A current Supreme Court judgment affects the way termination terms in JCT contracts are understood, and changes the allocation of risk for contractors and clients on building projects that cross national boundaries. Statistics in the industry show that roughly a quarter of international projects have termination problems. Investors, and project funders operating in Kenya, Britain, and the EU are discovering that wording which once appeared reasonable is now causing unexpected duties to pay, arguments over how long notices need to be, and arguments where rules about local buying differ from contract models based on English law.
It isn’t sufficient to simply use typical contracts anymore. Many projects which are international do not take into account local reasons for ending a contract such as legal limits on being unable to pay debts, rules about licences, or rules for approval by the public sector in public-private partnership schemes. A proper review of conditions, covering agreement on which law applies, how force majeure affects things, and rights to step in – is increasingly important to lower the chances of problems in both new and bought projects.
O’Bang Law’s construction and projects groups, helped by the network of ALFA International in more than sixty nations, often do tests on JCT conditions before signing, and during, projects for international funders. Their work is about making the language of termination fit with rules on Kenyan buying, EU rules, and what lenders want as security. Changing lengths of notice and how compensation is worked out early on has helped clients reduce the risks of arguments, and keep costs of difficult infrastructure agreements under control.