International Construction Contracts Research Articles

Agreed form requirements in international construction contracts: is enrichment irrelevant?

This article concerns the form requirements for additional work in construction contracts. A number of cases illustrate that it is hard to predict whether the contractor will be reimbursed for additional work when the parties have not adhered to the contracted form requirements. The author argues that the legally irrelevant factor of the purchaser’s enrichment is, in practice, important for predicting how the court will apply abstract legal concepts on the principle of pacta sunt servanda, agency, the parties’ inconsistent behaviour, the nature and purpose of the form requirement, the duty to cooperate, usages, good faith, and culpa in contrahendo

Analytical Framework for the Choice of Dispute Resolution Methods in International Construction Projects Based on Risk Factors

International construction projects provide opportunities for developing countries to advance in the global economy and for international construction and design firms to increase their profit and market share. Despite the attractive opportunities that international construction offers, international contractors are faced with many challenges and difficulties when moving into international markets. Many risks are associated with international construction, whether external or project-specific risks. Those risks affect how contract clauses are written, including the dispute resolution clause. This paper discusses the different dispute resolution methods employed in international construction contracts and develops an analytical framework (DRM-Risk matrix) suggesting the use of specific dispute resolution methods depending on the risks expected in the project. The matrix may eventually help international contractors in the selection of the appropriate dispute resolution method during contract formation depe...

Time Provisions in Standard Forms of Local and International Construction Contract

In any construction contract, the use terms and conditions in construction contract clauses has a great impact on the project performance, which in turn affects the achievement of the project completion date. Clauses within a contract should fit together to form a reasonably allocated risk among project parties and relevant to the complexity of projects. The General Condition clauses, which were looked at in this study, consist of the ones that relate to the time performance of the contract as well as that deal with action required at specific points in time within a contract. As we know, a clear and more complete General Condition documentation should end up with win-win situations for parties involved. If there are much unclear and even unknown information within the General Condition, the parties contracting will encounter uncertainties with relations to time that during the project execution. For the parties contracting, it is always to their advantage if more complete and comprehensive documentation used as it means fewer disputes, less conflicts, and time and energy saving during construction instead of claiming and debating over the provisions. The paper is to present an analysis on the time related clauses and provisions in the current local (used in Malaysia) and international construction contracts.

Adequacy of Quality Provisions in Standard Forms of Local and International Construction Contracts

Standard forms of contracts have been in use in the Malaysian construction industry as a means to expedite contractual and legal duties for the clients who wish to avoid expensive and complex legal endeavors to arrive at an agreement with their contractors. Various forms have been drafted by various professional bodies and organizations, both locally and internationally, to meet the demands of the local construction market for standard forms. Quality provisions are among the topics/issues covered in the standard forms. However, evidently, it is noted that the quality and its standards in the Malaysian construction industry has consistently remained as the root for many construction disputes. Whether or not standard forms of construction contracts have sufficiently cater for quality, remains a question. If the "one-size fits all" postulate does not hold especially when it comes to ensuring quality on site, the question of validity and effectiveness of standard forms becomes a pertinent one. This paper presents a study of various quality related clauses in local and international standard forms and comparisons were made among the chosen forms. Experts opinion within this field are sought as well in order to improve the robustness of this study. This paper also investigates the adequacy of the provision of these forms and suggests suitable changes to the current standard forms, where necessary, within the study.

Risk perception and Bayesian analysis of international construction contract risks: The case of payment delays in a developing economy

Although subjective probabilities and Bayesian methods are applied successfully in other industries to manage “subjective” risks similar to those encountered in construction contracts, very little is reported on the application of such methods for analysing construction contract risks, which are generally subjective in nature. Predominant industrial practice seems to be the use of arbitrary contingency figures, which are often subject to individual perceptions of risks, to give an overall impression of contract risks. This paper presents an application of an expert elicitation model and Bayesian methods to the analysis of the risk of payment delays in international contracts set in a developing economy, and a determination of how differing perceptions about risks affect estimates about the risk. Expert opinions about the risk of payment delays in an international contract set in Ghana are transformed into prior distributions about the risk using the relative likelihood method and combined with sample information about the risk for a Bayesian analysis of the risk. Results of the study validates the elicitation model applied and reveal that although construction professionals to have difficulty estimating intermediate and tail values of probability distributions, expert elicitation and Bayesian analysis can be applied to construction contract risks, as part of a more systematic management of contract risks, to achieve better rigour in risk analysis. It further confirms the assertion that differences exists in the belief functions and hence the risk estimates of experts from different socio-cultural backgrounds. Effective strategies for systematically analysing contract risks in international contracts must therefore consider the impact of risk perception in the risk management process.

