Sub-Clause 14.14 – FIDIC Yellow Book Guide to Employer’s Liability

🧑‍💼 For the Employer: A Line in the Sand

• It gives the Employer a clear financial endpoint.
• No one wants to face endless claims long after a project ends, especially when budgets are already closed and audits are done.
• So this clause protects the Employer from surprise late-stage claims—unless those claims were properly submitted and documented beforehand.

Think of it as the Employer saying, “You had your chance to tell me what I owe—if it’s not in the final documents, I assume we’re square.”

🧑‍🔧 For the Contractor: A Final Shot at Recovery

• This clause is also a wake-up call for the Contractor: Don’t miss the bus.
• If there’s any issue—a pending payment, a variation not settled, an unresolved claim—you must expressly include it in your:
  • Statement at Completion (as per Sub-Clause 14.10) AND/OR
  • Final Statement (as per Sub-Clause 14.11)

If not, it may be lost forever—even if the Contractor was genuinely entitled to it. 😬

🗣️ It’s like the Contract is saying:

“Speak now or forever hold your peace (unless there’s fraud or deliberate foul play, of course).”

🔁 The Timing Makes All the Difference

Here’s where the clause gets even more interesting—it makes a distinction based on timing:

• If the matter arose before the Taking-Over Certificate, it must be in both the:
  • Statement at Completion, and
  • Final Statement.
• If the matter arose after the Taking-Over, then just the Final Statement is enough.

This is a clever little legal nuance that acknowledges the shifting responsibilities and liabilities at different project stages.

🧨 But Wait—There’s an Escape Hatch 🔓

FIDIC doesn’t want this clause to be abused as a total liability shield for the Employer. So it says very clearly:

This clause does not limit liability where the Employer is guilty of:

• Indemnification obligations (like third-party claims),
• Fraud (e.g., intentionally hiding something),
• Deliberate default, or
• Reckless misconduct (gross negligence, willful blindness, etc.)

So even if the Contractor missed a deadline or didn’t submit a formal claim, the Employer can’t just shrug off serious wrongdoing. 💥

🔍 “The Employer shall not be liable…”

This is the clause laying down its boundary line. It’s saying:

“Dear Contractor, don’t come knocking later for payments or claims if you didn’t raise them on time and in the right format.”

This isn’t a minor procedural formality. It’s a full legal shut-off valve for any and all financial claims—unless certain conditions are met.

Think of it like this: ❌ If it’s not in the system, it doesn’t exist (as far as the Employer is concerned).

🧱 “in the Final Statement” (Clause 14.11)

This is the cornerstone. If the claim isn’t listed here, you’re done.

The Final Statement is the Contractor’s last financial declaration—your full and final tally of what you believe is owed.

So, under 14.14, if you left something out—say, you forgot to include a claim for additional access scaffolding—the Employer is officially not liable to pay for it later. Even if it’s valid. Even if it’s huge. Ouch.

✅ “…except to the extent that the Contractor shall have included an amount expressly for it…”

This part is a key filter. It’s not enough to generally mention a claim or vaguely allude to some extra cost.

You must expressly include the claim—clearly and deliberately—in:

• your Statement at Completion (if the issue arose before the Works were taken over), and
• your Final Statement (in all cases).

💬 So what does “expressly included” mean in real terms?

It means you must spell it out—what the issue is, how much you’re claiming, and why.
No guessing. No assumptions. No “see attached” with vague numbers. 📋

The wording is very intentional here: “expressly” = clearly stated, unmistakably identified.

🧠 So, if you were claiming a variation for an unforeseen services reroute, and you only wrote “some costs pending” in your Final Statement—you’ve just kissed that claim goodbye under this clause. 😬

📆 “…and (except for matters or things arising after the issue of the Taking-Over Certificate for the Works) in the Statement at Completion…” (Clause 14.10)

This part is really clever—it introduces a timing-based condition.

• If your claim is about something that happened before the project was taken over (i.e., before the Taking-Over Certificate was issued), you must have included it in the Statement at Completion.
• If the matter came up after the Taking-Over Certificate, then you’re not penalized for missing it in the Statement at Completion—only the Final Statement matters for that.

📅 This timing distinction aligns with the project lifecycle:

• Statement at Completion: focuses on issues during construction.
• Final Statement: picks up any leftovers, post-handover costs, defects, or late-awakening claims.

🚨 “Provided that this Sub-Clause shall not limit the Employer’s liability…”

Here comes the built-in safety valve. 💡

FIDIC adds this line to ensure that the clause isn’t abused by the Employer to escape serious legal responsibilities. Even if the Contractor fails to submit a claim on time, the Employer can still be held liable for:

1. Indemnification – Like paying for third-party claims if the Contractor was acting on behalf of the Employer.
2. Fraud – Deliberate deception? No way out.
3. Deliberate default – Willful failure to fulfill obligations.
4. Reckless misconduct – Ignoring risks or acting with gross negligence.

📢 So even though 14.14 is strict, it won’t protect an Employer who acted in bad faith or broke the rules intentionally.

🔍 3️⃣ Key Interpretations and Implications

🔐 Exclusions

• The Employer cannot be liable for claims not included in the:
  • Final Statement
  • Statement at Completion (unless it arose post-Taking-Over Certificate).

📌 Obligations

• The Contractor must ensure all entitlements are accounted for in these statements.
• Silence or omission = waiver of rights (unless falling under exceptions like fraud).

⚠️ Risks

• Risk to Contractor: Claims not included on time could be rejected outright.
• Risk to Employer: Remains liable for serious misconduct or indemnity obligations.

📑 Sub-Clause 14.10 – Statement at Completion

💡 Why it matters to 14.14:

This is the first checkpoint for closing out the financials.

