1. Ethics in Construction Law: Responses from eight member countries
EUROPEAN SOCIETY OF CONSTRUCTION LAW CONFERENCE, STOCKHOLM 25 AUGUST 2006
Anthony Lavers LL.B Hons. M.Phil Ph.D MRICS MCI.Arb. Barrister White & Case, London Visiting Professor of Law, Oxford Brookes University Chairman, UK Society of Construction Law

2. Statement of ethical principles: UK SCL Ethics Group
Ethical conduct is the compliance with the following ethical principles:
Honesty - act with honesty and avoid conduct likely to result, directly or indirectly, in the deception of others.
Fairness - do not seek to obtain a benefit which arises directly or indirectly from the unfair treatment of other people.
Fair reward - avoid acts which are likely to result in another party being deprived of a fair reward for their work.
Reliability - maintain up to date skills and provide services only within your area of competence.
Integrity - have regard for the interests of the public, particularly people who will make use of or obtain an interest in the project in the future.
Objectivity - identify any potential conflicts of interest and disclose the conflict to any person who would be adversely affected by it.
Accountability - provide information and warning of matters within your knowledge which are of potential detriment to others who may be adversely affected by them. Warning must be given in sufficient time to allow the taking of effective action to avoid detriment.
These principles apply to the work of all professionals working in the construction industry, whatever their original qualification or affiliation.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

3. Ethics in Construction Law: Responses fro eight member countries
ESCL questionnaire
Retentions
Tender evaluation
Consultant switches from employer to contractor
Fairness in contract administration
Contractor’s duty to warn of design defects
Termination or variation of contract for employer’s convenience
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

4. Ethics in Construction Law: Responses fro eight member countries
Responses received
Austria
England & Wales
France
Germany
Greece
Netherlands
Sweden
Switzerland
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

5. Ethics in Construction Law: Responses fro eight member countries
Retentions
Would contractual provision for retention be acceptable?
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

6. Ethics in Construction Law: Responses fro eight member countries
Retentions
Austria
Yes, “The Austrian standard contract provides” (Deckungsrücklass und Haftrücklass) for retentions.
England and Wales
Yes, “in the UK a retention fund remains a legitimate and largely acceptable contract mechanism” “The current controversy over the system of retention funds has arisen not because of the concept per se, but because of its perceived abuse particularly in delaying the release of the retention monies”.
France
Yes, “in a construction contract a provision can allow the client to withhold a sum at most 5% of the certified amounts”. “However, the contractor can bring a guarantee … from a financial institution” which the client must accept.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

7. Ethics in Construction Law: Responses fro eight member countries
Retentions
Germany
Yes, “An agreement of what is called a security retention is quite customary in German construction contract law. Usually a retention of about 5 to 10% of the contract sum is agreed by the parties”.
Greece
Yes, “Greek legislation on public works provides that a 5% mandatory retention is imposed on every payment certificate”. This also “comprises also usual practice in private construction”.
Netherlands
Yes, “A contractual provision to the effect that 5% of any certified amounts is withheld until the completion of the work is a generally accepted method of guarantee in the Netherlands”.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

8. Ethics in Construction Law: Responses fro eight member countries
Retentions
Sweden
Yes, “according to General Conditions (such as AB 92, ABT 94, AB04) such provisions are acceptable”.
Switzerland
Yes, “In Switzerland, this type of contractual provision is an element of the well-established and widely used standard form contract (the SIA /91) where it is referred to as ‘Rückbehalt’ (retention)” “The retention amounts to 10% of the service value at the end of the accounting period … If the service value, however, exceeds CHF 300,000, the retention amounts to 5% of the value”.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

9. Ethics in Construction Law: Responses fro eight member countries
Tender evaluation
Can the client normally take account of the contractor’s attitude and record on previous projects?
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

10. Ethics in Construction Law: Responses fro eight member countries
Tender evaluation
Austria
Yes, under Austria’s Procurement Act (Vergabegesetz) the quality of the contractor’s reliability (Zuverlässigkeit) is a valid criterion:
England and Wales
Yes, “in my experience UK Government agencies and other public sector bodies are already taking previous experiences with contractors into account”.
France
No, “The protagonists are protected by the principle of equality. Rules can’t disadvantage some of them”.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

