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The International Comparative Legal Guide to: A practical cross-border insight into construction and engineering law Published by Global Legal Group, with contributions from: Advokatbyrån Hellgren Linander AB Advokatfirmaet Thommessen AS Allen & Gledhill LLP Ashurst City Development Law Firm Clyde & Co COMAD, S.C. Deacons Duane Morris LLP FALM – Sociedade de Advogados, SP , RL Galadari Advocates & Legal Consultants Kachwaha & Partners Kyriakides Georgopoulos Law Firm Lahsen & Cía. Abogados Makarim & Taira S. Mäkitalo Rantanen & Co Ltd, Attorneys-at-Law Matheson Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados Melnitsky & Zakharov, Attorneys-at-Law Moravčević Vojnović i Partneri in cooperation with Schoenherr Nagashima Ohno & Tsunematsu Norton Rose Fulbright South Africa Inc. Osterling Abogados Rose LLP SBH Law Office Simmons & Simmons LLP Skrine Stassen LLP Rechtsanwälte und Notare TUGA|ARAT Law Offices Wintertons Legal Practitioners 4th Edition Construction & Engineering Law 2017 ICLG

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Page 1: Construction & Engineering Law 2017...6 Canada Rose LLP: Peter A.K. Vetsch & Courtney C. Kachur 37 7 Chile Lahsen & Cía. Abogados: Eduardo Lahsen Matus de la Parra & Pedro Mery Reyes

The International Comparative Legal Guide to:

A practical cross-border insight into construction and engineering law

Published by Global Legal Group, with contributions from:

Advokatbyrån Hellgren Linander ABAdvokatfirmaet Thommessen ASAllen & Gledhill LLPAshurstCity Development Law FirmClyde & CoCOMAD, S.C.DeaconsDuane Morris LLPFALM – Sociedade de Advogados, SP, RLGaladari Advocates & Legal ConsultantsKachwaha & PartnersKyriakides Georgopoulos Law FirmLahsen & Cía. AbogadosMakarim & Taira S.Mäkitalo Rantanen & Co Ltd, Attorneys-at-Law

MathesonMattos Filho, Veiga Filho, Marrey Jr e Quiroga AdvogadosMelnitsky & Zakharov, Attorneys-at-LawMoravčević Vojnović i Partneri in cooperation with SchoenherrNagashima Ohno & TsunematsuNorton Rose Fulbright South Africa Inc.Osterling AbogadosRose LLPSBH Law OfficeSimmons & Simmons LLPSkrineStassen LLP Rechtsanwälte und NotareTUGA|ARAT Law OfficesWintertons Legal Practitioners

4th Edition

Construction & Engineering Law 2017

ICLG

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Further copies of this book and others in the series can be ordered from the publisher. Please call +44 20 7367 0720

DisclaimerThis publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice.Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication.This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified professional when dealing with specific situations.

General Chapters:

The International Comparative Legal Guide to: Construction & Engineering Law 2017

Contributing EditorTim Reid, Ashurst

Sales DirectorFlorjan Osmani

Account DirectorOliver Smith

Sales Support ManagerPaul Mochalski

Sub EditorHollie Parker

Senior EditorsSuzie Levy, Rachel Williams

Chief Operating OfficerDror Levy

Group Consulting EditorAlan Falach

PublisherRory Smith

Published byGlobal Legal Group Ltd.59 Tanner StreetLondon SE1 3PL, UKTel: +44 20 7367 0720Fax: +44 20 7407 5255Email: [email protected]: www.glgroup.co.uk

GLG Cover DesignF&F Studio Design

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Printed byAshford Colour Press Ltd.July 2017

Copyright © 2017Global Legal Group Ltd.All rights reservedNo photocopying

ISBN 978-1-911367-62-8ISSN 2054-7560

Strategic Partners

Country Question and Answer Chapters: 3 Australia Clyde & Co: Kon Nakousis & Teodor Lomaca 10

