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Responsiveness to change by standard-form contr act drafters in the construction industrY

A case study of the FIDIC White Booh
Shekar Raj
Deartment of Auil Engrceng, Indian Institute of Tecltttology Kanur, Kartur, India, and

Standard-form contract drafters

205

Jan-Bertram Hillig and Will Hughes

Sclnol of Construction Managetnent and Ettgrcet'irtg, Uniuersity of Readirtg, Reading, UK Abstract
Purpose

Ingnieurs-Conseils FIDIC) White Booh standard form of building contract. It tracks the changes to this contract over its four editions, and seeks to identify their undellying causes. Design/methodology/approach - The changes made to the White Booh are quantified using a spec-ifc type of quaiitaiive content analysis. The anended clauses are then examined to understand the nature of the changes made. Findings - The length of the contract increased by 34 per cent behveen 1990 and 2006. A large

- The

purpose

of this paper is to

focus

on the Fdration hrternationale

des

proportion of the overall ircrease can be attributed to the clauses dealing rvith "conflict of
responded

ite'resticorruption" and "dispute resolution". hr both instances, the FIDIC drating committees have to intemational evelopnrents to discourage corruption, and to -encourage the use of altmative dispute resolution. Behveen 1998 and 2006, the aveage length of the sentences increased slightly, raising the question of rvhether long sentences are easily understood by users of cortracts. Research limitations/implications - Quantification of text appers to be particularly useful for the analysis of documents rvhich are regularly updated because changes can be clearly identilied and the leng-th of sentences can be determined, leading to conclusiotrs about the readability of the text. Ilos'evr, caution is needed because changes of great relevance can be made to contract clauses rvithout actually affecting their length. Practical implications - The paper will be instructive for contract drafters and infornlative for rrsers of FIDIC's White Booh. Originality/value - Quantifying text has been rarely used regarding standard'form contracts in the leld of construction. Keywords Construction industry, fnb acts, Dispute resolutions, fmrption

Paper type Research paper

L.

Introduction
lntematoDal

The Fdr'ation Internationale des Ingnieurs-Conseils FIDIC) frrst published its Ctient/Consultant Model Seruices Agreenrct (the White Boole) in 1990.
The authors rvould like to thank Mr Peter van der Togt, FIDIC Publications lttlanager, Geneva, for providing them with access to FIDIC documents for this research project.

1.1 Oueruieu

Jomal of LaN in

the

Built lnvironntent \ol. I No. 3. 2009 pp.206,-2?! O Drnenld Group Publshing l,imited l75Cll150 DOI t0.l 1084756r.r509t lml26l

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This standard-form contract between the client and the consulting engineer was
drafted after editing and revising the document it was intended to replace, namely FIDIC's International General Rules of Agleement (IGRA). The IGRA had been published in three versions for different kinds of consultancy selices (IGRA 1979 for Design and Supervision of Construction of Works, IGRA 1979 for pre-investment studies and IGRA 1980 for project management). In contrast, the Wte Bool is suitable for all the kinds of consultancy selvices encompassed by the three former ag'eements (see the foreword to the 2006 edition of. the Wltite Bool). Regarding the extent to which the White Booh is used in practice, the Danish International Development Agency (2004, p. 6) states, although without providing evidence, that the White Boolz, along with the World Bank document "Standard Request for Proposal", is the main intemationally recognised document for contracting of
consulting services.

206

After its initial publication in 1990, revised editions of the Wltite Booh were published in 1991, 1998 and 2006. This paper reports on a study in which the four editions were examined by quantifying the extent of changes. The aim of what was, in effect, a counting exercise was to track the changes made to the contract, and then to identify some of the underlying causes of those changes. The construction sector has seen many irnportant developments since the Wte Boole was first published, ancl it is interesting to see rvhether the changes identified in the White Boole can be related to these developments. Also, analysing these changes against the backdrop of important developments that have taken place in the construction industry will lead to some conclusions about the responsiveness of the drafting committee to these
developments.

1.2 Scoe of researclr tlrc general conditions of the White Boolt The subject matter of the present work is only the general conditions, i.e. the standard clauses of the WIte Boo. These were called "Standard fnditions" in the editions of 1990 and 1991. The other parts of the agreement (the particular conditions, the four appendices and any letter of offer and acceptance, see Clause 1.1. of the 2006 edition), have not been considered in the quantification. In this paper, we use the structure (and especially the clause nurnbering) of the fourth edition 2006 as the main point of rcference. This structure differs from that of previous editions. In the 2006 edition, the general conditions are divided into eight sections: general provisions; the client; the consultant; commencement, completion, variation and termination; payment; liabilities; insurance; and disputes and arbitration. For the purpose of this research, the two sections dealing with the client and the consultant as well as the two sections covering insurance and liability are treated as one. Hence, we have only six sections (Section 3.1).

