1. 1 16 International Contracts. Objective: To understand the basic issues when entering into an international construction contract. Summary: 16.1 Legal Awareness. 16.2 International Contract Forms and Provisions. 16.3 Political Risks. 16.4 Obtaining Foreign Contracts.

2. 2 16.1 Legal Awareness Beware: laws relating to international contracts may be based on a fundamentally different legal philosophy. Make sure you are aware of: –all local laws (not just contract law, for example, environmental regulations, labor employment laws, etc..); –available legal remedies (from arbitration through to litigation).

3. 3 16.2 International Contract Forms and Provisions There are many forms of contract worldwide. An International Contractor may not be familiar with local forms of contract in the host country: –both parties will be at a disadvantage; –a solution is to use a commonly used international form of contract; –forms that have a wide acceptance will likely be understood by both parties, and thus lead to a quicker agreement of terms; –commonly used forms are published by FIDIC (International Federation of Consulting Engineers Association).

4. 4 When entering into a foreign contract, you are subject to political risks: –political uprisings; –strikes; –vandalism; –terrorism, or war, etc... Minimize your risk by obtaining knowledge of the risks. Check: –US Department of State; –Other contractors; –International Banks; etc.. Minimize your risk by obtaining knowledge of the risks. Check: 16.3 Political Risks

5. 5 Sources of information: –International periodicals: ENR; International Construction Week; etc..; –National Publications: Commerce Business Daily, etc..; –Competitors who may need assistance on large projects; –Organizations: International Banks; US Embassies; US and Foreign Chambers of Commerce; etc... 16.4 Obtaining Foreign Contracts

6. 6 Contacting the Controlling Entity: –Send a firm resume to the controlling entity, as an indication of commitment; –send a representative of the firm to give a presentation.

7. 7 17 Legal Considerations in International Contracts. Summary: 17.1 Financing the Project. 17.2 Choices of Law and Forum.

8. 8 17.1 Financing the Contract Sources of foreign financing. –Private capital: banks, insurance companies, etc.. –Multinational lending agencies: International Bank for Reconstruction and Development (IBRD) which only lends to government or government backed enterprises; –US Agency for International Development (AID) which offers aid to finance projects in less developed countries;

9. 9 17.2 Choices of Law and Forum Choice-of-law (or forum) clause: –stipulates which legal system (or forum) will be used to resolve any litigation; –if enter into contract with government agency, a choice of law will not usually be permissible; –without such a clause, the law that is applied is usually that of the place of the project. Calvo clauses: –the contractor waives its right to have its government intervene on any claims it may have against the contracting state. Limitation of liability clauses: –reduces contractor’s risk from claims; –must be reasonable and concurrent with standard limitations to ensure enforceability.