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Construction & Engineering

CONSTRUCTION & ENGINEERING

Oman’s construction industry is rapidly growing. This growth is mainly due to huge investments in public and private construction projects driven by the Omani government. Acting for the Sultanate’s construction industry’s leading players, we advise on the full range of construction and real estate related transactions. With an integrated team of lawyers, we have the commitment, resources and know-how to get the deals done, whatever and wherever they are. Forward thinking and commercial in our approach, with a recognized ability to deliver complex deals, we handle the entire property ‘life-cycle’ from the initial acquisition, development, leasing, joint venturing and financing through to the final disposal.

We advise on various aspects relating to this sector such as:

A. APPROPRIATE USE OF STANDARD FORMS

We acknowledge that the use of industry standard forms (such as FIDIC and the Omani 1981 Contract) promotes consistency and understanding across the industry, and we advise on their appropriate use. We often propose amendments to the standard forms to protect the position of our clients.

For example, we have, on instructions from one of the Omani electricity distribution companies for which we act, drawn up amendments to the Oman 1981 standard conditions of contract intended to overcome the problem of delays, which is the single most common cause of disputes in the GCC. In doing so, we took much from current construction management learning to the effect that the arbitrary approach of taking a notional fixed target completion date, and then having the Engineer simply update the Contractor on the divergence of progress compared to the target (and hoping that the threat of liquidated damages or financial encouragement in the form of bonus for early completion) is not necessarily the only method of managing the delay problem.

As another example, we have also been involved in drafting extensive special conditions to the FIDIC 1999 Red Book contract for an Employer involved in the construction of a multi-structure tertiary education facility on a 500,000 m2 “green field” site, and for another Employer in respect of the construction of a multi-storey iconic bank headquarters. Our key strengths are:

  • An effective interface with professional third parties
  • We are used to working closely with the project designers, engineers, management and planning colleagues to ensure that construction documents reflect and fit with the requirements of other infrastructure development obligations, for example, environmental issues, planning permissions and agreements with other interested parties.

  • Flexibility
  • We recognize that, by its nature, infrastructure development work requires flexibility. We propose procurement methods, and prepare documents, which allow an appropriate level of flexibility in relation to development of the project and contracting arrangements.

  • Bankability
  • We understand that some infrastructure developments need to meet the requirements of those providing funding, whether they are end users, banks or other third party funders. In preparing all of our documents, we ensure that the arrangements and terms of the documents will be acceptable to those providing the funding to Public Entities.

  • Public bodies
  • We understand the need for entities involved in public sector projects to obtain best value in a transparent and accountable way, and to meet the objectives of all stakeholders. We understand the issues which arise when government entities interface with the private sector for the provision of engineering and construction works and services.

B. LARGE PROJECTS

Large scale projects have a wide range of other risks associated with them – risks that can arise from a number of sources – for example: exposure to contractor default, environmental constraints, regulatory compliance and availability of labour or materials. Understanding the project specific risks is key to a successful project. Early identification and management of these risks is naturally at the core of our advice on construction and engineering projects. Our construction group works as part of the client team to implement this process, working through to a risk allocation that generally imposes risk on the party best placed to bear it. In this respect, we advise manufacturers, operators, main contractors and sub-contractors and funders in connection with the procurement of new plant, infrastructure requirements, energy and other utility facilities, extensions and modifications to existing facilities, and plant and disputes arising during the course of a project. We have advised on a range of procurement structures for large scale engineering projects, including traditional procurement (re-measurement or lump sum contracts), construction management, design and build, PPP forms of procurement (such as BOO, BOT, DBFO, EPC and EPCIC agreements) and other transactions involving a range of boutique and standard form contracts.

We understand that a successful project relies on more than just appropriate documents. We regularly provide project support to developments during the construction phase, with the aim of minimizing areas of disagreement, and avoiding disputes. Our construction team is committed to providing the clients an excellent “front end” construction and engineering advisory services and support.

C. CONSTRUCTION CONTRACTS, CLAIMS AND DISPUTES

We have found that our construction law services in Oman are frequently needed when project participants are required either to present or to defend complex claims that become locked inprotracted negotiations, prior to threatened arbitration. These claims usually concern alleged entitlements to extensions of time (the single most common cause of construction disputes in the GCC), extra costs due to prolongation and/or variations and disputes concerning quality. We work closely with clients, and often also with their technical and claims consultants on such claims, advising on the legal merits of the positions being asserted, and reformulating arguments adopted by our clients in order to improve their negotiating position.

In this respect, we act for a wide variety of public and private sector clients in all major asset creation sectors of the economy and in particular the waste, transport, utilities, development and education sectors. Either as part of their core business, or due to a one-off project, our clients require intelligent management of contentious matters and disputes.

Our team has experience in the resolution of disputes arising out of major development, construction and infrastructure engineering projects in the Sultanate and abroad. Such disputes require an understanding of complicated and complex contractual structures and the inter-relationship of a variety of parties; how construction and engineering projects run on the ground, including the technical side of the job; and the types of problems that can arise during such projects. Very often complex laws and procedures apply to these disputes and our team has extensive experience of dealing with all of these matters and the types of problems that arise.

Our lawyers have significant experience in construction and engineering matters. We have regularly advised clientson various aspects of the FIDIC standard form and conducted a legal risk analysis for their various projects. Our team has also worked on the construction of one of the bank’s Headquarters in Muscat, and preparing its extensive Request for Tender under the FIDIC Red Book form for the Main Works contract.

We help all of our construction and engineering clients with the management of disputes using our unique project management capabilities. Our proactive approach ensures that our clients gain an early understanding of the strengths and relative merits of their position, together with early and accurate cost estimates. Our approach also ensures key documents are regularly updated as the dispute proceeds so that at all times the client can see the issues, the strategy, the progress and the related costs.

The description of work undertaken by SASLO for several clients under this sector broadly include the following:

  • Drafting, development and reviewing of EPC contracts;
  • Advising on the applicability of certain clauses of the EPC contract in a dispute and EPC related matters vis-à-vis Force Majeure, decennial liability matters;
  • Advising on several disputes relating to the construction projects;
  • Advising the contractor on termination of contractual obligation with a construction company;
  • Advising on the standard form of Agreement and Conditions of engagement for consultancy services for Building and Civil Engineering Works;
  • Advising on proposed Consortium / JV Agreements and subcontract standard forms;
  • Advising on permits required by EPC Contractors for the construction of a desalination plant in Oman;
  • Advising on validity of the Arbitration clause and Extension of time and provisions pertaining to design warranties;
  • Advising on matters relating to an Integrated Tourism Complex (ITC) Project in Salalah.