Construction Law Summer School, Cambridge
September, 2014
International construction law: latest developments in
civil law jurisdictions
Marc Frilet
Managing Partner « Frilet – Société d’Avocats »
Chair of the Management Committee of GcilA
French Representative of the DRBF
Vice-President of IFEJI
Co-chair of IFEJI CICA working group on Contracts and PPPs
Co-promoter of UNECE PPP International Centre of
Excellence: “Best practices, Laws, Institutions”
© 2014 - Frilet Société d'Avocats
01/09/2014
1
The World Bank contract conditions for
Civil Law countries (1)
Origin: Back to the 90s: World Bank Problems to finance projects
•
•
•
•
WB effort to develop projects that it could finance around the world
WB requirement for projects well prepared and implemented in
accordance with policies of the Bank and best value for money
Recognition that in most developing countries the applicable procurement
framework would not meet WB requirements
WB staff not sufficient to participate to the procurement and monitoring
of all projects
© 2014 - Frilet Société d'Avocats
01/09/2014
2
The World Bank contract conditions
for Civil Law countries (2)
WB moves in the 90’s: Aggressive procurement programs for LDCs
•
•
Extensive due diligence programs for evaluating procurement conditions
in LDCs: Country Assessment (CAS).
Outcome :
- World bank Programs on procurement international best practices
- World Bank and other IFI’s assistance programs on country basis for
drafting procurement codes and related procedures:
© 2014 - Frilet Société d'Avocats
07/03/2014
3
The World Bank contract conditions for
Civil Law countries (3)
WB implementation of the programs: some key findings:
•
•
•
Many similarities in the institutional and legal framework for
performance of civil works around the world
World Bank decision to harmonize procurement and contract
conditions in LDCs complying with WB policies (transparency,
governance, non-objection procedures, etc).
Recognition of benefits of standard bidding documents and of Users’
Guides
© 2014 - Frilet Société d'Avocats
07/03/2014
4
The World Bank contract conditions for
Civil Law countries (4)
Development of Standard Bidding Documents (SBDs)
•
•
•
Initial objectives: SBDs and guidelines comprising standard contract
conditions for universal use
Outcome: Issuance of SBDs including FIDIC Red Book, 1987 as standard
contract conditions (General conditions + particular conditions to be
adapted to the project and local particulars).
Issues: - FIDIC Red Book 1987 essentially based on ICE conditions and UK
contract law and related construction practice.
- Difficult implementation in Napoleonic civil law countries due to
the particular of Contract Law and related construction practice
© 2014 - Frilet Société d'Avocats
07/03/2014
5
The World Bank contract conditions for
Civil Law countries (5)
Reevaluation and decision to promote standard contract
conditions for civil law countries
•
Main issues for implementing FIDIC Red Book 1987 in Napoleonic civil law LDCs:
- Engineer extensive role and impartiality sometimes at doubt
- Detailed contract conditions conflicting with civil law tradition and concept, with
traditional industry organization, and usages and with relationship between public
employers and Contractors
- Public Order provisions from civil code or construction statutes and from public contract
case law at odds or superseding contract provisions
•
World bank decision: drafting standard conditions for civil works in civil law countries.
© 2014 - Frilet Société d'Avocats
07/03/2014
6
The World Bank contract conditions for
Civil Law countries (6)
Development of standard contract conditions for civil law
countries
• Background of the draft: general conditions of French origin (CCAG public works often
mandatory in francophone civil law countries, sometimes for decades)
•
•
•
•
•
Additional objective: convergence when possible with FIDIC contract conditions.
Contract conditions for civil works in civil law countries first published in 1995
Contract conditions became part of the suite of standard bidding documents mandatory
for civil law countries (referred to as DTAO).
The DTAO published in French, never been formally translated in English: official
translation in Spanish only.
