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Construction Arbitration

Last verified on Wednesday 21st June 2017

Norway

Mikal Brøndmo and Johnny Johansen

    Legal system

  1. 1.

    Is your jurisdiction primarily a common law, civil law, customary law or theocratic law jurisdiction? Are the laws substantially derived from the laws of another jurisdiction and, if so, which? What instruments have legal force and effect? Who are the lawmaking bodies? How and where are new laws published? Can laws be passed with retrospective effect?

    1. Norway is primarily a civil law jurisdiction, but generally more case law based than many other civil law countries, historically influenced by the German Civil Code as well as legislation in other Nordic countries. As Norway is a member of the European Economic Area (EEA), Norwegian laws are substantially affected by the legislation from the European Union in all policy areas of the Single Market. The Norwegian Arbitration Act is based on the UNCITRAL Model Law.

      Instruments of legal force are acts passed by the Parliament and regulations passed by the government. Recognised sources of law include case law, preparatory work, mandatory law and general principles of law. Updated compilations of acts in force are published biannually by the University of Oslo, whereas a foundation established by the Ministry of Justice and the University of Oslo publishes electronic versions of the all acts and key regulations on its open website. Pursuant to the Norwegian Constitution, acts and regulations disfavouring individuals may not be passed with retrospective effect.  

    Contract formation

  2. 2.

    What are the requirements for a construction contract to be formed? When is a "letter of intent" from an employer to a contractor given contractual effect?

    1. Norwegian law sets out no formal requirements and contracts are often based on an offer and an acceptance of that offer for a contract to be formed. However, construction contracts could also be formed throughout negotiations without any typical offer and acceptance.

      According to Norwegian case law, a letter of intent is presumed not to be contractually binding unless the contrary is explicitly stated, whereas defined and specified obligations set out in the letter of intent may nevertheless be considered binding. 

    Choice of laws, seat, arbitrator and language

  3. 3.

    Are parties free to choose: (a) the governing law of their contract; (b) the law of the arbitration agreement; (c) the seat of the arbitration; (d) any arbitral rules; (e) anyone to act as arbitrator; and (f) the language of the contract and the arbitration? If not, what are the limitations on choice and what happens if the parties act contrary to them?

    1. Under Norwegian law the parties are generally free to choose any of the above in construction contracts. However, for offshore construction contracts within the oil and gas industry the Norwegian government sets out requirements for Norwegian law and Norwegian venue in its approvals of the projects.

    Implied terms

  4. 4.

    How might terms be implied into construction contracts? What terms might be implied?

    1. The principle of contractual freedom is very strong in Norway. Thus, implementation of terms not explicitly stated as part of the contract requires a solid basis.

      Terms might be implied by interpretation of the contract based on Norwegian background construction case law. Terms might be implied if it is demonstrated that both parties agreed on certain terms, or in order to fill in contractual gaps. The intent of the parties and balance of the contract will serve as guidelines for the interpretation, whereas gaps are commonly interpreted in accordance with relevant background law based on common practice and case law. The principle of contractual freedom is very strong in Norway. Thus, implementation of terms not explicitly stated as part of the contract requires a solid basis.

    Certifiers

  5. 5.

    When must a certifier under a construction contract act impartially, fairly and honestly? To what extent are the parties bound by certificates (where the contract does not expressly empower a court or arbitral tribunal to open up, review and revise certificates)? Can the contractor bring proceedings directly against the certifier?

    1. The system of “Certifiers” and “Certificates” is seldom used in Norwegian construction contracts and is not regulated by Norwegian law. 

    Competing causes of delay

  6. 6.

    If an employer would cause (eg, by variation) a two-week critical delay to the completion of the works (which by itself would justify an extension of time under the construction contract) but, independently, culpable delay by the contractor (eg, defective work) would cause the same delay, is the contractor entitled to an extension?

    1. There are no Norwegian Acts regulating construction contracts. Concurrent delay is not regulated by Norwegian law. The commonly used Norwegian construction standard contracts (onshore NS 8407, offshore NTK 15) do not provide explicit guidance for such situations in the extension of time provisions either. There is no decisive case law available either, so the question under Norwegian law is uncertain. 

    Disruption

  7. 7.

    How does the law view "disruption" to the contractor (as distinct from delay or prolongation to the completion of the works) caused by the employer’s breaches of contract and acts of prevention? What must the contractor show for a disruption claim to succeed? If an entitlement in principle can be shown (eg, that a loss has been caused by a breach of contract) must the court or arbitral tribunal do its best to quantify that loss (even if proof of the quantum is lacking or uncertain)?

    1. Norwegian law does not regulate this aspect of construction contracts, and we assume that 95 per cent of the construction contracts are formed based on the standard construction contracts for onshore and offshore construction.

      Pursuant to case law and the mentioned standard contracts, the contractor is entitled to compensation for the relevant costs as well as the time consequences of an employer’s breaches of contract, including disruption. For a disruption claim to succeed, the contractor must normally substantiate his claim, and evidence and documentation dated from the time of the disruption is best practice in this respect. Furthermore, the evidence must also prove the actual consequences, in time or costs, caused by the disruption. Case law concerning “disruption”- claims is substantial in Norway. Where entitlement in principle is shown, but quantification is lacking, the court or arbitral tribunal normally does its best to quantify the loss based on the available evidence instead of rejecting the claim. In such circumstances, however, a common result is that the compensation is reduced significantly compared to the contractor’s claim. 

    Acceleration

  8. 8.

    How does the law view "constructive acceleration" (where the contractor incurs costs accelerating its works because an extension of time has not been granted that should have been)? What must the contractor show for such a claim to succeed? Does your answer differ if the employer acted unreasonably or in bad faith?

    1. The Norwegian onshore construction contracts provide entitlement to compensation for costs incurred due to “constructive acceleration”. The prerequisites are that the employer has rejected a legitimate request for an extension of time, that the involved costs are foreseen to be reasonable and that the employer is notified of the constructive acceleration and its estimated costs. These are circumstances the contractor must demonstrate in order for the claim to succeed.

      The Norwegian offshore construction contracts do not contain specific provisions directly governing “constructive acceleration” situations, and as such there is no contractual foundation for an award of costs incurred in such situations. The contractual system is that the decision on whether to accelerate in a delay situation always rests with the employer, and thus the contractor in effect has the choice between accelerating at own cost, and upholding the view that the employer is liable for the delay. In situations where the employer rejects responsibility for delay, acceleration may be instructed by way of a disputed variation order from the company.

      In onshore contracts the contractor is entitled to costs at any rate, so unreasonable acts or acts of bad faith does not impact the contractor’s rights. In offshore contracts, such acts may influence towards awarding the contractor constructive acceleration costs, albeit the question is uncertain. 

