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Construction Arbitration

Last verified on Wednesday 21st June 2017

Sweden

Johan Granehult and Kristoffer Löf

    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. Sweden is a civil law jurisdiction. The laws of Sweden have historically been influenced by other civil law jurisdictions such as Germany, as well as by the other Nordic countries. Instruments of legal force in Sweden are statutes (enacted by the Parliament), regulations (enacted by the government) and ordinances (enacted by various public authorities). In addition, Sweden recognises several different sources of law such as preparatory work, case law, customary law and general principles of law. Further, since Sweden is a member of the European Union, legislation from the European Union also substantially affects the Swedish legal system. The Swedish Constitution prohibits the enactment of retrospective legislation in the area of penal law and, as a general rule, tax law. 

    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. The formation of a construction contract requires, as any other contract under Swedish law, an offer followed by an acceptance of that offer. No specific form is required (ie, the offer and acceptance can be oral or in writing).

      Letters of intent and other pre-contractual documents are not specifically regulated in Swedish law. As a result, the legal effects of such documents will depend on their actual wording and the factual circumstances. Even if a document is called a letter of intent, certain provisions in the document may be held to be legally binding on either or both of the parties if a court finds that it was the intention of the parties to create a binding commitment. Common drafting practice in Sweden is to state clearly in the letter of intent which provisions are binding and which are non-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. The parties to a construction contract are free to choose the governing law of their contract, the law of the arbitration agreement, the seat of the arbitration, the arbitral rules, the arbitrators to determine the case as well as the language of the contract and the arbitration. 

    Implied terms

  4. 4.

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

    1. Terms might be implied into construction contracts to fill gaps in the contract. The terms will generally be implied based on general principles of contract interpretation, aimed at establishing the intent of the parties. If the wording of the contract is clear, the wording will be the primary source of evidence. If there is uncertainty as to the parties’ intention and a need to fill gaps, reference is primarily made to general principles of contract law codified in non-mandatory acts such as the Swedish Sales of Goods Act, the Act on Torts, the Contracts Act or other adjacent legislation, as well as trade usage or industry practice. There is no Swedish statute specifically regulating commercial construction contracts. 

    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. "Certifiers" and "certificates" are not generally used in Swedish construction contracts and are not regulated by Swedish law. The dominant Swedish general conditions for construction (AB 04 and ABT 06), which are used in more than 95 per cent of all construction projects in Sweden, provide that inspections of the works shall be carried out by an independent inspector. The inspector is appointed by the employer, but has to act impartially. His or her inspection reports are not binding on the parties, and can be reviewed and revised by a court or arbitral tribunal. There is no contractual relationship between the inspector and the contractor, and it is generally held that the contractor cannot bring proceedings directly against the inspector.

    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. The question of concurrent delay is not regulated by Swedish law, nor is the question specifically addressed in the dominant standard forms used on the Swedish market (AB 04 and ABT 06). Consequently, the answer to the question of concurrent delay will very much depend on the specific circumstances of each case. However, it is generally held that a prerequisite for a contractor’s entitlement to extension of time is that the contractor can establish a causal link between the employer risk event and the delay suffered by the contractor. Additional causes and events can affect the assessment of whether such a causal link exists. In the authors’ view, the most likely position of Swedish law is that the contractor would not be entitled to extension of time in the above example.

    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. As a general principle of Swedish contract law, a party who breaches a contractual obligation has to compensate the other party for any losses suffered as a consequence thereof. Pursuant to the dominant standard forms (AB 04 and ABT 06) the contractor is entitled to extension of time and compensation for costs if he is prevented from completing the contract works within the contract period due to circumstances attributable to the employer. The contractor has to show that the employer has breached his or her obligations and that the breach has caused the contractor a loss. He also has to show the amount of loss. If full proof of the loss cannot be provided, or only with difficulty, a court or arbitral tribunal may make a reasonable estimate of the loss. 

    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. Swedish statutory law does not deal with the concept of constructive acceleration, and there is no relevant case law on the matter except for certain decisions given on the dominant standard forms (AB 04 and ABT 06). These forms provide that the contractor is entitled to compensation for his acceleration costs if, in hindsight, it is established that the contractor was not granted an extension of time but should have been, provided that the contractor has complied with applicable notification requirements for extension of time and acceleration. The contractor must show that he was entitled to extension of time. He must also show the amount of the acceleration costs. 