4 Belarus SBH Law Office: Alexander Filipishin & Vitaly Tvardovskiy 20

5 Brazil Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados: Eduardo Damião Gonçalves & Thiago Moreira 28

6 Canada Rose LLP: Peter A.K. Vetsch & Courtney C. Kachur 37

7 Chile Lahsen & Cía. Abogados: Eduardo Lahsen Matus de la Parra & Pedro Mery Reyes 44

8 China City Development Law Firm: Cao Shan 51

9 England Ashurst: Tim Reid & Michael J. Smith 57

10 Finland Mäkitalo Rantanen & Co Ltd, Attorneys-at-Law: Aimo Halonen & Ieva Kovarskyte 69

11 Germany Stassen LLP Rechtsanwälte und Notare: Anne Schoenbrunn & Florian Diestelmann 74

12 Greece Kyriakides Georgopoulos Law Firm: Elisabeth Eleftheriades & Kimon Tsakiris 81

13 Hong Kong Deacons: Kwok Kit Cheung 89

14 India Kachwaha & Partners: Sumeet Kachwaha & Dharmendra Rautray 95

15 Indonesia Makarim & Taira S.: Heru Mardijarto & Alexandra Gerungan 102

16 Ireland Matheson: Rhona Henry & Nicola Dunleavy 109

17 Japan Nagashima Ohno & Tsunematsu: Naoki Iguchi 118

18 Malaysia Skrine: Janice Tay & Richard Khoo 124

19 Mexico COMAD, S.C.: Roberto Hernández García & Adrián Roberto Villagómez Alemán 131

20 Norway Advokatfirmaet Thommessen AS: Jacob F. Bull & Henrik Møinichen 137

21 Peru Osterling Abogados: Gabriel Loli León & Miguel Delgado Ramos 145

22 Portugal FALM – Sociedade de Advogados, SP, RL: António André Martins & Joana Maltez 151

23 Russia Melnitsky & Zakharov, Attorneys-at-Law: Semion Melnitsky & Olga Kruglova 156

24 Serbia Moravčević Vojnović i Partneri in cooperation with Schoenherr: Slaven Moravčević & Ivana Panić 166

25 Singapore Allen & Gledhill LLP: Ho Chien Mien 173

26 South Africa Norton Rose Fulbright South Africa Inc.: Emmanuel Tivana & Daniel McConnell 180

27 Sweden Advokatbyrån Hellgren Linander AB: Bo Linander & Mikael Lindberg 186

28 Turkey TUGA|ARAT Law Offices: Şeref Can Arat & Umut Tuğa 192

29 United Arab Emirates Galadari Advocates & Legal Consultants: Thanos Karvelis & Niel Coertse 200

30 USA Duane Morris LLP: Charles B. Lewis & Jeffrey L. Hamera 207

31 Zimbabwe Wintertons Legal Practitioners: Edmore Jori & Farai Chigavazira 215

1 Some Thoughts on Contractual Interpretation – Tim Reid, Ashurst 1

2 Construction Insights in Africa: A Short Comparative Guide – Richard Dyton, Simmons & Simmons LLP 4

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Chapter 19

COMAD, S.C.

Roberto Hernández García

Adrián Roberto Villagómez Alemán

Mexico

■ For the lump-sum contract in the private sector, the contract must be in written form, with a description of the work and the amount or design of the work when applicable. The contract can include clauses that parties consider appropriate for the characteristics of the work, without affecting the essence of the contract.

■ For contracts in the public sector, a public procurement process must be followed in order to formalise a public works contract. This type of contract must include all the requirements established in article 46 of the Law of Public Works and Related services (LPWRS), such as the name of the government authority, the applied public procurement procedure, the information of the bidder, the characteristics of the work to be done, and the amount and forms of payment (which are also established in the law). The bidder must know the model contract at the time of the bid.

1.3 In your jurisdiction please identify whether there is a concept of what is known as a “letter of intent”, in which an employer can give either a legally binding or non-legally binding indication of willingness either to enter into a contract later or to commit itself to meet certain costs to be incurred by the contractor whether or not a full contract is ever concluded.

The equivalent to a letter of intent in Mexico is the so-called “Preliminary/Promise Contract” provided for in the Civil Code which contemplates that parties or the party are obliged to enter into a future contract.In addition to the essential qualities of any contract, for this contract to be legally binding it must be in written form, and establish a time limit for the parties to enter into the future contract.This preliminary contract can only have as its object the future entering into a contract made in the terms and conditions agreed by the parties.

1.4 Are there any statutory or standard types of insurance which it would be commonplace or compulsory to have in place when carrying out construction work? For example, is there employer’s liability insurance for contractors in respect of death and personal injury, or is there a requirement for the contractor to have contractors’ all-risk insurance?