Global Legal Issues for Engineers and Constructors

When performing engineering and construction (E&C) throughout the world E&C personnel need to be aware of the differences in legal systems and how contracts are enforced in different countries. This paper provides information on some of the international legal conventions, regional legal issues, and comparative legal systems. Next the paper addresses international engineering and construction contracts by providing a discussion on the clauses that could differ in contracts throughout the world and which clauses are important to include in international contracts. Specific contract clauses are examined in relation to how their inclusion or exclusion might impact global engineering and construction projects. The next section presents issues related to claims and change orders along with a brief discussion of dispute resolution techniques including international arbitration and contract clauses related to dispute resolution techniques. Anticorruption legislation is mentioned along with kidnapping and ransom ...

Cultural Considerations in International Construction Contracts

International construction projects involve multinational participants from different political, legal, economic, and cultural backgrounds. As one of the major issues affecting the management of international construction projects, culture deserves wide research. This paper aims to establish a valid groundwork for further research on the impact of cultural issues on contractual arrangements; conflict causation, and the selection of dispute resolution mechanisms for international construction projects. The paper reviews the characteristics of international construction activities and discusses the cultural context. It sets the research background for disseminating the findings of two surveys, carried out in Hong Kong and in London and Sydney. The study identifies the important features expected for the contract of international construction projects and ascertains their significance to further in-depth research.

Using Private‐Public Linkages to Regulate Environmental Conflicts: The Case of International Construction Contracts

The article takes a pluralistic view of the ‘trade‐environment’ conflict by exploring one of the settings of this conflict: the lex constructionis– international construction law. It seeks to unravel the way in which the unique structural‐cultural attributes of this legal domain have affected its environmental (in)sensitivity. The article's main argument in that context is that the contractual tradition of the lex constructionis (as manifested in the standard contracts that dominate this field) and its unique institutional structure, have created a culture of ecological indifference. This culture has important practical consequences because of the deep ecological problematic of international construction projects. The article develops an alternative contractual model, which depicts the construction contract as a semi‐political mechanism, rather than a private tool. This conceptual change seeks to break the public/private separation that characterizes the contractual discourse in the international construction market. The article explores, further, whether this alternative contractual vision could be realized in practice, and proposes several implementing modules which could further this goal. While the article explores a particular international regime, its methodology and conclusions – in particular, the political‐constitutional interpretation of the contract and the critique of the public/private dichotomy (see sections III.3 and III.4) – should be relevant to the regulation of many other (national or international) environmental dilemmas.

Bonding Procedures for North American and International Construction Contracts

Surety bonding has become essential in today's construction market. The industry is complex, and contractors face high expectations for contract performance. The global construction market and the chance to learn from others justify discussing general bonding procedures and comparing North American and international construction bonding. The main difference is in the type of bonding; the North American construction industry uses an obligatory type rather than the forfeiture type commonly used internationally. Further, there are noticeable differences in bond amounts due to the type of bonding. The procedures used by North American sureties in issuing bonds are more rigid as the surety assumes the entire responsibility of the contract completion whereas bonds are considered an extension of the contractor's line of credit in international contracts. The common law implications, surety requirements, premiums, and other concerns are detailed.

