TECHNOLOGY TRANSFER CONTRACTS BASED ON FIDIC STANDARDS Y) AIRPORTS 2) BRIDGES = DAMS O ROADS onal RAILWAYS . —_ ea) HARBOURS PPLOAWNETRS ASIAN AND PACIFIC CENTRE FOR TRANSFER OF TECHNOLOGY NEW DELHI, INDIA ~ Us LJC o { Lhe = aa 744 LEGAL AND FINANCIAL MATTERS OF TURNKEY TECHNOLOGY TRANSFER CONTRACTS BASED ON FIDIC STANDARDS Report of the Seminar held in Bangalore, India - September 1991 AUGUST 1993 ASIAN AND PACIFIC CENTRE FOR TRANSFER OF TECHNOLOGY NEW DELHI, INDIA SGT ias TACIRATS ‘are, , erica eo eeRE, OOO a fr ie vere Wee tikes bat A a - ; i ~ “- o - ‘ : . ~ | . " ; , van 7 _ a s é ee ' -< é i " 7 mn ip 5 , : ‘ a7uoha t sada_! ~ s ee ee AY at oa saleee:.4 je7g: : s ns “ a . 7 7 7 o 7 >D J : * ~ “4 4 a4 e 4 7 ey a - PREFACE The Asian and Pacific Centre for Transfer of Technology (APCTT) was ‘established in 1977 at Bangalore, India. The Centre operates as a United Nations regional centre under the aegis of the Economic and Social Commission for Asia and the Pacific (ESCAP). The statute of the Centre was adopted as the basis of the Centre’s operation at the 41st session of the Commission of ESCAP in 1985. The Centre receives its overall direction from the annual session of ESCAP and specific guideli' ies from the annual sessions of its Governing Board. The Centre has a Technical Advisory Committee to provide guidance on technical matters relating to its programme. The objectives of the Centre are to assist the members and associate members of ESCAP through strengthening their capabilities to develop, transfer, adapt and apply technology, improve the terms of transfer of technology; and to identify and promote the development and transfer of technologies relevant to the region. In pursuance of the above objectives and to promote regional and interregional cooperation in technology development and transfer, the Centre organizes training for appropriate personnel engaged in development and transfer of technologies and provides advisory and consultancy services. Recognising the important role of development projects in developing countries, it was considered that two clear needs of this activity were : (a) to educate and train the key people from governments, private industries and consultants within developing nations who would be involved in development project work; (b) to improve the rate of technology transfer as development projects get implemented. In the work programme of APCTT, it was felt that action could be taken to meet the first of the recognised needs so that the people trained could have a better capacity to become involved in development projects. This would enable the second need - to improve the rate of technology transfer to be met. More details relating to how the programme involved the target groups and those relating to organizational matters of the seminar are available in Part A of the Overview of this publication. This section also lists the conclusions and recommendations of the seminar as well as the way this work could be pursued in the future seminars that may be held in other developing countries of the region. Mr K.B. Norris and Mr Charles B. Molineaux had kindly agreed to prepare detailed lectures relating to various aspects pertaining to legal and financial matters of turnkey technology transfer contracts based on FIDIC standards. It had been envisaged that this valuable work could be utilized with advantage in several other seminars or workshops on the subject to be held in the future. To facilitate such an activity, APCTT is now bringing out a detailed report of the seminar which was held in 1991. The course material prepared by Mr Norris and Mr Molineaux and used during the seminar has been suitably edited and special sub-headings provided in the course material for each lecture in order to highlight the important segments covered. By and large, the structure of the lectures as presented during the seminar has been retained. It may be noted that Lectures 1 to 17 are related to the Red Book Guide, Lectures 18 to 26 to the Yellow Book Guide and Lectures 29 and 30 to the White Book Guide of the (i) FIDIC Secretariat. Lectures 27 and 28 deal with other forms of contract. The Case Studies have also been retained and the first twenty are relevant to the areas covered in the Red Book and the last ten similarly are relevant to the Yellow Book. While it any be only a matter of convenience between the Course Director and the Second Trainer to share the total content of the programme, the lecture notes or the course material prepared by Mr Norris were for Lecture Nos. 1, 2, 3, 6, 7, 9, 11, 13, 15, 17, 18, 20, 23, 25, 27,28, 29 and 31. The lecture notes prepared by Mr Molineaux were for Lecture Nos. 2, 4, 5, 8, 10, 12, 15, 16, 19, 21, 22, 24, 26 and 30. Since the course material was so closely connected to the Red, Yellow and White Books, it was felt that for a proper appreciation of this material these books should be available to the readers along with the course material. APCTT is very thankful to the FIDIC Secretariat for their spontaneous response to APCTT’s request to reproduce these three books by making them a part of the bound volume of the report of the seminar. The financial arrangements for this programme were made available through the generous support of the Asian Development Bank (ADB) and the United Nations Development Programme (UNDP) through Project RAS /90/020 - Technology Transfer and Management. APCTT would like to record its deep appreciation for the support extended to APCTT by the ADB and UNDP. APCTT’s thanks are also due to several divisions of