Yes, there is statutory insurance for the contractor with respect to its employees under the Law of Social Security (for death, personal injury or sickness of employees). In addition, depending on the object of the contract, the parties can establish in clauses of the contract, the insurances that they deem necessary in terms of the

1 Making Construction Projects

1.1 What are the standard types of construction contract in your jurisdiction? Do you have contracts which place both design and construction obligations upon contractors? If so, please describe the types of contract. Please also describe any forms of design-only contract common in your jurisdiction. Do you have any arrangement known as management contracting, with one main managing contractor and with the construction work done by a series of package contractors? (NB For ease of reference throughout the chapter, we refer to “construction contracts” as an abbreviation for construction and engineering contracts.)

Mexico has not developed its own general standard types of construction contracts (model contracts), although some specific projects have used international forms such as FIDIC (Fédération Internationale des Ingénieurs-Conseils), AIA (American Institute of Architects – USA) and ConsensusDocs (USA).On the contrary, in Mexico companies develop their own construction and engineering contracts, according to the applicable law of the place where the works are to be performed and according to the nature of the contract (public or private).Regular types of construction contracts include Lump-Sum, Unit Prices, Mixed (Lump-Sum and Unit Prices), and in recent times, due to the participation of foreign companies in the market, more Construction Management contracts (at-risk or pure) have seen the light of day. According to Mexican legislation, parties can agree on any matter that they decide as long as they do not violate public order/public interest rules.

1.2 Are there either any legally essential qualities needed to create a legally binding contract (e.g. in common law jurisdictions, offer, acceptance, consideration and intention to create legal relations), or any specific requirements which need to be included in a construction contract (e.g. provision for adjudication or any need for the contract to be evidenced in writing)?

To create a legally binding contract in Mexico, it is important to comply with all the requirements established in the general law applicable to contracts, such as: consent or willingness; licit object; capacity to contract; and the form that each contract requires according to the law. Nevertheless, there could be specific rules such as the following:

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As for private contracts, the parties are entitled to freely agree the terms of retentions and translate such agreement into a contract clause; however, in the case that the parties do not agree on the employer’s right of retention, the Civil Code contemplates the payment of liquidated damages from the contractor to the employer instead of a retention (article 2104 Civil Code).

1.7 Is it permissible/common for there to be performance bonds (provided by banks and others) to guarantee performance, and/or company guarantees provided to guarantee the performance of subsidiary companies? Are there any restrictions on the nature of such bonds and guarantees?

In Mexico, performance bonds are the most common mechanism for guaranteeing contractual obligations.Regarding public works contracts, the LPWRS establishes in its article 48 the requirement for performance bonds, which must be provided in order to sign the contract. The amount and specific conditions are established by the authority, but usually the percentage is not higher than 10 per cent of the total contract value.With respect to private contracts, the existence of performance bonds is subject to the conditions agreed by the parties.

1.8 Is it possible and/or usual for contractors to have retention of title rights in relation to goods and supplies used in the works? Is it permissible for contractors to claim that until they have been paid they retain title and the right to remove goods and materials supplied from the site?

It is not common practice to include these provisions in construction contracts. Nevertheless, article 2644 of the Civil Code mentions that when the contractors have not been paid, they can retain the work that has been constructed, but it does not mention the right to retain the title or to remove goods. The only case in which this would be possible is if the parties expressly agree and establish it as a contract clause.

2 Supervising Construction Contracts

2.1 Is it common for construction contracts to be supervised on behalf of the employer by a third party? Does any such third party (e.g. an engineer or architect) have a duty to act impartially between contractor and employer? Is that duty absolute or is it only one which exists in certain situations? If so, please identify when the architect/engineer must act impartially.

It is common for construction contracts to be supervised by a third party on behalf of the owner. Third parties are supposed to act impartially, but in practice they act on behalf of the owner. Usually the engineer or architect may provide elements for the employer to decide on the suspension of the works, but unless there is express authority of the third party (unusual), the suspension shall come directly from the employer.

2.2 Are employers entitled to provide in the contract that they will pay the contractor when they, the employer, have themselves been paid; i.e. can the employer include in the contract what is known as a “pay when paid” clause?

“Pay when paid” clauses are possible in private contracts. In

object of the contract. The most common insurances used in practice are: professional liability (design); civil liability; general liability (all-risk); automobile; equipment or machinery; environmental; construction; or work insurance.As of public work contracts, they usually oblige the contractor to provide insurance on certain matters, in order to cover contingencies during the execution of the contract. Depending on the procurement entity, there will be additional requirements according to internal laws and regulations (Comisión Federal de Electricidad (CFE), Petróleos Mexicanos (Pemex), etc.).