    Force majeure and hardship

  9. 9.

    What events of force majeure give rise to relief? Must they be unforeseeable and to whom? How far does the express or implied allocation of risk under the contract affect whether an event qualifies? Must the event have a permanent effect? Is impossibility in performing required or does a degree of difficulty suffice? Is relief available where only some obligations (eg, to make a single payment or carry out one aspect of the works) are affected or is a greater impact required? What relief is available and does it apply automatically? Can the rules be excluded by agreement?

    1. If the parties have not regulated this in its contract, there are no default rules of force majeure applicable to construction contracts in Norway. The Norwegian standard construction contracts, both offshore and onshore, define force majeure as “an occurrence beyond the control of the party affected, provided that such party could not reasonably have foreseen such occurrence at the time of entering into the contract and could not reasonably have avoided or overcome it or its consequences”. The definition thus allows for a certain degree of discretion by the court or arbitral tribunal with regard to the question of impossibility in performing versus a degree of difficulty.

      The available relief is that the failure to perform will not be regarded as a breach of contract, and a corresponding extension of time is granted. The parties bear all extra costs incurred due to the force majeure situation themselves, and will not be liable for any costs or delays incurred by the other party.

  10. 10.

    When is a contractor entitled to relief against a construction contract becoming unduly expensive or otherwise hard to perform and what relief is available? Can the rules be excluded by agreement?

    1. Neither onshore nor offshore standard construction contracts in Norway include general hardship clauses.

      The “principle of frustration” is a general principle dictating that in situations where central prerequisites that existed at the time of entering into the contract have failed or proven to be incorrect, this may lead to a right to revise the contract in line with its original intent. The threshold for revising contracts based on this principle is high in general under Norwegian law, and especially so in construction contracts. In Norway, the principle of freedom of contract is key. This entails that courts and arbitral tribunals will be reluctant to revise a clear agreement between two professional parties. Pursuant to case law, the principle is only possible to argue if the contract does not regulate the situation. Otherwise, the parties have to rely on the contract and not the principle.

    Impossibility

  11. 11.

    When is a contractor entitled to relief if after the contract is concluded it transpires (but not due to external events) that it is impossible for the contractor to achieve a particular aspect of the contractual specification? What relief is available?

    1. Neitjer the Norwegian standard contracts, such as NS 8405 and 8407, nor the Norwegian offshore standard contracts, such as NTK 15, not contain hardship clauses, see question 10, and it is not common to imply such clauses by interpretation. However, the principle of frustration may in certain circumstances give the contractor the right to revise a contract if it is impossible to achieve a particular aspect of the contractual specification. Force majeure events are regulated separately, see question 9. 

    Clauses that seek to pass risks to the contractor for matters it cannot foresee or control

  12. 12.

    How effective are contractual provisions that seek to pass risks to the contractor for matters it cannot foresee or control, for example making the contractor liable for: (a) a specified event of force majeure; (b) ground conditions that no reasonably diligent contractor could have foreseen; or (c) errors in documents provided by the employer, such as employer's requirements in design and build forms?

      • The principle of freedom in contract is strong in Norwegian contract and construction law. A contractual provision seeking to pass risk to the contractor for a specified event of force majeure would therefore presumably be effective, as long as the provision was explicit in specifying the relevant event.
      • Ground conditions that no reasonably diligent contractor could have foreseen are generally acknowledged as the employer’s responsibility in Norwegian construction law, albeit this is only specifically set out in the standard onshore construction contract NS 8407 (General conditions of contract for design and build contracts) and the standard offshore construction contract Norwegian Subsea Contract (NSC 05). Thus, clauses seeking to pass this risk to the contractor must be explicit in order to gain effect. There is nevertheless a chance that such a clause would only be found valid to a certain extent – a risk that can be significant reduced by taking certain measures as set out in case law.
      • The Norwegian standard onshore construction contracts contain clauses that render the employer responsible for errors in its own documents. Clauses seeking to pass risks to the contractor for such errors are accepted, and this is directly stated in some of them. For offshore construction contracts this is normally not part of the standard terms, but often specified between the parties (eg, responsibility for the FEED). However, in both onshore and offshore contracts the contractor is normally not responsible for errors due to incorrect information from the employer, unless the contractor should have uncovered this during the performance of his mandatory inspection. 

    Duty to warn

  13. 13.

    When must the contractor warn the employer of an error in a design provided by the employer?

    1. In Norwegian standard construction contracts, both onshore and offshore, the contractor is normally obligated to notify the employer of an error in a design provided by the employer as without undue delay after the error was uncovered or ought to have been uncovered. 

    Good faith

  14. 14.

    Is there a general duty of good faith? If so, how does it impact upon the following (where they are otherwise permitted under the construction contract): (a) the level of intervention in the works that is allowed by the employer; (b) a party’s discretion whether to terminate or suspend the contract; or (c) the employer’s discretion to claim pre-agreed sums under the contract, such as liquidated damages for delay?

    1. In Norwegian contract law there is a general duty of good faith, which is also applicable in construction law. However, the general duty of good faith does not commonly impact the rights under contracts between commercial parties, as the principle of freedom of contract is important under Norwegian law. That said, evident acts of bad faith are likely to be sanctioned by arbitral tribunals.

    Time bars

  15. 15.

    How do contractual provisions that bar claims if they are not validly notified within a certain period operate (including limitation or prescription laws that cannot be contracted out of, interpretation rules, any good faith principles and laws on unfair contract terms)? What is the scope for bringing claims outside the written terms of the contract under provisions such as sub-clause 20.1 of the FIDIC Red Book 1999 ("otherwise in connection with the contract")? Is there any difference in approach to claims based on matters that the employer caused and matters it did not, such as weather or ground conditions? Is there any difference in approach to claims for (a) extensions of time and relief from liquidated damages for delay and (b) monetary sums?

    1. Contractual provisions that bar claims if they are not validly notified within a certain period are commonly used in construction contracts, and are usually effective. In practice, however, courts and arbitral tribunal often deem that claims are not time barred due to specific circumstances such as uncertainty as to when the period for notification starts to run.

      A potential claim outside the written terms of the contract cannot be brought in under provisions in the Norwegian standard contracts, such claims must be brought in based on non-statutory law or tort liability.

      There is no difference in the approach to claims based on matters the employer caused and matters it did not, nor are there any differences in approach to claims for extensions of time and monetary sums. 

    Suspension

  16. 16.

    What rights does the employer have to suspend paying the contractor or performing other duties under the contract due to the contractor’s (non-)performance, or the contractor have to suspend carrying out the works (or part of the works) due to the employer’s (non-) performance?