1.3 The FIDIC draftittg conunittees

The four editions of FIDIC's Wltite Boole were prepared by two different drafting committees. The editions of 1990, i991 and 1998 ivere prepared by FIDIC's client/consultant relationships cornmittee IDIC, 2001. Acknowledgements Section; see also FIDIC, 1998, p. 5). In contrast, the 2006 edition was drafted under the
responsibility of FIDIC's (2006, p. 5; and the Acknowledgements Section of the 2006 edition of the Wite Booh) Contracts Committee.

2. Method
The primary method used in this piece of rvork is a specific t1'pe of quantitative content analysis. In this method, researchers establish a set of categories and then count the number of instances that fall into each category (Silverman, 2001, p. 123). Since the data can be accurately measured it is a quantitative research method. This method is particularly useful for the analysis of documents, which are regularly updated such as standard-form contracts. One example of research work using this method has been reported by Hilburn and Hughes (2005), who looked into the changes in the code of

Standard-form contract drafters

207

conduct of the royal institute of British architects over different editions. Minor and major changes could be identified. It appeared that some of these changes were responses to regulatoly pressures instigated by the British Govemment to deregulaie the profession of architects. For example, it appeared that some clauses of the code were omitted from one edition to the next in order to comply with statutory requirements. Elselvhere, Bunni quantified text to ascettain the length of sentences in rhe FIDIC's Conditions of Contract for Electrical and Mechanical Works 1987 (Bunni, 1987, pp. I78, I94,195) and the number of sub-clauses in FIDIC's Red Bool 1999 Bunni, 2005, pp. 503, 504). He used the data to draw conclusions about the clarity of
the standard-form contracts.

In the present research it was anticipated that the counting of words of the General Conditions of. the Wi.te Bool, over the four editions, would reveal hends towards or arvay from certain topics. 'With an understanding of these trends an attempt can be made to look for the motivation behind the changes introduced. Regarding the counting itsell the following rules have been applied in order to be systematic about the process: Everything outside the General Conditions has been excluded. Marginal words and other headings have not been counted, as according to Clause I.2.1 of. the 2006 edition of the White Boo these ought not to be considered while interpreting the clauses. Only the text of the clauses has been considered for the counting of words. Hyphenated words, for example "[. . .] vice-vetsa [. . ']" in Clause 1.2.2 of the 2006 edition, have been counted as one word. Words rvith a slash, for example "[.. .] and/or [. . .]" in Clause 4.4.1(b) of the 2006 edition, have been counted as two words. Terms such as "[. ..] Appendix 1 [...]" (Clause 1.1.1 of the 2006 edition) are counted as t$'o words. Some of the clauses have text containing altemate names for various appendices in square brackets, for example "[. ..] Appendix (Scoe of Seruices) [.'.]" in Clause 1.1.3 of the 2006 edition. The words in such square brackets have not been

. . . .

. .

counted.

Figures such as "[. . .] 56 [. . .]" (clause 4.6.1 of the 2006 edition) are counted as one word.

As mentionecl above, this quantification providas a basis for examining why particular clauses of. the Wte Boole were amended. For this purpose the clauses have been examined, in the context of prevailing developments within the conshuction sector that may have led to the changes.

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3. Data
3.1 Ouerall uord count A full word count of the different editions shows that the total number of words has grovi'r significantly, the 2006 edition having about 34 per cent more words than the 1990 edition (Figure 1). There was no significant increase in the number of words in 1991 but the 1998 and 2006 editions of. the Wtite Boohhad considerably more words
than the previous ones.

208

Figure 2 shows the number of words in the different sections of the General Conditions. When compared to the first edition of 1990, the 1991 edition had almost the same number of words under most headings, there being no difference at all or only a trivial difference of one or two words. The only sificant change was in the commencement, completion, variation and termination section where there were 14 more words in 1991. This was due to the addition of a second sentence in Clause 29
which says that if the contract is terminated the provisions regarding the "limit of compensation and indemnity" (Clause 18) remain in force. The comparison of 1991 u'ith 1998 reveals that significant changes were made only to the geneml provisions and the dutes sections. All other sections were retained as before. In 2006, the
number of words has gone up considerably in all sections. The details of these changes will be described and discussed in the following sections of this paper.

3.2 Chnnges in ndiuidual clnuses Figwe 3 tracks the changes in the individual clauses. The types of changes that have
been made to each clause in successive editions can be seen.