1.5 Are there any statutory requirements in relation to construction contracts in terms of: (a) general requirements; (b) labour (i.e. the legal status of those working on site as employees or as self-employed sub-contractors); (c) tax (payment of income tax of employees); or (d) health and safety?

Regarding public contracts:(a) General requirements: for this type of contract, the LPWRS

establishes a list of requirements that the contract must include and comply with in order to be awarded.

(b) Labour: Labour Law establishes that all companies shall comply with its terms, including sub-contractors, outsourcing companies, etc.

(c) Tax: according to the tax laws, both parties shall comply with their own obligations.

(d) Health and safety: this requirement is only for the contractor in terms of article 67 LPWRS.

Regarding private contracts: the parties can agree on the general terms and conditions for the contract, as long as such agreements do not violate the public interest rules and statutory requirements such as the following:(a) General requirements: for example, the lump-sum contract is

required to be in written form, with a description of the work and the amount or design of the work where applicable.

(b) Labour: it is important to distinguish whether the status of those working on site is as employees of the employer or employees of the self-employed contractor. For the first assumption, the employer must comply with the obligations provided for in the Federal Labour Law. In the case of self-employed contractors, the labour relationship will be between the contractor and the employees, so the contractor must be the one who complies with the obligations of the Federal Labour Law (articles 10, 13, 15 FLL).

(c) Tax: taxes will be paid under the Tax Code. Each of the parties shall comply with its own obligations.

(d) Health and safety: in terms of article 15-C of the Federal Labour Law, the employer is obliged to review that the contractor complies with the applicable measures for safety, health and environmental protection.

1.6 Is the employer legally permitted to retain part of the purchase price for the works as a retention to be released either in whole or in part when: (a) the works are substantially complete; and/or (b) any agreed defects liability is complete?

For public contracts, the LPWRS establishes in its article 46BIS the possibility for the employer to make a retention in two phases: (a) during the performance of the works (as a performance guarantee); and/or (b) that of defects liability. The conditions of these retentions are one of the essential requirements of public contracts, as provided in section X of article 46 of the same law.

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3.3 Are there terms which will/can be implied into a construction contract?

In the case of public works contracts, the LPWRS provisions are automatically applicable and even if the contractual clauses are silent or ambiguous with respect to a matter established in the LPWRS, the latter will apply.Concerning private contracts, parties may choose a specific piece of legislation to apply to the contract. Therefore, the Civil Code of the respective state, and/or the Commercial Code, shall apply.

3.4 If the contractor is delayed by two events, one the fault of the contractor and one the fault or risk of his employer, is the contractor entitled to: (a) an extension of time; or (b) the costs occasioned by that concurrent delay?

Regarding public contracts, article 46 BIS of the LPWRS mentions that if the delay is caused by the contractor, the contractual penalties will apply, as long as they do not exceed the total price of the contract. In that case, there will not be an extension of time unless the parties agree to one.If the delay is caused by the employer, the contractor is entitled to receive: (i) the costs occasioned by that concurrent delay; and (ii) an extension of the final deadline in the same proportion of the delay, in accordance with article 52 of the LPWRS.In the case that there are two events that cause the delay, the affected party can allege concurrent delay. Nevertheless, this has to be proved, notwithstanding that the law is silent on this.For private contracts, the Civil Code does not establish a hypothesis regarding the extension of time caused either by the contractor or the employer; however, in the case of the costs occasioned, article 1840 mentions that the parties can agree on a clause for liquidated damages in case one of them does not comply with its obligations which, in this case, may result in a delay.

3.5 If the contractor has allowed in his programme a period of time (known as the float) to allow for his own delays but the employer uses up that period by, for example, a variation, is the contractor subsequently entitled to an extension of time if he is then delayed after this float is used up?

There is no specific provision or case law regarding this matter, but in principle the contractor would not be entitled to an extension of time, since that float is a way to “cover” the risks, and providing an extension would mean a double benefit for the contractor.It is important to remember that the parties can agree such provisions in the contract.

3.6 Is there a limit in time beyond which the parties to a construction contract may no longer bring claims against each other? How long is that period and from what date does time start to run?

