October 2016 – Construction Law

QATAR COURT OF CASSATION CONFIRMS CONDITIONS FOR THE ENFORCEMENT OF ICC AWARDS IN QATAR

Oct 17 2016

By Matthew Walker and Leanie van de Merwe, K&L Gates, Doha

In Appeal No. 173/2016, the Qatar Court of Cassation considered an appeal against the Court of Appeal’s decision dismissing an application for the enforcement of an International Chamber of Commerce (ICC) award.

SPEEDREAD

The Qatari Court of Cassation has clarified the position on enforcement of foreign arbitral awards in Qatar, by confirming that none of the domestic requirements relating to certification and authentication of foreign official documents apply to international awards, thanks to the New York Convention.

This judgment is a significant step in the right direction for arbitration in Qatar, especially where it concerns the hotly debated topic of enforcement of foreign awards. Qatar, which has a mixed legal system (Civil Law based on overriding principles of the Shari’a), does not recognise the principle of legal precedent in the same way as a common law jurisdiction does. Judges are generally not strictly bound by the decisions made in previous cases or by superior courts. However, whilst this judgment may not be strictly binding on the lower courts in Qatar, it may be considered as highly persuasive, and is therefore not a case that the lower courts should overlook lightly.

It remains to be seen whether the French courts will uphold or dismiss the appeal in the parallel proceedings to annul the award. Until then, the Court of Cassation’s judgment stands and provides considerable clarity on the requirements for enforcement of an ICC award in Qatar. (Appeal No. 173/2016).

Third-Party Funding of Construction Disputes: An Overview of Litigation and Arbitration Finance

Oct 13 2016

By Ian Meredith, Benjamin T. Mackinnon, K&L Gates, London

Introduction

Over the last decade, financing for commercial and investor-state arbitration / litigation claims has grown into a significant industry in certain jurisdictions with hundreds of cases now being funded by specialist investment funds (known as ‘third-party funders’). The benefits of third-party funding go well beyond solely the provision of funds to claimants who may otherwise be unable to bring worthy claims, and many commercial parties now use third-party funding as a means of managing risk. The increased availability of third-party funding and the potential to negotiate tailored solutions means that it is now becoming a routine issue for consideration at the outset of disputes and often before they even exist.

Over the course of several articles, we will examine some of the specific issues relevant to determining whether third-party funding is appropriate for your dispute, how best to approach third-party funders, and some of the issues that can arise during the course of a claim being supported by a third-party funder.

This article will provide an overview of third-party funding and highlight why it is becoming increasingly relevant for in-house lawyers dealing with construction disputes. The next articles in the series will examine some of the specific issues that can arise in respect of third-party funding and how best to approach funders.

Flintco Pacific, Inc. v. TEC Mgmt. Consultants, Inc.: “Reasonable Reliance” on Subcontractor’s Bid

Oct 10 2016

By Timothy L. Pierce, Hector H. Espinosa, and Benjamin Kussman, K&L Gates, Los Angeles

In California, general contractors can “reasonably rely” on subcontractors’ bids when submitting their own bids to the owner. In Flintco Pacific, Inc. v. TEC Mgmt. Consultants, Inc., Case No. B258353 (July 19, 2016), the California Court of Appeal addressed what constitutes “reasonable” reliance, holding that it was unreasonable for a general contractor to rely on a subcontractor bid based on price alone, while ignoring other, material conditions of the offer.

In Flintco, Flintco Pacific, Inc. (“Flintco”), a general contractor, received a bid from TEC Management Consultants (“TEC”) to perform subcontract work on a community college building project. In addition to the bid price of $1,272,960, TEC’s bid included the following conditions: (1) a 35% up-front deposit; (2) the right to withdraw its bid if not accepted within 15 days; and (3) a minimum 3% price escalation, per quarter, after the 15-day acceptance period. Flintco used TEC’s bid price in compiling its own bid and was awarded the contract in July 2011. Read More

Payment Applications – Strict Approach Regarding What Constitutes a Valid Payment Application and Pay Less Notice

Oct 03 2016

By Nita Mistry, K&L Gates , London

In Jawaby Property Investment Ltd v The Interiors Group Ltd [2016] EWHC 557 (TCC), refurbishment works were carried out under a JCT Design and Build Contract, 2011 edition with amendments. The procedure followed for the first six payment applications involved the contractor (“TIG”) emailing a valuation to the employer’s (“JPIL”) agent with supporting documents specified in the contract. The agent would then assess the sum due and issue a payment certificate.

For the seventh payment application, a different approach was taken. TIG provided a valuation that it described as an “initial assessment”. This suggested that it was not firm and final. In addition, the valuation did not value the works beyond 5 January, whereas previous valuations went up to and included valuation of the works up to the due date (8 January). Nevertheless, JPIL’s agent assessed the sum due in the usual way and issued a payment certificate, this time with a negative sum. TIG requested some clarification, to which JPIL’s agent responded by attaching a record of the site visit and valuation assessment. The courts considered whether the “initial assessment” issued by TIG was a valid payment notice and whether the certificate for payment issued by JPIL was a valid pay less notice.

Archive:October 2016