The 1990, 1991 and 1998 editions each have 44 clauses, in the same format,

so comparing them is straighorward. In Figure 3, these three editions are displayed

5,000
1990: 3,458 words

4,500 4,000 3,500 3,000 2,500 2,000

l: 3,480 words (less than I % increase) 1998: 4,025 words (+ I 57o) 2006: 4,638 words (+ I 6010)
199

r,500 t,000

Figure 1.
Total number of words in successive White Book
editions

500 0

r990

l99l

1998

2006

l,000
900 800 700 600 500 400 300 200
100 0

1990 t99l r

1998

r 2006

Standard-form contract drafters

209

Figure 2.
A - General provisions D - Commencenrcnt, complclion, variation and tennination
B - Clicnt and consultant E - Paymcnt
C - Liabilities and insurance F - Dispute resolution

Number of rvords under various headings of the General Conditions

in the first three columns. The clause numbers of the 1990 edition are sho$'n in the first column. The second and third columns indicate the extent of changes made in the 1991 and 1998 editions. For these editions, no clause numbers are shown because they were the same as in 1990. The fourth and fifth colun'ns of Figure 3 perlain to the 2006 edition. The new clause numbers of this edition can be seen in the fourth column where corresponding clauses (to the earlier editions) are identified. The fifth column indicates the extent of change made in 2006. Sorne of the changes which can be traced in Figure 3 ae dealt with in the subsequent sections of this paper. Here, only three general obselations regarding Figure3 will be made. First, the 11 "minor changes" made in 1998 occurred because the tqm "Part II" was replaced by the term "the Particular Conditions" (which is one word longer); there were no other changes in these 11 clauses. These 11 changes accountfor an lncrease of 11 words out of the total increase of 545 words. Second, in 1998 significant changes (in Figure 3 identified as "R\4/: clause rewritten u'ith significant changes") were made to only three out of the 44 clauses (Clause 40: conflict of interest; Clauss 43 and 44: settlernent of disputes); the other 30 clauses were reproduced exactly as in 1991. The increase of 534 rvords while revising only tluee clauses signifres that the changes were extensive and probably irnportant. Regarding these three changes see Sections 3.5 and 4.2 (on conflict of interest/conuption and fraud) and Sections 3.6 and 4.2 (on dispute resolution) of this paper. Finally, in 2006, as can be seen from Figure 3, the changes made were more pervasive. Out of the original 44 clauses, only nie rvere left unchanged rn'hile significant revisions rvere made to 16 of them. Other clauses saw minor changes in wordings rvhile retaining the original meaning. Three new clauses rvere added (Clause 1.3: communications; Clause 2.4: client's financial anangements; Clause 2.9: payment of services).

Q C)

=' a x oc t ^'3 -.389..

t F.= CJJI< } OE

tt

ei az'
=
9.b <
1990
t

99l

1998

2006

990

l99l

t998

2006

Definition and interpretation

2

l.l
1.2 3.1

NSC NSC

Pvment 30

5.t.r.5.r.2
s.2.t. s.2.2
5.3

3l
32 33 34 35

NSC NSC

Client. consultant and personnel

3

5.4
5.5

4
s 6 7
8

3.2 3.3

5.6
3

3.4
2.1

General provisions NC 36
37
.4 .5

2.2
2.3 2.4

9 IO

NC

38

.6
7

2.5 2.6.1 2.8

39

II
l2
13, 14 and

40

RW

t0. 4.7
.8 9

RW

4t
NC
42 Dispute resolution 43 44 RW RW

l5

2.9 2.6.2. 2.6.3. 2.7. 3.5. 3.7

Liabilitv and insurance

8.

r. 8.2

l6
l'7

6.t
6.2

8.3

RW RW

r8 t9

6,3.6.4- 6.5
7.1

7.2 20 Commencement. completion. variation and termination

2t
22

4.1

23 and24
25

26 27 28 29

4.2 4.3 4.4 4.5 4.6 4.8 4.9

No change NSC

Minor change in wording

Some part deleted Change in important wordlphraseysentences Addition of new sub-clause Addition ofnew clause Clause re-written with significant changes