    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 contract between the parties is silent on the matter, there are no default rules of force majeure applicable specifically to construction contracts. However, there are general principles of contract law that can give rise to relief in the event of force majeure. Generally, force majeure events are defined as external events that were unforeseeable to the parties at the time the contract was made and that cannot be prevented by reasonable means. Further, for an event to constitute a force majeure, the event must make the performance of the contract wholly or partially impossible, at least in an economical sense. In case of a force majeure event, the affected contractual obligation is likely to become subject to modification in accordance with section 36 of the Swedish Contracts Act, which is a general clause that can be used to modify or set aside contract terms that are deemed to be unconscionable in the circumstances. The parties are free to agree the definition of force majeure and the consequences of any such event in their contract. 

  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. As a general rule, contracts have to be performed and executed in the accordance with their terms, even if they become unduly expensive or otherwise hard to perform. In exceptional circumstances (and exceedingly rarely in commercial contexts), contract terms can become subject to modification under section 36 of the Swedish Contracts Act, which is a general clause that can be used to modify or set aside contract terms that are deemed to be unconscionable in the circumstances. The parties are free to agree both on the definition and the consequences of hardship or similar.

    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. There is no general rule under Swedish statutory law dealing with the concept of ‘impossibility’, nor is the question addressed directly in any of the dominant standard contract forms (AB 04 and ABT 06). Depending on the specific circumstances of each case, the contractor may argue for modification of the contractual obligations with reference to section 36 of the Swedish Contracts Act, which is a general clause that can be used in exceptional circumstances to modify or set aside contract terms which are deemed to be unconscionable in the circumstances. It should be noted, however, that this provision is primarily aimed at consumer contracts and is very rarely used when it comes to commercial contracts.

    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?

    1. The principle of freedom of contract is strong in Swedish law. Contractual provisions that seek to pass risks on to the contractor for matters he or she cannot foresee or control will generally be effective, but may in rare cases be subject to adjustment pursuant to section 36 of the Swedish Contracts Act. 

    Duty to warn

  13. 13.

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

    1. Whether the contractor has an obligation to warn the employer of an error in a design provided by the employer will generally depend on the specific terms of the contract. Under the dominant standard form for employer-designed works (AB 04), the contractor must notify the employer of an error in the design as soon as the contractor becomes aware of the error. If the contractor fails to fulfil this duty, the contractor has to compensate the employer for any costs arising as a result of such failure. It is likely that the same would apply also under general principles of Swedish contract law. 

    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. The extent and meaning of good faith is not universally defined and it is debated how, if at all, it applies to construction contracts under Swedish law. As a result, it is not possible to provide any general answers to the situations (a), (b), and (c). The potential effects of these situations must be analysed on a case-by-case basis, taking into account all related facts. However, evident acts of bad faith are likely to be sanctioned by the courts.

    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. The principle of freedom of contract is strong in Swedish law. Contractual provisions that bar claims if they are not notified within an agreed time period will generally be effective. In exceptional circumstances, contract terms can become subject to modification in accordance with section 36 of the Swedish Contracts Act, which is a general clause that can be used to modify or set aside contract terms that are deemed to be unconscionable in the circumstances. However, this provision is very rarely used when it comes to commercial contracts.

    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. It is a general principle of law that if a party does not perform one or some of the essential duties under the contract, the other party can be entitled to suspend his own performance. To what extent and for how long a party shall be entitled to such suspension must be determined on a case-by-case basis and cannot be answered in general terms. Further, the dominant standard contract forms (AB 04 and ABT 06) provide several events that entitle the employer to suspend payment or the contractor to suspend the contract works. 

    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. There is no general rule under Swedish statutory law dealing with the right of a purchaser of goods or services to reduce the agreed scope or with the concept of "termination for convenience" in relation to commercial contracts, and such rights generally need to be expressed in the contract to apply. If not, the original contract scope is binding. The dominant standard contract forms (AB 04 and ABT 06) include customary variation provisions but do not include any right for the employer to terminate for convenience. In principle, the employer can use his variation rights under these forms to omit all the remaining works, but may then have to reimburse the contractor for the termination costs incurred and for loss of profit. 

    Termination

  18. 18.