    1. The employer may suspend payment to the contractor if liquidated damages have incurred, or if the employer has other valid claims towards the contractor. The employer’s right to suspend payment is limited to an amount covering the employer’s specified and reasoned claim.

      The contractor may under Norwegian standard onshore construction contracts suspend carrying out works with 24 hours' prior notice if the employer is in substantial breach of his contract obligations to effectuate payment or to grant extension of time. The contractor is also entitled to, with 24 hours' prior notice; suspend carrying out works when it is apparent that such fundamental breach will occur.

      Under Norwegian standard offshore construction contracts no specific provisions regarding contractor’s right to suspend the works due to lack of payment are set out. Such a right must therefore be argued to follow from background law. Whether a court or arbitral tribunal is likely to accept this is uncertain, and depends upon the concrete circumstances such as the outstanding amount and the length of time passed since its due date.  

    Omissions and termination for convenience

  17. 17.

    May the employer exercise an express power to omit work; or terminate the contract at will or for convenience, so as to give work to another contractor or to carry out the work itself?

    1. According to the Norwegian standard onshore construction contracts, the employer may not exercise an express power to terminate at will or for convenience so as to give work to another contractor until taking over has occurred.

      The question is not directly regulated in the Norwegian standard offshore construction contracts and is stated to be uncertain in Norwegian legal theory.

    Termination

  18. 18.

    What termination rights exist? Can a construction contract be terminated in part? What are the practical and financial consequences?

    1. A termination right is in place for a party if the other party is in substantial breach of contract with the effect ex nunc and as such a construction contract may be terminated in part, but only in future, not with a retroactive effect. If terminated due to substantial breach, the employer is normally obliged to pay contractor for the work performed, and may take over the use of certain equipment by covering the rental costs. The party that has a right to terminate the contract is also entitled to coverage of relevant costs due to the termination. 

  19. 19.

    If the construction contract provides for the circumstances in which each party may terminate the contract but does not expressly or impliedly state that those rights are exhaustive, are other rights to terminate available? If so, what are they and what are the practical and financial consequences?

    1. Unless otherwise agreed, the remedies for substantial breach of contract provided for in the standard construction contracts are not limited to termination.

  20. 20.

    What limits apply to exercising termination rights?

    1. Provided the parties have complied with the conditions in the contract, there are no limits to the exercising termination rights.

    Completion

  21. 21.

    Does the law of your jurisdiction deem the works to be completed (irrespective of what the contract says) if, say, the employer takes beneficial possession of the works and starts using them?

    1. As there are no Norwegian Acts regulating construction contracts, this assessment will be based on the contract between the parties and background law. If the employer takes possession of the works and starts using them the works will often be deemed completed, depending on the contract.

      Furthermore, if the employer takes beneficial possession of the works and starts using them against contractor’s will, this is regarded as a breach of contract according to Norwegian construction law. The risk for the parts of the subject matter of the contract that is taken into possession is passed to the employer when such illegitimate use starts. 

  22. 22.

    Does approval or acceptance of work by or on behalf of the employer bar a subsequent complaint? What constitutes acceptance? Does taking over the work by the employer constitute acceptance? Does this bar subsequent complaint?

    1. Approval of the work by the employer constitutes acceptance of matters that should have been discovered before takeover. However, taking over the work does not bar subsequent complaints regarding matters that should not have been apparent to the employer at the time of the takeover. 

    Liquidated damages and similar pre-agreed sums ('liquidated damages')

  23. 23.

    To what extent are liquidated damages for delay to the completion of the works treated as an exhaustive remedy for all of the employer’s losses due to (a) delay to the completion of the works by the contractual completion date; and (b) delays prior to the contractual completion date (in the absence of, say, interim milestone dates with liquidated damages for delay attaching to them)? What difference does it make if any critical delay is caused by the contractor’s fraud, wilful misconduct, recklessness or gross negligence? If so, what constitutes such behaviour and can it be excluded by agreement?

      • Liquidated damages is as a main rule an exhaustive remedy for all of the employer’s losses due to delay to the completion of the works by the contractual completion date, but this naturally depends on the contract wording.
      • Liquidated damages is normally also the exhaustive remedy for all of the employer’s losses due to delays prior to the contractual completion date. Furthermore, an entitlement to damages may also be granted if a lack of notice from contractor has caused losses that could have been avoided if such notice had been given. However, if the critical delay is caused by the contractor’s fraud, wilful misconduct or gross negligence the employer may choose to claim compensation instead of liquidated damages.

      Exceptions from limitations of liability due to gross negligence, wilful misconduct or fraud are well acknowledged principles in Norwegian contract law, especially if such behaviour is demonstrated by senior staff (project management/board, etc) of the relevant party. A definitive deviation from reasonable and/or justifiable professional behaviour is generally seen to constitute gross negligence if the circumstance is of substantial importance, whereas breaches of contract for the purpose of own gain is often seen to constitute wilful misconduct. Attempts to exclude liability for such circumstances by agreement may be successful for gross negligence, but are likely to be censored by the arbitral tribunal’s discretion for contractor’s fraud and wilful misconduct. 

  24. 24.

    If the employer causes critical delay to the completion of the works and the construction contract does not provide for an extension of time to the contractual completion date (there being no "sweep up" provision such as that in sub-clause 8.4(c) of the FIDIC Silver Book 1999) is the employer still entitled to liquidated damages due to the late completion of works provided for under the contract?

    1. If the delay is caused by a breach of contract by the employer, the court or arbitral tribunal is likely to dismiss a claim for liquidated damages if an extension of time would have been granted under the standard contract regulations. 

  25. 25.

    When might a court or arbitral tribunal award less than the liquidated damages specified in the contract for delay or other matters (eg, substandard work)? What factors are taken into account?

    1. the main rule is that the employer is entitled to liquidated damages in accordance with the contract. Under normal circumstances there is no discretion for the court or an arbitral tribunal to award less than the amount specified in the contract. A Norwegian court or arbitral tribunal will be reluctant to deviate from the parties’ agreement, especially in commercial contracts, such action requires extraordinary circumstances. 

  26. 26.

    When might a court or arbitral tribunal award more than the liquidated damages specified in the contract for delay or other matters (eg, work that does not achieve a specified standard)? What factors are taken into account?

    1. In a situation where the contractor is delayed, liquidated damages are the exhaustive remedy for such delay. The only exception is where the contractor has acted in fraud, wilful misconduct or gross negligence, where the concrete loss due to the delay may be claimed, cf. answer to question 23. Circumstances such as substandard work are in general handled by the contractual defect system, with rectification obligations, claims for payment reductions or damages, and not by an increase in liquidated damages. 

    Assessing damages and limitations and exclusions of liability

  27. 27.

    How is monetary compensation for breach of contract assessed? For instance, if the contractor is liable for a defect in its works is the employer entitled to its lost profits? What if the lost profits are exceptionally high?

