.2 (procedure) and 3.7 (decision) makes it contractually enforceable.

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📘 E. A Brief Word on 1999’s Clause 3.5 – “Determinations”

In the 1999 edition, the Engineer makes determinations under Sub-Clause 3.5, which is less structured than 2017’s 3.7.

• There’s no mandatory neutrality language.
• No process for consultation or timelines.
• This means the Engineer had broader discretion, and Contractors had less procedural protection.

In contrast, the 2017 edition turned that discretionary role into a transparent process with mutual checks.

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✨ Summary of Interactions (Visual Map):

Clause	Role in 13.7 (1999) / 13.6 (2017)
1.1.6.5 / 1.1.49	Defines “Laws” – sets the scope of applicable legal changes
1.13	Contractor’s duty to comply with all laws; 13.6 provides compensation if laws change later
20.1 / 20.2	Claims process – how the Contractor invokes 13.6; 2017 version is strict, 1999 is vague
3.5 (1999)	Engineer’s determination in 1999 – informal
3.7 (2017)	Engineer’s agreement/determination – formal, neutral, procedural
20.2.6 (2017)	Covers claims with continuing effects (e.g., recurring costs from regulatory change)

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5️⃣ What If Scenarios?

🟠 What if a new Indian tax law increases GST from 18% to 20% during the project?

✅ The Contractor can claim increased cost:

• In both editions, as it’s a post–Base Date change.
• In 2017, must issue notice within 28 days, then submit details in 84 days.

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🟠 A court ruling redefines hazardous waste handling, increasing disposal costs. Can the Contractor claim?

✅ Yes, because:

• Judicial interpretations are included under both clauses.
• In 2017, must comply with Sub-Clause 20.2 for timing and substantiation.

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🟠 What if the change occurred before the Base Date but its implications were realized later?

❌ Not compensable under either clause. The date of legal enactment or interpretation determines eligibility — not when its effects are understood.

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6️⃣ Suggestions for Clarity and Improvement

Let’s roll up our sleeves and see how we can sharpen this clause for real-world use. Because let’s face it — legislative changes aren’t rare anymore!

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🚨 A. Why This Clause Needs More Precision

Here’s the thing: while 13.7 (1999) and 13.6 (2017) are both solid, they leave a few open ends that could lead to misunderstandings or even disputes, especially in cross-border or regulatory-heavy projects.

Common Frictions:

• 🤷‍♂️ What counts as a “change in law”? (Especially with retrospective amendments?)
• 📅 When does the clock start ticking on notice periods?
• 🧾 How do you prove cost or delay if it’s caused by interpretation or policy circulars, not formal acts?

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🔍 B. Clarifications with Real-World Examples

🟢 Example 1 – Indian GST Rule Change (Cost Impact)

A new GST circular reclassifies a supply used in construction from 12% to 18% overnight.

• Under 1999: You’d rely on “judicial or official governmental interpretation” — ✅ allowed, but timing is vague.
• Under 2017: You must issue notice in 28 days under Sub-Clause 20.2 — or your claim could be barred.

🎯 Clarity Tip: Define what constitutes “official governmental interpretation” and provide examples like tax circulars, tribunal rulings, or ministerial notifications.

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🟡 Example 2 – Environmental Clearance Now Mandatory (Time Impact)

A new state regulation requires an Environmental Clearance for foundation excavation in forest zones.

• This could delay work by 90 days — but 1999 doesn’t even mention EOT in 13.7.
• 2017 covers both EOT and Cost — ✅ but only if timelines are met.

🎯 Clarity Tip: In Particular Conditions, include a non-exhaustive list of approvals that would trigger the clause — e.g., MoEF, Pollution Control Board, etc.

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✍️ C. Suggested Modified Wording (Compliant with FIDIC Golden Principles)

Here’s a proposed redraft of Sub-Clause 13.6 (2017), ideal for Indian infrastructure contracts:

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📄 Suggested Particular Conditions Text – Clause 13.6 (2017)

Sub-Clause 13.6 – Adjustments for Changes in Laws [Modified]

The Contract Price and/or the Time for Completion shall be adjusted to reflect any increase or decrease in Cost and/or time impact resulting from:

a. Any legislative change, statutory instrument, decree, judicial pronouncement, circular, notification, or interpretation thereof; b. Any change in the requirements for or the issuance of permits, approvals, clearances or consents by statutory bodies including but not limited to:

• Central or State Pollution Control Boards,
• MoEF&CC (Ministry of Environment, Forest & Climate Change),
• GST Council and Tax Authorities,
• Labour Commissionerate,
• Regional Development Authorities;

provided that such change:

• is made or officially published after the Base Date;
• was not reasonably foreseeable by the Contractor;
• has a demonstrable impact on the Contractor’s cost or schedule.

