Legal | CMS
updated cost and resource loaded schedules. Contractors should reciprocate by being transparent and proactive. Keeping good records is an essential discipline. Pinch points should be highlighted and worked through together contemporaneously.
grounds for and consequences of termination should be prescriptive. The contract should represent a fair balance of risk for both parties. Fortunately, procurers of international mega projects are now waking up to this fact. Pressures to deliver projects on time and on budget are likely to lead to project owners providing increased incentivisation for contractors. This includes re-evaluating contract clauses which are too onerous for contractors and a potential shift away from the traditional lump sum turnkey contracts towards cost- plus contracts with incentives for contractors to achieve the required performance.
Once the contract has been set
up properly, it should be managed with care and not shut away in a drawer only to be looked at again if a dispute arises. We have seen recently that project owners are buying in systems to help them independently monitor the progress of the project against the baselines agreed in the contract, rather than relying on this information to be provided by the contractors. Some are going even further and demanding access to regularly
global-opportunity.co.uk
One of the beauties of this is that issues can be nipped in the bud before they become disputes. An example of where we have done this successfully is dealing proactively during a process plant project with changes in design that have been forced on the parties by post-contract circumstances, such as a change in the market for the chemical that the plant was originally designed to produce. The alternative would probably have been acrimonious variation claims with the parties arguing about the time and cost effects of the necessary changes. If disputes do arise, they can (and should) be dealt with at any early stage. We are now frequently being consulted to help clients monitor projects and avoid disputes through the use of smarter project and contract management techniques. Large time and money claims submitted after completion are becoming a thing of the past. Many international construction contracts now include layered dispute resolution clauses. Long and expensive arbitrations (and less commonly in international contracts, court proceedings) are no longer the only mechanism available for the formal resolution of disputes. The clauses are layered so that they increase in terms of formality and finality at each stage. If disputes cannot be resolved informally between the senior representatives of the parties, they are then often referred to a Dispute Adjudication Board (DAB) before arbitration is used as a last resort. The beauty of a DAB is that the dispute is usually resolved on an interim but binding basis in real time by people with knowledge of the project before the matter becomes too adversarial, rather than after the event by a tribunal with limited actual knowledge. Enforcement of DAB decisions has been a problem in the past but is now on the agenda of those drafting the standard form contracts. Parties familiar with the UK’s statutory adjudication
‘We find that parties who are familiar with English law and English law concepts are often best placed to gain an advantage over their competitors in tendering for and executing projects, managing issues that arise and resolving disputes.’
procedure may prefer to include an express adjudication regime in the contract instead. Adjudication decisions are readily and quickly enforced by the English Courts. Investing time and resources up front in setting up the contract properly in the first place is likely to pay dividends. Combine that with effective project and contract management and you are likely to have a winning formula. If things do go wrong, much is to be gained by dealing with issues head on and utilising the layered dispute resolution clauses as the project progresses. A familiarity with English law can only help you, whether or not it is selected as the governing law for your contract.
Adrian Bell is a partner and solicitor advocate specialising in construction,
infrastructure and energy disputes at CMS. CMS
has 2,800 legal and tax advisers in 56 offices around the world. With over 25 years experience in the construction and engineering industry, CMS’s lawyers are long-standing experts who are best placed to act quickly whether it be commercial, procurement or dispute avoidance/resolution advice. The CMS Infrastructure and Projects Group comprises over 130 lawyers advising sponsors, lenders, sub- contractors and the public sector on projects and their financing in many jurisdictions around the world. Contact:
adrian.bell@
cms-cmck.com Tel: 020 7367 3558
ISSUE 01 | GLOBAL OPPORTUNITY 2014 57
GO
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132 |
Page 133 |
Page 134 |
Page 135 |
Page 136 |
Page 137 |
Page 138 |
Page 139 |
Page 140 |
Page 141 |
Page 142 |
Page 143 |
Page 144 |
Page 145 |
Page 146 |
Page 147 |
Page 148 |
Page 149 |
Page 150 |
Page 151 |
Page 152 |
Page 153 |
Page 154 |
Page 155 |
Page 156 |
Page 157 |
Page 158 |
Page 159 |
Page 160 |
Page 161 |
Page 162 |
Page 163 |
Page 164 |
Page 165 |
Page 166 |
Page 167 |
Page 168 |
Page 169 |
Page 170 |
Page 171 |
Page 172 |
Page 173 |
Page 174 |
Page 175 |
Page 176 |
Page 177 |
Page 178 |
Page 179 |
Page 180 |
Page 181 |
Page 182 |
Page 183 |
Page 184 |
Page 185 |
Page 186 |
Page 187 |
Page 188 |
Page 189 |
Page 190 |
Page 191 |
Page 192 |
Page 193 |
Page 194 |
Page 195 |
Page 196 |
Page 197 |
Page 198 |
Page 199 |
Page 200