CIOB Complex Projects Contract 2013:Construction Issues in the Middle East

8 November 2013, London

Francis Ho, Head of Constructionfrancis.ho@olswang.com | + 44 20 7067 3000 | Twitter: @fkyh

CPC2013 in the Middle East

•An international contract

•Roots in common law (similar to FIDIC or NEC)

•Provisions for Local Law and requirements in General Conditions (e.g. clauses 5.3, 10.7.1, 15.5, 18)

•Arbitration allows for more familiarity for international parties in dispute resolution, use of the English language, “neutrality” and better worldwide enforceability

•Special Conditions allow further modification to suit local requirements/local markets

•Local counsel advice recommended as always

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Local Sponsors

•May be bound by local laws regarding jurisdiction and dispute resolution forum (e.g. Board of Grievances in KSA)

•Public policy requirements

•Prohibition on speculation

•Prohibition on gambling

•Usury

•Other practices forbidden under Shari’ah law

•May also be influenced by politics, e.g. embargo on use of Israeli goods and services

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Local Contractors

•Local content requirement

•Joint ventures with local parties

•Advantages and disadvantages

•Risk of lack of expertise

•Cultural incompatibility –differing localised business practices

•Appropriate security for performance required

•Eid al-Fitr

•Eid al-Adha

•Ramadan

•Summertime working hours

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Split EPC Contracts

• Tax advantages in on-/off-shore works split

• Where there is a split EPC, developer/owner will generally require “wrap” which:

• Takes precedence over split EPC contracts

• Provides for joint and several liability of on- and off-shore contractors

• Contains liquidated damages provision for late performance of entire EPC works

• Contains overriding dispute resolution clause

• Imperative for parties to obtain local law advice to ensure contract structure compliant with local laws

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Contract Administration and Expectations

•Consider relevant legal regime –applicability of notices as condition precedent to claim

•Guillotine provisions?

•Civil law jurisdictions

•Obligations of good faith and co-operation

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Managing Disputes

• Issues with evidence in international projects

• Without prejudice privilege

• Local rules of evidence

• GCC civil code jurisdictions –should only disclose those documents requested by other side

• Disclosure during mediation may be used in subsequent proceedings

• Managing performance security

• On demand bonds / standby letters of credit

• Notice?

• Evidence:

• When to call?

• Revocable/irrevocable

• Enforcement of arbitral awards and court judgments

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