The Contractor shall, within 28 days of becoming aware of such change, give Notice to the Engineer. Full particulars shall be submitted within 84 days, in line with Sub-Clause 20.2.

Failure to meet these timelines shall result in loss of entitlement, unless the Engineer determines that the Contractor was prevented from compliance due to justifiable causes.

The Engineer shall, after consultation, agree or determine adjustments under Sub-Clause 3.7.

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📌 Explanation of the Changes

Modified Element	Why It Matters
Expanded scope of “change in laws”	Prevents arguments over whether tax circulars or policy notes qualify
Clear inclusion of permit/approval regimes	Vital for India, where regulatory approvals often delay work
Examples of authorities	Makes the clause tangible — especially for EPC & public works
“Not reasonably foreseeable” test	Adds fairness filter to limit spurious claims
Defined timelines for compliance	Reinforces procedural discipline under Sub-Clause 20.2

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🧱 D. Compliance with the FIDIC Golden Principles

The Golden Principles (GPs) allow for amendments to General Conditions when they clarify intent or ensure compliance with mandatory laws.

As per GP2:

“The Particular Conditions should clarify and fill out the General Conditions, not contradict or distort them.”​1. FIDIC Yellow Book 20…

✅ The above modifications:

• Preserve the intent of Sub-Clause 13.6,
• Do not alter rights or responsibilities arbitrarily,
• And make the Contract more enforceable in a specific legal jurisdiction (e.g., India).

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🎯 Final Takeaways for Clause Optimization

✅ If You’re an Employer: Clarify exactly what “change in law” means. Use examples and specify exclusions (e.g., minor local levies under ₹10,000/month may not be claimable).

✅ If You’re a Contractor: Maintain a Change-in-Law Logbook, and immediately flag new regulations with potential cost/time impact — even before full details are known.

✅ If You’re Drafting Particular Conditions:

Link timelines to Sub-Clause 20.2 but allow extensions in case of regulatory ambiguity.

Use defined terms like “Published Regulation” or “Designated Authority”.

7️⃣🧭 What Happens After the Contractor Issues Notice under Sub-Clause 13.6?

You’re absolutely right to ask:

“Does giving notice mean the Engineer immediately decides the outcome, or is there a structured path?”

The answer is: 🚦 It’s a multi-stage process — and the Engineer’s determination happens after both notice and submission of particulars.

Let’s break it down.

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🔄 Full Step-by-Step Flow (FIDIC 2017 – Clauses 13.6 + 20.2 + 3.7)

🟨 Step 1: Triggering Event

• A change in Laws occurs that affects the Contractor’s cost and/or time.
• It must happen after the Base Date.

🟧 Step 2: Notice (Sub-Clause 20.2.1)

The Contractor must give Notice within 28 days of becoming aware of the change.

• This is not the claim itself, just a signal that a claim may come.
• If this notice is not given, the Contractor loses entitlement, unless there’s a valid reason accepted by the Engineer.

🟦 Step 3: Submission of Fully Detailed Claim (Sub-Clause 20.2.4)

Within 84 days of the event (or becoming aware of its consequences), the Contractor must submit:

• A statement of facts,
• Supporting documents (e.g., new law, memo, cost breakdown),
• Extension of Time request (if applicable),
• Legal and contractual basis for the claim.

🛠️ Note: At this point, Sub-Clause 13.6 is only one part of the basis — the claim is now processed under the full structure of Clause 20.2.

🟩 Step 4: Engineer’s Agreement or Determination (Sub-Clause 3.7)

After receiving the fully detailed claim, the Engineer must:

• Attempt agreement between parties (3.7.1),
• If no agreement, then issue a determination within 42 days (or other agreed time) under 3.7.2,
• The Engineer must be neutral and base their decision on the contract and facts.

📌 So, to answer your doubt clearly:

✅ The Engineer’s determination IS required.
Giving notice doesn’t skip this — it only starts the process.