    1. As a main rule, only rectification costs, including costs incurred discovering the defect, can be claimed as compensation for a breach of contract under Norwegian standard construction contracts such as NS 8407 (onshore) and NTK 15 (offshore). If other losses such as lost profits are to be compensated, the defect must be caused by wilful misconduct or gross negligence, see question 23. 

  28. 28.

    If the contractor’s work is technically non-compliant, is the contractor liable for remedying it if the rectification cost is disproportionate to the benefit of the remedy? Can the parties agree on a regime that is stricter for the contractor than under the law of your jurisdiction?

    1. There is no general law in Norway regulating the contractor’s liability under construction contracts.

      In the standard onshore construction contracts, such as NS 8405 and NS 8407, the contractor will not be held liable for the rectification cost if they are disproportionate to the benefit of the remedy. The parties may agree on a regime that is stricter for the contractor, provided it is sufficiently clear with respect to the transfer of risk.

      In the standard offshore construction contracts such NF 15 and NTK 15, the contractor is liable for remedying even if the rectification cost is disproportionate to the benefit of the remedy. However, the contractor’s total liability will normally be agreed between the parties.

  29. 29.

    If there is a defects notification period (DNP) during which the contractor must or may remedy any defect in its works that appears during a certain period after their completion, if the construction contract is otherwise silent, does it affect the employer’s rights to claim for any defects appearing after the DNP expires?

    1. The Norwegian construction standards, both offshore and onshore, have specific provisions for such circumstances. Upon expiry of the DNP, the employer is no longer obligated to rectify defects. 

      For onshore construction the DNP is set to five years after the takeover, and a new five-year period runs from the time of rectification for the relevant rectified parts, however, not surpassing one year after the original five-year deadline.

      For offshore construction the DNP is set to two years after conclusion of the delivery protocol, and a new year runs from the time of rectification for the relevant rectified parts, however, not surpassing two years after the completion of the first guarantee work. 

  30. 30.

    What is the effect of a construction contract excluding liability for “indirect or consequential loss”?

    1. The effect is that only direct losses can be claimed. This is in line with the normal standard construction contracts in Norway such as NS 8407 (onshore) and NTK 15 (offshore). 

  31. 31.

    Are contractually agreed limits on – or exclusions of – liability effective and how readily do claims in tort or delict avoid them? Do they not apply if there is fraud, wilful misconduct, recklessness or gross negligence: (a) if the contract is silent as to such behaviour; or (b) if the contract states that they apply notwithstanding such behaviour? If so, what causation is required between the behaviour and the loss?

    1. Contractually agreed limits on and exclusions of liability are common and effective. Claims in tort or delict will usually not avoid them. Such contractually agreed limits on liability do not apply in situations where there is wilful misconduct or gross negligence, cf. answer to question 23. If the contract is silent as to such behaviour, a court or an arbitral tribunal may interpret such an exception as a valid part of the contract, as it is a general principle. If the contract explicitly states that such limitations or exclusions of liability apply notwithstanding such behaviour, it is not certain whether this will be respected by a court or an arbitral tribunal. This will depend upon a concrete assessment of the relevant situation.  

      The question of what causation is required between the behaviour and the loss is not clarified in case law. However, in legal theory, it has been argued that knowledge that one’s actions may lead to significant losses for the other contracting party clearly fulfils the required causation, as it constitutes a disloyal prioritisation of one’s own interests over the other contracting party’s interests.

    Liens

  32. 32.

    What right does a contractor have to claim a lien (or similar) in the works it has carried out? If so, what are the limits of the right if, for example, the employer has no interest in the site for the permanent works? How is the right recognised and enforced?

    1. The contractor may not claim a lien or similar in the work it has carried out according to Norwegian standard construction contracts such as NS 8407 and NTK 15. 

    Subcontractors

  33. 33.

    How do conditional payment (such as pay-when-paid) provisions operate under the law of your jurisdiction (including interpretation rules, any good faith principles and laws on unfair contract terms)?

    1. Conditional payment provisions are common and will normally be effective as long as the parties handle the claim loyally.

  34. 34.

    May a subcontractor claim against the employer for sums due to the subcontractor from the contractor? How are difficulties with the merits and proof of the subcontractor’s claim addressed, including any rights the contractor has to withhold payment? What if aspects of the project suggest that the law of your jurisdiction should not apply (eg, the parties to both the main contract and the subcontract have chosen a foreign law as the governing law)?

    1. There is no general rule or provision in the Norwegian construction standard contracts, neither onshore nor offshore, permitting claims from the subcontractor against the employer for sums due from the contractor, unless the employer has accepted such an obligation under the contract. If the parties to both contracts have chosen a foreign law as the governing law, this would in general be accepted by Norwegian courts and arbitration tribunals, and the foreign law would then dictate the outcome. 

  35. 35.

    May an employer hold its contractor to their arbitration agreement if their dispute concerns a subcontractor (there being no arbitration agreement between the contractor and the subcontractor or no scope for joining two sets of arbitral proceedings) or can the contractor, for example, require litigation between itself, the employer and the subcontractor? Does it matter if the arbitration agreement does not have its seat in your jurisdiction?

    1. The employer is entitled to hold its contractor to their arbitration agreement, even if the dispute concerns a subcontractor, regardless of the agreed dispute resolution between the subcontractor and the contractor. 

    Third parties

  36. 36.

    May third parties obtain rights under construction contracts? How readily can those connected with the employer (such as future or ultimate owners) bring claims against the contractor in respect of (a) delays and (b) defects? To what extent are exclusions and limitations of liability in the construction contract relevant?

    1. As a main rule, third parties may not obtain rights under construction contracts. 

  37. 37.

    How readily (absent fraud, wilful misconduct, recklessness or gross negligence) can those connected with the contractor (such as affiliates, directors or employees) face claims in respect of (a) delays (b) defects and (c) payment? To what extent are exclusions and limitations of liability in the construction contract relevant?

    1. Those connected with the contractor, such as affiliates, directors and employees cannot face claims in relation to a contract between a contractor and an employer. However, an extremely narrow exception in relation to board of directors’ liability exists. 

    Limitation and prescription periods

  38. 38.

    What are the key limitation or prescription rules for claims for money and defects (and insofar as you have a mandatory decennial liability (or similar) regime, what is its scope)? What stops time running for the purposes of these rules (assuming the arbitral rules are silent)? Are the rules substantive or procedural law? May parties agree different limitation or prescription rules?