It kicks in after the Taking-Over Certificate has been issued but before the Final Statement. The Contractor is required to submit the Statement at Completion, which includes:

• The value of all work done up to that point,
• Details of interim payments already made,
• Any amounts the Contractor believes are still due, including provisional sums, variations, claims, and adjustments.

🔗 How it ties in:

Sub-Clause 14.14 says that for any claim arising before the Taking-Over Certificate, it must appear in this statement—and the Final Statement—to keep the Employer liable.

So if you forget to include a variation order or unresolved payment claim here, you’re already in dangerous territory. 🛑

🧠 Think of 14.10 as your “Claim Preservation List”—if it’s not there, 14.14 might shut the door on it later.

📄 Sub-Clause 14.11 – Application for Final Payment Certificate (The Final Statement)

💡 Why it matters to 14.14:

This is the last financial document the Contractor submits. It’s the grand finale. 🎬

The Contractor submits the Final Statement within 56 days of issuing the Performance Certificate (per Sub-Clause 11.9). It includes:

• The final account of the Works,
• Any remaining claims or entitlements the Contractor believes are due.

🔗 And here’s the key part:

Sub-Clause 14.14 flat out says: if a claim isn’t expressly included in this Final Statement, the Employer is not liable for it.

🗣️ It’s like FIDIC is saying:

“If you don’t ask for it now, don’t come back later asking for it again.”

So Contractors, this is your final opportunity to bundle up any unresolved variations, payments for prolongation, or compensation events. Miss this train, and it’s not coming back. 🚂

📝 Sub-Clause 14.12 – Discharge

💡 Why it matters to 14.14:

Once the Final Statement is submitted, it must be accompanied by a written discharge—basically a formal note saying:

“I, the Contractor, agree this is the final amount, and I won’t ask for anything else later.”

But there’s a twist! 🌀

🛡️ FIDIC allows the Contractor to exclude specific unresolved claims from this discharge (usually those under dispute or DAB/Arbitration). This is vital for preserving rights even after Sub-Clause 14.14 kicks in.

🔗 Relevance to 14.14: This clause gives the Contractor one final tool to say:

“Hey, I’m signing off on everything else, but I still have an active claim for XYZ. That’s not off the table.”

If properly used, this keeps the Employer on the hook for that specific item—even beyond the deadline under 14.14.

⚖️ Sub-Clause 20.1 – Contractor’s Claims

💡 Why it matters to 14.14:

While not in the same “Payment” section, Sub-Clause 20.1 is where the claim process starts. It includes:

• Giving notice of the claim within 28 days,
• Submitting detailed particulars,
• Keeping records,
• Following the procedures for DAB (Dispute Adjudication Board) or arbitration, if unresolved.

🔗 Link to 14.14: Even if you followed everything in Clause 20.1, you still need to include the claim in your Final Statement (per 14.14) to ensure the Employer’s liability continues.

🧠 FIDIC is essentially saying:

“Filing a claim under Clause 20 is great. But if you want to get paid for it, you’d better make sure it’s on the books in 14.11.”

🤔 5️⃣ What-If Scenarios?

💡 Scenario 1:

What if the Contractor discovers an error in the Final Statement after submission?

Unless it’s a case of fraud or indemnity or occurred after Taking-Over, the Employer is not liable. The claim may be barred.

💡 Scenario 2:

Can the Contractor include a claim not yet fully quantified in the Final Statement?

Yes—but it must be expressly included, even as an estimate. Otherwise, it risks being excluded by Sub-Clause 14.14.

💡 Scenario 3:

What if the Employer committed a deliberate act that caused damage after Final Statement submission?

Then this Sub-Clause won’t protect the Employer. Liability still exists for fraud or reckless misconduct.

🛠️ 6️⃣ Suggestions for Clarity and Improvement

🧹 Possible Ambiguities:

• ❓ What qualifies as being “expressly included”? Is a mere mention enough? Not necessarily—amounts should be quantified or described in a traceable manner.

✅ Suggestions:

• Define a standard format or template for the Final Statement that flags all pending issues.
• Introduce a buffer clause that allows claims to be conditionally included pending dispute resolution outcomes (e.g., “subject to DAB outcome under Clause 20”).
• Encourage attaching a comprehensive schedule of unresolved issues to the Final Statement.

Detailed Explanation:

1. Start of Process: The process begins with the implementation of Clause 14.14.
2. Submission of Statements: The Contractor submits the Final Statement and the Statement at Completion as required.
3. Engineer’s Review: The Engineer reviews these statements to ensure they are complete and accurate.
4. Accuracy Check: A decision point where the Engineer assesses if the submission is complete and accurate.
   • If Yes, the process moves to the next step.
   • If No, the Engineer requests additional information or corrections, returning to the submission step.
5. Engineer Issues Final Payment Certificate: Upon satisfactory submission, the Engineer issues the Final Payment Certificate.
6. Cessation of Employer’s Liability: Following this, the Employer’s liability ceases, except for specified obligations such as indemnification or in cases of fraud or misconduct.
7. End of Process: The process concludes with the cessation of the Employer’s liability under Clause 14.14.

This diagram illustrates the sequence of interactions and responsibilities between the Contractor, Engineer, and Employer as per Clause 14.14. The process begins with the Contractor submitting the Final Statement to the Engineer. The Engineer then reviews this statement. If the statement is incomplete or inaccurate, the Engineer requests additional information or corrections, and the Contractor resubmits the statement.

Once the statement is deemed satisfactory, the Engineer issues the Final Payment Certificate to the Employer. Following this, the Employer’s liability to the Contractor ceases, except for specified obligations such as indemnification or in cases of fraud, deliberate default, or reckless misconduct by the Employer. The Contractor acknowledges this cessation of liability, marking the end of this specific contractual process.