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

    1. As a general principle of law, a contract can be terminated if there is a material breach of contract. The dominant standard contract forms (AB 04 and ABT 06) provide a number of grounds for termination for each party. Under these forms, termination can only be made with respect to the remaining works (ie, not with retroactive effect). A valuation of the works shall be made, and the value of the executed works shall be credited to the contractor. In principle, the defaulting party has to indemnify the other party for all losses and costs suffered as a result of the termination. If the employer terminates for contractor’s breach, the damages will include any extra costs for procuring a new contactor to carry out the remaining works.

  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 provided in the construction contract will not be deemed to be exhaustive. The parties can normally rely on general principles of contract law with regard to termination rights (see question 18). 

  20. 20.

    What limits apply to exercising termination rights?

    1. There is no general rule providing for any such limits. 

    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. Generally, the contract works will be deemed to be completed when completed in accordance with the contract. Under the dominant standard contract forms (AB 04 and ABT 06), it will have certain consequences if the employer takes beneficial possession of the works (passing of risk of loss, reduction of liquidated damages for delay, etc), but the works will not be deemed to be complete. However, if the employer fails to arrange the final inspection on time, the works will be deemed to be complete under AB 04 and ABT 06.

  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. These matters are not regulated by Swedish law. Under the dominant standard contract forms (AB 04 and ABT 06), the matter of acceptance of the works is determined at a final inspection. If the works are approved at the final inspection, they are handed over to the employer. The approval of the works does not bar a subsequent complaint. Complaints for latent (hidden) defects can be made during the entire defects liability period. Complaints for defects that could have been discovered at the final inspection can only be made within certain time periods (six months, or 18 months for substantial defects).

    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?

    1. In the absence of specific contract provisions regulating this, it will be a matter of contract interpretation to determine whether a liquidated damages clause will be considered to be an exhaustive remedy for delay. If there is no indication in the contract suggesting that certain remedies are excluded, they should be available. In the dominant standard contract forms (AB 04 and ABT 06), liquidated damages are expressly stated to be the exhaustive remedy for all of the employer’s losses due to delay of the works. This will include both the completion date and delays prior to the completion date (in the absence of interim milestone dates with liquidated damages attaching to them). Such limitation of liability may be held unenforceable if the delay is caused by the contractor’s fraud, wilful misconduct or gross negligence. Liability for fraud or wilful misconduct can, as a general rule, not be excluded by agreement. General limitation of liability wording has traditionally been considered not to cover gross negligence. In a recent ruling, however, the Swedish Supreme Court held that limitations of liability do, in principle, cover gross negligence, but also that such clauses may be adjusted pursuant to section 36 of the Swedish Contracts Act (judgment dated 24 February 2017 in case T 3034-15). However, a detailed clause in a commercial contract expressly excluding liability also for grossly negligent acts will generally be held effective.

  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. Pursuant to general principles of law, an employer would not be entitled to liquidated damages if he or she caused the delay him or herself. 

  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. Liquidated damages clauses are valid under Swedish law and are generally upheld in accordance with their terms. Swedish law recognises that liquidated damages may have both compensatory and penalising (or incentivising) purposes. Owing to the strong principle of freedom of contract, a Swedish court or arbitral tribunal would only in exceptional circumstances modify or set aside a liquidated damages clause in a commercial contract. The Swedish Supreme Court has stated in a case (NJA 2012 s. 597), where it upheld a liquidated damages clause, that section 36 of the Swedish Contracts Act can be used in exceptional cases if the employer is over-compensated. If the employer has taken the works in beneficial use, the liquidates damages shall be adjusted to reflect that circumstance. 

  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. See questions 23 and 25.

    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. Generally, compensation for a breach of contract is assessed by comparing the hypothetical situation without the breach of contract with the situation after the breach of contract. The difference is then to be compensated by the party in breach of the contract. Therefore, compensation may cover all losses suffered, direct and indirect, to the extent they can be proven.

  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 mandatory rule in Swedish law regulating the contactor’s liability for remedying non-compliant work when the cost is disproportionate to the benefit of the remedy. As stated above, contracts generally have to be performed in accordance with their terms, even if they become unduly expensive or otherwise hard to perform. In exceptional circumstances, contract terms can become subject to modification in accordance with section 36 of the Swedish Contracts Act (see questions 10 and 15). Under the dominant standard contract forms (AB 04 and ABT 06), the contractor is not liable to rectify defects that do not substantially affect the state or appearance of the works or the possibility of using them in an efficient manner, to the extent that the rectification cost would be unreasonable in relation to the cost of the rectification. In such cases, the employer is entitled to a price reduction. It also follows from the Swedish Sales of Goods Act, which is commonly said to reflect general principles, that a seller is not liable to remedying non-compliant work if the cost is disproportionate to the benefit for the buyer. 