    1. The key limitation or prescription rules for claims for money and defects are found in the Norwegian Act relating to the limitation period for claims. The general limitation period is three years, commencing at the time of from which the creditor is first entitled to demand performance. For claims for compensation due to breach of contract, the limitation period commences on the day when the breach occurred. There is also an additional limitation period of one year from when the hindrance ceased for claims that where not asserted due to a legitimate lack of knowledge of the claim, up to a maximum of 10 years. The rules are substantive law.

      Commencement of arbitral/court proceedings or acknowledgement of the claim are the two main measures that stop time running. The parties may agree different limitation or prescription rules, and this is done in the Norwegian standard onshore and offshore construction contracts.

    Other key laws

  39. 39.

    What laws apply which cannot be excluded or modified by agreement where the law of your jurisdiction is the governing law of a construction contract? What are the key aspects of, say, the FIDIC Silver Book 1999 that would not operate as its plain words suggest?

    1. The principle of freedom of contract is strong under Norwegian law. There is no act that specifically regulates construction contracts and there are few mandatory laws or regulations, apart from laws regarding consumer contracts, criminal law, corruption and the health and safety at work act, which may be relevant to the drafting of construction contracts.

  40. 40.

    What laws of your jurisdiction apply anyway where a foreign law governs a construction contract? What are the key aspects of, say, the FIDIC Silver Book 1999 that would not operate as its plain words suggest?

    1. There is no statute that specifically regulates construction contracts and there are few mandatory laws or regulations. If the work, or part of the work, is to be performed in Norway the laws regarding criminal law, corruption, pollution and the Health and Safety at Work Act would apply regardless. The law regarding corruption and public policy would apply for Norwegian entities, regardless of the governing law and the place of performance of work.

      The FIDIC contracts are seldom used in Norway.

    Enforcement of binding (but not finally binding) dispute adjudication board (DAB) decisions

  41. 41.

    For a DAB decision awarding a sum to a contractor under, say, sub-clause 20.4 of the FIDIC Red Book 1999 for which the employer has given a timely notice of dissatisfaction, in an arbitration with its seat in your jurisdiction, might the contractor obtain: a partial or interim award requiring payment of the sum awarded by the DAB pending any final award that would be enforceable in your jurisdiction (assuming the arbitral rules are silent); or interim relief from a court in your jurisdiction requiring payment of the sum awarded by the DAB pending any award?

    1. Pursuant to Norwegian law, the contractor may obtain a partial award from the arbitral tribunal, requiring payment of the sum awarded by the DAB pending any final award, but not an interim award requiring payment. Partial awards are enforceable in Norwegian courts, interim awards from an arbitral tribunal are not. However, if the contractor is able to substantiate the validity of the claim and the high threshold is passed, it might be able to obtain an interim relief from the courts.

    Courts and arbitral tribunals

  42. 42.

    Does your jurisdiction have courts or judges specialising in construction and arbitration?

    1. The Norwegian courts and judges therein do not specialise in specific fields of law (with the exclusion of certain courts that are not relevant for construction cases). However, within arbitration the tribunals normally include experienced arbitrators within construction law.

  43. 43.

    What are the relevant levels of court for construction and arbitration matters? Are their decisions published? Is there a doctrine of binding precedent?

    1. As there are no courts specialising in construction and arbitration matters, see question 42, the relevant levels of court are the ordinary district courts, the courts of appeal and the Supreme Court. The parties may at every stage of the proceedings, request in-court mediation as an attempt to solve the dispute amicably. All decisions are published and available online.

      Arbitration awards are not published.

      Supreme Court judgments, which formulate legal principles, or express interpretations of statutory or non-statutory law, are considered as binding precedents for the lower courts. 

  44. 44.

    In your jurisdiction, if a judge or arbitrator (specialist or otherwise) has views on the issues as they see them that are not put to them by the parties, can they raise them with the parties? Is the court or arbitral tribunal permitted or expected to give preliminary indications as to how it views the merits of the dispute?

    1. As a general rule Norwegian judges should not present their views on issues that are not put to them by the parties. Neither should the judge give any preliminary indications as to how he or she views the merits of the dispute. The judges may ask the parties questions to ensure proper enlightenment of the case and indirectly those could contain some (implicit) guidance on issues that are not emphasised within the dispute. Such guidance, however, should never impair the impartiality or independence of the judge.

      The same principles will normally be applied by Norwegian arbitrators, although the parties and the arbitral tribunal are free to organise their proceedings differently.

  45. 45.

    If a contractor, say, wishes to arbitrate pursuant to an arbitration agreement, what parallel proceedings might the employer bring in your jurisdiction? Does it make any difference if the dispute has yet to pass through preconditions to arbitration (such as those in clause 20 of the FIDIC Red Book 1999) or if one of the parties shows no regard for the preconditions (such as a DAB or amicable settlement process)?

    1. If the employer’s claim is covered by the scope of the arbitration agreement, no parallel proceedings can be initiated in Norway, except for challenging the jurisdiction of the arbitral tribunal and interim relief applications. In addition a party may, by the consent of the arbitral tribunal, request the courts to obtain testimony from parties or witnesses as well as other evidence.

      It is uncertain whether Norwegian courts would consider preconditions such as those found in clause 20 of the FIDIC Red Book 1999, as jurisdictional requirements or issues of admissibility. However, in spite of the courts possibly considering the preconditions as jurisdictional requirements, the courts are not likely to allow a party to initiate parallel proceedings in the courts, if the arbitration was initiated by the time legal proceedings were instituted. In such situations a case should only be heard if the court finds it “obvious” that the arbitration agreement is invalid, or that arbitration cannot be implemented for other reasons. 

  46. 46.

    If the seat of the arbitration is in your jurisdiction, might a contractor lose its right to arbitrate if it applied to a foreign court for interim or provisional relief?

    1. No.

    Expert witnesses

  47. 47.

    In your jurisdiction, are tribunal- or party-appointed experts used? To whom do party-appointed experts owe their duties?

    1. In Norway both tribunal- and party-appointed experts are used. There is no system of duties as such in Norwegian law, and there are no set rules for the duties of experts in construction cases. The experts must, if they are heard as witnesses in an oral hearing, provide assurance that they will speak the truth as all witnesses must, but otherwise no formal rules apply.

    State entities

  48. 48.

    Summarise any specific limitations or requirements that apply when the employer is a state entity or public authority (including, for example, public procurement rules, limits on rights to suspend or terminate, excluded lien rights and arbitrating – as well as enforcing an award – against such an employer)?

    1. As a general rule there are no limitations or requirements that apply when the employer is a state entity or public authority, except for public procurement rules. The Norwegian state prefers solving disputes in the public courts instead of arbitrations, and most public contracts include dispute resolution clauses to this effect. Consequently, state entities rarely submit to commercial arbitration. The legislation on public access and the interests of the public might pierce a confidentiality agreement.

    Settlement offers

  49. 49.