DTAO and contract conditions widely used in Latin-America and francophone Africa
© 2014 - Frilet Société d'Avocats
07/03/2014
7
The World Bank contract conditions for Civil
Law countries (7)
Excerpts of the World Bank Foreword for the DTAO including
civil law countries contract conditions (free translation) 1
“The “DTAO”, included in this publication has been prepared for the borrowers having a civil
law tradition and which consequently use administrative law for the procurement of work for
international call for tenders. The use of this DTAO is mandatory for works partially or totally
financed by the World Bank, in accordance with the provisions of the 2011 edition of the
Directive “procurement for good works and services (other than consultancy services)” by the
World Bank borrowers for loans from BIRD and credits in grants from AID, when the following
conditions are fulfilled (value of the work above US $10 millions). “
“The practical procedures which are proposed are the result of a wide international experience
and comply with the above Directives.”
© 2014 - Frilet Société d'Avocats
07/03/2014
8
The World Bank contract conditions for
Civil Law countries (8)
Excerpts of the World Bank Foreword for the DTAO including
civil law countries contract conditions (free translation) 2
“In addition the bank has published, for borrowers of common law tradition, standard bidding
documents where the contract conditions are the one published the Fédération Internationale
des Experts Conseils (FIDIC).”
The foreword provides also:
“The DTAO is based on previous editions of the French Cahier des clauses administratives
applicables au marché public de travaux, as well as other similar documents in use in other
francophone countries, as amended to include the mandatory provisions of the Directives, and
included essentially in the other divisions of the english edition Dossier type d’appel d’offres de
la Banque Mondiale pour les travaux de Génie Civil, mars 2012, based on the master bidding
documents for procurement of works prepared by the multilateral development banks and the
international financial institutions.”
© 2014 - Frilet Société d'Avocats
07/03/2014
9
The World Bank contract conditions for Civil
Law countries (9)
Comparison between the current FIDIC MDB and the current
CCAG civil law: increasing convergence between clauses.
• Over the years both contract forms have been revised and a lot of convergence has taken
place between the two sets of contract conditions.
•
•
Several working groups from the industry led by the Confederation of International
Contractor Association (CICA) in regular contract with MDBs and their head of
procurement (HOP) and FIDIC have exchanged and participated to the revision.
Examples of convergence now included in the contracts:
-
Engineer role of FIDIC MDB close to the “Maître d’oeuvre” in CCAG civil law: as such,
far less risks of conflict in Napoleonic Civil Law countries.
-
Definition of “Force majeure” and its consequences.
Definition of unforeseen sub-soil conditions and their consequences.
© 2014 - Frilet Société d'Avocats
07/03/2014
10
The World Bank contract conditions for Civil
Law countries (10)
Comparison between the current FIDIC MDB and the current
CCAG civil law: convergence remains in surface.
•
•
A clause by clause comparison, with its effective consequences in respective legal cultures is a
very difficult exercise which remains to be carried out:
It would no doubt confirm progress. However several caveats:
Example: why if there is a common objective of having a contract performed for the
satisfaction of the employer and on time and on budget:
•
•
-
the FIDIC MDB comprises more detailed clauses in comparison with the CCAG civil law?
the CCAG civil law is much more detailed for some sets of clauses?
Does it mean that in one or in the other document the outcome is more secure or more
predictable? Not really.
Useful comparison can be made with the aborted attempt to harmonize European contract law:
tests have shown that based on a same set of contractual clauses, whatever their specificity and
with the same factual situation, the final outcome in case of a dispute is often different.
© 2014 - Frilet Société d'Avocats
07/03/2014
11
The real world of Napoleonic civil law and its
impact on civil works contract conditions.
•
•
•
Many legal practitioners and industry representatives experienced in both jurisdictions can
summarize the situation in one image:
In Napoleonic civil law countries contract conditions for civil works are only the tip of the
iceberg, whereby in common law contracts are the essence of the buoyancy.
A key illustration: article 4.2 of the CCAG Civil Law relating to the order of precedence of
the project documents
•
Ranking 2 (4.2 b): the Tender and its annexes.
Ranking 9 (4.3 e) the CCAG contract conditions.
This single fact explains why “entire agreement clauses” are not part of the Napoleonic
Civil law culture.
© 2014 - Frilet Société d'Avocats
07/03/2014
12
Some key Napoleonic Civil Law consideration
impacting on contract implementation.(1)
I- Content of the agreement:
•
Civil code provisions
- Article 1135: agreements are binding not only upon their express terms, but also for all consequences that equity
usage or law give to the obligation, in consideration to its nature.
- Article 1160: clauses which represent a usage although non-written are deemed to be supplementary in a contract.
