Copenhagen, 5th March 2009 dansk byggeri - Export Section1 By Frank Kehlenbach Director of EIC

BOARD 10 Members GENERAL ASSEMBLY AB CH D DK EF FINGR I NL PS TRUK WG CONTRACT CONDITIONS WG PRIVATE FINANCE/PPP WG AFRICA Copenhagen, 5th March 2009 dansk byggeri - Export Section2 15 MEMBER FEDERATIONS

Copenhagen, 5th March 2009 dansk byggeri - Export Section3 With an aggregated international turnover in 2007 of more than 120 billion, European international contractors are the most important players in the international construction business.

Copenhagen, 5th March 2009 dansk byggeri - Export Section4 EIC Contractor‘s Guides on the FIDIC „New Books“ were produced between 2000 and 2003 and have been published in the International Construction Law Review. November 2004 March 2000 March 2002 March 2003

EIC welcomes that FIDIC have enlarged its suite of standard forms with a DBO option Competition is based on efficiency & life-cycle costs BUT: Uneasiness as the FIDIC DBO Contract assigns to the Contractor a strict responsibility for the quality or any loss or damage of the asset or loss of production of the facility for a period of 20 years EIC would have preferred that FIDIC had distinguished more clearly between Design-Build and Operation & Maintenance phases EIC doubts whether a “one size fits all” approach meets the sector- specific demands Copenhagen, 5th March dansk byggeri - Export Section

Definitions are now in alphabetical order Employer must detail his financial plan already in the Financial Memorandum at tender stage Contractor is not obliged to proceed with a Variation during the Operation Service Period Termination for Convenience now provides for loss of profit The issues of Risk & Responsibility, Insurance and Force Majeure (“Exceptional Event”) have been re-arranged in a more logical way Claims, Disputes & Arbitration clause includes new positive elements Copenhagen, 5th March dansk byggeri - Export Section

“Employer’s Representative” is in fact an Engineer! Performance Security shall be valid also for the Operation Service Period Difficulties in establishing the meaning of the (new) term “Design-Build” in relation to the “Works” The provisions regulating the Operations Service Period are under-dimensioned Limitation of Liability clause has been watered down considerably A new “guillotine clause” with regard to the Contractor’s Claims in relation to substantiation of claims Copenhagen, 5th March dansk byggeri - Export Section

The FIDIC DBO Contract could open the door for a quality- based competition for the lowest life-cycle cost of a facility European contractors have a large experience in providing Design-Build & Operation/Maintenance projects within a single contractual package However, in PPP schemes the contractor’s liability is usually limited to the equity in the Special Purpose Vehicle, whilst no such limitation is stipulated in the DBO Contract EIC‘s DBO Contractor’s Guide shall draw the attention of members to the risks and challenges of FIDIC‘s new form Copenhagen, 5th March 2009 dansk byggeri - Export Section8

Is there a sufficiently large market for this new FIDIC standard form? For what type of projects, for which type of clients and in which countries? Is the FIDIC DBO form compatible with 3 rd party financing? How will the incentives for payment during the Operation Service Period work in practice? Can the Contractor limit his liabilities and obligations? Is the Dispute Settlement procedure (Clause 20) adequate? Also for the Operation Service Period? Copenhagen, 5th March 2009 dansk byggeri - Export Section9

Address:EIC Secretariat Kurfuerstenstrasse 129, D Berlin, Germany Phone:++49 (0)30 / Fax: ++49 (0)30 / Internet: Copenhagen, 5th March 2009 dansk byggeri - Export Section10