JULY 2014
Legal Focus
43 Construction
This month we focus on Construction law, and find out more by speaking to Oliver Moufang, an Equity Partner at GSK, an accredited specialist for building and architect law and a university lecturer for building and real estate law. I mainly specialise in the areas of real estate, construction, commercial tenancy law and litigation.
Please introduce yourself, your role and firm.
GSK has six offices in Germany, inter alia in Munich, Berlin, Frankfurt am Main, and Hamburg. In Europe, we have for many years had an alliance with Nabarro LLP in Great Britain, Nunziante Magrone in Italy, and Roca Junyent in Spain. Together with our alliance partners we have 23 offices with more than 850 lawyers in Europe.
With more and more regions reporting economic growth in the last fiscal quarter, have you seen greater activity in the construction sector in terms of investment and the completion of projects, when contrasted with the first quarter of 2014?
In general, the construction sector shows a weather-related upswing in the second quarter of each year. Such upswing has not yet taken place this year, which is mainly due to the mild winter during which works could be continued largely without interruption. All in all, however, a stronger growth than in the previous years can be expected for 2014. One of the driving forces is the housing sector which largely benefits from low interest, stable income and growing demand for residential buildings in the cities.
After the budget of the Federal Government could be adopted with some delay at the beginning of June 2014, it can now be expected that the public building sector will soon become more active, in particular in the form of investments in public building projects. To date, for example, the investments in the traffic infrastructure were subject to the availability of funding.
How have regions/countries/states helped and/ or hindered activity in the construction industry over the past year?
In the area of architect law, the HOAI, i.e. the official scale of fees for services by architects and engineers, was significantly amended in 2013. It provides for nationally mandatory
minimum and maximum prices for the services rendered by architects and engineers. The major amendments relate to fee increases, modernisation and extension of the defined services, and the regulation on acceptance as a requirement for the final invoice of the architect.
What have been the key areas of litigation in the construction industry over the past year?
Litigation is again and again based on disputes caused by disruptions in the course of construction and the additional costs incurred in this context by both the contractors and the principals. The evaluation of such delays, in particular their impact on the further course of construction, is a very complex task, as it requires not only a clarification of the disputed facts, but also a legal analysis and a construction management assessment. Further regular subject matters of litigation include additional remuneration claims of the contractor due to changed works or services, claims of the principal based on defects, questions relating to a verifiable invoice of the contractor, and the assertion of contract penalties. Frequently, litigation is also concerned with the allocation of the liability risks among the different parties involved in a construction project, such as the different contractors, the architect, the expert planners, or the project manager.
If you could change any legislation, what would it be and why?
An integration of the construction contract law into the German Civil Code (BGB) would certainly be desirable.
Principally, the construction contract law is - at least largely - works contract law. The relevant regulations in the German Civil Code, however, apply only to a very limited extent to construction contract law. There are only few special regulations in the German Civil Code. The works contract law stipulated in the German Civil Code does not meet the requirements of the complexity
of construction works. In addition, the parties often agree that the VOB/B, i.e. part B of the general contract provisions for the performance of construction works, shall apply. The provisions of the VOB/B do not have the status of a law, but are merely considered as being standard terms and conditions. These contain extensive requirements for the handling of construction contracts, but they are also subject to very strict judicial inspections of content. The integration of the VOB/B in a construction contract, which in practice is often accompanied by deviations from individual provisions of the VOB/B, often turns out to be invalid. This repeatedly results in legal uncertainties for the contracting parties.
First attempts at a corresponding codification of the construction contract law in the German Civil Code were made in the form of the Deutscher Baugerichtstag e.V. - an association of experts from science and practice - which drew up concrete proposals. These proposals were taken up by a working group of the Federal Ministry of Justice, which summarised them in 2013 in the form of a final report. It is currently unforeseeable whether this will be further pursued in the form of a bill of law during the current legislation period.
What do you feel were the top construction stories for 2013?
The Elbe Philharmonic Concert Hall in Hamburg, the construction of the Airport Berlin-Brandenburg, or Stuttgart 21 (inter alia reconstruction of the Stuttgart main station) are all building projects which attracted a great deal of national attention in 2013, primarily due to excessive increase in construction costs and significant delays in completion. LM
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