Construction


The EU has thus far left it primarily to the member countries to establish and apply local laws relating to the construction field, in the private and public sectors, including various laws regarding the environment, regarding contract rights and duties and regarding permits that must be obtained, as well as legal remedies for delayed performance and inadequate performance. There is, however, some important EU Secondary Legislation which needs to be taken into account, as adopted into national legislation, such as Directive 89/106/EEC (construction products), Directive 2001/95/EC (general product safety), Directive 92/57/EEC (health and safety at construction sites), Directive 89/665/EEC (procedures and remedies, public works and supply contracts), Directive 93/37/EEC (public works contracts), Directive 93/38/EEC (public procurement in water, energy, transport, telecommunications projects), Directive 98/4/EC (amending Directive 93/38/EEC), Directive 85/337/EEC (environmental impact assessments, public and private projects), Directive 91/692/EEC (standardisation of environmental reports) and Directive 92/43/EEC (conservation of flora and fauna and natural habitats).


Please see further the chart on pages 90-97 and the Chapters on "Contracts", "Environmental Law" and "Real Estate".

Despite occasional regional and national differences, most laws and procedures throughout Europe relevant to construction are very similar, including those in Norway and Switzerland. Except for certain projects, national and non-national construction enterprises stand on an equal footing. Indeed, so many of the rules in the construction field are substantially similar that a great number of construction transactions and subcontracting transactions are carried out via standard, pre-printed forms that, when compared, turn out to be very similar in purpose and in function (such as regards design responsibility, subcontracting, insurance requirements, payment and damages provisions).

Forms promulgated by F1D1C ("Federation Internationale des Ingenieurs-Conseils") are widely used in Europe in international construction matters. These are available, pre-printed, and set forth terms covering the most common construction situations including general "Conditions of Contract for Construction", "Conditions of Contract for Plant & Design-Build", "Conditions of Contract for EPC [Engineering, Procurement & Construction] Projects" and "Short Form of Contract". Most FIDIC forms are available in many languages. For example, the Hungarian "Vallalkozok elominosoitese" is the FIDIC "Standard Pre-qualification Form for Contractors", the "Epitesi munkak szerzodeses feltetelei" is the FIDIC "Conditions of Contract for Construction", the "Kulcsrakesz let. szerzodeses feltetelei" is the FIDIC "Conditions of Contract for EPC Turnkey Projects" and the "Alvallalkozoi megallapodas" is the FIDIC "Sub-Consultancy Agreement".

There are also many nationally available forms which are used in particular countries and which reflect in specific ways the laws, customs and procedures for the jurisdictions in question.

Whether the project is documented via a FIDIC form or via a national form or via a custom-made form, most projects follow the following sequence, each of which has legal significance under local law: issue of the tender documents, submission of tenders, issue of the letter of acceptance, issue of performance security, commencement date (followed by an agreed upon time for completion and payment), tests upon completion, defects notification period and remedying of defects, issue of the performance certificate and return of the performance security. There is also the possibility of disputes, which may need to be resolved by mediation, arbitration or court litigation. Please see Chapter on "Dispute Resolution".

A commonly used form in Denmark is the AB 92, the "Almindelige Betingelser for Arbejder og Leverancer i Bygge- og Anlsgsvirksomhed" ("General Conditions for Works and Supplies for Building and Civil Engineering Works"), which is a detailed general form covering the terms and conditions in construction projects and which was approved by the Danish Ministry of Public Works ("Ministeriet for offenlige arbejder") in 1992, hence its short title, AB 92. It contains clauses dealing with the overall terms of agreement ("Aftalgrundlaget"), execution of the works ("Entreprisens udf0relse"), time limits ("Tidfrister"), handing over of the works ("Aflevering") and disputes ("Tvister").

