Conditions of Contract for Underground Works (the “Emerald Book”) in Energy projects
Field of application
Fédération Internationale Des Ingénieurs Conseils (FIDIC) in partnership with the International Tunnelling and Underground Space Association (ITA) published the Emerald Book on 7 May 2019.
The Emerald Book can efficiently host several types of underground projects, based on works located beneath the natural or man-made surface of the earth.
Energy projects such as hydropower projects (such as dams, hydraulic tunnels and powerhouse), and underground pumped-storage power stations are within the scope of the Emerald Book. Energy storage may be revolutionized by renewable energy-based salt caverns, that can be built on the basis of the Emerald Book.
Tunnelling projects include transportation tunnels, mines, drainage tunnels used for discharging waste from underground mines, or underground pipelines (for gas transportation for example).
Oil and Gas projects can also be performed on the basis of the Emerald Book. These types of project include but are not limited to oil and gas plants, onshore or offshore terminals, underground oil refineries, underground gas storage facilities, such as salt caverns, depleted gas reservoir or aquifers.
The future will empower interesting construction ideas to become reality, such as underground cities or even underground habitation environments on the moon.
Dispute resolution
The balanced risk allocation provided by the Emerald Book, may result in a reduced incidence of disputes regarding underground construction projects.
Although the Emerald Book may be seen as providing some uncertainty regarding time and cost of a project, it is acknowledged that less disputes may arise because of the fact that the Contractor is paid fairly and provided with a reasonable amount of time to complete the works.
By using a standardized contract, the risk of litigation is lower, considering that the development of construction projects is determined by the successful avoidance of disputes.
ITA’s consideration is that the resort to ordinary courts does not benefit the project, resulting in unnecessary delays and expenses. An efficient mechanism of dispute resolution revolves around the timely identification of issues.
As FIDIC made us familiar with before, Emerald Book includes a multi-tier dispute resolution mechanism based on: (1) review by Engineer, (2) constitution of a Dispute Avoidance/Adjudication Board (DAAB), and (3) arbitration.
The dispute is finally settled in arbitration according to the rules established by the International Chamber of Commerce (ICC), as in most of the other FIDIC forms.
Conclusion
Subsurface infrastructures have become a prerequisite of the modern world, as they improve our lives by offering better access to services and products.
Emerald Book has a wide field of application and it has the potential to become a very spread contract amongst important underground construction projects.
It provides a fair and balanced risk allocation between the Contractor and Employer, for the main goal of succeeding in the completion of the project.
The Contractor carries out and takes responsibility for the design Construction, in accordance with the Employer’s reference design.
Time for completion is adjustable by the variation of the subsurface physical conditions, Emerald Book being the first Book to provide with the possibility of reducing it whenever the conditions are less onerous than those described within the GBR, for economical purposes.
Using Emerald Book shall result in less disputes for the reasons of fair cost allocation and reasonable time for completion.
