As widely accepted in international construction practice, entitlement to a claim, such as time extension and additional payment, under construction contracts and, more specifically, under FIDIC-type contracts, time bars regulated under the contract constitute a condition precedent. In other words, failure of the contractors to observe the time bar provisions and to serve the required notices within the period stipulated under the contract may lead to a cease of the contractors' entitlement to claims.
In that sense, FIDIC 99 Red Book Sub-Clause 20.1 reads as follows:
“If the Contractor considers himself to be entitled to any extension of the Time for Completion and/or any additional payment … the Contractor shall give notice to the Engineer, describing the event or circumstance giving rise to the claim. The notice shall be given as soon as practicable, and not later than 28 days after the Contractor became aware, or should have become aware, of the event or circumstance.”
Under Turkish Law, there is no specific provision concerning the time bar provisions and/or extension of time. One of the fundamental principles of Turkish Law is the “freedom of contract” as regulated under Article 26 of the Turkish Code of Obligations, which reads as follows:
“The parties may agree on the content of a contract freely within the boundaries provided by law”.
Accordingly, unless the provisions stipulated under a contract are against the imperative provisions of the law and public policy, the parties to a contract are free to regulate the provisions of the contract as per their own will. When the parties to a contract are both merchants, the thresholds in the determination of the validity/ admissibility of the contractual provisions are even higher, with the understanding that the merchants are prudent in commercial life and are expected to be in a position to clearly understand the outcome/ meaning of the contractual provisions, in comparison to the ordinary consumer.
With regards to the scholarly views in Turkish Law, it is suggested that being a prudent contractor and a prudent merchant, a contractor, from the beginning of the contractual negotiation, shall take into account all the facts that may affect the contract period and shall act accordingly. It is therefore expected from the contractors, being prudent merchants by application of Turkish Law, to be aware of both the contractual provisions and the relevant facts that may affect the contract term. Accordingly, as a general view, it is mostly accepted that time bar provisions under construction contracts are valid and binding on the parties according to Turkish Law. Hence, lack of compliance to such provisions may cause the contractor to lose some (or may be all) of its entitlement to claim.
In line with the international practice adopted by the courts and arbitral tribunals, the Turkish Law approach and the legal position adopted by the Turkish Courts and the Supreme Court of Turkey have a similar nature regarding the time bar provisions and the possible outcomes of non-compliance to the same.
Regarding the general principle of freedom of contract and that the time bars introduced under the construction contracts are valid and binding, the 15th Civil Chamber of the Supreme Court of Turkey ruled in one of its decisions in 2001 (Case No. 2000/4429, Decision No. 2001/1032, dated 26/02/2001) as follows:
“Extension of time requests under (FIDIC) construction contracts are tied to strict rules in order to ensure international consistency. For the purposes of preventing potential abuse on time extensions, it is of utmost importance that claims are raised in a timely manner and with proper substantiation. Accordingly, the engineer's rejection of the claimant's time extension claims could not be considered against the contract provisions, due to the fact that such claims were not timely made or substantiated in accordance with the contract”.
In this respect, although there is no specific provision concerning the time bar provisions and/or time extension in Turkish Law, if the contractor does not submit the time extension and/or additional payment request within the time bar provisions regulated in the contract together with the documents and information confirming the claim, the contractor may lose some of its rights to entitle a claim, as accepted in international practice. With that being said, under several conditions, it is possible to argue that the time bar provisions under the contract are invalid and/or are non-binding. There are several issues that need to be taken into account and determined while making any such legal qualification concerning the validity and binding effect of the time bar provisions, such as, among others, the established practice among the contracting parties or compliance of the time bar provisions with the good faith principle. It utmost important to make a detailed determination on a case-by-case basis before concluding the validity of the time bar provision.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.