11. Ethics in Construction Law: Responses fro eight member countries
Tender evaluation
Germany
Yes, “Under the German law of procurement the reliability of the tenderer is a tender criterion”.
Greece
No, “no Evaluation Committee may take account of criteria or factors not listed in the tender documents”.
Netherlands
No. Even under the previous Aanbestedingsreglement, arbitrators would not allow public authorities to rule against contractors unless explicit selection criteria were used. The EC-influenced 2005 Procurement Regulations regarded the previous regime as too subjective.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

12. Ethics in Construction Law: Responses fro eight member countries
Tender evaluation
Sweden
Yes, “According to the Swedish Procurement Act and Procurement Case Law the outcome of a lawsuit against a Tender Evaluation Team on the same legal grounds as in Pratt Contractors v Transit New Zealand would probably end in the same way”.
Switzerland
Yes, “Based on my reading of the recent jurisprudence of the Federal Administrative Court, I would think that it would be considered admissible to take into account experiences made with a tenderer in the course of a previous contract”.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

13. Consultant switches from employer to contractor
Austria
No, it would not be possible to change the position.
England and Wales
Yes, “some projects are specifically designed with this in mind”.
France
Yes but only in the private sector: “if the contractors, the developer and the (architect’s) company, are … in agreement, they can conclude this kind of contract”. In the public sector, the rules of competition imposed by the Code des Marchés Publics would not allow such an arrangement.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

14. Consultant switches from employer to contractor
Germany
Yes “if an architect simply administers the project and thereby succeeds in avoiding any conflicts of interest”.
Greece
Yes in the private sector, although this is rare “there are no specific limits to his (the designer’s) relationship to the contractor or the developer imposed by the national law”.
In the public sector, although in Greek law “there is no specific legal provision that explicitly restricts the initial designer of a project from participation in a consortium with a contractor” nevertheless it may contravene the EU-influenced public procurement principles of fair and genuine competition, equal treatment, proportionality and transparency.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

15. Consultant switches from employer to contractor
Netherlands
No “The architect/engineer should not accept this change of role, because here could easily come into being a conflict of interest.”
Sweden
Yes “The situation is rather common in design and build contracts.” “In Sweden there are no laws or regulations hindering the architect/engineer” in acting for the developer and then the contractor.
Switzerland
Yes “I do not believe that there would be any arguments based on professional ethics in this type of dispute.”
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

16. Fairness in contract administration
Can the client appoint a junior employee of his as contract administrator of a traditional construction contract?
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

17. Fairness in contract administration
Austria
Yes. “In Austria, we do not know the typical position of an Engineer (as under FIDIC) as a more or less neutral actor”.
England and Wales
No. “It creates an impossible situation where the presumption and the reality is that the Engineer is subject to ‘client interference’.”
France
No “the situation described couldn’t exist in France”.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

18. Fairness in contract administration
Germany
Yes “The architect cannot and will never take on the role of an intermediary or of a wholly independent person. If a completely neutral intermediary is to be brought in, this requires the consent of both parties. This role, however, is traditionally not the architect’s under German law”.
Greece
Yes. The client appoints the ‘supervising engineers’ who will undertake monitoring, “the supervision of the work is the responsibility of the contracting authority”.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

19. Fairness in contract administration
Netherlands
Yes “These functionaries are under Dutch law considered to be representatives of the owner. So the duty of ‘fairness’ as between employer and contractor does not apply beyond the requirements of ‘good faith’.
Sweden
No “the client/purchaser preferably shall employ a neutral senior manager as Engineer/Architect/Project Manager. If not … it may be a breach of contract”.
Switzerland
No response.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

20. Contractor’s duty to warn
Is the contractor obliged to warn of design defects?
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

21. Contractor’s duty to warn
England and Wales
Yes “To continue building to a defective design when there is physical danger would be illegal as well as ethically reprehensible”.
France
Yes. The contractor has “to make the client aware of defects in design work”.
Germany
Yes. “According to German construction contract law, the contractor is also subject to an extensive obligation to object and notify”.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