Fidic 4th - a Practical Legal Guide (A Commentary on the International Construction Contract) by E. C. Corbett

Fidic 4th – a Practical Legal Guide (A Commentary on the International Construction Contract) by E. C. Corbett. Published by Sweet and Maxwell, London (1991, xviii and 706 pp. incl. Preface, Table of Contents and Cases, Comparison between FIDIC 4th Edition and 3rd Edition, Appendix (FIDIC 4th Part IF) and Index ). Hardback Price £70.00. FIDIC, the Federation Internationale Des Ingenieurs-Conseils, is an association of national associations of Consulting Engineers with headquarters in Lausanne in Switzerland. FIDIC first produced a standard form of contract for civil engineering projects in 1957. The 4th Edition of the ‘Conditions of Contract for Works Civil Engineering Construction’, the subject of this book, was published in 1987. FIDIC 4TH entitled ‘A Practical Legal Guide’ is a very substantial book, written by a lawyer experienced in international civil engineering projects. The book is worthy of its title and worthy of study by all concerned with such projects. The format of the book is as follows:- > Table of Cases > > Introduction > > FIDIC 4th Part I with Commentary > > Comparision of FIDIC 4th and 3rd Editions > > Appendix comprising FIDIC 4th Part II; Form of Agreement; Form of Tender, and Appendix to Form of Tender. > > The Introduction has four sections, namely:- > 1. Introduction, setting out the origins of the 4th Edition, with comparison of dates of publication of the various editions of the conditions produced by the Institute of Civil Engineers in the United Kingdom (the ‘I.C.E. Conditions’; there seems to have been some leapfrogging over the dates of publication of the two sets of conditions), the Nature of the Conditions with principal changes from the 3rd Edition, Amendment of FIDIC's 4th Edition and clauses requiring attention in order to remove ambiguities, anomalies or discrepancies in the drafting. At the end of this latter section there is a valuable and necessary warning – ‘Generally, great care is needed when amending any standard form of contract’. Too true! How often has one come across amendments to standard forms of contract made enthusiastically and with the best of …

What has Gone Wrong with Construction Disputes: an Engineer's View

The likelihood of disputes arising in the course of international construction contracts has increased in recent years. Indeed, the engineering industry has fallen into disrepute with many employers and international financing institutions (‘IFIs’) and it has, in some quarters, laid itself open to the accusation of being incapable of managing its affairs. The problem is not peculiar to engineering or to one country. Taking the figures of the American Arbitration Association as an example, the cases filed in 1988 of which those related to construction formed only a part, showed an all-time high of over 54,000 disputes, continuing a five-year growth pattern. In Australia, it was decided that the situation there warranted special study and an eight-man team, drawn from government and industry, visited sixteen countries and held meetings with some ninety organisations and firms in an effort to learn from the experience of others. The outcome was a hundred page report entitled ‘Strategies for the Reduction of Claims and Disputes in the Construction Industry’ issued in 1988. Not so many years ago, it was relatively rare for discussion of a claim to reach such an impasse that one of the parties to the Contract asked for an Engineer's decision under Clause 67.2 Difficult claims tended to be put on one side by tacit agreement for further discussion at the end of the Contract when they could be considered in conjunction with any other claims still outstanding and included in an overall settlement. In the few cases where an Engineer's decision was asked for, the decision was almost invariably accepted by both parties. Even where it was not and the requirement to proceed to arbitration was stated, the dissenting party generally made no immediate move to commence arbitration. The usual practice was to rely, perhaps unwisely in the light …

International construction contracts in Tanzania

The paper reviews management of international contracts in Tanzania resulting from case studies by interview carried out by one of the authors. It covers problems associated with delay, failure in meeting objectives, funding and transfer of technology among the participating parties. Outline is also given of the various factors necessary for establishing joint ventures between Tanzanian and foreign construction firms. Promotion of a ‘local’ construction capacity in the international arena is explored and highlighted.

Suing Solely to Extract a Settlement Offer

Suing Solely to Extract a Settlement Offer

Alloment of risks in international construction contracts (in German) : Fessler, W Rock Mech, Suppl 4, 1975, P129–136 (paper to 23rd Geomechanical Colloquium, Austrian Society for Geomechanics, Salzburg, 17–18 Oct 1974)

Alloment of risks in international construction contracts (in German) : Fessler, W Rock Mech, Suppl 4, 1975, P129–136 (paper to 23rd Geomechanical Colloquium, Austrian Society for Geomechanics, Salzburg, 17–18 Oct 1974)