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Adapting FIDIC Standard Forms for
Local Conditions and Regulations
TCDPAP Annual Conference - '‘New Approaches and Date: 16 April 2010
Solutions for Consultancy Business Innovation’
MENACHEM HASOFER
Partner
+852 2843 2384
menachem.hasofer
@mayerbrownjsm.com
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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Introduction
• 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
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Design and Construction of an
Major Engineering Project
Compliance
Government
Financier / Project
Sponsor Authorities
Locally
Standards / Policies
Licensed
Consultant
Technical
Approvals
Services Team
Project
Owner
Manager
Engineer / Lead Main Contractor
Consultant
Sub-consultants Sub-contractors
Co - ordination
“Back to Back” obligations
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Experience Sharing : Similarities between People's
Republic of China (PRC) and Socialist Republic of Vietnam
• 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
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Case Study: Principal Laws and Decrees
/ Circulars / Decisions Affecting
Engineering & Construction Projects in Vietnam
• 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")
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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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Adapting FIDIC Standard Forms
for Local Conditions and Regulations
• 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
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Adapting FIDIC Standard Forms :
Topics for Consideration
• 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
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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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