The “Ten” top risks for International Contractors

John Bishop

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

Codes and Standards

• What technical standards or codes will apply?

– Are those stated in the contract going to be applicable

• legally

• in practice

3

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

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

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

Performance Damages

• LDs (Delay and Performance) – Enforceable?

• Under local law• If excessive

– Different countries different results– Capped? – Exclusive remedy?– Following termination

7

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

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

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

Bonding

• On demand

• Conditional

• Hybrid

• Applicable law

• Repayment following a wrongful call?

11

Termination

• Grounds for termination– Reasonable?– Cure period?– Procedure for termination

• Local Law issues– Judicial intervention necessary?– For convenience

12

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

Currency Risk

• Price in fixed currency/currencies but cost incurred in different split– variations

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Thank You

John.bishop@pinsentmasons.com

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