Asia-Pacific projects in focus on second day of regional contract users’ conference

30 May 2024

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Day two of the 2024 Official FIDIC Contract Users’ regional conference for Asia-Pacific region took place online on 30 May 2024. Day two began with an opening address from FIDIC board member and managing director of Intercontinental Consultants & Technocrats (ICT) Prashant Kapila, who thanked the sponsors, strategic partner Fenwick Elliott, the UK’s largest law firm specialising in construction and energy law, gold sponsor law firm CMS, silver sponsor law firm White & Case and bronze sponsor, the law firm Charles Russell Speechlys.

Addressing the 140+ attendees at the event, Kapila said: “Your interactions and discussions at this conference are so important in ensuring that FIDIC contracts remain relevant in what we all know is a changing and challenging marketplace and industry that we are all currently working in. A key strength of FIDIC contracts is that they are responsive to users’ demands and that they keep up to date with the latest industry and business developments and conferences like this enable us to do just that.”

Kapila also highlighted the key role of FIDIC’s hard-working contracts committee members, who had played a key role in putting together the conference programme and he also thanked those on the conference content group who have been involved in the programme and content creation. He then introduced the first main session of the day, Project Highlights in Asia Pacific, which showcased the application of FIDIC contracts in various public and private projects across the Asia Pacific region.

The session moderator, Jafar Khan, FIDIC contracts committee member and assistant group general counsel at Mott MacDonald, introduced the speakers Shaikh Khalilur Rahman, project director (joint secretary to government of Bangladesh) at Dhaka Mass Transit Company, Dhirendra Mehrotra, general manager at the National Capital Region Transport Corporation in India and Leighton O’Brien, a partner with international law firm, Allens.

Delhi-Meerut regional rapid transport system (RRTS)

Speaking first, Dhirendra Mehrotra, general manager at the National Capital Region Transport Corporation in India, spoke about the implementation of Delhi-Meerut regional rapid transport system (RRTS) and the adoption and impactful application of FIDIC Conditions of Contract by the corporation. Mehrotra said that the RRTS was a complex project, the first of its kind in India with design speed of 180 kmph and with design parameters different from metro systems.
This network-of-networks of public transport will significantly reduce air pollution and decongest Delhi, leading to decentralisation of economic activity and generation of large number of jobs. “The RRTS is a transformational regional development initiative similar to regional rails developed in mega-cities like Paris, London, Madrid and Seoul,” he said.

Mehrotra also highlighted the key role of the National Capital Region Transport Corporation(NCRTC). He said that the National Capital Region of India was a multi-state region with National Capital Territory of Delhi as its centre. For the successful and timely implementation of RRTS, a joint venture company (NCRTC) was created consisting of the central government of India and four participating states such as Uttar Pradesh, Haryana, Rajasthan and NCT of Delhi. NCRTC is mandated for designing, developing, implementing, financing, operating, and maintaining of RRTS projects in the NCR to provide comfortable and fast transit to NCR towns and meet the high growth in transport demand.

He also spoke about the use of FIDIC contracts and the procurement process on the project. A taskforce consisting of officials from procurement, finance, planning and various technical verticals was formed for adopting the procurement strategy. After several rounds of brainstorming, a procurement plan was chalked out deciding the whole Delhi-Meerut RRTS project into smaller packages for bidding and execution. Where international bidders were expected to participate, such packages were kept under ADB funding to adopt the FIDIC general conditions of contract, said Mehrotra.

Dhaka MRT (Line-5): Southern Route in Bangladesh

The next speaker, Shaikh Khalilur Rahman, project director (joint secretary to government of Bangladesh) at Dhaka Mass Transit Company, spoke about his project, the Dhaka MRT (Line-5): Southern Route. The objectives of the project were to reduce traffic congestion in Dhaka city, improve the environment ini the city, to provide a modern and safe mass rapid transit system for residents, to reduce travel time and contribute in increasing the GDP growth rate, to establish an east-west connection and develop an interchange among the mass transit corridors.

Rahman outlined the details of the nine procurement packages being used on the project, gave details of the work being tendered and described a number of the challenges being encountered on the project and also more generally those issues encountered around contract execution in Bangladesh.

The final speaker, Leighton O’Brien, a partner with international law firm, Allens, spoke about the Snowy2.0 pumped hydro project in the Kosciuszko National Park in New South Wales, Australia. The $12bn government-funded project comprises 27 km of power waterway tunnels and a power station complex located 800 metres underground. The project is being delivered under an EPC contract, which is a modified version of the FIDIC Silver 2017 2nd Edition Book. The project will provide 2,200 MW of generating capacity and 350,000 MW hours of storage duration.

O’Brien described the EPC contract structure which included civil works, electrical and mechanical works. The amended FIDIC Silver Book was adopted as it was a recognised international standard (particularly in Europe, Africa, Middle East and Asia) and provides a risk allocation largely consistent with the Australian market. He also talked about some of the changes that had taken place in the market, which post-Covid had included demand exceeding supply, the effects of the pandemic and also the war in Ukraine, hyper escalation, subsurface risk profile moving (contamination, utilities, geotech) and price risk profile moving.