3.3 Changes betuueen the third and fourth editiotts As can be seen in Figure 4, the number of words has increased in rnany clauses between the 1998 and 2006 eclifions. h this figure the clauses are numbered on the basis of the 1998 edition. The number of words of the (newly numbered) clauses of the 2006 edition was counted for those clauses which conespond to the 1998 clauses. As can be seen in Figure 4, the most significant instances of increase are Clauses I (definitions), 2 (interpretation), 5 (duty of care and exercise of authority), 31 (time for payment), 40 (conflict of interest/coruption and fraud) and 43 (settlements of disputes). Also, a large number of clauses show small changes in the number of rvords which are a result of minor changes in u'ording of the clauses. Overall, 35 of the 44 clauses have undergone changes, minor or major. An important point is that there were also decreaies in the nurnber of words in the 2006 edition, for exarnple in Clauses 4 (normal, additional and exceptiotral circumstances), 6 (client's prcperty) and 32 (cun'ency of payment). These omissions of text highlight the lirnitations of the word count rnethod: important deletions of text may not emerge in the data because the number of deleted u'ords ma)' be balanced out by an equivalent number of added words. Quing to rhe change of format in 2006 it is sometimes difficult to find clear-cut corresponding clauses. At certain places it is easier to compare goups of clauses. Hence, in Figure 4, Clause 13 t'epresents Clauses 13-15 while Clause 23 represents Clauses 23 and 24. For a list of the corresponding clauses etween the 1998 and 2006 editions), see Figure 3. 3.4 Cltntges regarding the general rouisiotts The first three editions contained separate sections on "l)efinitions and intelpretation" (Clauses l and 2)and "General pt'ovisions" (Clauses 36-42). hi the 2006 edition these sections have been fused to the new section entitled "General provisions" (Clauses 1.1-i.10). In Table I, the nerv structure of the 2006 edition has been applied to all editions, meaning that the words of the fotmerll' two sections of the 1990, 1991 and 1998 editions have been added and their sums displayed under the label "General provisions". These general provisious consist of clauses on definitions, intetpretation, ommunications, law and language, change in legislation, assignments and sub-contracts, copyright, notices, publication and conuption and fraud.

Standard-form contract drafters

2LL

lrrrrt

rroo6l
:

100

i il
ll
l3
t7

l:

F-igure 4. The nurnber of rvords in

the corresponding clauses

of the 1998 and the 2006

l9 2l

42

editions
44

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I per cent increase in the number of words in 1991 is due to addition of words to the interpretation rules (Clause 2(iii) of the 1991 edition: plus six words). As indicated in Figure 2 and Table I, the number of u.'ords in the general provisions has increased more significantly in 1998 and in 2006. The 13 per cent increase of 1998 can be prirnarily attributed to the addition of 85 words to the clause dealing with conflict of interest (Clause 40; regarding this increase see also Sections 3.5 and 4.1). The only 61.r change between 1991 and 1998 relates to the definitions clauses: the number of words in this clause increased by one word because the term "Part II" was replaced by the term "the Particular Conditions" (regarding this change see also Section 3.2). The largest increase occured in 2006 when the number of words of the general provisions grew by 24 per cent against the overall increase of 15 per cent (between 1998 and 2006). This increase was due to several changes. Firct, in the 2006 edition, 15 terms were defined as opposed to only 11 in 1990, 1991 and 1998. Second, the interpretation lules had five sub-clauses and 100 words as opposed to three sub-clauses and 52 words. Third, the clause dealing with conflict of interest rr'as extended by 95 rvords. Fourth, a nerv clause was inserted r'hich defines a language of communication (Clause 1.3; the Ianguage is to be specified in the particular conditions). Finally, several minor changes occuned in 2006.
The 3.5 Clnnges of the clauses on "conflict of nterest/corrutiorz and fi'az" One area the general provisions section deals s'ith confficts of interest and (Figure conuption"r'ithin 5). Before looking at the number of words of the relevant clauses, a
note should be made regarding their titles. In the 1990 and 1991 editions, Clause 40 was entitled "fnflict of interest". In 1998 the title of Clause 40 was changed to "Conflict of intereslcoruption and fraud" and in 2006 the conesponding Clauses 1.10 and 4.7 were renamed to sirnply "Conuption and fiaud" (both clauses have the same title). These changes of title point to major amendments which took place in 1998 and 2006, and this notion is confirmed by the increase in the number of rvords: rvhile the clauses dealing with conflict of interest did not change between 1990 and 1991 the clause being retained exactly as in 1990 the number of words nearly tripled in 1998, and another signifcant amount of text rvas inserted in 2006. For a discussion of these arlendments, see Section 4.1.

3.6 Annges of tlu clauses on disute resolution The Wte Bool's section on disputes underwent a change of name between the third and fourth editions. It was entitled "Settlement of disputes" in 1990, 1991 and 1998 and "Disputes and Arbitration" in 2006. The respective clause numbers changed as well, from clauses 43 and 44 in the editions of 1990, 1991 and 1998 to Clause 8 in the 2006 edition.
Number of words Rest of the document

Table I.
Number of rvords in the "General provisions" and in the remainder of document
1990
1991

General provisions

Total
3,458 3,480 (+19) 4,025 (*16To) 4,638 (+15%)

3I0
316

341

+ 342:652 :657 (+lo"o)

(+l3oto\ (*2406)

2,86
2,823 (+lolo) 3,282 (+160/0) 3,717 (+73%)

1998 2006

3l?
414

+ 426:743 507 :921

Conflict of Interest/Comrption and Fraud

1990: 53 words I 99 I : 53 words 1998: 138 words

Standard-form contract drafters

(+ 160%)