the Economic and Social Commission for Asia and the Pacific (ESCAP) to progress this programme from its inception to completion and in particular to the Divisions of Technical Cooperation and Industry, Human Settlements and Environment. It is true that the seminar evolved a lot of interest in 1991. But the objectives of the programme of APCTT go far beyond the seminar of 1994. In order to pursue this programme in many developing countries of the region further initiative and support is necessary and it is hoped that this publication will become an important step in pursuing this initiative in the years ahead. August 1993 K.V. Swaminathan Acting Director (ii) PRINCIPAL SPEAKERS K.B. (Tony) Norris Tony Norris has had many years experience in consulting engineering with Sir Alexander Gibb & Partners of the UK, including fifteen years on construction sites in Uganda, Zimbabwe and Pakistan and five years in the offices of the World Bank in Washington D.C. He retire 1 as Senior Consultant to the firm. He is now in private practice as an arbitrator and independent expert. Tony Norris served for many years on the FIDIC Civil Engineering Contracts Committee, latterly as Chairman, and participated in the J preparation of the Fourth Edition of the Red Book and of the Guide to ® , its use. He also served on the FIDIC Turnkey Contract Task Committee which is preparing Conditions of Contract for Design - Build (Turnkey) Works. In February 1993, he was appointed Chairman of the newly established FIDIC Contracts Committee with responsibility for coordinating the preparation of all FIDIC model forms of Contract and other FIDIC documents relating to contract management. He is a frequent speaker at engineering conferences and workshops and has contributed numerous articles to the technical press. In June 1992, Tony Norris was presented with the first Louis Prangey award for significant service to FIDIC and to the profession of independent consulting engineering. Tony Norris is a Fellow of the Institution of Civil Engineers and a Fellow of the American Society of Civil Engineers. Charles Molineaux has specialized in construction and engineering law and represented owners, engineers and contractors in questions relating to international, federal, local government and private projects. He practiced law in New York City, appearing in federal and state courts, in trial and appellate work, and before arbitration and contract appeals boards for twenty years. He served as General Counsel of a major international construction contractor, from 1980 to 1987, and is now in private law practice in Washington D.C. As an arbitrator, he has participated in construction cases, both ad hoc and under institutional rules. He has also lectured and conducted training in arbitration for the International Law Institute, the Cairo Arbitration Centre and the American Arbitration Association and he serves as a member of the advisory board of the BNA World Arbitration and Mediation Report. He recently served on the liaison committee of the International Federation of Consulting Engineers (FIDIC) which published in 1987 the Fourth Edition of its widely used Conditions of Contract for Works of Civil Engineering Construction. Charles Molineaux is a Fellow of the American Bar Foundation, an affiliate member of the American Society of Civil Engincers, and a trustee of The Moles. Charles B. Molineaux (iii) ACKNOWLEDGEMENT The Asian and Pacific Centre for Transfer of Technology (APCTT) wishes to place on record its deep appreciation for the financial support extended to this project by the Asian Development Bank (ADB) and the United Nations Development Programme (UNDP). In particular our special thanks are due to Mr Osman R.I. Bako, Chief, Central Projects Services Office and Dr Jean-Pierre Vu, Manager, Consulting Services Division of the ADB and Mr S.K. Zacharia, Chief, Division for Regional Programmes, Regional Bureau for Asia and the Pacific of the United Nations Development Programme (UNDP), New York and to Mr Erling Dessau, Resident Representative of the United Nations Development Programme (UNDP), New Delhi, the principal project representative. Through the ESCAP Secretariat, APCTT has received enormous support in pursuing this project and thanks are due to Mr Moeljono Partosoedarso, Chief and Mr S. Latif, Senior Programme Management Officer of the Technical Cooperation Division and to Mr Kazi F. Jalal, former Chief of the Division of Industry, Human Settlements and Environment of ESCAP. Mr K.B. Norris and Mr Charles B. Molineaux have taken extraordinary interest in preparing the material and the clarity with which they have presented the details has left a lasting impression among all the participants. Thanks are also due to them for the assistance in preparing the completion report and identifying the points which could benefit the use of this material for future seminars and workshops. APCTT considered that the three publications of the FIDIC Secretariat used during the seminar relating to the FIDIC Conditions of Contract for Works of Civil Engineering Construction (The Red Book Guide, 1989), the FIDIC Conditions of Contract for Electrical and Mechanical Works (The Yellow Book Guide, 1988) and the Client/Consultant Model Services Agreement were very essential for a proper appreciation of the course material and for the use of this material for future workshops in the region. APCTT would like to express its deep gratitude to the authorities of the FIDIC Secretariat for their consent to the inclusion of these three books in this publication.