The document discusses the impact of COVID-19 on the Indian construction industry, highlighting challenges such as cash flow issues, supply chain disruptions, time and cost overruns, and the need for contract renegotiations due to the pandemic. It outlines the government's role in addressing these issues through various notifications and emphasizes the importance of amicable dispute resolution strategies moving forward. Additionally, it proposes standard operating procedures and templates for handling construction contracts affected by COVID-19 to streamline processes and foster cooperation among stakeholders.

1. Indian Construction
Contracts & Covid19 : Way
Forward
SR. MANAGER (LEGAL), DIRECTORATE GENERAL OF HYDROCARBONS/ BHARAT
PETROLEUM CORPORATION LIMITED
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2. Views are personal
PROBLEMS & ISSUES

3. Impact of Covid19 on Construction
Industry
 Cash flow
 Supply chain disruptions
 Time overrun: need for extension of time
 Cost overrun: need for increase in contract price
 Contractors: Substantial Increase in Cost of Performance
 Owners: Substantial decrease in Cost of Performance
 Manpower Issues
 Work resumption and other HSE issues
Views are personal

4. Time Overrun: Some Issues
 Time lost due to Covid-19 lockdown
 Time lost due to Covid19 affecting/ impacting supplies/ services
even prior to lockdown
 Time lost due to demobilisation and remobilisation
 Extra time that would be required for carrying out works in a
restricted regime.
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5. Cost Overrun: Some Issues
 Idling charges
 Care of Facilities during Lockdown
 Demobilisation/ Remobilisation Costs
 Costs of paying labour wages during lockdown
 Price increase in raw materials & goods post-lockdown
 Mitigation plans in Project
 Suppliers/ Contractors claims including demurrage
 Other costs
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6. Government’s Role
 Perusal of various Circulars
 Proactive response from a policy angle.
 Pandemic is considered as force majeure
 But how force majeure will impact contract performance may depend
on case-to-case basis
Views are personal

7. List of Government Notifications on
Covid19 as FM
 Impact of COVID-19 on foreign supply chains recognized as force majeure in government supply
contracts: Department of Expenditure, Ministry of Finance's OM dt. 19.02.2020
 DOE Notification dt. 13.05.2020 (time extensions)
 Time extension in scheduled commissioning of Renewable Energy projects considering foreign supply
chain disruptions: Ministry of New & Renewable Energy, OM dt. 20.03.2020
 MORTH Letter no. H-25016/01/2018-Toll dated 25th March 2020
 Ministry of Shipping, Guidelines to Major Ports dt. 31.03.2020
 Indian Railways (https://pib.gov.in/PressReleseDetail.aspx?PRID=1608603)
 DGS Order No. 08 of 2020 dt. 31.03.2020
 Ministry of Shipping order no. PD-13/33/2020-PPP/e-339106 dt. 20.03.2020
 Other Circulars
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8. Some Questions
 Whether force majeure or not?
 Obligations affected by force majeure and manner?
 Whether notice has been given in time?
 Whether change in Law?
 How should be the contract, especially terms relating to price and time, be re-
negotiated?
 Time and Cost Overrun and escalation?
 Non-applicability of LD/ claim for damages for delay.
 Genuine dispute: How to resolve?
 Prolonged force majeure and consequences
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9. Legal Issues & Problems
 Inability of parties
 to agree upon cost/ time overruns
 Inability of a general Contractor to perform
 The bleak prospect of disputes & the ability of the legal system to handle
it
 Inability to get proper advice on financial and legal aspects
 Government benefits: Awareness: Important role to be played by
construction associations, bodies like SCL and others.
 How to Proceed?
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10. Views are personal
WAY FORWARD

11. “Breathing Space”
 How to deal with Construction Contracts Post-Covid19?
 Amicably Sort out Issues with the objective of completing projects
ASAP
 Provide for Amicable Dispute Resolution Solutions to make
construction contracts viable
 To bring to an end contracts made unviable post-Covid19
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12. Ways Forward
 Standard Operating Procedure for Construction Projects affected by Covid 19
 Enablers
 Way Forward: Formats & Checklists
 Awareness of Government Measures
 Dispute Resolution
SCL and other construction associations may take the lead
Views are personal

13. SOP for Construction Projects affected by
Covid 19
 SOP on the Way Forward
 Invocation of Force Majeure/ Change in Law
 Cost Overruns
 Time Overruns
 Other Issues
 Discussions: in good faith & in interest of project completion
 Cash Flow
 Advance payments/ modification of contractual milestones
 Escrow accounts
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14. SOP for Construction Projects affected by
Covid 19 (contd.)
 Inability of the general Contractor to perform/ make payment-
direct payment between Client and Sub-Contractors & modalities
 Preliminary/ Interim Orders aimed at completion of project & at
the same time maintaining Contractor cash flows
 Dispute Resolution
 Conciliation/ Mediation
 Arbitration
 Stress on inexpensive, swift, virtual and decisive resolution of disputes.
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15. Enablers
 Templates/ Checklists/ Formats:
 Force majeure & change in law invocation & response templates
 Checklists on Impact
 Checklists on negotiations on Cost/ Time overruns
 Novation Agreement Formats
 Arbitration, Conciliation & Mediation Agreements Formats
 Settlement agreements Formats
 Compilation of Government schemes and judicial decisions in
construction sector for general awareness
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16. Accelerated Dispute Resolution
Drastic Times call for Drastic Measures
 Speed, Inexpensive and Effective dispute resolution
 Fixed time ~ 3 months & Fixed costs ~5- 6 lakhs
 Completely Virtual
 Construction Dispute Specific
 Neutral
 Interim Measures: Extension of BGs & Preservation- Completion of
Project should be the objective
 Three modes: Accelerated Conciliation, Mediation & Arbitration
 Checklists/ Formats for use in Dispute resolution to be fixed
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17. Accelerated Construction Conciliation
 Inability of the general contractor to perform/ make payment- direct payment between
Client and Sub-Contractors
 A finance, technical and a legal expert in each Panel
 Virtual & Time limit of three months
 No external counsels
 Specific disputes to be agreed between the parties and referred
 Common statement of facts and points of disagreement
 Proceedings to be confidential except as to costs
 In case of rejection of Settlement Proposal, costs of conciliation & subsequent legal
proceedings to be on Indemnity basis, if unsuccessful.
Views are personal

18. Accelerated Construction Mediation
 Professional Mediator well-versed in Construction Disputes
 Virtual & Time limit of three months
 No external counsels
 Specific disputes to be agreed between the parties and referred
 Common statement of facts and points of disagreement
 Proceedings to be confidential except as to costs
 For party rejecting the last settlement offer, costs of mediation & subsequent legal
proceedings to be on Indemnity basis, if unsuccessful.
Views are personal

19. Accelerated Construction Arbitration
 Fixed Costs: Not more than Rs. 5- 6 lakhs net
 A finance, technical and a legal expert in each Tribunal
 Time limit of three months
 Documents only/ Expedited (S. 29B ACA 1996)
 Specific disputes to be agreed between the parties and referred
 Common statement of facts and points of disagreement reg. facts/ law
 Power to decide on the basis of commercial sense, equity, etc.
 Strict implementation of Loser Pays principle for Costs
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20. Parting Thoughts
 Construction bodies may discuss with
stakeholders about measures suggested
 Multi-tier Dispute Resolution
 May enter into deals with Arbitral
institutions
 Need to Proceed quickly
 Statute on construction contracts
THANK YOU
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