He also highlighted the geotechnical baseline report (GBR), which records subsurface conditions and behaviours anticipated to be encountered in subsurface construction. O’Brien said that this allocates risk for anticipated excavation complications, defines parameters of the physical characteristics of the ground and groundwater conditions in quantitative terms, with the overlying objective being to produce clarity and fairness for bidding and contract performance.

The next session, Dispute Avoidance – increasing demand of dispute boards and a look at common areas of dispute, was chaired by the FIDIC Contracts Committee member Kiri Parr and included a panel of FIDIC general counsel Daduna Kokhreidze, Sarwono Hardjomuljadi, president of the Society of Construction Law, Indonesia, Fan Yang, in-house counsel at the China Harbour Engineering Company Limited, Jeremie Witt, partner at CMS and Chow Kok Fong, founder of Equitas Chambers.

FIDIC general counsel Daduna Kokhreidze spoke about the use of the dispute avoidance and adjudication board under the FIDIC contracts, the work of FIDIC’s Dispute Avoidance and Adjudication Forum and the recent publication of a FIDIC Practice Note on Dispute Avoidance. “The benefits of dispute avoidance are that it clears up differences at an early stage, before positions crystalise, therefore avoiding disputes from piling up,” she said. Kokhreidze also highlighted some of the obstacles to the adoption of dispute boards, chief amongst which were the parties’ lack of knowledge and familiarity with dispute avoidance and its benefits and the resulting perception that the dispute board constitutes an unnecessary cost.

The next speaker Sarwono Hardjomuljadi, president of the Society of Construction Law, Indonesia, highlighted the success story of using a dispute avoidance and adjudication board on the Patimban Harbour Project in Indonesia. He outlined the needs of the parties, which were for the employer to achieve more “legal certainty” and for the contractor, preserving and maintaining “good relationships”.

Fan Yang, in-house counsel at the China Harbour Engineering Company Limited, talked about some of the lessons that could be learned from the use of the FIDIC dispute avoidance process and also how things were handled in the Hong Kong market. She said that both FIDIC and the Hong Kong regimes had their pluses and minuses, but both could learn from each other.

The next speaker, Chow Kok Fong, founder of Equitas Chambers, outlined the use of statutory adjudication in the Singapore market. He detailed the volume of adjudications and also discussed some of the lessons learned. “In 96% of the cases started during the course of a project, parties can live with the result. Except where disputes escalate to an unmanageable mess, the parties have little interest in being proven ‘right’; the primary commercial goal is project delivery,” he said. Fong said that there were different time frames for different kind of decisions. Decisions with operational consequences – i.e. the critical path – should be determined expediently, while there should be a slightly longer time span for decisions which concern only financial consequences and this may be calibrated with reference to the payment period. Overall, reputation, integrity and expertise of the adjudicator are crucial to generate confidence in the process, he said.

Final speaker in the session, Jeremie Witt, partner at CMS, talked about some of the recent trends in dispute boards and other forms of dispute resolution. He highlighted some of the regional differences between Australia vs Asia vs Middle East and those around standing boards versus ad-hoc boards. Regarding the parties’ approach, he had witnessed more active engagement with the dispute board process as opposed to treating it as a step on the path to arbitration. Witt then went on to detail some of the success stories and benefits that he and his colleagues had seen recently from the use of dispute boards.

Summing up the conference, FIDIC vice president James Mwangi thanked all attendees and the event sponsors - strategic partner, law firm Fenwick Elliott, gold sponsor, law firm CMS, silver sponsor White & Case and bronze sponsors, law firm Charles Russell Speechlys. He also thanked the FIDIC staff behind the scenes “for their efforts in keeping the event running smoothly and for organising such an excellent event”.

He also mentioned forthcoming FIDIC events including the Official FIDIC International Contracts Users’ Conference to be held in London from 3-4 December, the ICC-FIDIC Conference on International Construction Contracts and Dispute Resolution in Seoul, Korea in October and FIDIC’s flagship Global Infrastructure Conference in Geneva from 9-10 September.

Day two of the conference concluded with two discussion tables, one dealing with the key issue of international arbitration, led by Husni Madi from the FIDIC contracts committee and the other looking at the use of FIDIC contracts in the Asia-Pacific region and the FIDIC Golden Principles, led by Nina Tsaturova, head of legal and director of Intelligent Solutions. The discussion on international arbitration, with panellists David Liatowitsch of Burckhardt, David Robertson from White & Case, Yee Leong Chong from Allen & Gledhill LLP and Swee Im Tan of 39 Essex Chambers, took a deep dive into the subject, examining the different approaches taken and experiences from a number of markets.

 

The Golden Principles discussion table with panellists Gagan Anand of Legacy Law Offices LLP, Jeremy Glover from Fenwick Elliott and Navdeep Mahajan from MG Contractors, outlined the key aspects of what makes a FIDIC contract a FIDIC contract and gave an overview of the key elements of the contracts that should be adhered to. Both tables saw very lively and interesting discussions with many questions raised from conference attendees.

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