22. Contractor’s duty to warn
Greece
Yes “Greek law does not contain an explicit provision with regard to the contractor’s obligation to notify the client of defects in design work. Nevertheless such an obligation has been construed to derive from articles 691 and 699 of the Greek Civil Code and is deemed to constitute a secondary (ancillary) obligation of the contractor”.
Netherlands
Yes. “The contractor has a duty to warn for shortcomings in things prescribed or made available by the employer, but the roles can be reversed if the level of expertise and knowledge and involvement of the employer are sufficiently high”.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

23. Contractor’s duty to warn
Sweden
Yes. Under the Standard form AB the parties are obliged to “keep each other informed regarding circumstances which may be considered of significance to the Works”. However, note that this only applies “when the contractor discovers (the defect) and there is no obligation to discover and notify”.
Switzerland
Yes “the contractor has an obligation to advise the owner as to defects in the design” to the extent that he discovers them”.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

24. Termination or variation for employer’s convenience
Does the client normally have unlimited powers to terminate or vary the contract without good reason?
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

25. Termination or variation for employer’s convenience
Austria
Yes but if the client terminates the contract without reason, the contractor would have the right of compensation for losses.
England and Wales
No although it would be possible for a contract to give such powers if it was genuinely agreed. In practice, no contractor would agree to such provisions.
France
No Article 1134 of the French Civil Code provides that agreements ‘can only be revoked by mutual assent or for causes which the law authorises’. Contractual freedom has never been absolute under French law.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

26. Termination or variation for employer’s convenience
Germany
Yes “Basically, the employer is always entitled unilaterally to terminate a building contract … However, if the termination is not justified on substantial grounds, which are the responsibility of the contractor, then the employer alone will bear the financial consequences of the termination with notice.
Greece
No. Although Article 700 of the Greek Civil Code authorises the employer to terminate a contract for work at any time up to its completion, which can extend to cases where the contractor is not at fault, “the client may not exercise his aforementioned right abusively and in a manner contrary to the principles of good faith”. Compensation would be payable to the contractor if such a right is exercised.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

27. Termination or variation for employer’s convenience
Netherlands
Yes. Article 7: 764 of the Dutch Civil Code provides that “The employer has at all times the authority to end the contract wholly or in part”.
Sweden
Yes. “The Employer can generally act as he wishes but has to compensate the Contractor”.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

28. Ethics in Construction Law: Responses fro eight member countries
Conclusion
All 8 responding countries are familiar with the retention mechanism and it is widely regarded as acceptable at a level of about 5%. In France, Germany, Greece and The Netherlands, alternative forms of security may be taken instead.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

29. Ethics in Construction Law: Responses fro eight member countries
Conclusion
There were notable differences on tender evaluation, with Austria, England and Wales, Germany, Sweden and Switzerland allowing past experiences of contractor’s attitude and claims consciousness to be taken into account in the tender process. In France, Greece and The Netherlands they would not generally be allowed.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

30. Ethics in Construction Law: Responses fro eight member countries
Conclusion
Most of the countries could accept a designer switching from employer to contractor, although there were doubts in Austria and The Netherlands and it would not be allowed in the public sector in France.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

31. Ethics in Construction Law: Responses fro eight member countries
Conclusion
On fairness in contract administration, Austria, Germany, Greece and The Netherlands had no difficulty with the idea of a client representative administering the contract. This would constitute a problem in England and Wales, France and Sweden.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

32. Ethics in Construction Law: Responses fro eight member countries
Conclusion
A contractor’s duty to warn of design defects was found in all respondent countries, although differences were noted in the position of the contractor if the client ignores the warning.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

33. Ethics in Construction Law: Responses fro eight member countries
Conclusion
Real differences were evident in the owner’s powers of termination / variation for convenience, with more power apparent in the hands of the owner in Austria, Germany, The Netherlands and Sweden, although this would not prevent contractors from claiming compensation for their losses.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries

34. Ethics in Construction Law: Responses fro eight member countries
Conclusion
The individual national Societies of Construction Law can provide access to high quality information on construction law in member countries and ESCL is in a unique position to commission comparative research through its members.
1 December 2018
Ethics in Construction Law: Responses fro eight member countries