  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. There is no general rule in Swedish law regulating this question in relation to construction contracts. Under the dominant standard contract forms (AB 04 and ABT 06), the contractor is liable for defects that become apparent during the DNP. After the DNP, the contractor is only liable for substantial defects caused by negligence. 

  30. 30.

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

    1. As set out in the foregoing, the principle of freedom of contract is strong in Swedish law. A contract clause excluding liability for indirect or consequential loss will generally be upheld in accordance with its wording. As for the possibilities of modifying or setting aside a limitation of liability clause, see question 23. The definition of "indirect or consequential loss" will be a matter of contract interpretation on a case-by-case basis. 

  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. See questions 23 and 30. The Swedish Supreme Court has stated in a case (NJA 2007 s. 758) that if contractual limitations of liability have been agreed, the employer can generally not make a claim against the contractor in tort, not even against the contractor’s subcontractors as the employer must be deemed to have accepted the limitations whether the contractor is carrying out the work himself or through subcontractors.

    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. Once the construction materials have been incorporated in the permanent works, the contractor has, as a general rule, no right to claim a lien or other security rights in these works. The materials will be considered to be fixtures to the employer’s real property. As for the site, the contractor only has a right of access to the same for the purpose of performing the works. He or she is not deemed to have received any lease or other similar legal right.

    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. As set out in the foregoing, the principle of freedom of contract is strong in Swedish law. Conditional payment clauses such as pay-when-paid clauses will generally be valid and upheld under Swedish law. Depending on the specific circumstances of each case, a subcontractor may argue for modification of such a clause under section 36 of the Swedish Contracts Act, which is a general clause that can be used to modify or set aside contract terms that are deemed to be unconscionable in the circumstances. 

  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. Unless the employer has agreed to such direct claims from subcontractors, a subcontractor cannot claim against the employer, or another party in the same contractual chain, for sums due to the subcontractor from the contractor under Swedish law. If a foreign law applies that permits such direct claims, Swedish procedural laws (court or arbitration) would not hinder such a claim from being made.

  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 existence of an arbitration agreement between two parties constitutes a bar against court proceedings, which means that the courts lack jurisdiction if a party invokes the arbitration agreement before the court. Therefore, a contractor cannot require litigation between him or herself, the employer and the subcontractor if a valid arbitration agreement exists between the employer and the contractor. The position would be the same where litigation is brought in Sweden but the seat of the arbitration is outside Sweden.

      If all parties agree, an arbitral tribunal could admit joinder or intervention of the subcontractor into the arbitration between the contractor and employer. In effect, however, that would amount to the parties entering into a new arbitration agreement.

    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. Unless a third party is expressly given a right under the contract, third parties cannot generally obtain rights under construction contracts and bring claims against the contractor in respect of delays or defects. If a contract is worded to give rights to a third party (which would be very rare in a construction contract), exclusions and limitations of liability in the contract will typically be given effect.

  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. See question 36. Only a party to a contract can have liabilities under it. Affiliates, directors or employees of the contractor will not be liable for delays, defects or payments. If a contractor becomes insolvent, claims against directors may sometimes be made under the Companies Act. 

    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 general limitation period under Swedish law is 10 years. The Swedish Limitations Act provides a number of events that interrupt the limitation time. The rules are regarded to be part of the substantive law. 

      The parties are, with some exceptions, free to enter agreements on different limitation rules. The dominant standard form construction contracts (AB 04 and ABT 06) contain several provisions on limitation of claims. 

      In a recent case from the Swedish Supreme Court (NJA 2015 s. 862), the Court stated that if a construction contract provides for a certain act to become the starting point for a different limitation period and such act does not occur (in the relevant case a three-month limitation period would be counted from an approved final inspection), the general 10-year limitation period will apply.

    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 in Swedish law. There is no statute that specifically regulates commercial construction contracts and there are few, if any, mandatory laws or regulations that may be relevant to the drafting of construction contracts as long as the agreement is not a consumer contract or contrary to public policy (which is a very narrow concept under Swedish law). 