AB 92 conditions are applied to building projects as well as to specialist civil engineering construction contracts, subcontracts and contracts for electrical and plumbing installations. AB 92 was drafted with various relevant Danish laws in mind and is in conformity with the Danish Contract Law No. 781 of 26 August 1996, the Invitation to Submit Tenders Law No. 450 of 6 July 2001 (public works) and the Sale of Goods Act No. 213 of 22 April 2002. There are related forms in Denmark, such as ABR 89 (form of contract regarding technical consulting services) and ABT 93 (form of contract regarding turnkey projects).

In France, most construction contracts concluded with private sector owners are divided into two major parts: the "CCAG" or "Cahier des Clauses Administratives Generates" (general administrative provisions) and the "CCAP" or "Cahier des Clauses Administratives Particulieres") (detailed conditions). These often reflect the terms and standards published by AFNOR (the French standards board) and terms based upon form construction contracts published by the "Moniteur" publishing group. Distributed between the CCAG and the CCAP are clauses describing the purpose of the contract, financial clauses, the time period for performance, insurance, guarantees and an arbitration clause. The clauses and forms are drawn up so as to take into account relevant French laws, including theCommercial Code (Article 231), the Town Planning Code (Articles R.421, 422 and 424, "Code de 1" urbanisme"), Law No. 75-1334 of 31 December 1975 on subcontracting (as variously amended, including amendments by the Loi Murcef No. 2001-1168 of 11 December 2001)), Articles 1792-6 of the Civil Code (on performance guarantees) and Articles 1442 et seq. of the New Code of Civil Procedure (concerning arbitration of disputes, in general).

In Germany, a standard form of construction contract is the "VOB-Contract", with VOB standing for "Verdingungsordnung ftir Bauleistungen" (and comprising general conditions of contract relating to the award and execution of public works contracts). The VOB, the principal German law relating to construction matters, is subdivided into three parts, Part VOB/A being on "General Terms" (Allgemeine Bestimmungen), Part VOB/B being on "General Terms for Carrying out Construction Work" (Allgemeine Vertragsbedingungen fur die Ausfiihrung von Bauleistungen) and Part VOB/C being on "General Technical Contract Terms" (Allgemeine technische Vertragsbedingungen fiir Bauleistungen).

As in the case of the Danish and French forms, there are detailed provisions in VOB contract forms that are designed to comply with German local laws, including the Civil Code (Burgerliches Gesetzbuch) but principally the provisions of the VOB, such as VOB § 1 (Art und Umfang der Leistung = nature and scope of performance), VOB §§ 3-4 (Ausfiihrungsunterlagen und Ausfiihrung = performance documents and performance). VOB § 10 (Haftung der Vertragsparteien = liability of the contracting parties), VOB § 17 (Sicherheitsleistungen = security), VOB § 16 (Zahlung = payment) and VOB § 18 (Streitigkeiten = disputes). In Germany, as in other European countries, there are also specialised forms of contracts in the construction business, of which mention may be made of the ARGE-Vertrag ("Arbeitsgemeinschafts-Vertrag" = special form for associated building contractors) and the HOAl-Vertrag ("Honorare fiir Leistungen der Architekten und der Ingenieure" = contracts based upon the provisions covering architects and engineers' fees).

In Ireland, a standard form of contract is the "Royal Institute of the Architects of Ireland Agreement and Schedule of Building Contract" and

in Italy a standard form for private works is the "Capitolato Speciale di Appalto per Lavori Privati" (Special Conditions of Contract for Private Building Works). In Spain a standard form is the "Contrato Privado de Ejecucion de Obra con Suministro" (Contract for Carrying out Private Building Works with Supply of Materials and Service).

In the Netherlands, a commonly used form is the so-called UAV ("Uniforme Administratieve Voorwaarden voor de Uitvoering van Werken" = Uniform Administrative Conditions for the Execution of Works), as issued by the Stichting Instituut voor Bouwrecht (Netherlands Institute for Construction Law). The various provisions include "Algemeen" (general provisions), "Aanvang, uitvoeringsduur oplevering" (commencement of work, time for execution, completion and acceptance), "Bouwstoffen" (materials), "Meer en minder werk" (changes and omissions), "Zekerheidstelling, verzekering" (security, insurance) and "Beslechting van geschillen" (dispute resolution).

