i-law

International Construction Law Review

INTRODUCTION

HUMPHREY LLOYD

DOUGLAS S JONES

Nick Henchie, a partner in Mayer Brown International LLP, begins this issue with an article discussing some of the effects on international construction of the present financial troubles. It is entitled “Shifting Sands in the Economy and International Procurement Market” (at page 276). The author looks at various ways in which the lack of money affects the international construction market—procurement methods, cash flow, security documents, limitations on liability, liquidated damages, design responsibility, fluctuations, restrictions on employers’ approaches, what might be excusable delay and even dispute resolution and the choice of law. He concludes that although attention must now be paid to securing projects, to credit-worthiness and to guarantees to secure performance, there is a role for innovation and creative thinking, even though the allocation of risk continues to move in favour of employers particularly with regard to limitations of liability and responsibility for design. There will also be a return to lump-sum contracting.
Our next contribution is entitled a “Review Article” (at page 291) since Professor M A B Chao-Duivis, the Director of the Instituut voor Bouwrecht in The Netherlands has taken the opportunity to look in some detail at the “Principles of European Law: Service Contracts” published in 2007 by the Commission on European Contract Law. Professor Chao-Duivis is Professor of Construction Law at the Delft University of Technology, as well as a Deputy Justice of the Court of Appeal and a valued member of our Editorial Advisory Board. The document apparently runs to over 1,000 pages. It sets out proposals on the subject of service contracts under the heading of seven chapters. It covers construction (in Chapter 2), “processing”, design as well as “storage information” and treatment. “Processing” is defined as “contracts whereby one party, the processor, is to perform a service on an existing movable or incorporeal thing or to an immovable structure for another party, the client”. Although the premise of the Principles is that “Europeanisation” is desirable, Professor Chao-Duivis does not here challenge that disputed topic but instead discusses the proposals. Both the paper and the study itself are valuable since they focus on matters which are essentially business or commercial questions, namely, the decisions made rather than the rules of society and of law which come into operation in order to determine whether someone is responsible and the consequences of it. The paper looks at a number of subjects, such as the duty to co-operate and the distinction between contracting and “processing”. The article considers also the proposals on design. The overall conclusion about the work is that its expectations have not been met, for although the “idea is good, the text is well organised but there are errors in the detail, both on questions of principle and linguistically”. Much is difficult to understand. Clearly the opportunity still exists to “do better”.
From Europe we move to Australia. Andrew Chew, Special Counsel of Mallesons Stephen Jaques, of Sydney, has carried out a study of long-term equipment and material procurement and supply contracts for mining and infrastructure projects in Australia. He provides “An Overview of Commercial and Legal Issues” (at page 307). Although the article stems from an important sector of the Australian economy, the author’s investigation and conclusions are of wider application, not least because the author looks at the effect of the United Nations Convention on Contracts for the International Sale of Goods. Many other countries endorse the CISG and Australian legislation and contracting practice applicable to long-term contracts reflect law and practice elsewhere.
At page 334 we have a combined effort from academics at the Department of Building of the National University of Singapore and in the Department of Construction Management at Tianjin University. Professors Sui Pheng Low, Jun Ying Liu and Research Assistant Imy Tan use the standard form of contract for the public sector in Singapore (PSSOC) as a springboard to conduct an informative survey of the causes of construction delay in Singapore and four selected ASEAN countries. In addition to Singapore the countries are Indonesia, Malaysia, Thailand and Vietnam. The main conclusions on a country-by-country basis are summarised in Table 10, although some results are not complete for certain countries. Nevertheless the results are interesting. For example, poor site management and supervision is top of the list in Singapore but low down the list in Thailand. In contrast, shortages of materials and equipment are bottom of the list in Singapore but top of the list in Thailand.
Philip Britton has written for us recently on changes in Europe relating to choice of law under the measures known as Rome I and II (see his articles [2008] ICLR 347 and 518). At page 359 he helpfully provides a note on the latest position in the United Kingdom.
We have Correspondents’ Reports: one from Hong Kong (at page 361) and two from the United Kingdom (at pages 367 and 378). Mr David Bateson of Mallesons Stephen Jaques in Hong Kong describes recent developments in arbitration and mediation in Hong Kong. He discusses the effect of a new draft Arbitration Bill and the new rules of the Hong Kong International Arbitration Centre. This report also covers mediation which is of course of considerable importance in Hong Kong. The first UK report is by Adrian Brown and Miranda Ramphul of Herbert Smith LLP who write on recent case law in public procurement and in particular the effect and application of the decision of the European Court in Lianakis (Case C–532/06). They consider its application in the context of some other cases—Lettings International v. Borough of Newham [2008] EWHC (QB) 1583, the Northern Irish case of McLaughlin & Harvey v.Department of Finance and Personnel and another Northern Irish case, Henry Bros (Magherafelt) Ltd v. Department of Education for Northern Ireland. The second UK report covers the changes being made to the 1996 “Construction Act” which affect security of payment and adjudication (to be found in a Bill entitled the Local Democracy, Economic Development and Construction Bill 2008). The report is written by Brian Mason and Martin Bridgewater of Herbert Smith LLP. Mr Bridgewater is our correspondent for the United Kingdom. Although the Bill has not completed its passage through Parliament, the debates and the reasons for rejecting proposed amendments to the Bill are of considerable relevance, both domestically and in other countries where the United Kingdom’s legislation on security of payment and adjudication is observed with some interest.
We conclude with two book reviews. Sarah Lupton, who writes regularly for us and is a well established author and commentator on building contract and architectural matters, reviews European Architect Law: Towards a New Design by Stephanie van Gulijk which she finds, with reason, to be excellent. There is also a short review of the eighth edition of the established work by Professor Justin Sweet and Mark M Schneier: Legal Aspects of Architect Engineering and the Construction Process.

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