    If the seat of the arbitration is in your jurisdiction, on what basis can a party make a settlement offer that may not be put before the arbitral tribunal until costs fall to be decided?

    1. The Norwegian Arbitration Act has no regulation of situations where a party wishes to disclose a settlement offer to the arbitral tribunal after the merit has been ruled upon, and when the tribunal is to decide the costs. The common practice in Norwegian arbitrations is that the decision on costs in rendered in the arbitral award, and does not succeed the award. There is, however, nothing preventing the parties from agreeing on such a procedure with the tribunal.

      Pursuant to the Norwegian Arbitration Act, a party is entitled to present such evidence as it wishes, including putting forward settlement offers by the other party. However, according to the Code of Conduct of the Norwegian Bar Association, members of the bar are restricted from disclosing settlement offers made by the other party to the arbitral tribunal/court, without the consent of the other party. A party is free to disclose its own settlement offers made. The parties may also agree to keep the settlement offers confidential and separate from the arbitral tribunal.

    Privilege

  50. 50.

    Does the law of your jurisdiction recognise "without prejudice" privilege (such that "without privilege" communications are privileged from disclosure)? If not, may it be agreed that a sum is payable if communications to try to achieve a settlement are disclosed to a court or arbitral tribunal?

    1. Under Norwegian law, "without prejudice" communications are not privileged from disclosure. However, it is not likely that such information would be presented to the court or an arbitral tribunal, see question 49. The parties to an arbitration may agree not to disclose without prejudice communication or agree that a sum is payable if communications to try to achieve a settlement are disclosed to an arbitral tribunal.

  51. 51.

    Is the advice of in-house counsel privileged from disclosure under the law of your jurisdiction? Is the relevant law characterised as substantive or procedural law?

    1. Under Norwegian law, the privilege of non-disclosure applies to all counsels practicing law, in-house or externally. Instead of separating between in-house and external counsels, the decisive question for whether or not an advice is exempted from disclosure, is whether the counsel, when giving the advice, is acting in the capacity of being a counsel, or not. The relevant law is characterised as procedural law.

    Guarantees

  52. 52.

    What are the requirements for a guarantee under the law of your jurisdiction? Are oral guarantees effective?

    1. Norwegian general guarantee law has no specific formal requirements for the effectiveness of guarantees and oral guarantees may therefore be effective. 

  53. 53.

    Under the law of your jurisdiction, will the guarantor’s liability be limited to that of the party to the underlying construction contract, if the guarantee is silent? Can the guarantee’s wording affect the position?

    1. Provided that the guarantee wording is silent and a common understanding between the guarantor and the beneficiary of the guarantee's content cannot be established, the guarantor's liability will most likely be corresponding to the liability in the underlying construction contract. The guarantee wording can affect the position. The guarantor's primary liability under the guarantee, for example, for default interest, will be additional to the guarantor's liability relating to the underlying construction contract.

  54. 54.

    Under the law of your jurisdiction, in what circumstances will a guarantor be released from liability under a guarantee, if the guarantee is silent? Can the guarantee’s wording affect the position?

    1. Guarantees are in general irrevocable and a guarantor will only be released from its liability if (i) the guaranteed obligations in the underlying construction contract have been completed or discharged in full, (ii) the guarantor has fulfilled all its obligations under the guarantee (eg, by paying the maximum liability amount), or (iii) the guarantor has been released and discharged by the guarantee beneficiary. The guarantee wording can affect the position.

    On-demand bonds

  55. 55.

    If an on-demand bond is governed by the law of your jurisdiction on what basis might a call be challenged in your courts as a matter of jurisdiction as well as substantive law? Assume the underlying contract is silent on when calls may be made.

    1. If the demand for payment has been made in accordance with the terms of the guarantee, the guarantor is obliged to comply with the demand. However, it is established in legal theory that if the demand for payment undoubtedly does not reflect a valid claim in the underlying contract (eg, the demand is fraudulent), the guarantor may validly reject to comply with the demand. 

  56. 56.

    If an on-demand bond is governed by the law of your jurisdiction and the underlying contract restrains calls except for amounts which the employer is entitled to (like sub-clause 4.2 of the FIDIC Red Book 1999), when would a court or arbitral tribunal applying your jurisdiction’s law restrain a call if the contractor contended that: (i) the employer does not have an entitlement in principle; or (ii) the employer has an entitlement in principle but not for the amount of the call?

    1. The same answer as for question 55 is relevant. An on-demand guarantee is independent from the underlying contract and the terms of the underlying contract will, therefore, not be relevant for the interpretation of the guarantee. 

    Further considerations

  57. 57.

    Are there any other material aspects of the law of your jurisdiction concerning construction projects not covered above?

    1. As explained above, there is no Norwegian Act regulating construction contracts.

      Norway has a long tradition for standard construction contracts, both onshore and offshore, which are agreed documents between representatives from the main parties involved in construction projects.

      For onshore construction contracts the latest revisions of the standard contracts are NS 8405, NS 8406 and NS 8407, where the latter is the EPC contract.

      For offshore construction contracts the latest revisions of the standard contracts are NF 15, NTK 15 (EPC) and NTK 15 Mod. As mentioned above, the Norwegian government requires the offshore construction contracts within the oil and gas industry to be governed by Norwegian law and with Norwegian venue, although the parties are free to agree on either courts or arbitration as long as the venue is in Norway.

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GAR know-how provides reliable cross-jurisdictional insight to help cement the building blocks of international practice. In this section, select experienced practitioners answer commonly asked questions for key jurisdictions so allowing readers to be better-placed to solve the challenges of their working days.

Questions

    Legal system

  1. 1.

    Is your jurisdiction primarily a common law, civil law, customary law or theocratic law jurisdiction? Are the laws substantially derived from the laws of another jurisdiction and, if so, which? What instruments have legal force and effect? Who are the lawmaking bodies? How and where are new laws published? Can laws be passed with retrospective effect?


  2. Contract formation

  3. 2.

    What are the requirements for a construction contract to be formed? When is a "letter of intent" from an employer to a contractor given contractual effect?


  4. Choice of laws, seat, arbitrator and language

  5. 3.

    Are parties free to choose: (a) the governing law of their contract; (b) the law of the arbitration agreement; (c) the seat of the arbitration; (d) any arbitral rules; (e) anyone to act as arbitrator; and (f) the language of the contract and the arbitration? If not, what are the limitations on choice and what happens if the parties act contrary to them?


  6. Implied terms

  7. 4.

    How might terms be implied into construction contracts? What terms might be implied?


  8. Certifiers

  9. 5.

    When must a certifier under a construction contract act impartially, fairly and honestly? To what extent are the parties bound by certificates (where the contract does not expressly empower a court or arbitral tribunal to open up, review and revise certificates)? Can the contractor bring proceedings directly against the certifier?


