Ashu, In global claims substantiation is not an issue. Real issue is “What was the actual impact of the series of the events which has affected the project”. Let’s talk through the example of a global claim: In a highway construction project: 1. Employer is required to handover the site with Notice of Commencement. However, Employer hands over the site in parts to Contractor; 2. Employer is unable to have permission from electricity department to relocate the HT lines from project corridor; 3. Employer also unable to procure approvals from authorities for some part of the work. All the above issues togather delayed the over all completion of the project by 8 months. Being concurrent in nature it was difficult to establish a particular delay event leads to a particular time and cost impact. Let me make one thing clear, site handing over was not delayed by 8 months. Permissions were not delayed by 8 months. However, cumulative impact was 8 month. Contractor submits a claim for 8 month EOT and additional cost on account of 8 months delay. During the arbitration proceedings, Contractor establishes that: 1. It is impossible to submit the EOT claim for each individual event 2. He is not able to recover the claimed cost by any other way. Now I will try to highlight Arbitrator’s approach towards such claims in India: 1. Global claims are not out rightly rejected by an Arbitrator, if claims have factual and logical facts for each delaying event. 2. In India, Arbitrator uses their judgment to make an apportionment between such series of delay events to determine the extent of impact. They also ascertain the mitigation efforts by the Contractor to overcome from such events. Finally, was there any delay on the part of Contractor during the contract?

By definition, liquidated damages are a reasonable estimate of the loss the Employer anticipates he will suffer, if the work is completed late. So, the parties know in advance the extent of risk they are taking. Liquidated damages clause should limit the liability, should state clearly and unambiguously. If there is no limit cap on limit liquidated damages and Employer recover the damages disproportionate to loss suffered. Contractor can move to the Court of Law to seek reduction in the applicable damages to reflect the actual loss suffered by the Employer. In the Civil Code of some countries, exercise of a right shall be unlawful if, among other things, the interests desired are disproportionate to the harm that will be suffered by the other party. Neither party may exercise its rights under a contract in a manner, which is oppressive or abusive to the other.

Answer to this issue depends on the wording of Extension of Time Clause as the wording of the clause will determine about the loss of right. I will put my view on this issue in susequent posts.