There are several forms available in the UK, whose names clearly describe their different functions and coverages: "JCT (= Joint Contracts Tribunal) Standard Form of Building Contract Private with Quantities", "JCT Fixed Fee Form of Prime Cost Contract", "JCT Standard Form of Building Contract with Contractor's Design", "General Conditions of Government Contracts for Building and Civil and Engineering Works", "JCT Management Contract" and "JCT Agreement for Minor Building Works". There are also various forms available through the ICE (Institution of Civil Engineers).

All the foregoing forms reflect the same underlying principles, they take local differences into account (which usually are quite small ones) and overall they are substantially similar.

Occasionally there may be some local differences, such as to the length of statutory warranties (for structures, for fixtures) and there may even be some relatively isolated rules (or practices) such as the situation in France whereby an indexation clause in a construction contract may not be linked to a consumer price index or other index having no specific or direct connection with the construction industry.


Moreover, as shown by the chart below, although local terminology differs from country to country, it almost always describes the same general processes, throughout the construction industry, in all of Europe.



Other national standards organisations which are members of CEN (Comite Europeen de Normalisation = Europaisches Komitee fur Normung = European Committee for Standardisation): Austria (ON = Osterreichisches Normungsinstitut); Belgium (IBN/BIN = Institut Beige de Normalisation/Belgisch Instituut voor Normalisatie); Czech Republic (CSNI = Cesky normalizacnf institut); Denmark (DS = Dansk Standard); Finland (SFS = Suomen Standardisoimisliitto); Latvia (LVS = Latvijas Standarts); Netherlands (NNI = Nederlands Normalisatie-Instituut); Norway (NSF = Norges Standardiseringd-Forbund); Portugal (IPQ = Institute Portugues da Qualidade); Slovenia (SIST = Slovenski institut za standardizacijo); Spain (AENOR = Asociacion Espanola de Normalization y Certification); Sweden (SIS = Swedish Standards Institute); Switzerland (SNV = Schweizerische Normen-Vereinigung).


National laws and procedures may be set forth in various ways but when taken as a whole amount to a very similar regime, from jurisdiction to jurisdiction. For example, in France, in addition to the relevant legislation mentioned above, there are: the French Construction Code ("Code de la construction et de l'habitation") as well as Articles 552 et seq. of the Civil Code and Civil Code Article 1799-1 (relating to payment guarantees), Law No. 71-584 of 16 July 1971 (relating to private works), the Public Works Code ("Code des marches publics"), Law No. 85-704 of 12 July 1985 (public and private works), Decree No. 2001-210 of 7 March 2001, Decree 2001-797 of 3 September 2001 and Decrees 2002-231 and 2002-232 of 21 February 2002 (all relating to public works contracts).

Local laws substantially similar to those cited above for France, for example, can be found in the laws of all European countries, sometimes

codified together (as in the German VOB) and sometimes scattered among other legislation. Moreover, all the New EU Accession Countries have been involved in bringing their construction laws into harmony with EU norms. For example, effective 1 March 2003, Latvia enacted Government Regulation No. 92 on "Darba aizsardztbas prasibas, veicot buvdarbus" (= requirements concerning safety of construction works), specifically implementing the requirements of Directive 92/57/EEC regarding the requirement of work safety during construction works. Similar laws have been in effect for some years in Norway (since 1995, "Byggherreforskriften: Sikkerhet, helse og arbeidsmilj0 pa bygge-og anleggsplasser" = Regulations for builders: Safety, health and the working environment on building sites and in construction workplaces) and in Switzerland (Swiss Code of Obligations, Article 328).




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