2006:233 words (+ 69%)

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Figure 5.
Number of words in clauses dealing rvith

coict of
iuterest/comption and fraud, conflict cf intereslcomrption and fraud

Figure 6 shows the number of words of the clauses dealing with disputes over the four editions. As can be seen, the number of s'ords did not change in 1991: the Clauses 43 and ,14 being retained exactly as in 1990. In 1998 the nurnber of words increased by more than fotu'times, from 111 words to 560 rryords. In 2006, the clauses were expanded again but not as dramatically as previously: the number of words increased by 64-624 (Fieure 6). The increases in the number of words in 1998 and 2006 sienify the focus on these clauses while the White Booh was being edited. For a discussion of these changes see
Section 4.2.

4. Discussion on the responsiveness of the contract drafters In order to examine the responsiveness of the respective FIDIC drafting committees
responsible for the White BooI (Section 1.3), two areas of the agreement are examined in turn, namely the clauses regarding conflicts of interest and dispute resolution. These clauses have in common that their number of words has signifrcantly increased both in 1998 and in 2006 (Sections 3.5 and 3.6 and Figures 5 and 6).

4.1 Conflict of interest/comttiorz clnuse In 1998, the clause dealing with conflict of interest (Clause 40) was completely rewritten. Instead of simply stating that consultants have no interests in the project other than those agreed, and that they have to refrain from activities conflcting with

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700 Dispute resolution 600 words words 1998: 560 words (+ 405o/o) 2006: 624 words (+ I l%) 1990:

l99l:

lll lll

2L4

500

400

300

200

Figure 6.
Number of words in clauses dealing with dispute resolution, dispute resolution

r00

l99l

998

2006

the interests of the client, the new Clause 40 of 1998 specifred several collusive practices not to be followed by the consultant. In addition, the remedies of the client were

specified: it was deemed that consultants who are guilty of one of the collusive practices listed in the clause are in breach of their contractual duty of care, and that the client is entitled to terminate the agreement in this situation. In addition, the clause makes clear that the remedies available to the client under the general law remain applicable in addition to the contractual remedies. In 2006, when a new clause numbering was inhoduced to the contract, the remedies part of the clause was retained; this content can noq be found in Clause 4.7 of the 2006 edition. However, the part on the collusive practices was completely rewritten (now Clause 1.10 of the 2006 edition). Among other things, the new clause specifrcally obliges the consultant to adhere to the Organisation for Economic Cooperation and Development (OECD) convention on combating bribery of foreign public officials, and the consultant also has to notify the client immediately in the event of illicit requests received from any 'ublic official", a term u'hich is defined in detail. lVhen examining the responsiveness of the FIDIC drafting committee regarding the matter of conflict of interesVconuption, the international development needs to be analysed. Construction processes are susceptible to corruption because of the huge amount of money involved; this is aspecially true in the field of public contracting. Togivean examplethatillustrates the dimension, in themid-1990s theWorld Bankused to lend over US$20 billion a year, of which some 25-30 per cent was spent on projects involving procurement ofconstruction services flaynes, 1996, p. 17). Ifwe look at the

developments which took place at the end of the last centuly, the following events come to light in 1996 the United Nations (IN) general assembly adopted the UN declaration against corruption and bribery in international commercial transactions. In June i996

Standard-form contract drafters

the world bank announced revisions to its guidelines intended to guard against conuption in procurement for projects it funds. In December 1996 the world trade
these markets. In November 1997 the OECD adopted a convention on combating bribery

organisation agreed to undertake a study of transparency and due process in the award of govemment procurement contracts as a first step towarcls reducing corruption in

2L5

of foreign public officials in intemational business transactions. These facts shorv clearly that the fight against comrption was high on the international agenda in the
years prior to the publication of the 1998 edition of. the Wtite Bool.The major changes made to tbe Wte Book in 1998 appear to be a direct consequence of this international development. This isconfirmedbya statement of FIDIC(2007,p.27), sayingthat the nerv "imposilions of sanctions" into the clause dealing rvith conffict of interest vvas an "answer to calls to eliminate conupt practices from the award and conduct of public works contracting". Hence, it can be concluded that the FIDIC drafting committee was very responsive to the international trend to discourage conuption.