  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. As stated above, the principle of freedom of contract is strong in Swedish law and there are few, if any, mandatory laws or regulations that may become relevant if a foreign law is agreed to govern a construction contract, as long as the agreement is not a consumer contract or contrary to public policy (which is a very narrow concept under Swedish law). However, If the construction works are carried out in Sweden, there are some mandatory statutes that will apply, such as the Planning and Building Act, the Environmental Code, the Land Code and the Working Environment Act. 

    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. There are no legal precedents in Sweden dealing with the questions set out above. It is likely, although not tested by the courts, that an arbitral tribunal would find itself competent to order payment in a partial (separate) award, provided that the payment is considered due and payable. As a comparison, the possibility to issue a separate award on payment of amounts due is often used with respect to a party’s failure to pay the advances on arbitration costs to the arbitral institution. Such a payment has some similarities to a sub-clause 20.4 payment, in the sense that the payment obligation is due, although the final allocation of the amount will only be made later. As an alternative to a separate award, interim relief may be sought in the local courts. If so, the relief would typically be an order to provide security for the payment, since payment proper requires a determination on the merits, which is not suitable for interim relief, but other interim measures may also apply.

    Courts and arbitral tribunals

  42. 42.

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

    1. There are no specific courts or judges in Sweden specialising in construction disputes. Nor are there any standing arbitral tribunals or similar dealing with construction contracts.

  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. In Sweden the relevant levels of court for civil law matters, including construction contracts, are the district courts, the courts of appeal (hovrätt) and the Supreme Court. Almost all court decisions are available through various databases. There is no formal doctrine of binding precedents. However, the Supreme Court’s judgments are a source of law and generally must be followed by the district courts and the courts of appeal. It is also very common for construction disputes in Sweden to be resolved by arbitration. The dominant standard contract forms (AB 04 and ABT 06) contain arbitration clauses.

  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. A Swedish judge in a commercial case shall not, as a general rule, raise issues of fact that have not been put to him or her by the parties. Nor should a Swedish judge give any preliminary indications on how he or she views the merits of the dispute. The same principles would usually be applied by arbitrators. Failure to adhere to these principles could, in grave cases, amount to a challengeable procedural irregularity or, if the award is based on issues not raised by the parties, a challengeable excess of mandate. Some differences exist with respect to issues of law in domestic disputes (not involving foreign parties or lawyers). In those instances, the principle iura nova curia is deemed to apply, why views on the law may be raised more freely than views on the facts and arguments.

  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. As stated above (see question 35), the arbitration agreement constitutes a bar to court proceeding (on the merits – it does not prevent proceedings for interim relief). In principle, this means that the employer cannot bring any parallel court proceedings on the merits as long as the claim is covered by the scope of the arbitration agreement. 

      Whether a claim is covered by the scope of an arbitration agreement can sometimes be subject to dispute. In a recent ruling, the Swedish Supreme Court made certain general statements regarding claims for damages for breach of contract and torts claims (judgment dated 4 April 2017 in case Ö 1096-16). The failure by a party to perform a contract can sometimes constitute both a breach of contract and a tort. Normally, the legal relationship on which the claimant bases his claim (ie, contract or tort) will determine whether an arbitral tribunal or a court has jurisdiction to rule on the claim. However, if a claim is presented as a torts claim but the factual grounds invoked by the claimant are based, in all material respects, on factual grounds that would also constitute a breach of a contractual obligation, the claim may be deemed to be a contractual claim by nature and thus covered by the arbitration agreement.

  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, interim measures of protection remains available to either party irrespective of an arbitration clause or pending arbitration. Therefore, a contractor would not lose its right to arbitrate if it applied to a foreign court for interim or provisional relief. 

    Expert witnesses

  47. 47.

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

    1. Arbitral tribunals are entitled to appoint experts, although they seldom do so. Party-appointed experts, however, are very common. Party-appointed experts are hired and paid by the respective parties and legally owe their duties to them. However, as provided for in the IBA Rules on the Taking of Evidence in International Arbitration, they usually undertake, as a contractual matter and express in their expert reports, to be objective and independent. 

