All fields of human activity undergo natural unification and harmonization over time. Following successful unification, business negotiations become easier and cheaper, communication and management are simpler and distrust vanishes. Complications and disputes can then be settled with less effort, especially in international transactions.

In business, in general (and in construction, in particular), this issue is more complicated than anywhere else. In the past, construction used to be local by nature as an industry with local contractors and employers devising and implementing habitual rules which were rigid and difficult to alter or unify.

Contractual relationships are subject to unification at three levels:

• Law;
  
• Principles;
  
• Sample documents.

National substantive laws and regulations rarely provide sufficient rules for large construction projects. On the contrary, local commercial laws tend to be inadequate in terms of dealing with contract administration, price, time, variation procedures, risk allocation and claims issues. The use of extensive sample documents has assisted in filling these gaps and has led to greater certainty and foreseeability in large construction projects.

Governing law ordinarily states that general terms and conditions, as prepared by professional or other organizations, will be part of the contract merely by being referred to. The position these terms and conditions are to occupy within the hierarchy of the contractual documents has to be defined in the contract.

The long-term use of sample documents in a certain industry sometimes leads to their incorporation in local public procurement legislation. In this way, the FIDIC forms have become part of public procurement law in, for example, Central and Eastern Europe and the Middle East. Developments in some Arabic countries are now so advanced that standardized conditions or their parts have become mandatory elements of local public procurement law.

Specific provisions are encountered in international construction contracts. For example, large construction contracts often foresee the participation not only of the employer and the contractor, but also of a neutral third party (the contract administrator) authorized to make decisions and certify various operations or activities performed by the contracting parties. The meaning and effect of those certificates will always depend on a particular contract and the governing law. Concerning their meaning, these certificates usually reflect the as-built state. Such a certificate is scrutinized at a point in time specified in the contract and is usually a pre-condition for invoicing and payment. Contracts tend to include provisions that define the conditions upon which a performance certificate (or related payment) can be refused. It is not then surprising that numerous disputes arise at this point if the engineer proceeds contrary to the contract while issuing such certificates. British courts have ruled that the engineer is considered as incompetent in such situation, giving the contractor the right to claim payment even when lacking the certificate.

Complications also appear where common law principles are used in connection with completion where a distinction is drawn between such completion, thereby allowing the resulting work to be used for the agreed purpose (substantial completion) and fulfilment of the contractual commitment (performance). Most sample forms used in international construction projects build, therefore, on the substantial completion concept, coming from the common law. This approach presumes that the work has been taken over by the engineer, but without relieving the contractor of any of its contractual responsibilities. Only the performance certificate will have such consequences, once issued.

Typical features of international construction projects are discussed in other chapters of this book where common issues such as price, time, claims, variations and risk allocation are explained.

These and other common features of large international construction projects frequently dealt with in sample forms of contract have arguably become part of lex mercatoria (from the Latin for ‘merchant law’, i.e. supranational customs and rules of international trade).

International debates have been ongoing in professional circles for decades, but these efforts have not yet provided any statutory regulation for international construction contracts. The central question is whether such regulation is necessary at all. Even lex mercatoria itself owes its existence to the inadequacy and ‘stubbornness’ of written law. International traders very often conclude that they do not need any such national law in any case. Owing to customs and the inflexibility of commercial law, traders create their own habitual rules. This extends to resolving disputes in the least painful way by using their own agreed alternative methods which exist separately to those prescribed by the state.

These days, FIDIC forms (as a standardized law applicable to construction projects) are without doubt part of lex mercatoria. However, many questions remain as to whether they are anything more than general terms and conditions of contract prepared by a professional organization. For example, what is their relation to international principles of contract law, general principles of law or the principles that prevail in the construction industry or trade in general? Can they become an international business custom? Can the individual provisions of FIDIC conditions be used in disputes even when there is no reference to a FIDIC sample document in the contract (i.e. where such document is not a part of the contract)? Would the selection of lex mercatoria as the governing law of a contract be deemed applicable and can FIDIC be subsumed under this category as a suitable source of regulation? And, finally, can the FIDIC contractual conditions replace applicable law?

Another issue centres around the option to fill the gaps in a national law with supranational regulations and the possibility of using the FIDIC forms in this context (Mallmann, 2002).

FIDIC conditions were not created with the intent of becoming a source of law. What is relevant, however, is how they are practically applied by contract drafters, parties to the contract and in dispute resolution.

FIDIC forms are sometimes used as a source of law in disputes resolved in arbitration where there is a gap between contractual provisions and the governing law. When there is doubt or uncertainty, adjudicators, arbitrators or judges fill these ‘gaps’ with generally accepted FIDIC form provisions. Similarly, FIDIC forms can be used to find out what clauses would be generally accepted in construction contracts before the project begins. For instance, it may be possible to compare unclear or potentially invalid clauses of a bespoke contract to a particular FIDIC clause at the negotiation stage.