4.2 Disute resolution clause The increases in words in the dispute section of. the Wte Bool in 1998 and 2006 lead to the question as to what content has been added. The ansrver for 1998 is that FIDIC inserted a detailed mediation clause (Clauses 43.2-43.8) rvhich addresses different matters, such as the priority of mediation over arbitration, the appointment of the mediator and the confidentiality of the rnediation process, to name just a few. In 2006, a substantial amendment of the mediation clause led to the further rise in words of the dispute section. Examples of the amendments made were the following: new provisions were introduced regarding the rnediation procedure (this rnatter was addresses for the first tirne: Clause 8.2.3 of the 2006 edition states that the mecliation shall be conducted in accordance with the procedure specified in the particular conditions; the CEDR model mediation procedure applies as a default) and the question of who pays the mediator (the costs are to be borne equally by the parties, Clause 8.2.6). An important amendment which also caused an inoease in words is the extension of the time period during which arbitration is prohibited: this period was extended from 28 days, from the start of the mediation, to 90 days, from the giving of a mediation notice, Clause 8.2.7 of. the 2006 edition. An example of a decrease of words can be found in the rnediation clause as well: according to the 2006 edition of the Wte Boo, disputes no longer have to be refen'ed to designated representatives of the parties as the first step of alternative dispute resolution (ADR), as ',/as provided by Clause 43.1 of the 1998 version. This decrease in words is not visible in the data because of the extensive addition of text to the mediation clause in 2006. At the same time, owing to this instance of decrease in words, the ovemll increase in words of 2006 appears to be rather modest even though a lot of new text has been included, On examining the responsiveness of FIDIC's contmct drafting committee it becomes clear that the insertion of the mediation clause in 1998 was a response to the intemational developments towards ADR. This is evidenced by a statement of FIDIC rnade in 2001: "The 1998 version [. ..] provides for the interuention of a neutral mediator [.. .] before any matter is referred to arbitration. This reflects the general

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success achieved in curtailing the cost of dispute resolution when mediation is used"

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(FIDIC, 2001, p. 28). The international development in the direction of ADR can be illustrated by the following aspects: until the rnid-1990s arbitration and litigation seem to have been the popular methods of dealing with conflicts, as indicated by the following: in the five ]'ear period from 1985 to 1990 the International Chamber of frnmere had 2,380 requests for assistance in arbitration and only 35 for conciliation or nediation (Tyrril, 1992, p.353). Not surprisingly the first and the second edition of the Wtzite Boo provided for arbitration as the only alternative if the client and the consultant failed to agee on matters in dispute. However, despite their popularity, there was a growing dissatisfaction with these methods prirnarily due to the high costs involved ad the long time taken to reach a settlement.In a 1995 suruey covering some 400 of The Tinrcs Top 1000 companies, a substantial majority (70 per cent) suggested that litigation takes too long a time and almost 40 per cent suggested that the costs of litigation are far too high (Tlte Tinces,1995). There is also evidence of a stark increase of ADR all over the world since the beginning of the 1990s: for example, in the USA, the administrative dispute resolution act rvas passed in 1990 permitting federal agencies to resolve all types of disputes, including consh'uction disputes, by ADR. In January 1993 the (British) National Joint Consultative Committee for Building (1993) produced its guidance note on ADR. Also, a research project on dispute resolution conducted in the t||( indicated that instances of mediation were rising in the i990s while those of arbitration and litigation were decreasing (Gould et a|,1999, pp. 126, 139). The interest in ADR was espeially stimulated by the potential to facilitate early settlernent of disputes which is both financially and emotionally advantageous to the disputants (Fiadjoe, 2004, p. 10). In summary, the increase in the number of words in the dispute section, caused by

the insertion and expansion of a rnediation clause, illustrates a good level of responsiveness of the FIDIC drafting committee. Other organisations which publist
stanclard-form conhacts have reacted much later, or not yet at all, to the trend towards ADR, even though the advantages of mediation are widell' accepted (reduced costs, protection of relationships, etc.). For example, the (British) Joints Conhact Tribunal (CT) waited until 2005 to insert a rnediation clause into its standard building con-tt:act (Clause 9.1 of JCT SBC 2005); the German standard-form conshuction contract VOB/B 06 was extended in 2006 b]' a clause which provides that the parties can agree to resolve their disputes by other means than litigation (Clause 18(3) of the VOB/B: a particular mode of dispute resolution is not mentioned in this clause but it seems that

the drafters had mediation, and also arbitration, in mind). Furthetmore, the British construction contract NEC3, as published in 2005, still has no mediation clause. Finally, there seems to be a trend in consh'uction contracting towards the introduction of procedural conventions on mediation in standard-foun conh acts, the
reason being that mediation becomes more evaluative and adversarial @rooker, 2007, p.233).The mediation clause of the 2006 Wite Bool can be seen as at the forefi'ont of this trend because it provides detailed rules regarding the procedure of the mediation process, its confidentiality, and the costs of the mediator.