    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. In general, there are no special construction-related rules that apply to public employers. However, the Public Procurement Act (which is based on the EU directives) will apply to the procurement of the contractor. Further, the legislation on public access to information may limit a public employer’s possibilities to undertake confidentiality obligations or other obligations relating to the management of documents and information. With respect to enforcement of arbitral awards, although there is no Swedish case law expressly on point, it is generally understood and accepted as a matter of state practice that an arbitration agreement represents a waiver of immunity by the state. In the Svea Court of Appeal case RH 1981:76: (the Liamco case), which concerned the question of whether the State of Libya could claim immunity against enforcement of an arbitral award, the Court of Appeal held that by accepting the arbitration clause Libya was deemed to have waived its right to invoke immunity. The decision was appealed by Libya to the Supreme Court, but the dispute was settled before the Supreme Court rendered any decision. Although the decision of the Svea Court of Appeal thus never became res judicata, the decision is generally held to represent the present state of Swedish law. Hence, the generally accepted view in Sweden is that an arbitration clause is deemed to constitute a waiver of immunity in judicial proceedings aimed at the recognition and enforcement of a foreign arbitral award in Sweden.

    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 principle of free admissibility of evidence is strong in Swedish law (and so is the principle of the court’s or arbitral tribunal’s free assessment of evidence). This generally means that a party can present whatever evidence it desires before an arbitral tribunal, including settlement offers made by the other party. In principle, Swedish law does not include the concept of ‘inadmissible evidence’. However, some legal commentators argue that agreements regarding the permissibility of evidence may be upheld by arbitral tribunals. Under the Code of Conduct of the Swedish Bar Association, members of the bar are not allowed to put before a court or arbitral tribunal any settlement offer made by the other party. 

    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. Swedish law does not include the concept of a ‘without prejudice privilege’. However, the scope of disclosure is much narrower under Swedish law than under common law, and a without prejudice communication would be very unlikely to be subject to disclosure to begin with (hence the more narrow definition of privilege in civil law jurisdictions compared to common law jurisdictions). See question 49.

  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. The advice of an in-house counsel is not privileged from disclosure. In-house counsel does not enjoy the same privilege as members of the Swedish Bar Association. The law is considered procedural. In international arbitration in Sweden (and elsewhere) the relevant privilege regime is often drawn up by the arbitral tribunal, taking several circumstances into account, including under what regime in-house counsel has believed itself to operate under.

    Guarantees

  52. 52.

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

    1. No specific form is required for a guarantee to be effective under Swedish law. The guarantee can be oral or in writing. 

  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. Generally, the guarantor’s liability will be limited to that of the party to the underlying contract. However, the wording of the guarantee can affect the position and the guarantor’s liability will always be determined by the wording of the guarantee.

  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. Generally, the guarantor will be released from liability when the underlying obligations have been fully performed or, if this occurs earlier, when the guarantee expires. Further, the guarantor may also be released from liability if the scope or the contents of the underlying obligation have been substantially changed. The wording of the guarantee can affect this position. A more extensive liability for the guarantor may be agreed (for example, that variations or other changes in the underlying contract shall not affect the guarantor’s obligations under the guarantee).

    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. There is no Swedish statutory law regulating on-demand bonds. Swedish law aims at upholding the agreement of the parties. Therefore, the answers to the questions set out above will depend on the specific wording of each guarantee. An on-demand bond governed by Swedish law will generally be upheld to a very large extent. 

  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. As set out above, an on-demand bond will generally be upheld to a very large extent. However, each on-demand bond will be interpreted in accordance with its specific wording. Therefore, the answers to the questions above will depend on the exact wording of each on-demand bond. It is common drafting practice in Sweden for on-demand bonds to state that the bond is a primary undertaking by the guarantor in favour of the employer and that the guarantor is not entitled to refuse payment for any cause relating to the underlying contract.

    Further considerations

  57. 57.

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

    1. As stated above, there is no Swedish statute specifically regulating construction contracts.

      As in many other countries, the lack of legislation within the field of construction law has encouraged the development of standardised contracts. In Sweden, there is one standard contract form that is by far the most commonly used construction contract, namely the General Conditions of Contract for Building and Civil Engineering Works and Building Services, AB 04. AB 04 is also available in a design-build version, the General Conditions of Contract for Design and Construct Contracts for Building, Civil Engineering and Installation Works, ABT 06. These contract forms have been prepared by the Swedish Construction Contracts Committee, which is an organisation consisting of several industry organisations. AB 04 or ABT 06 are used in almost every Swedish construction project and are to some extent expressions of industry practice, which may be referred to by courts even if those contracts have not been used. Even though some of the provisions of AB 04 and ABT 06 may thus become relevant without express reference to their terms, their contents do not constitute law. An agreement between the parties to make AB 04 or ABT 06 part of their contract is thus required.

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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?