Last week lawyers gathered in London to discuss the latest in contract forms, dispute resolution and risk mitigation around the globe, and this is what they said...
Last week’s International Construction Law Conference in London was attended by hundreds of delegates from across the globe. The scope of the conference was matched by a weighty cast of judges, professors, barristers, and eminent solicitors, and all were there to look at trends in international law.
The opening session focused on new contract forms. These included the uptake of collaborative working, target cost contracts, and the early warning and risk management techniques pioneered by the NEC.
On the disputes side, Dispute Advisory Boards (DABs) appeared to be gaining popularity and adjudication was being used more and more on a consensual basis outside statutory regimes such as the UK’s Construction Act.
These trends were not however consistent across the globe. For example, it appears that the 21 year old FIDIC 4th edition was still being used for new projects in some emerging markets, and UAE contracts tended to avoid DABs and adjudication in favour of traditional international arbitration.
One contracting development which did appear to be influencing emerging markets was the relatively new World Bank MDB or “Multilateral Development Bank” form. Use of the MDB form by developing countries is being imposed as a condition of loans or aid granted by the World Bank and other participating institutions.
A session devoted to the MDB showed that it was an amended form of the FIDIC Red Book (1999), but that in a number of cases the risk allocation had possibly been made less precise.
One contracting development which did appear to be influencing emerging markets was the relatively new World Bank MDB or 'Multilateral Development Bank' form
The staff and labour provisions of the MDB were also criticised as perhaps going too far in the direction of social engineering by imposing requirements to educate staff and nearby local communities about the risks and dangers of STDs and even for the provision of condoms.
Another session emphasised the legal challenges facing a multinational contractor entering a new market. A common tactic to exclude the effect of local law by applying English or American law to the contract. For reasons of national pride however, this is often not allowed. In such cases getting local advice on key issues of concern was crucial and yet very difficult to achieve effectively. For example, the influence of Sharia Law in the Middle East on certain standard clauses was said to be somewhat uncertain.
Three practical solutions were recommended for managing such risks in foreign legal environments:
• Know your client. One should not underestimate the value of time spent in building a relationship with the client before committing to a contract.
• Consult local professionals (i.e. architects, engineers) as well as lawyers. Local professionals will often have a better grasp of detailed regulatory and operational requirements than lawyers do. These more detailed requirements are frequently not published making reliance on local knowledge essential.
• Include as many “self-help” mechanisms in the contract as possible. These can include deemed approvals, security for payment, and suspension / termination rights.