5. Length of sentence
Standar condidons of contract are drafted using legal language which is expected to remain precise when subjected to legal scrutiny. Unforlunately, this may promote

complexity and incomprehensibility (Bunni, 1987, p. 178). The results of a survey among the users of FIDIC's Rd Booh emphasised, among other things, the importance of simplicity of expression (Flughes, 1996). In this context, it is interesting to examine the length of sentences in the White Boole and the trends which can be recognised by
looking at the four editions. The average number of words in a sentence is 32 in the editions of 1990, i991 and 1998. However, it increased to 34 in the 2006 edition. Further results of the examination are presented as graphics in tu'o figures. Figure 7 shows the changes from 1991 to 1998 and Figure 8 the changes from 1998 to 2006. The 1990 and 1991 editions are nearly the same and this is why the changes from 1990 to 1991 have not been displayed in a graphic. The graphs for 1991 and 1998 are nearly the same except for the region of 40-60 words. This is expected because, while most of the text is nearly the same in the two editions, many sentences of approximately this length have been introduced in the expanded clauses dealing with disputes. As Figure I shows, in 2006 the proportion of sentences having 20-40 words declined and the proportion of sentences having 60-90 words increased. Thus, sentences have become longer in the 2006 edition. Interestingly, as opposed to 1998, this change in the length of sentences is not confined to select parts of the document; it is wide-ranging.
40
35

Standard-form contract drafters

217

30

r'

8zo

b15 s

t0
5

Figure 7.
0

0r

20

40

60

80

t00

t20

140

r80

The distribution of number of rvords in a sentence 1991 and 1998

Number of words in a sentence

35

830 o

6zs 820
l0
5

tt
"Figure 8.
0

60

80

r00

t20

The distribution of number of words in a

sentence

Number of words in a sentence

1998 and 2006

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1,3

6. Conclusion The analysis of FIDIC's White Bool by means of "word count" brought several
findings of rvhich the most important are highlighted: ' The text of the General Conditions has gone up by 34 per cent over the four eclitions. While the inclease in words rvas trivial in 1991, significant increases occured in 1998 and 2006.

2t8

From all clausas, the ones on "conflict of interest/conuption" and "dispute resolufion" saw the most dramatic ino'eases in the number of words (in 1998 and 2006). The amendments made to the clauses on "conflict of intereslcotruption" and

"dispute resolution" show that the FIDIC drafting committees were quite responsive to significant developments and willing to align the standard-form conhact to cun'ent practices. Regarding the responsiveness to the cutrent trend to ADR, a comparison with other standard-fonn contracts shorvs that the FIDIC drafting commiltees of 1998 and 2006 were lnore responsive than other drafters

of standard-form

contracts;

the Wte Book's mediation/albitration

clause

appears as a model dispute clause in modetn contracting.

Sentences became longer between 1998 and 2006. The avemge length of sentences increased from 32 words in the editions of 1990i1991/1998 to 34 rvords in the 2006 edition.

The issue of length of sentences has only been touched briefly in this researcli. It is arguable whether sentences with 32 or more words represent a good sfyle. I\{ost slyle guides recommend much shortel'sentences because it is widely accepted that shorter
sentences al'e easier

to understand. Bunni (1987, p. 178), for exatnple, points out (although without revealing a source) that sentences of 28 or more words can only be "easily and readily understood by 4 per cent of the population". We expressly suggest the examination of "sentences length" and the effect of long/short sentences on the simplicity and clarily of the document as an area of future work. A comparison of different standard-form conb'acts promises interesting results. Similarly, other aspects should be explored in order to establish "good contract langtage", for example the use of specifrc words and the rvay in which standard-fom contracts have been clarified from one edition to the other. In this regard, it would be useful to analyse the changes in the language of. the Wlzite Bool because FIDIC made a lot of efforts to increase the clarity and reduce the risks of misinterpretation of the clauses. This can be concluded from FIDIC publications. For example, it rvas stated in the 2001 guide to the Wzite Booh that the puqrose <lf drafting the fust edition was, alnong others, to use a simpler language and a more logical order (FIDIC,2001, p. 1). \4oreover, in its annual review for
2005-2006, FIDIC uses the

term "clarifred" hl'ice, "defined more preciseil"' e1s, "simplified" once and "reinforced" once when describing the new features of the 2006

edition (FIDIC,2006, p. 11). As described above, the changes to the clauses ou "conflict of interest/comtption" and "dispute resolution" were lnade to respond to cunent practices. This finding raises the more general question as to what causes changes in standard-fom contracts. In this context, it needs to be borne in mind that the pulposes of contmcts are vely diverse, and may depend on the circumstances in''hich a contract is considered. For example,