  10. Competing causes of delay

  11. 6.

    If an employer would cause (eg, by variation) a two-week critical delay to the completion of the works (which by itself would justify an extension of time under the construction contract) but, independently, culpable delay by the contractor (eg, defective work) would cause the same delay, is the contractor entitled to an extension?


  12. Disruption

  13. 7.

    How does the law view "disruption" to the contractor (as distinct from delay or prolongation to the completion of the works) caused by the employer’s breaches of contract and acts of prevention? What must the contractor show for a disruption claim to succeed? If an entitlement in principle can be shown (eg, that a loss has been caused by a breach of contract) must the court or arbitral tribunal do its best to quantify that loss (even if proof of the quantum is lacking or uncertain)?


  14. Acceleration

  15. 8.

    How does the law view "constructive acceleration" (where the contractor incurs costs accelerating its works because an extension of time has not been granted that should have been)? What must the contractor show for such a claim to succeed? Does your answer differ if the employer acted unreasonably or in bad faith?


  16. Force majeure and hardship

  17. 9.

    What events of force majeure give rise to relief? Must they be unforeseeable and to whom? How far does the express or implied allocation of risk under the contract affect whether an event qualifies? Must the event have a permanent effect? Is impossibility in performing required or does a degree of difficulty suffice? Is relief available where only some obligations (eg, to make a single payment or carry out one aspect of the works) are affected or is a greater impact required? What relief is available and does it apply automatically? Can the rules be excluded by agreement?


  18. 10.

    When is a contractor entitled to relief against a construction contract becoming unduly expensive or otherwise hard to perform and what relief is available? Can the rules be excluded by agreement?


  19. Impossibility

  20. 11.

    When is a contractor entitled to relief if after the contract is concluded it transpires (but not due to external events) that it is impossible for the contractor to achieve a particular aspect of the contractual specification? What relief is available?


  21. Clauses that seek to pass risks to the contractor for matters it cannot foresee or control

  22. 12.

    How effective are contractual provisions that seek to pass risks to the contractor for matters it cannot foresee or control, for example making the contractor liable for: (a) a specified event of force majeure; (b) ground conditions that no reasonably diligent contractor could have foreseen; or (c) errors in documents provided by the employer, such as employer's requirements in design and build forms?


  23. Duty to warn

  24. 13.

    When must the contractor warn the employer of an error in a design provided by the employer?


  25. Good faith

  26. 14.

    Is there a general duty of good faith? If so, how does it impact upon the following (where they are otherwise permitted under the construction contract): (a) the level of intervention in the works that is allowed by the employer; (b) a party’s discretion whether to terminate or suspend the contract; or (c) the employer’s discretion to claim pre-agreed sums under the contract, such as liquidated damages for delay?


  27. Time bars

  28. 15.

    How do contractual provisions that bar claims if they are not validly notified within a certain period operate (including limitation or prescription laws that cannot be contracted out of, interpretation rules, any good faith principles and laws on unfair contract terms)? What is the scope for bringing claims outside the written terms of the contract under provisions such as sub-clause 20.1 of the FIDIC Red Book 1999 ("otherwise in connection with the contract")? Is there any difference in approach to claims based on matters that the employer caused and matters it did not, such as weather or ground conditions? Is there any difference in approach to claims for (a) extensions of time and relief from liquidated damages for delay and (b) monetary sums?


  29. Suspension

  30. 16.

    What rights does the employer have to suspend paying the contractor or performing other duties under the contract due to the contractor’s (non-)performance, or the contractor have to suspend carrying out the works (or part of the works) due to the employer’s (non-) performance?


  31. Omissions and termination for convenience

  32. 17.

    May the employer exercise an express power to omit work; or terminate the contract at will or for convenience, so as to give work to another contractor or to carry out the work itself?


  33. Termination

  34. 18.

    What termination rights exist? Can a construction contract be terminated in part? What are the practical and financial consequences?


  35. 19.

    If the construction contract provides for the circumstances in which each party may terminate the contract but does not expressly or impliedly state that those rights are exhaustive, are other rights to terminate available? If so, what are they and what are the practical and financial consequences?


  36. 20.

    What limits apply to exercising termination rights?


  37. Completion

  38. 21.

    Does the law of your jurisdiction deem the works to be completed (irrespective of what the contract says) if, say, the employer takes beneficial possession of the works and starts using them?


  39. 22.

    Does approval or acceptance of work by or on behalf of the employer bar a subsequent complaint? What constitutes acceptance? Does taking over the work by the employer constitute acceptance? Does this bar subsequent complaint?


  40. Liquidated damages and similar pre-agreed sums ('liquidated damages')

  41. 23.

    To what extent are liquidated damages for delay to the completion of the works treated as an exhaustive remedy for all of the employer’s losses due to (a) delay to the completion of the works by the contractual completion date; and (b) delays prior to the contractual completion date (in the absence of, say, interim milestone dates with liquidated damages for delay attaching to them)? What difference does it make if any critical delay is caused by the contractor’s fraud, wilful misconduct, recklessness or gross negligence? If so, what constitutes such behaviour and can it be excluded by agreement?


  42. 24.

    If the employer causes critical delay to the completion of the works and the construction contract does not provide for an extension of time to the contractual completion date (there being no "sweep up" provision such as that in sub-clause 8.4(c) of the FIDIC Silver Book 1999) is the employer still entitled to liquidated damages due to the late completion of works provided for under the contract?


  43. 25.

    When might a court or arbitral tribunal award less than the liquidated damages specified in the contract for delay or other matters (eg, substandard work)? What factors are taken into account?


  44. 26.

    When might a court or arbitral tribunal award more than the liquidated damages specified in the contract for delay or other matters (eg, work that does not achieve a specified standard)? What factors are taken into account?


  45. Assessing damages and limitations and exclusions of liability

  46. 27.

    How is monetary compensation for breach of contract assessed? For instance, if the contractor is liable for a defect in its works is the employer entitled to its lost profits? What if the lost profits are exceptionally high?


  47. 28.

    If the contractor’s work is technically non-compliant, is the contractor liable for remedying it if the rectification cost is disproportionate to the benefit of the remedy? Can the parties agree on a regime that is stricter for the contractor than under the law of your jurisdiction?


  48. 29.

    If there is a defects notification period (DNP) during which the contractor must or may remedy any defect in its works that appears during a certain period after their completion, if the construction contract is otherwise silent, does it affect the employer’s rights to claim for any defects appearing after the DNP expires?


  49. 30.

    What is the effect of a construction contract excluding liability for “indirect or consequential loss”?


  50. 31.

