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 HASOFER Partner

2 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.

3 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

4 Co - ordination “Back to Back” obligations Financier / Project Sponsor Government Authorities Technical Services Team Locally Licensed Consultant Owner Project Manager Engineer / Lead Consultant Sub-consultants Main Contractor Sub-contractors Compliance Standards / Policies Approvals Design and Construction of an Major Engineering Project

5 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

6 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

7 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

8 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

9 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

10 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

11 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?

12 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

13 Q & A Thank you

14 Disclaimer These materials are provided by JSM and reflect information as of 16 April 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.