The generic period of the statute of limitations under Mexican law is 10 years. Nevertheless, this period can be modified or changed in an agreement by the parties.Additionally, article 66 of the LPWRS establishes that the employer can only make a claim within 12 months following the day of completion and acceptance of the works; the claims may be made for latent defects and for any other responsibility that the contractor may have incurred in terms of the contract.

accordance with article 1839 of the Civil Code, the parties have contractual freedom, which allows them to include whatever clauses they deem convenient, and considering “pay when paid” is not an essential requirement for the validity of the contract, it is entirely valid.

2.3 Are the parties permitted to agree in advance a fixed sum (known as liquidated damages) which will be paid by the contractor to the employer in the event of particular breaches, e.g. liquidated damages for late completion? If such arrangements are permitted, are there any restrictions on what can be agreed? E.g. does the sum to be paid have to be a genuine pre-estimate of loss, or can the contractor be bound to pay a sum which is wholly unrelated to the amount of financial loss suffered?

Liquidated damages are the most commonly used sanction for breaches of contract under Mexican law. The parties can agree in advance a certain sum to be paid in the event of particular breaches, or in the cases agreed by them. However, this kind of provision has some restrictions. In private contracts, the amount of liquidated damages cannot exceed the value of the breached obligation, and in public contracts, liquidated damages cannot exceed the amount of the performance bond.

3 Common Issues on Construction Contracts

3.1 Is the employer entitled to vary the works to be done under the contract? Is there any limit on that right?

For public contracts, article 59 of the LPWRS allows the authority to modify the scope of the work, yet there are some limits on this right: variation in the scope is the responsibility of the authority, and the determination must be supported and establish the impact on the price and payment terms; such modification cannot vary the contract term or price in more than 25 per cent, nor modify the original project substantially. If the changes exceed the mentioned percentage but do not vary the object of the contract, the parties can execute a Change Order, which will be considered part of the contract. Public lump-sum contracts cannot be modified when the total price or term are affected.Regarding private contracts, articles 2623 and 2627 of the Civil Code provide that in a lump-sum contract, the employer is entitled to vary the scope of the work. In this type of contract, it is essential that the parties agree on the terms and conditions of the Change Order, due to all the changes that may be involved (in terms of payment and time).When executing a Change Order, it is important to verify that the new terms do not conflict with contractual provisions, but also comply with applicable laws and regulations (i.e. Construction Regulations).

3.2 Can work be omitted from the contract? If it is omitted, can the employer do it himself or get a third party to do it?

In terms of article 2027 of the Civil Code, if the contractor incurs in omission to perform certain work, the employer can do it himself or hire a third party to do it at the contractor’s expense. This provision applies to both private and public contracts, since article 13 of the LPWRS establishes that the Civil Code is supplementary.

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has the right to choose between requiring the compliance with the obligations of the contract, and terminating the contract (article 1949 of the Civil Code).However, it is important that the causes for termination are expressly set out in the contract so that the parties are clear as to under which circumstances the contract can be terminated.

3.12 Is the concept of force majeure or frustration known in your jurisdiction? What remedy does this give the injured party? Is it usual/possible to argue successfully that a contract which has become uneconomic is grounds for a claim for force majeure?

Force majeure is recognised in our jurisdiction as an event that is not foreseeable where the party is unable to prevent it from happening.Given the nature of such events, it is not possible to ask for liquidated damages (article 1847 Civil Code), unless one of the parties had the opportunity to prevent the force majeure and did not act correspondingly.Under the terms of article 62 LPWRS, it is possible in public contracts to argue that the force majeure event caused the impossibility to continue with the works, bringing about the early termination of the contract.Case law states that for an event to be considered force majeure, it is not enough reason that the compliance with contract terms turns more complicated or burdensome, but that it is impossible to be accomplished.

3.13 Are parties which are not parties to the contract entitled to claim the benefit of any contract right which is made for their benefit? E.g. is the second or subsequent owner of a building able to claim against the original contracts in relation to defects in the building?

According to article 1869 of the Civil Code, the third party is entitled to claim the benefit only in cases where the parties to the contract agree to establish that the benefit will be for this third party.In public contracts, the law does not contemplate this scenario and therefore, it is not possible.

3.14 Can one party (P1) to a construction contract which owes money to the other (P2) set off against the sums due to P2 the sums P2 owes to P1? Are there any limits on the rights of set-off?