    Are contractually agreed limits on – or exclusions of – liability effective and how readily do claims in tort or delict avoid them? Do they not apply if there is fraud, wilful misconduct, recklessness or gross negligence: (a) if the contract is silent as to such behaviour; or (b) if the contract states that they apply notwithstanding such behaviour? If so, what causation is required between the behaviour and the loss?


  51. Liens

  52. 32.

    What right does a contractor have to claim a lien (or similar) in the works it has carried out? If so, what are the limits of the right if, for example, the employer has no interest in the site for the permanent works? How is the right recognised and enforced?


  53. Subcontractors

  54. 33.

    How do conditional payment (such as pay-when-paid) provisions operate under the law of your jurisdiction (including interpretation rules, any good faith principles and laws on unfair contract terms)?


  55. 34.

    May a subcontractor claim against the employer for sums due to the subcontractor from the contractor? How are difficulties with the merits and proof of the subcontractor’s claim addressed, including any rights the contractor has to withhold payment? What if aspects of the project suggest that the law of your jurisdiction should not apply (eg, the parties to both the main contract and the subcontract have chosen a foreign law as the governing law)?


  56. 35.

    May an employer hold its contractor to their arbitration agreement if their dispute concerns a subcontractor (there being no arbitration agreement between the contractor and the subcontractor or no scope for joining two sets of arbitral proceedings) or can the contractor, for example, require litigation between itself, the employer and the subcontractor? Does it matter if the arbitration agreement does not have its seat in your jurisdiction?


  57. Third parties

  58. 36.

    May third parties obtain rights under construction contracts? How readily can those connected with the employer (such as future or ultimate owners) bring claims against the contractor in respect of (a) delays and (b) defects? To what extent are exclusions and limitations of liability in the construction contract relevant?


  59. 37.

    How readily (absent fraud, wilful misconduct, recklessness or gross negligence) can those connected with the contractor (such as affiliates, directors or employees) face claims in respect of (a) delays (b) defects and (c) payment? To what extent are exclusions and limitations of liability in the construction contract relevant?


  60. Limitation and prescription periods

  61. 38.

    What are the key limitation or prescription rules for claims for money and defects (and insofar as you have a mandatory decennial liability (or similar) regime, what is its scope)? What stops time running for the purposes of these rules (assuming the arbitral rules are silent)? Are the rules substantive or procedural law? May parties agree different limitation or prescription rules?


  62. Other key laws

  63. 39.

    What laws apply which cannot be excluded or modified by agreement where the law of your jurisdiction is the governing law of a construction contract? What are the key aspects of, say, the FIDIC Silver Book 1999 that would not operate as its plain words suggest?


  64. 40.

    What laws of your jurisdiction apply anyway where a foreign law governs a construction contract? What are the key aspects of, say, the FIDIC Silver Book 1999 that would not operate as its plain words suggest?


  65. Enforcement of binding (but not finally binding) dispute adjudication board (DAB) decisions

  66. 41.

    For a DAB decision awarding a sum to a contractor under, say, sub-clause 20.4 of the FIDIC Red Book 1999 for which the employer has given a timely notice of dissatisfaction, in an arbitration with its seat in your jurisdiction, might the contractor obtain: a partial or interim award requiring payment of the sum awarded by the DAB pending any final award that would be enforceable in your jurisdiction (assuming the arbitral rules are silent); or interim relief from a court in your jurisdiction requiring payment of the sum awarded by the DAB pending any award?


  67. Courts and arbitral tribunals

  68. 42.

    Does your jurisdiction have courts or judges specialising in construction and arbitration?


  69. 43.

    What are the relevant levels of court for construction and arbitration matters? Are their decisions published? Is there a doctrine of binding precedent?


  70. 44.

    In your jurisdiction, if a judge or arbitrator (specialist or otherwise) has views on the issues as they see them that are not put to them by the parties, can they raise them with the parties? Is the court or arbitral tribunal permitted or expected to give preliminary indications as to how it views the merits of the dispute?


  71. 45.

    If a contractor, say, wishes to arbitrate pursuant to an arbitration agreement, what parallel proceedings might the employer bring in your jurisdiction? Does it make any difference if the dispute has yet to pass through preconditions to arbitration (such as those in clause 20 of the FIDIC Red Book 1999) or if one of the parties shows no regard for the preconditions (such as a DAB or amicable settlement process)?


  72. 46.

    If the seat of the arbitration is in your jurisdiction, might a contractor lose its right to arbitrate if it applied to a foreign court for interim or provisional relief?


  73. Expert witnesses

  74. 47.

    In your jurisdiction, are tribunal- or party-appointed experts used? To whom do party-appointed experts owe their duties?


  75. State entities

  76. 48.

    Summarise any specific limitations or requirements that apply when the employer is a state entity or public authority (including, for example, public procurement rules, limits on rights to suspend or terminate, excluded lien rights and arbitrating – as well as enforcing an award – against such an employer)?


  77. Settlement offers

  78. 49.

    If the seat of the arbitration is in your jurisdiction, on what basis can a party make a settlement offer that may not be put before the arbitral tribunal until costs fall to be decided?


  79. Privilege

  80. 50.

    Does the law of your jurisdiction recognise "without prejudice" privilege (such that "without privilege" communications are privileged from disclosure)? If not, may it be agreed that a sum is payable if communications to try to achieve a settlement are disclosed to a court or arbitral tribunal?


  81. 51.

    Is the advice of in-house counsel privileged from disclosure under the law of your jurisdiction? Is the relevant law characterised as substantive or procedural law?


  82. Guarantees

  83. 52.

    What are the requirements for a guarantee under the law of your jurisdiction? Are oral guarantees effective?


  84. 53.

    Under the law of your jurisdiction, will the guarantor’s liability be limited to that of the party to the underlying construction contract, if the guarantee is silent? Can the guarantee’s wording affect the position?


  85. 54.

    Under the law of your jurisdiction, in what circumstances will a guarantor be released from liability under a guarantee, if the guarantee is silent? Can the guarantee’s wording affect the position?


  86. On-demand bonds

  87. 55.

    If an on-demand bond is governed by the law of your jurisdiction on what basis might a call be challenged in your courts as a matter of jurisdiction as well as substantive law? Assume the underlying contract is silent on when calls may be made.


  88. 56.

    If an on-demand bond is governed by the law of your jurisdiction and the underlying contract restrains calls except for amounts which the employer is entitled to (like sub-clause 4.2 of the FIDIC Red Book 1999), when would a court or arbitral tribunal applying your jurisdiction’s law restrain a call if the contractor contended that: (i) the employer does not have an entitlement in principle; or (ii) the employer has an entitlement in principle but not for the amount of the call?


  89. Further considerations

  90. 57.

    Are there any other material aspects of the law of your jurisdiction concerning construction projects not covered above?