Werksmans Construction & Engineering Seminar - John Bishop presentation
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The top ten risks for international contractors

The top ten risks for international contractors

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  • 1. The “Ten” top risks for International Contractors John Bishop
  • 2. Law Clauses • What Law will apply? – Do we understand the consequences? • For the effectiveness of a contract • For the performance • Change of Law – Who takes the risk of a change of law? 2
  • 3. Codes and Standards • What technical standards or codes will apply? – Are those stated in the contract going to be applicable • legally • in practice 3
  • 4. The Disputes Process • What procedures will keep us out of arbitration? – DRBs/DABs/other ADR processes • Does the local law impose a process? – E.g. compulsory adjudication • Are the Arbitration terms effective? – No right to arbitrate before completion, – Will local Courts enforce? – Local law intervention • Will your award be enforceable? – The New York Convention. 4
  • 5. Conditions Precedent • Does the Contract Contain Conditions Precedent to entitlement? – Maybe hidden • “Upon” “If” – What is the consequence of failing to meet the condition precedent? • Is a bar on entitlement enforceable under local law? • Is a bar capable of being circumvented? • Most international contracts require parties to pursue their claims to maintain the economic balance 5
  • 6. EOTs • What events? – What about near misses? • Concurrency – English Law position – Scottish Law position – Anti concurrency clauses • In some countries – the prevention principle – overriding legal entitlement to relief 6
  • 7. Performance Damages • LDs (Delay and Performance) – Enforceable? • Under local law • If excessive – Different countries different results – Capped? – Exclusive remedy? – Following termination 7
  • 8. Caps and Exclusions • Is there a cap? – Is it effective under the local law? – What liabilities are outside the cap? • Exclusion of consequential losses? – What is a consequential loss? – What are the exclusions? – Is the clause enforceable? – Following termination? 8
  • 9. Cash Risk • Is payment secured? – Rights when non payment • Interest • EOT • Termination • Suspension – Retention money and the right to exchange for a bond? – Cash consequence of an improper bond call – Right to evidence of financing – Speedy dispute resolution 9
  • 10. Design Risk • Hidden design risks – the selection of plant and materials – through subcontractors • Design approval processes – what is the process – is it capable of being abused? • restrictions on comments, time and nature • Unfair design risk – Employer Data – Ground conditions – Employer’s requirements/selection of plant 10
  • 11. Bonding • On demand • Conditional • Hybrid • Applicable law • Repayment following a wrongful call? 11
  • 12. Termination • Grounds for termination – Reasonable? – Cure period? – Procedure for termination • Local Law issues – Judicial intervention necessary? – For convenience 12
  • 13. Right to suspend • Suspension – By contract – By Law • Not in English Common Law – So potentially a breach • May be statutory right but may be conditions • Normal in civil law jurisdictions 13
  • 14. Currency Risk • Price in fixed currency/currencies but cost incurred in different split – variations 14
  • 15. Thank You John.bishop@pinsentmasons.com
  • 16. Pinsent Masons LLP is a limited liability partnership registered in England & Wales (registered number: OC333653) authorised and regulated by the Solicitors Regulation Authority, and by the appropriate regulatory body in the other jurisdictions in which it operates. The word ‘partner’, used in relation to the LLP, refers to a member of the LLP or an employee or consultant of the LLP or any affiliated firm of equivalent standing. A list of the members of the LLP, and of those non-members who are designated as partners, is displayed at the LLP’s registered office: 30 Crown Place, London EC2A 4ES, United Kingdom. We use 'Pinsent Masons' to refer to Pinsent Masons LLP, its subsidiaries and any affiliates which it or its partners operate as separate businesses for regulatory or other reasons. Reference to 'Pinsent Masons' is to Pinsent Masons LLP and/or one or more of those subsidiaries or affiliates as the context requires. © Pinsent Masons LLP 2014 3 For a full list of our locations around the globe please visit our websites: www.pinsentmasons.com www.Out-Law.com 16