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💡 Visual Snapshot of the Sequence

CHANGE IN LAW OCCURS ➡️ Contractor Notices (28 days) ➡️
Submits Full Particulars (84 days) ➡️
Engineer Reviews ➡️
🤝 Agreement Attempt OR 🧑‍⚖️ Determination ➡️
(Dispute? → Dispute Avoidance/Adjudication Board under Clause 21)

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🔄 Important Cross-Linkage in 13.6 Itself:

“The Engineer shall proceed under Sub-Clause 3.7 [Agreement or Determination] to agree or determine these matters.”

✅ So yes — Sub-Clause 13.6 directly instructs the Engineer to engage after the full claim is received.

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8️⃣🧠 Final Summary:

Stage	What Happens?	Is Engineer Involved?
Notice	Contractor gives early warning	✅ Aware, but no decision yet
Full Particulars	Contractor submits detailed claim	✅ Yes, triggers action
Agreement or Determination	Engineer must act per Sub-Clause 3.7	✅ Yes, critical role

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Final Takeaways

✅ Topic	📘 1999 – 13.7	📕 2017 – 13.6
Change in Law Protection	✅ Yes	✅ Yes
Covers Time Impact	❌ No	✅ Yes
Notice/Details Timelines	❌ None	✅ 28/84 Days
Legal Scope	Narrower	Broader (incl. treaties, int’l law)
Tied to Claims Procedure	Implicit	Explicit
Clarity & Structure	Medium	High

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🧠 Final Thought:

FIDIC 2017 Sub-Clause 13.6 reflects a more modern, legally robust, and structured approach. It offers:

• ✅ Better risk allocation
• ✅ Stronger procedural discipline
• ✅ Wider protection for Contractors (if deadlines are met)

But it also requires Contractors to be more vigilant and organized in contract administration. Missing a deadline could mean losing entitlement—even for a legitimate cost.

📋 FIDIC 2017 – Sub-Clause 13.6 Compliance Checklist

Step	Responsibility	Action Item	Done ✅
1️⃣	Contractor	Monitor for any change in laws, regulations, judicial interpretations, circulars, or government notifications after the Base Date.	⬜
2️⃣	Contractor	Assess whether the legal change will cause additional cost and/or delay in performance of contractual obligations.	⬜
3️⃣	Contractor	Within 28 days of becoming aware, submit a Notice under Sub-Clause 20.2.1 to the Engineer.	⬜
4️⃣	Contractor	Maintain a record of the date of awareness of the legal change for documentation and timeline control.	⬜
5️⃣	Contractor	Submit a Fully Detailed Claim under 20.2.4 within 84 days of the event or awareness, including: – Copy of the legal change – Cost impact breakdown – EOT request (if applicable) – Legal/contractual basis (reference to Sub-Clause 13.6)	⬜
6️⃣	Contractor	If the legal change has continuing effects (e.g., ongoing tax changes), submit Monthly Interim Claims as per Sub-Clause 20.2.6.	⬜
7️⃣	Engineer	Upon receipt of the full claim, initiate consultation for agreement between Contractor and Employer under Sub-Clause 3.7.1.	⬜
8️⃣	Engineer	If no agreement is reached, issue a formal determination within 42 days under Sub-Clause 3.7.2.	⬜
9️⃣	Contractor & Engineer	Ensure all correspondence, documents, and determinations are logged and filed properly to support any future DAAB or arbitration reference.	⬜
🔟	Employer	Acknowledge and act upon the Engineer’s determination promptly, including issuing Variation or payment adjustment if required.	⬜

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✅ Bonus: Suggested Project Management Tip

📂 Maintain a dedicated “Change in Law Tracker” as part of your project document control system. Include a column for:

• Date of publication,
• Source of law/circular,
• Initial assessment (impact/no impact),
• Notification date,
• Claim ID/reference.

📬 SAMPLE LETTERS UNDER SUB-CLAUSE 13.6 (FIDIC 2017)

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📄 Letter 1: Initial Notice of Claim (within 28 days)

📌 Scenario: Introduction of a new GST surcharge on imported construction goods.

Subject: Notice under Sub-Clause 20.2.1 – Change in Laws (GST Surcharge Introduction)

To: The Engineer
Date: [Insert Date]
Contract: [Project Name and Contract Number]

Dear [Engineer’s Name],

In accordance with Sub-Clause 20.2.1 and Sub-Clause 13.6 of the Conditions of Contract, we hereby give notice of a change in Laws which we believe will have a material impact on our performance of the Works.