In terms of the Civil Code, in these cases it is possible for the parties to set off the debts up to the amount of the lowest one (articles 2185 and 2186 Civil Code). The limitations to this right are expressly mentioned in article 2192 of the Civil Code, some of which may be applicable if one party waives this right, and/or if the debts to set off are fiscal debts.

3.15 Do parties to construction contracts owe a duty of care to each other either in contract or under any other legal doctrine?

Parties owe a duty of care to each other considering that they are professionals, performing valid work under the law. Lack of duty of care will impact on the performance of the contract and could cause a possible breach by the person that does not comply correctly.

3.7 Who normally bears the risk of unforeseen ground conditions?

For private contracts, article 2618 of the Civil Code establishes that every risk that may occur before the completion of the work will be at the contractor’s expense, unless otherwise agreed by the parties.In the case that the contract is ambiguous, the Civil Code may be applied, since it is supplementary to the LPWRS and the latter is silent (article 13 LPWRS).Notwithstanding the aforementioned, unless otherwise stated in the construction contract, the Owner shall bear the risk of unforeseen ground conditions, and not the contractor.

3.8 Who usually bears the risk of a change in law affecting the completion of the works?

In public contracts, the party who bears the risk of a change in law is the contractor, due to his obligation to comply with the applicable law, in accordance with article 67 LPWRS.Regarding private contracts, in the case of lump-sum agreements, all the risks that may arise during construction will be borne by the contractor (article 2617 Civil Code); by interpretation of this article, it may be understood that the risk of a change in law is also included. However, it is important to negotiate risk allocation when drafting a contract.

3.9 Who usually owns the intellectual property in relation to the design and operation of the property?

The employer owns the intellectual property in public contracts in accordance with section XIII of article 46 LPWRS; all the intellectual property rights derived from the contracted services will be the property of the employer except when there is an impediment.In the case of private contracts, the Civil Code does not establish anything about this; it must be agreed by the parties, but the owner shall usually keep these rights.

3.10 Is the contractor ever entitled to suspend works?

This hypothesis is rarely seen, but the contractor may suspend the works in cases where the employer does not pay the contractor or there is extended force majeure. Also, the Civil Code recognises the concept of force majeure, which is commonly provided for in contracts.

3.11 On what grounds can a contract be terminated? Are there any grounds which automatically or usually entitle the innocent party to terminate the contract? Do those termination rights need to be set out expressly?

Under the terms of article 60 LPWRS, a public contract can be terminated on the grounds of general interest, and when it is demonstrated that continuing with the work would not benefit the State. The only scenario that the LPWRS contemplates for the contractor to terminate the contract is when force majeure has occurred, making it impossible to continue with the works (article 62).In terms of the Civil Code, which applies to private contracts and to public contracts in a supplementary manner, the innocent party

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4.2 Do you have adjudication processes in your jurisdiction? If so, please describe the general procedures.

There is no “adjudication” as understood in the United Kingdom, Australia or Malaysia. However, parties may agree to submit their disputes to a Dispute Adjudication Board (DAB) as adjudication processes have a binding effect. This is rather uncommon in Mexico, due to the lack of regulation.

4.3 Do your construction contracts commonly have arbitration clauses? If so, please explain how arbitration works in your jurisdiction.

Many construction contracts have arbitration clauses – mainly those of CFE and Pemex. Arbitration in Mexico abides by the rules of ICC, LCIA and the Commercial Code which follows the UNCITRAL (United Nations Commission on International Trade Law) Model Law.

4.4 Where the contract provides for international arbitration, do your jurisdiction’s courts recognise and enforce international arbitration awards? Please advise of any obstacles to enforcement.

Yes, the courts recognise and enforce international arbitration. Mexico is a signatory of the New York and Panama Conventions.

4.5 Where the contract provides for court proceedings in a foreign country, will the judgment of that foreign court be upheld and enforced in your jurisdiction?

There are provisions in the procedure laws for enforcement of a judgment in a foreign court. The procedure and requirements have to be met in order to enforce a foreign judgment.

4.6 Where a contract provides for court proceedings in your jurisdiction, please outline the process adopted, any rights of appeal and a general assessment of how long proceedings are likely to take to reduce: (a) a decision by the court of first jurisdiction; and (b) a decision by the final court of appeal.

In cases related to construction, this is a commercial matter. Usually such matters are solved by civil or commercial courts. There is a main procedure, an appeal and two federal instances. The entirety of the instances may take between two to four years.

