RIBA/UKTI “Working Internationally”

Mike Allan

Partner

Projects and Construction

INTRODUCTION

Two broad themes:– How might you set up in a foreign territory?– How might you contract with your client?

Cover those two themes under 4 headings:– Corporate set up– Joint venture– Jurisdiction and governing law– Contract terms

CORPORATE SET UP

• Local law will govern:– whether you can work in a territory– lawfully working in that country– how to set up a corporate body

• You need the advice of those with local expertise

CORPORATE SET UP

• Aim/Objectives/Concerns– form or structure depends on these higher level

issues– the mechanics follow

• No automatic conclusion that to work in a country you will need/want a company incorporated in that country.

• A business with a life of its own?• Brand?

CORPORATE SET UP

• Factors affecting determination– local laws eg. 51% local ownership, local directors – tax/finance issues as a key driver. What would work

best and what are you able to achieve?

• Particular risk factors ?– within the project or the services – liability needs to be parcelled or ring fenced

• Political realities

CORPORATE SET UP

• Corporate structure issues– Directors– Voting rights– Nature of investment/funding into the vehicle

(equity/debt)– Fees paid out eg management fee– Profits to be paid– Ownership of assets eg physical assets, rights

JOINT VENTURE

• Local law will determine:– Whether you have to joint venture – Whether you can joint venture– How you can/must structure that joint venture

• Incorporated or not?

• Status of that JV as between its partners?

• Status of that JV to third parties?

JOINT VENTURE

• JV with whom?• Obligations and Liabilities

– Integrated model: • all the work is done by the JV • liability will be pooled so costs, losses and profits

come out of the JV in shares– Non-integrated JV

• Delineated responsibility for scope • payment and liability relate to that scope

JOINT VENTURE

• JV Agreement – Contents/issues– Control and management of the JV

• decision making – by a Project Board/Project Manager– matters reserved to the partners

– Security– Expiry– Jurisdiction/Choice of law

Jurisdiction/Governing law

• Jurisdiction – which court in which country will hear any issue

arising out of the contract • Governing law

– which law will the court apply to answer the issue in question.

• What respect is there for the rule of law?• What certainty do you have that you know the effect of

the contract?

Jurisdiction/Governing law

• Importance of the clauses:– They dictate the parties rights, liabilities, costs and

time commitments should a dispute arise– They establish where and under what law any

dispute resolution will occur which establishes how to protect positions

– Picking particular jurisdictions can save time and money

– There may be more favourable regimes to apply

Jurisdiction/Governing law

• International Arbitration– Advantage in the increased certainty of knowing the

forum and the procedure that will be applied?

• Different laws come into play to determine– The governing law of the substantive contract– The governing law of the agreement to arbitrate– The procedural law governing the arbitration

Form of Contract

• What is key– Scope/quality: doing what, how well?– Time: by when?– Price: for how much?– And if it goes wrong?

• How familiar is the document?– Internationally recognised contract suite– Well recognised precedent within the territory?– Bespoke?

Form of Contract

• Certainty– accepted meanings, court precedent– laws apply to aid/restrict contract interpretation

• Contract fundamentals– What security are you giving and getting?– What are your ultimate liability positions?– Don’t gamble the company

Working hard to make it easier

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