Kluwer Construction Blog

The news of the requested standstill period for Dubai World debt repayments has left those of us who advise on Public Private Partnership (PPP) projects in the region wondering what it will mean for us……

Why is it relevant for PPPs?

As most readers of this blog will be aware, PPP projects are usually largely funded by debt borrowed by a Special Purpose Vehicle (SPV). The SPV uses the money to build an asset gets paid by the public sector for the provision of services or utilities connected to that asset over the long term. The payments to the SPV come from the relevant public authority to whom the services/utilities are provided eg the schools authority, or the power offtaker.

Cash-flow from lender to owner to construction manager to subcontractors is the lifeblood of any construction project. And maintaining a sufficient flow of funds is essential to every construction manager’s ability to manage the job. Contract provisions requiring a contractor or subcontractor to continue to work, even if the right to payment is disputed, mean little to the fate of the project if subcontractors cannot meet payroll.

As a consequence, who will bear the risk of non-payment has becomes a frequent negotiation point, particularly so during periods of economic uncertainty. Imagine that two sophisticated corporations spend thousands of dollars and hundreds of hours of th [...]

As lawyers, we want what is best for our client. We will fight for that additional clause or that tricksy wording that will give our client that added protection that may, someday, prove decisive in an argument with the contractor or the employer.

One issue that lawyers often fight quite savagely over (but in that overly courteous way beloved of lawyers) in construction contracts is the inclusion or exclusion of a fitness for purpose obligation on a contractor or architect. But do we know what we are fighting over? What will happen if fitness for purpose is not expressly included? And what is the real effect of including a fitness for purpose obligation? Will it be implied into your contract [...]

With construction activity in India now worth $50 billion per annum and accounting for around 6% of Indian GDP, India is an attractive market for contractors.

The construction sector in India employs around 40 million people. The granting of ‘industry’ status to the Indian construction industry by the Indian Government has resulted in fast track procurement procedures and enabled construction companies to obtain crucial working capital at market rates. As a result, institutional investors have re-rated many Indian construction stocks and many joint ventures are being discussed with foreign construction companies.

Before plunging head long into this rapidly growing sector, here are four issue [...]

ArcelorMittal South Africa’s announcement that it has reached an agreement with gold producers Harmony and DRDGold is a blow to construction contractors hoping for more competitively priced steel in the South African market.

The long-running dispute concerned the pricing of flat steel products and began in 2002 when the mining companies first lodged a complaint with the Competition Commission. They claimed that ArcelorMittal had a dominant position in the country’s flat steel market and had abused this by charging excessive prices. This was to the detriment of customers for flat steel.

The case was referred to the Competition Tribunal in 2004. In 2007 the Competition Tribunal fo [...]

In a judgment dated February 25, 2009 (Cour de cassation, civ. 3, 25 February 2009, No. P07-20.096), the Court of cassation, the highest court in the French judiciary, confirmed its previous decisions (Cour de cassation, chambre mixte, 30 November 2007, No. 06-14.006; Cour de cassation, 3e civ., 30 January 2008, No. 06-14.641) according to which certain provisions of the French Law on Subcontracting dated December 31, 1975 are mandatory, and as such are to be applied even when French law is not the governing law chosen by the parties to the contract.

For several years, there has been a debate among scholars on the classification of certain provisions of the 1975 Law as mandatory w [...]

Federal Law No. 11079, 2004 [PPP LAW] instituted the general rules for bidding and contracting of Public-Private Partnerships (PPPs) within the realm of public administration. This is an important volley in the Brazilian government efforts to develop funding and management alternatives for public works in furtherance of the bidding system instituted by the Federal Law No. 8666, 1993 [Brazilian BIDDING LAW] and to reduce the state presence in the Brazilian economy.

Firstly introduced in the Anglo-Saxon world as an alternative to privatization and to the former system, under which the government administration was responsible for ownership, maintenance and operation of assets of public interes [...]

Enforcement of arbitration awards in the United States in substantial matters is governed by the Federal Arbitration Act, 9 U.S.C. § 1, et seq. (FAA). A closely related statute found at 9 U.S.C. §§ 201-208 contains specific provisions for international awards rendered under the New York Convention, but the FAA also governs those proceedings unless there is a conflict. Enacted in 1925 during an era when strong judicial hostility to arbitration was the norm, the FAA has long been in need of updating and revision. But various efforts to do so (other than an effort to eliminate its applicability to most consumer cases) have not really gotten off the ground. While it is generally short and to [...]

Recap

The previous blog on this topic considered the potential for liability to be unwittingly assumed by parties to construction contracts. This was highlighted by the example of decennial liability under the UAE Civil Code. This blog considers another perhaps unknown liability: strict liability for harmful acts under UAE law, and considers whether parties are able to exclude such liability by contract.

THE LAW OF TORTS IN THE UAE

Extent of Liability

The UAE law of tort is set out in Articles 124 and Articles 282 – 298 of the Civil Code. These articles appear to impose strict liability on an “actor” in respect of any harm done (it seems accepted by all commentators that thi [...]

Important changes in licensing regulations for engineering surveys, design and construction works were introduced by Federal Law No 148-FZ dated July 22, 2008 on “Amendments to the Russian Town-Planning Code and some legislative acts of the Russian Federation”.

As of January 1, 2010, licensing of engineering survey, design and construction activities, including developer (“zakazchik-zastroishchik”) functions will be completely abolished. Developers, engineers, designers and contractors will be allowed to continue such construction related activities under an SRO (self-regulating organization) mandate.

To explain what this means to organizations operating in the Russian Fe [...]