17
CONSTRUCTION EUROPE
OCTOBER 2013
LAW AND CONTRACT
wholesale adjustment to the
standard FIDIC risk allocation,
and go beyond the inclusion of
project specific amendments.
In Middle Eastern FIDIC-badged
contracts, amendments to the risk
allocation can sometimes spread
to such lengths that the contract
effectively becomes bespoke.
This will often be problematic
for contractors if the employer
adopts a take- it-or-leave-it
attitude and refuses to accept
amendments to the conditions
of contract if certain risks cannot
be priced or programmed by
contractors for specific projects.
There are a number of
considerations that European
contractors may wish to think
about when tendering for works
in Qatar.
Tender bonds, for example, are
on bonds of an on demand nature
and are typically 10% of the value
of the contract to cover the
tender period. They are required
for governmental contracts under
the Tenders & Bids Regulatory
Law 2005.
Any tender submitted without
a tender bond will be excluded
by the Competent Tenders
Committee, and any bid would be
subsequently disqualified.
When it comes to site data
and site issues, we frequently
see significant risk transfer and
responsibility for site data being
passed to the contractor. This is
sometimes the case even where
the contractor does not have
design responsibility under the
contract.
Contractors will have to make
a decision on whether they can
price and programme for the
ground condition risk, even if they
have not had sufficient time to
verify any site data or carry out
any site investigations during the
tender period.
UNFORSEEN RISK
Contractors should consider
whether unforeseen ground
conditionrisk isone itcanmanage,
or whether any amendments
are required to the conditions of
contract to deal with this type of
risk. This may include setting out
the impact it will have on their
price and tender programme.
Contractors should also think
what assumptions – if any –
should be made to its technical
and commercial bid to deal with
unforeseen ground condition risk.
The Qatar Civil Code does not
distinguish between penalties
and liquidated damages. Quite
often contracts refer to penalties
instead of delay damages or
liquidated damages for delay.
In order to be enforceable,
liquidated damages provisions
must, under the principles of
Qatari law, reflect a genuine
pre-estimate of loss likely to
be suffered by the party which
claims compensation.
The concept of decennial liability
has its origins in the French Civil
Code and is a ten-year strict
liability guarantee which protects
building owners if there is total or
partial collapse, or any defects in
the buildings or facilities which
result in threatening their stability
and strength.
As liability is strict, the building
owner does not have to prove
breach of contract or negligence
on the part of the contractor
in order to succeed in its claim.
Under Qatar Law the decennial
liability may still apply even if the
building is not partly or totally
collapsed. Any defect which
results in threatening the safety
and stability of the building is
enough to apply this type of
liability. A defect might be a result
of using defective materials,
non compliance of the material
used, wrong determination of
the building base, or any other
error in the construction of the
building or the design.
While decennial liability benefits
building owners, it poses a risk
to certain European contractors
who have not previously done
business in Civil Code jurisdictions
where this type of decennial
liability applies. Contractors
are sometimes unaware of its
existence or its implications.
As there is no concept of the
prevention principle or time at
large under Qatar law, contractors
should carefully check the
grounds for making extension of
time claims to the original time
for completion date.
The procedure for dispute
resolution is also subject to
alteration, with frequent deletion
of Dispute Adjudication Board
provisions.
Certain government contracts
select court proceedings over
arbitration, or if arbitration is
permittedtherecanberestrictions
on a contractor being able to
start arbitration proceedings until
the works are taken over by the
employer.
This may have cash-flow issues
for contractors if they cannot
bring a dispute at any time on
claim for non-payment.
There
is
sometimes
complacency
among
many
European contractors working in
Qatar and we put this down to
over-reliance on FIDIC standard
forms.
This often means contractors
have been focusing too much
on the technical and commercial
aspects of their tenders, and not
enough on the actual conditions
of contract and the governing
law.
ce
Navigating in the Gulf
T
he 2022 World Cup and
the Qatar National Vision
2030 have created a
great opportunity for European
contractors in the Gulf – it is
probably sufficient to point out
that an estimate of nearly €150
billion worth of projects in the
capital Doha will be awarded in
the run up to theWorld Cup.
This is good news for European
contractors that are looking to do
business in Qatar.
While no two projects are the
same, many European contractors
will encounter the standard
form of contract published by
the International Federation
of Consulting Engineers, more
commonly known by its French
acronym, FIDIC.
The FIDIC standard form has
been used in theMiddle East since
the 1970s. As most European
contractors familiar with doing
business in Qatar will probably
know, the forms of contract that
are predominantly used by major
Qatari government procurers are
based on FIDIC standard forms.
For the major infrastructure
being procured by Qatar Railways
Company, Ashghal (the Public
Works Authority) and the Qatar
2022 Supreme Committee, all
have adopted FIDIC or FIDIC-
based contracts.
In spite of all that, the FIDIC
standard form is frequently
amendedby particular conditions,
which often impose significant,
Pinsent Masons LLP is a full service international law firm with
over 1,100 lawyers worldwide. Pinsent Masons has offices in the
UK, Munich, Paris, Ireland, Quatar, UAE, China, Hong Kong and
Singapore.
Pinsent Masons has over 200 lawyers specialising in international
construction and infrastructure development and is ranked by
legal directories as a leading adviser to the sector. The firm was
awarded Global Construction Law Firm of the Year 2008 to 2010, and
Infrastructure Team of the Year 2008.
■
For more information on any legal or contractual issue, please
contact Virginie Colaiuta at Pinsent Masons.
Tel: +44 (0)20 7490 6498
e-mail:
There are opportunities in Qatar, but it is also good to understand the
differences in contracts there, advises
Paul Prescott
, senior associate in
Pinsent Masons’ Qatar Branch