- Article 1159: in case of ambiguity, the contract must be interpreted in accordance to usages of the country where it is
concluded.
•
Practical consequences: The engineer’s duty in civil works projects
- Engineer’s duties in projects preparation and design are based on well-known usages; some laws refer to them: MOP Law.
- In civil works remeasurement contracts the employer must provide “Avant Projet Sommaire” (APS) and “Avant Projet
Détaillé” (APD)
- The Contractor is only responsible for “Etude d’Exécution” (EXE), i.e. more or less shop drawings.
- APS and APD are further defined in the engineering industry guide of 2006 (SYNTEC), which clarifies with a lot of details the
duty of engineers and design professionals for APS and APD.
- In practice, any dispute on APS and APD completeness and quality will be primarily determined on the basis of the above.
Contractual clauses to the contrary will have little relevance in practice.
© 2014 - Frilet Société d'Avocats
01/09/2014
13
Some key Napoleonic Civil Law consideration
impacting on contract implementation.(2)
II: Contract interpretation: Good Faith and related duty to advise
•
Article 1134 of the civil code relating to the implementation of the agreements provides:
“they must be implemented in good faith.”
•
•
•
•
This one line provision has given rise to many developments by the case law which qualify
sometimes heavily the black letter of the contract and related allocation of risk and
benefits
Originally, only bad faith conducts were sanctioned.
However, very early the case law decided that the good faith requirements should extend
beyond the black letter of the contract and trigger a positive and far-reaching duty to
advise upon the party having the professional knowledge and practice (consequently in
most cases the duty falls on the Contractor for the benefit of the employer).
Due to the particular nature of a construction contract under the Napoleonic civil code, the
duty for the Contractor to warn or to advise the employer leads in some circumstances to a
duty to challenge an engineer’s instruction or an employer’s decision.
© 2014 - Frilet Société d'Avocats
01/09/2014
14
Some key Napoleonic Civil Law consideration
impacting on contract implementation.(3)
III: Underlying of Contractor’s obligation: entrepreneurship contract and strict liability
•
Entrepreneurship contract: under Napoleonic Civil law, construction and civil works
contracts qualify as “contrat d’entreprise”.
- Under contrat d’entreprise, the obligation of the Contractor is to reach results: i.e.
work completed in accordance with scope and conditions: very few excuses:
force majeure, employer default, third party interference.
- In case of failure to reach the result, the employer can repudiate the contract and
has no obligation to pay.
•
Strict liability: the Contractor in jointly and severally liable with architects, engineers and
other professionals having participated to the process for ten years after completion.
Liability is for any damage which affects the strength of the building or the works, or of one
of their constituent part and render them unfit for the intended purpose. It cannot be
contracted out, but is always insured under a mandatory insurance scheme.
© 2014 - Frilet Société d'Avocats
01/09/2014
15
Some key Napoleonic Civil Law consideration
impacting on contract implementation.(4)
IV- Industry organization
•
•
•
•
•
The combination of three major concepts: contrat d’entreprise; duty to advise and
decennial liability in existence for over two centuries, have led to an integrated
organization of the Contractors.
French Contractors consider essential to prevent legal and statutory risks to have
sufficient in-house engineering and technical skills to comply with their duty to advise, to
achieve results and to meet the strict liability requirements.
This triggers a natural trend of Employers and Engineer to leave a large freedom to the
Contractor to organize itself for developing the work methodology and progress,
When an Employer or Engineer becomes too prescriptive without obvious justifications
and when the Contractor disagrees, the case law often rules in favor of the Contractor
(“immixtion remedy”).
In a nutshell; the respective role of engineer and Contractors are in a day-to-day practice
on site substantially different from the common law situation.
© 2014 - Frilet Société d'Avocats
01/09/2014
16
Some key Napoleonic Civil Law consideration
impacting on contract implementation.(5)
V- Impact of public contract law
•
•
•
•
•
•
Napoleonic civil law country, distinguish between 1) private law, which includes contract law
which is codified; and 2) administrative law which includes public contract law which is not
codified.
Two different set of courts have a distinctive jurisdiction up to the highest level.
For private contract law: the supreme court is the Cour de cassation. For public contract law, the
supreme court is an another supreme court: : le Conseil d’Etat.