On [Date of Awareness], we became aware of a notification issued by the Central Board of Indirect Taxes & Customs (CBIC), which introduces a 5% surcharge on imported construction materials classified under HSN Code XXXX. The notification is effective from [Effective Date] and applies to materials critical to our ongoing procurement activities under the Contract.

We consider that this change in law constitutes grounds for a claim for adjustment to the Contract Price under Sub-Clause 13.6.

We shall submit full particulars of the claim within 84 days as per Sub-Clause 20.2.4.

Yours faithfully,
[Authorized Signatory]
[Contractor’s Company Name]

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📄 Letter 2: Submission of Fully Detailed Claim (within 84 days)

📌 Scenario: Delay due to new requirement for Environmental Clearance.

Subject: Submission of Full Particulars – Claim under Sub-Clause 13.6 (Delay due to Environmental Clearance Regulation)

Dear [Engineer’s Name],

Following our notice dated [Notice Date] regarding the introduction of a new regulation under the [State/Environmental Act], we hereby submit the fully detailed claim under Sub-Clause 20.2.4.

The regulation issued by [Authority] on [Date] mandates an Environmental Clearance (EC) process for excavation works near designated forest zones. As our site lies within 1.2 km of such a zone, the new requirement has delayed our access to excavation and piling activities.

We request:

• An extension of [Number of Days] to the Time for Completion,
• Additional Cost amounting to [INR/USD Amount], including costs for consultants, application fees, and idle equipment.

Please find enclosed:

• Copy of Government Notification
• Revised Programme indicating delay
• Cost breakdown with supporting invoices
• Legal analysis referencing Sub-Clause 13.6 and 20.2

We request you to proceed under Sub-Clause 3.7 for agreement or determination.

Yours faithfully,
[Authorized Signatory]
[Contractor’s Company Name]

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📄 Letter 3: Monthly Interim Claim (for continuing cost impact)

📌 Scenario: Ongoing monthly cost due to compliance with revised safety regulations.

Subject: Interim Monthly Claim – Continuing Effects of Change in Law (New Safety Inspection Regime)

Dear [Engineer’s Name],

As per Sub-Clause 20.2.6, we submit our monthly interim claim regarding continuing impacts from the implementation of the [National Construction Safety Rules 2024] enforced from [Date].

The regulation mandates third-party safety inspections and weekly reporting, incurring additional costs of [Amount] per month since [Start Month].

Please find enclosed:

• Consultant invoices,
• Monthly safety logs,
• Attendance and deployment records,
• Cumulative summary of prior claims under this head.

We will continue submitting interim claims monthly until the cost impact ceases.

Yours faithfully,
[Authorized Signatory]
[Contractor’s Company Name]

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📄 Letter 4: Engineer’s Response (Request for Clarification / Acknowledgement)

📌 Scenario: Engineer acknowledges the claim but seeks further clarification.

Subject: Acknowledgement of Claim under Sub-Clause 13.6 – Request for Further Details

Dear [Contractor’s Name],

We acknowledge receipt of your notice dated [Insert Date] and your claim submission dated [Insert Date], concerning the change in law regarding [brief reference].

Before proceeding with the determination under Sub-Clause 3.7, we request the following additional information:

• Clarification on how the cost impact was calculated,
• Revised resource histogram reflecting the delay impact,
• Comparison of pre- and post-change legal positions.

Please submit the requested information within [X days] to avoid delay in the determination process.

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

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📄 Letter 5: Engineer’s Determination (Final Outcome)

📌 Scenario: Engineer completes review and issues determination.

Subject: Engineer’s Determination under Sub-Clause 3.7 – Claim under Sub-Clause 13.6

Dear [Contractor’s Name],

We refer to your notice dated [Insert Date] and full particulars dated [Insert Date], regarding the change in laws affecting [short summary].

Pursuant to our consultation and review under Sub-Clause 3.7, we hereby determine that:

• The Contractor is entitled to an extension of [X days] to the Time for Completion.
• The Contractor is entitled to a payment of [Amount], to be certified in the next IPC.

This determination is made without prejudice to either Party’s right to refer the matter to the DAAB under Clause 21.

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