Fwd: first draft, any comments please

 

In respect of the situation with the payment certificates, we would like to bring your attention to the following:

 

1.  According to the Contract, the Statement should represent the amounts "to which the Contractor considers himself to be entitled for the preceding month".  Therefore, it makes no sense that Client includes any deduction for DD in such Statement as according to Client's position DD are not due. 

 

2.  There is no contractual requirement that the Statement has to be signed by the Engineer. The Contract provides that the Engineer, having in mind the amount claimed by the Contractor in the Statement, should issue an Interim Payment Certificate, which shall state " the amount which the Engineer fairly determines to be due, with supporting particulars"
 

3. However, from the L/C Client sent us this morning, we understand that in order to release any funds BANKS requires: 

(i) Statement issued by Client and certified by the Egnigeer;

(ii) Interim Payment Certificate signed by the Engineer. 

 

BANK requirements for release of funds, which are mandatory, should be  interpreted in the light of the logic of the Contract, which is that the Contractor presents his view on how much he should be paid for the preceding month in the form of a Statement and the Engineer uses this Statement to make his fair determination of the actual amount due.  The L/C requirements also seems to follow this logic as they require the Engineer only to "certify" the Statement, which does not meet "approve" or "agree", dislike the requirement to the Interim Payment Certificate, which has to be "signed" by the representative of the Engineer.  There is a clear distinction between the two requirements and we see no reason why BANK requirement to "certify" the Statement should be interpreted as a requirement to "approve" it, therefore such requirement should not be used as an excuse by the Engineer not to certify any Statement.  Moreover, the Contract goes even further providing that even "A Payment Certificate shall not be deemed to indicate the Engineer's approval, consent or satisfaction".  

 

4.  Client should discuss the situation both with the Engineer and the bank and try to go back to the contractual procedure, which we claim was not followed by the Engineer.  According to it: 

 (i) Client shall issue a Statement (which should be certified by the Engineer, if it has all necessary elements of a Statement), which represents Client's understanding of how much it has to be paid; 

 

(ii) the Engineer shall issue an Interim Payment Certificate within 28 days of receiving the Statement, which should represent its believe of how much is due to the Contractor; 

 

(iii) if the Contractor is not happy with the amount in the Interim Payment Certificate, he has right to dispute the Engineer's determination under clause 67.  Please note that the Engineer has right to make any deductions on behalf of the Employer only in case it has determined under the Contract's procedure that the Employer has a valid claim and is entitled to payment for such claim (which has not been done in this particular case).