All contracts entered into between a public employer and a Contractor are governed by private
contract law as refined or superseded as the case may be by public contract law.
Rationale for having a distinctive set of public contract law: contracts entered into between a
Contractor and a public authority are not concluded for the exclusive interest of each party, but
also for general interest and for the benefit of the public at large.
Consequences: general interest overrides private interest and justifies, in some situations, legal
rights and obligations not available in private contract: “droits exorbitants du droit commun”,
© 2014 - Frilet Société d'Avocats
01/09/2014
17
Some key Napoleonic Civil Law consideration
impacting on contract implementation.(6)
VI - Example of public contract law provisions:
I- Special rights of the Public Employer
•
Unilateral right to terminate:
- Termination at any time: such termination is possible when justified by a legitimate
public interest, which may include financial reasons, notwithstanding any clause to
the contrary.
- Termination for default: the right of termination in case of gross default is available
notwithstanding any clause to the contrary. When events of termination are listed in
a contract, a judge will only confirm the termination if he considers that a gross
default is characterized.
•
Unilateral right to amend a contract (concept broadly similar to European case law):
- Those rights may be limited by contract. This is the case in World Bank civil law
standard conditions, when the proposed amendment is beyond a certain threshold.
© 2014 - Frilet Société d'Avocats
01/09/2014
18
Some key Napoleonic Civil Law consideration
impacting on contract implementation.(7)
VII- Exemple of public contract law provisions:
•
II-Special Rights of the Contractor
Unforeseen ground conditions
This right of public order nature benefit to the Contractor in case of material impediments during
the performance of the works of exceptional nature, unforeseeable at the conclusion of the
contract and deriving from a cause external to the parties.
•
Right to be compensated for a performance of works of absolute necessity.
When some additional works are imperative in order to complete the works described in the
contract, the Contractor may carry out such work, even in the absence of notification to proceed.
•
Hardship
In case of occurrence or a major change of economic circumstances unforeseeable at the time of
the conclusion of the contract the contract has a right to indemnification based on the rebus sic
stantibus principle (hardship). Hardship only applies above a certain threshold in certain situations.
•
Right of indemnification: quantum of damages
The principle is a right to full indemnification including loss of profits (damnum emergens, and
lucrom cessens),
© 2014 - Frilet Société d'Avocats
01/09/2014
19
•
•
•
•
•
•
Public contract law: the decisive role of the
French Conseil d’Etat.
Public contract law is the product of a case law developed by administrative courts and by
the Conseil d’Etat.
Conseil d’Etat is a most prestigious institution, created by Napoleon for advising the State
and public authorities and making final decision on administrative cases.
As a custodian of general interest, he has the authority and duty to safeguard both the
private and public interest in public contracts. He has the authority to rule in equity.
The equitable public contract law developed by the Conseil d’Etat is a result of a well
organized institutional set up including the conditions of instructing the cases, the
guarantee of continuity and development of public contract law.
For industry and legal practitioners, public contract law key principles and their
developments are relatively easy to know and widely acceptable. The Conseil d’Etat itself
plays an important role in careful and synthetic drafting of major decisions, their
interpretation, their publication, and authoritative comments: one leading and semiofficial source of information and of interpretation of the case law for many decades: the
AJDA journal.
In practice, several leading cases have more or less the status of a legal or regulatory
provision.
© 2014 - Frilet Société d'Avocats
01/09/2014
20
Conclusion: legal reasoning for implementing
contract conditions for civil works in
Napoleonic Civil Code practice.
•
•
•
Legal reasoning is based on a “top-down” approach.
This contrasts with Common Law essentially based on a “bottom-up” approach.
Example of traditional steps for preventing or resolving a dispute.
- First step: Dig into the contract environment, and of course the factual situation.
- Second step: identify a governing concept or a family of concepts, categories or
principles deriving either from civil law of contract (or equitable public law of
contract as the case may be) for identifying the boundaries of the dispute.
- Third step: identify related usages and common practices.
- Fourth step: review appropriate scholars opinions and French Conseil d’Etat
advices to State and public authorities and of course, case law in an appropriate
order.
© 2014 - Frilet Société d'Avocats
01/09/2014
21