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CLAIM FOR FIRE INCIDENT

Recently there was a fire incident on our project which though was not huge, it did delay us by some 20 days due to issues with authorities investigations and rectification works. The project was scheduled for handing over in 40 days and one fine day, we saw heavy smoke from one of the airwell. Since it was closed at top and the project being 30+ storey, smoke entered the passage. Civil Defense were called and fire was extinguished in some 6 hours. The point is there are no electrical services in the duct and the police report says fire is caused by fire caught due to heat (no suggestions was given how this occurred) or it was due to cigaratte butt. Extent of damage is not an issue but the methodology of claim is. Effect on activities was broken down by us as follows; 1. Inaccessibility due to health hazard 2. Project on hold by authorities (note only cleaning was allowed) 3. Remedial works for damaged areas Verbally, contracts manager of PMC denied any right of contractor to claim for EOT (time only due to neutral events) with reason being that Contractor is responsible for safety and care of works. But in my discussion i convinced him to accept our notice and claims with any further negotiations and argument to be undertaken in future as the translation and determination of legal implication of Police Investigation would be prejudicial. Now i made a claim on following assumptions, (FIDIC 92) > sub-clause 12.2 - for physical obstruction / conditions due to health hazard > sub-clause 20.4 - Employer's risk as until implication of Police Investigation report is not known all rights of contractor are reserved. (i say (e), (g), (h) > sub-clause 44.1 - Areas on hold by authorities as well as additional work under (a) and (e) Though still not on paper, i plan to undertake my argument as, - The report is open for interpretation and does not put any party responsible for the act. - Cause may be due to intented or un-intended criminal act of the employee of contractor, sub-contractor or any parties involved. - Criminal act of our employee is not responsibility of its Employer. Analogy is that of murder or riots.

Now, i would look for suggestions how the argument can be better presented. And if the argument itself is valid.
24 days ago

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Samer H. Skaik, BEng, MSc (W/D), PMP, MIEAust, ACIArb likes this
10 comments

Follow tony

tony mackenzie Hi Is there a CAR policy in force or other insurance cover? Do you have a clear idea of proximate cause ? Is there a loss adjusters report? If there is insurance you always have the option if the insurer so wills it of subrogation!
24 days ago Like

Follow Wafic

Wafic ABDALLAH Any project under construction should have insurance cover? Builder Risk coverage is intended to cover buildings during the course of construction. Once they are completed, another policy (owners policy) is needed.
24 days ago Like

Follow liaqat

liaqat hayat If CAR policy in force covers fire accident /mishaps?


24 days ago Like

Follow Mohammed Irfan

Mohammed Irfan Shaikh CAR policy will only cover costs for damages to Works completed, and for materials waiting to be incorporated in the contract. We have already submitted our claim and almost on verge of approval, only matter of substantiation for few of our claims. This events causes delay for the project. Employer wants to utilize this oppurtunity to enforce penalties on the Contractor. No standard CAR policy have coverage for penalties (based on my understanding).
24 days ago Like

Follow Mohammed

Mohammed Azad Hossain Irfan is right; CAR Policy has no coverage for penalties on the contractor like imposing of LAD/Penalties for the delay. However, ill luck would have it, Standard Contract clauses/FIDIC etc. has also no coverage for Fire. However, if it can be proved that for this event the Contractor is not responsible (subject to police verification. Civil Defence report/evidence etc.), then the Contractor could be entitled for EOT.
23 days ago Like

Follow liaqat

liaqat hayat I understand that the CAR policy is contractor's all risk policy and should cover fire hazards. It may mean only more premium to be paid to the insurance company and that may be the missing point.
23 days ago Like

Follow tony

tony mackenzie did you accelerate?


23 days ago Like

Follow Haritha

Haritha K. The case has to be viewed under different points: 1. The Safety of the works shall be contractor's responsibility. Even if the fire is due to the external party who was not part of the contract, the contractor shall be made responsible for the damages (as far as the Employer is concerned) since the contractor should have avoided entry or opportunity for the other party to damage to the works. 2. There shall be CAR policy for sure, but it shall not cover the penalties though it could cover the Damage to works, equipment & people due to fire. But it depends on what are all have been included at the time taking the policy. And also the extent of contractor's default in this case would be considered by the insurance company is always a point of discussion. 3. Further Irfan, I could agree with your reasoning that the report is open for interpretation, so till it is concluded the issue cannot be out rightly rejected by the Employer. But the point you made "Criminal act of our employee is not responsibility of its Employer" - Can not be acceptable (here if my understanding is right - what you stated is - If the

your employee does the act which led to the fire wilfully it is not your responsibility as a contractor) because the Contract clause always states "If any damage to works/ equipment / personnel due to the personnel employed by the contractor whether it is willful / negligence/ ignorance the contractor is responsible for that" - Even under the law it is so. 4. One more clarification required in this point - "Only the police / civil defence are doing the report" - (Is there no report made by Employer & Contractor jointly for the cause/ source of damage and the extent of it??) - If the report is made by police /civil defence then I think it would be the basis of Insurance company also to pay you the claim amount and Employer will also conveniently use the report if there are any points against to the contractor. The points made are not exactly what you have asked for, but I feel these points needs consideration before you substantiate the claim with Insurance company / Employer.
22 days ago Like

Follow Asel

Asel El Housan Dear Irfan I don't know if it is late, to summarize, the damages costs will be covered by the CAR insurance and you are seeking the approval of your EOT. The first thing you should target is getting the insurance accepting your claim. I understand you are under FIDIC 1987 re-printed in 1992; once the claim is accepted by the insurance, you should claim your EOT under Clause 44.1(e) other special circumstances which may occur, other than through a default of or breach of contract by the Contractor or for which he is responsible, We faced this case many times and Clause 44.1(e) should cover you if not amended.
3 days ago Like

Follow Jerry

Jerry Nulun Basis and methodology of claims will be an issue. Though Contractor is responsible for safety and care of works and if the causes of fire is classified under "other special circumstances under sub-clause 44.1 (e) EOT may prevail, damages to possible extend claim under prevailing insurances. However, be mindful that insurance companies has in "very" fine print their own exclusion clauses. I any case an "expert determination" of cause of fire is required.
2 days ago Like

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