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Date: 16 April 2010
Adapting FIDIC Standard Forms for Local Conditions and Regulations
TCDPAP Annual Conference - '‘New Approaches and
Solutions for Consultancy Business Innovation’
MENACHEM HASOFERPartner
+852 2843 2384menachem.hasofer@mayerbrownjsm.com
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Mayer Brown is a global legal services organisation comprising legal practices
that are separate entities ("Mayer Brown Practices"). The Mayer Brown
Practices are: Mayer Brown LLP, a limited liability partnership established in
the United States; Mayer Brown International LLP, a limited liability partnership
incorporated in England and Wales; and JSM, a Hong Kong partnership, and
its associated entities in Asia. The Mayer Brown Practices are known as Mayer
Brown JSM in Asia.
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• Increasing size and complexity of projects in this region
• Increasing involvement of international contractors and overseas project financiers / sponsors
• Greater need for parties to carefully tailor FIDIC forms to match local conditions and regulations
• Importance of carefully following the contractual processes throughout the project
Introduction
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Co - ordination
“Back to Back” obligations
Financier / Project Sponsor
Government
Authorities
Technical
Services Team
Locally
Licensed
Consultant
OwnerProject
Manager
Engineer / Lead Consultant
Sub-consultants
Main Contractor
Sub-contractors
Compliance
Sta
ndar
ds /
Pol
icie
s
App
rova
ls
Design and Construction of an
Major Engineering Project
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• Socialist-oriented market economy
• Central, Municipal and Provincial Government
• Rapid economic progress
• Constantly evolving system of laws, decrees and regulations affecting engineering projects
• FIDIC forms used for projects with 'foreign' elements
Experience Sharing : Similarities between People's Republic
of China (PRC) and Socialist Republic of Vietnam
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• Law on Construction No. 16/2003/QH11 dated 26 November 2003 (as amended by No. 38/2009/QH12 dated 19 June 2009) ("Law on Construction")
• Decree No. 12/2009/ND-CP on management of investment projects for construction works dated 12 February 2009 (amended by Decree No. 83/2009/ND-CP dated 15 October 2009) ("Decree 12")
• Circular No. 06/2007/TT-BXD of 25 July 2007 providing guidance on contracts in construction activities ("Circular 06")
• Decision No. 131/2007/QD-TTg dated 9 August 2007 issuing regulations on hiring foreign consultants in construction activities in Vietnam ("Decision 131")
• Circular No. 40/2009/TT-BXD dated 9 December 2009 on applying foreign construction standards to construction activities in Vietnam ("Circular 40")
Case Study: Principal Laws and Decrees
/ Circulars / Decisions Affecting
Engineering & Construction Projects in Vietnam
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Case Study: Principal Regulatory
Requirements for Projects in Vietnam • Mandatory articles in construction contracts, including:
– warranties and insurance
– environmental protection, labour safety, fire protection
– notification and correction of errors
– force majeure circumstances
– contract must be governed by the Laws of Vietnam
– language: Vietnamese and English permitted
• Evaluation and approval of engineering design
• Construction Permit
• Approval for application of foreign construction standards
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• General Conditions - amendments to be limited as far as possible
• Appendix to Tender must be prepared with care
• Starting point is FIDIC's Guidance Notes for the Preparation of the Particular Conditions of Contract
• Customised (bespoke) amendments : specialist drafting skills required to avoid inconsistencies
Adapting FIDIC Standard Forms
for Local Conditions and Regulations
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• Tendering procedures• Business licensing for foreign contractors / consultants• Evaluation and approval of engineering design by locally
qualified consultants• Sub-Contracts / Nominated Sub-Contracts• Role and independence of “the Engineer”• Possible requirement for approval of Employer’s Project
Manager for key matters
Adapting FIDIC Standard Forms :
Topics for Consideration
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Adapting FIDIC Standard Forms :
Topics for Consideration (...continued)
• Site Possession / Site Clearance• Sectional Completion / Phased Completion • Worker’s compensation and works insurances• Professional indemnity insurance for design works• Performance Security / Retention / Advance payment• Consequences of suspension / termination• Payment currency - exchange restrictions
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Adapting FIDIC Standard Forms :
Topics for Consideration (...continued)
• Strictness of regime for notices of claim / extension of time / variations : consider local 'claims culture'
• Dispute Adjudication Board (DAB) or Dispute Review Board (DRB) : Finding an appropriate Adjudicator
• Reference to Mediation / Arbitration - need to comply with local Arbitration laws
• Privity of contract : claims by sub-contractors and employees against Employer
• Statutory time limit for defective work claims: application to extended warranty periods?
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Adapting FIDIC Standard Forms :
Conclusions
• International project participants must become familiar with local laws and practices
• Locally qualified and experienced engineers and other consultants are key members of the project team
• Particular Conditions and Appendix of appropriate FIDIC form must be suitable to local conditions / regulations
• Customised amendments : imprecise drafting could lead to significant problems - specialist advice recommended
• Contractual processes provide protection only if carefully followed throughout the project
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Q & A
Thank you
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Disclaimer
• These materials are provided by JSM and reflect information as of 16 April 2010.
• The contents are intended to provide a general guide to the subject matter only and should not be treated as a substitute for specific advice concerning individual situation.
• You may not copy or modify the materials or use them for any commercial purpose without our express prior written permission.
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