Going Underground? Is the FIDIC Yellow Book or Emerald Book your companion?

Upcoming Danish infrastructure projects, mining projects in Greenland, or just underground projects in general, may attract foreign contractors to bid on Danish tenders. But what kind of terms should you consider when contracting (or subcontracting) for these works?

From an international perspective, the FIDIC Yellow Book or Red Book has been a suitable choice to attract international contractors. However, in 2019, as a joint initiative between FIDIC and the International Tunnelling and Underground Space Association (ITA), the Conditions of Contract for Underground Works (the Emerald Book) were launched.

The Emerald Book is based on the second edition of the FIDIC Yellow Book, published in 2017, and is specifically designed for underground projects. This raises the question of any tender dealing with significant underground works: Is the Emerald Book a suitable companion for your project compared to Yellow Book?

A key focus on subsurface physical conditions

The Emerald Book lists three features that mainly characterize underground works:

• For the successful realization of the project, the method of excavation and ground support are major factors, and therefore a central part of the Works
• Focus on construction logistics and the environment. Physical access to Underground Works is often limited to just a few or even a single location.
• Greater cooperation with third parties is required, as the land, beneath which the Works are to be constructed, is typically owned by them.

Underground works present another set of risks that differ from those encountered in conventional construction. Consequently, the Emerald Book introduces several new clauses, with a key focus on the subsurface physical conditions that cannot be assessed with sufficient precision prior to entering into the contract. The physical conditions do not only include natural physical conditions, physical obstructions, and pollutants, but also reactions of the ground excavation.

While maintaining this focus, the Emerald Book continues to uphold the fundamental principles of balanced risk sharing established in the Yellow Book (and other FIDIC contract forms).

The geotechnical baseline report and time for completion

The Emerald Book introduces the use of a Geotechnical Baseline Report (“GBR”) to be provided by the employer. The GBR is a single contractual source of risk allocation related to subsurface physical conditions to the Parties.

The GBR describes the subsurface physical conditions and excavation in accordance with the construction method specified in the contract. The GBR must be included in the contract to serve as the basis for executing the excavation and lining works. Consequently, subsurface physical conditions not addressed in the GBR may be considered unforeseeable, allowing the Contractor to claim for extension of time and costs.

In addition, the Emerald Book introduces a new provision, Sub-Clause 13.8.3, not found in the Yellow Book. This Sub-Clause allows the Engineer to reassess the Completion Schedule based on the time allowed for the excavation and lining works. Like the Yellow Book, the Engineer takes the risk of unexpected or unforeseeable underground conditions. However, Sub-Clause 13.8.3 also enables the employer to benefit if conditions for excavation and lining work turn out better than anticipated. In short, if actual ground conditions differ from those described in the GBR and affect the critical path, the Time for Completion will be adjusted accordingly.

In line with the above, the Emerald Book sets out in Sub-Clause 13.8.2 that the contract price shall be based on the items set out in the bill of quantity and subject to remeasurement based on the actual measurement of the works, similar to the provisions in the 2017 Red Book.

Similarities and main differences between the Emerald book and the yellow book

The Emerald Book follows the structure of the Yellow Book (and other FIDIC terms), which are divided into two parts, followed by example forms. Part I contains the General Conditions, while Part II includes the contract data and special provisions.

The Emerald Book aligns with the FIDIC contracts’ core structure, setting out the appointment and role of the Engineer, as well as similar clauses on dispute resolution.

Furthermore, the Yellow Book and Emerald Book assume that the contractor will be responsible for the majority of the design and build.

The Emerald Book is specifically tailored for underground works, such as tunnels or mining, with high geotechnical uncertainty, whereas the Yellow Book targets general contracts where the Contractor designs and builds above-ground infrastructure, including facilities or roads.

The Emerald Book offers a more balanced allocation of risk in underground projects, making it a suitable choice for these types of projects, whereas under the Yellow Book, the Contractor typically bears most of the design and construction risks.

Do you want to know more about FIDIC contracts?

If you wish to know more about how we can help you with your FIDIC contract or gain insight into our experience, please contact attorney-at-law, Joachim Riis Jensen, by email  or phone +45 – 3120 3033.