AcknowledgmentThe authors would like to thank Cynthia Irene Osio Sánchez for her invaluable contribution to this chapter. Cynthia is an associate at COMAD, S.C. (Tel: +52 55 5661 3733 / Email: [email protected]).

3.16 Where the terms of a construction contract are ambiguous, are there rules which will settle how that ambiguity is interpreted?

Yes, the Federal Civil Code and the Codes of the 32 federative entities, as well as the Commercial Code, provide rules for the interpretation of a contract as follows: (i) the ambiguous term must be interpreted in accordance with the other conditions of the contract, but also applying the sense that is consistent with the object and purpose of the contract; (ii) the customary practice of the country of the party must be taken into consideration; and (iii) if it is impossible to resolve the doubt through these rules, then it will be resolved in favour of the greater reciprocity of interests (articles 1851–1857 Civil Code).

3.17 Are there any terms in a construction contract which are unenforceable?

In general, terms and conditions that are illegal and/or against a public order or public interest provisions are not enforceable. “Illegal acts” are understood as all those acts that go against laws or customary practices (articles 1830 and 1795 Civil Code).

3.18 Where the construction contract involves an element of design and/or the contract is one for design only, are the designer’s obligations absolute or are there limits on the extent of his liability? In particular, does the designer have to give an absolute guarantee in respect of his work?

The designer’s obligations are not absolute in the sense of those situations in which a construction contractor may incur a fault for construction reasons and not due to design factors.

4 Dispute Resolution

4.1 How are disputes generally resolved?

According to the public contracts law, disputes are generally resolved through claims, conciliation, arbitration and trial (articles 83–104 LPWRS), nevertheless, the most used means to solve a dispute in Mexico regarding public contracts is still going to court. Disputes in private contracts may be solved through the mechanisms agreed by the parties and established in the contract. In this case, the law establishes no limitation. In order to choose a particular method of dispute resolution, it is important to know the type of project and the most convenient resolution method.

COMAD, S.C. Mexico

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Mex

ico

Roberto Hernández GarcíaCOMAD, S.C.FEBO 29Mexico City 03940Mexico

Tel: +52 55 5661 3733 Fax: +52 55 5663 0814 Email: [email protected]: www.comad.com.mx

Adrián Roberto Villagómez AlemánCOMAD, S.C.FEBO 29Mexico City 03940Mexico

Tel: +52 55 5661 3733Fax: +52 55 5663 0814 Email: [email protected]: www.comad.com.mx

COMAD, S.C. is a prestigious boutique law firm, founded 51 years ago (1965), that specialises in: construction and infrastructure law (transactional and disputes); public procurement (transactional and disputes); and corporate integrity in construction (training and advice). It has participated in some of the most relevant infrastructure projects in Mexico and Central America. The firm and its members are recognised in international independent publications such as Chambers and Partners, Who’s Who Legal and Euromoney. It is the only law firm certified in these areas of law by the National Chamber of Consulting Enterprises (CNEC).

Roberto is an international attorney specialised in construction law, public procurement law and compliance. He has a Master’s degree in Mexican Administrative Law from the Universidad Panamericana, Mexico City. He has also attended specific courses at prestigious universities such as the University of California (Davis and Berkeley), The University of Florida, Harvard University and Cambridge University, UK. He has served as a leader in international construction groups, for example, as Co-Chair of the International Construction projects Committee of the International Bar Association (IBA), and Chair of the Infrastructure Disputes Committee of the International Chamber of Commerce (ICC) in Mexico. He is the Consulting Editor and Co-Author of the books: “Construction and Infrastructure Disputes: A global handbook”; and “International Public Procurement: A guide to best practice”, both published in the UK.

Adrián is a lawyer specialised in construction law, public procurement, corporate law and dispute resolution procedures (Dispute Boards and International Arbitration); especially in the construction field. Adrián completed the LL.M. Program (Master of Laws Degree) at the University of California, Berkeley, School of Law. He also received the Certificate of Specialization in International Law from this University. Adrián has published articles for the Berkeley Journal of International Law (International Arbitration), “Obras” Magazine (Dispute Boards), “CNEC” Magazine (Reform of the Energy Sector in Mexico), among others. Adrián has been a member of the Forum on the Construction Industry of the American Bar Association, in which he has participated as a speaker on topics related to Energy Reform in Mexico. Adrián has been active in Dispute Boards for infrastructure projects.

COMAD, S.C. Mexico

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