Hughes and Greenwood (1996) suggested

five different

purposes, based on

extrapolating from various theoretical perspectives, many of which were incompatible with each other: record of a business deal, plan for the effect of contingencies by allocating risks, management procedures manual, agenda for litigation, industry reference point. Apart from responding to changes in custom and practice, changes may be designed to address one or other of these conhact functions. Clarity in drafting will not only help users to avoid litigation, because their duties are clear, but will also help to keep the expense of litigation down, for the same reason. A final point to note is that short sentences and a clear language are not the only features of a "good contract style". There are many more aspects to be considered, for example the transparency of the contmct's risk allocation (N.8. the new development towards contractual risk registers), or the fact that contracts always have to be read "iu connection with the underlying national law of contract". The latter aspect means that the clearest written contract will never give a clear picture of the legal situation to a reader who is unfamiliar with the underlying conhact law. The best example of this problem is that most standard-form construction contracts (such as the ones of FIDIC, JCT, ICE and NEC) do not mention any "claims for breach of contract", i.e. (if the common law applies) general damages and the principles regarding the assessment of damages such as compensation, causation, remoteness of damages and mitigation. However, the issue of "length of sentences" should not be neglected by contract drafters, and therefore the research method of counting words, as applied in this research, is an important piece in the jigsaw of "what makes a good contract?". References
Brooker, P. (2007), "4n investigatior of evaluative and facilitative approaches to consbuction mediation", Structural Su.ruey, Vol. 25 Nos 314, pp.220-38.

Standard-form contract drafters

219

Bunni, N.G. (1987), "The liability and insurance clauses of the FIDIC form for electrical and mechanical works", International Construction. Lau Reuiew, Vol. 4 No. 3, pp. 172-95.
Bunni, N.G. (2005), The IIDIC Forms of Contract,3rd ed., Blackwell, Oxford. Danish International Development Agency (2004), Samle Standord Tender Document 61C84750-7628-4F19-807C-651149010869/0/UsersGuideConsultancyVer2.pdf 14 October 2008).

Larger Conxtllancy Contracts: User's Guile, available at: wrvw.urn.dkNR/rdonlyres/

(accessed

for

Fiadjoe, A. (2004), Allernatfue Disute Resolution: A Deueloiug World Persecliu, Cavendish, London.

FIDIC (1998), "The FIDIC annual report (1997-1998), draft version of 13July 1998", Fdration Internationale des Ingnieurs-Conseils, available at: u'wrv.ficlic.org/resourc/annrep98. pdf (accessed 26 September 2008).
FIDIC (2001), TI Wtile Book Guide,2nd ed., Fdration Internationale des Ingnieurs-Conseils,
Lausanne.

FIDIC (2006), Tlrc FIDIC Annual Reort (2005-2006), Fdration Internationale

des

Ingnieurs-Corseils, draft version available at: \nvw.fidic.org/resources/representation/ annuah'evierv/annrep06.pdf (accessed 4 October 2008). Gould, N., Capper, P., Dixon, G. and Cohen, M. (1999), Disule Resolution fu tlw Constructian hustry: An Euahtion of Brilish Practice, Thonas Telford, London.

Hilburn, H.D. and Hughes, W.P. (2005), "Regulating professions: shifts in codes of conduct", in Khknen, K. and Sexton, M. (Eds), Proceedings of C182005, Cotnbittg Forces:

IJLBE
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Aduancing Facilitis Management and hnstruction Througlt. htrtouatiort, Iune 13-16, Helsini, Vol. I, pp. 352-63. Hughes, W.P. (1996), "EIC/FIDIC questionnaire survey: the use of the FIDIC Red Book",

available at: www.personal.rdg.ac.uk/- kcshuwil/publish/ElC-FlDlC'Surnmary.pdf

(accessed 14 October 2008).

220

Hughes, W,P. and Greenwood, D.G. (1996), "The standardisation of contracts for construction", International Constt'uction Lw Reuiew, Vol. 13 No. 2, pp. 196-206.

Jaynes,

G.L

nstructiott

(1996), "Dispute review boards: the world bank I-a.w Reuiew, Vol. 13 No. 1, pp. 17-27.

is

aboard", Intemational

National Joint fnsultative Committee for Building (lN3), Guidance Note 7. Altenmtiue disute Resolation, National Joint Consultative Committee for Building London. Silverman, D. (2001), hterretathry Qualitatioe Data. Metlwds Interactiou., 2nd ed., Sage, London.

for Analyzittg Talk, Text and

(Th) Tnes (1995), "Survey by the law f,rm Herbert Smith", Tlze Times, January. Tyrril,J. 0992), "Conciliation and mediation of international commercial disputes - the lawyer's rold', lnternational Construction Law Reuiew, Vol. 9 No. 3, pp. 351'83.

Further reading
FIDIC (1998), 'FIDIC news

at www.fidic.org/news/Content. asp?ArticleCode:007Co&Rubrique=Contracts&Date:10/20l98&lang=en (accessed

Fdration Intemationale d Ingnieurs-Conseils, available
26 September 2008).

new consultant services agreement, released 20 October 1998,

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