Construction Contract
FIDIC forms of contract have been used in the Middle East since 1970. Many Islamic countries have joined the International Federation of the consulting engineer, 'Fédération Internationale des Ingénieurs - Conseils' (FIDC), which was established in 1913. The FIDIC contract is considered a contracting agreement (Maqaawala), as is known in "Shariah law".
There are five (5) main types of contracts, according to FIDIC, as follows:
Red Book.
Yellow Book.
White Book.
Sliver Book.
Green Book.
The above books deal with different types of FIDIC contracts with various terms and conditions.
Construction Contracts Under Islamic Law
Islamic law prohibits dealing with matters that are not existing at the time of making the agreement, the reason for this prohibition is to avoid "Gharar", which means ( Risk and Uncreatiy) here are the following exceptions:
(Ageed Alsalam): It is a contract for sale.
(Ageed Istisna). It is a contact of the manufacturer.
Construction and engineering contracts, which are known as (Ageed Magqaawala) in Shariah law, this type of contract gained their origin and validity from (Ageed Istisna). Thus, it's recognized and accepted by all Islamic jurists.
Although construction contracts are allowed in Sharia law, there are five (5) principles that a draftsman must consider while drafting or reviewing construction contracts in the Kingdom of Saudi Arabia or any country that applies Sharia law.
Riba: It means illicit gain or unjustified profit and unlawful enrichment.
Gharer: It means cheating, danger and unwariness, sometimes, it means risk and uncertainty.
Good Faith: Both parties to the contract should act in a good faith starting from the stage of the negotiation to signing the contract out and during its execution. Whether a party has acted in good faith or bad faith it depends on the particular facts and the circumstance of each case.
Due Process: It is a fundamental principle of Islamic law that both parties to the contract should be heard and have a chance to present their cases and submit evidence to prove them.
Jahalal: It means lack of knowledge.
However, FIDIC is not officially recognized in the Kingdom of Saudi Arabia. Therefore, the Saudi government has its own procurement law to be followed and adopted in all public sectors, contracts. While the private sector (private business) is at liberty to apply FIDIC provided that its applicability should be in compliance with Sharia law, transparent, fair and understood by both parties to the contract. The contract should not contain any ambiguities or prohibited activities, such as "Ghare" or Jahalal.
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