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Ground Condition Risks in Qatar

Paul Prescott and Gabriel Olufemi

14 October 2014



Contents

• Introduction• Standard Forms of Contract

• Adverse Ground Conditions Issues

• Contractual Remedies

• Remedies under Qatari Law

• Conclusion



Introduction

“The ground is the place where things are most likely

to go wrong during a construction project, and the

worse the ground, the greater the risk”(The Institution of Civil Engineers, 1991)

• Risk can be managed, minimised, shared, transferred or

accepted. It cannot be ignored!

• Who should be responsible for ground condition risk?



FIDIC „Red‟ Book and „Yellow‟ Book

• Employer is required to provide data before and after the

Base Date (i.e. even after the tender submission)• Contractor is deemed to have inspected and examined

the site only to the extent as far as practicable, taking

into account cost and time

• Contractor is responsible for interpreting data provided tohim

• Employer carries the risk of physical conditions that

could have been unforeseeable by an experienced

contractor at the date of tender • Follows the well established Clause 12 of the ICE Form



FIDIC Silver Book

• Contractor is responsible for the interpretation andverification of the data provided

• Employer offers no warranty as to the sufficiency or

completeness of information provided

• Risk of adverse ground conditions lies with thecontractor

• Contractor accepts full responsibility in completing the

works and has to include his price for any unforeseen

difficulties or costs



Ashghal Contract

• Employer is required to provide site data before and afterBase Date (i.e. those obtained on behalf of Employer)

• Contractor is deemed to have inspected and examined

the site

• Contractor is responsible for interpreting data provided tohim

• Contractor carries the risk of physical conditions that

could have been unforeseeable (i.e. No EOT or cost for

unforeseen ground conditions)



Qatar Rail Contract

• Employer makes no representation or warranty inrespect of site data

• Contractor is deemed to have obtained all site

information and priced for ground conditions risks

• Contractor bears entire risk of any and all physicalconditions (including contamination) at worksite

• Contractor has no entitlement to EOT or cost for

unforeseeable ground conditions



Qatar Petroleum Contract

• Employer makes no representation or warranty inrespect of site data

• Contractor deemed to have obtained all site information

and priced for ground conditions risks

• Contractor bears entire risk of any and all physicalconditions at worksite (including climatic, weather and

sea conditions)

• Contractor has no entitlement to EOT or cost for

unforeseeable ground conditions



Adverse Ground Condition Issues

• Risk Allocation• Foreseeable by an experienced contractor?

• Site information

• Employer to provide „adequate‟ GI reports

• Ground investigations can never fully disclose all groundconditions

• Pricing and programming at Tender Stage

• Liquidated Damages

• Risk Mitigation



Contractual Remedies

What are the Contractor‟s contractual remedies for adverse

ground conditions?



Contractual Remedies

“Red/

Yellow”

Book

“Silver” Book Ashghal Q-Rail and

QP

Responsibility for

interpretation of Data

Contractor Contractor Contractor Contractor

Responsibility for

unforeseeable adverse

ground conditions

Employer Contractor Contractor Contractor



Other Contractual Remedies

Alternative contractual remedies

• Force Majeure

• Impossibility



Force Majeure (FIDIC)

• Clause 19.1 (5 limbs)1. Exceptional event or circumstance in the Country

2. Beyond Party‟s control

3. Party could not reasonably have provided against it before

entering into the contract

4. Party could not have reasonably overcome or avoided

5. Not substantially attributable to other Party

6. Express exclusion of ground condition risk

• Clause 19.1 - Illustrative Examples of FM events

• 6th limb - Prevention (Permanent or temporary. Not

economic profitability)



Force Majeure (FIDIC)

• Notice of Force Majeure – 14 days (Clause 19.2)• Duty to Mitigate Delay (Clause 19.3)

• Entitlement to:

– Extension of time

– Cost (no profit)

• Other contract notices

• Suspension for 84 days or termination (Clause 19.6)

• Difficult to establish

• No case law



Impossibility under FIDIC

• Clause 19.7 – Event or circumstances outside Party‟s control in the

Country (including FM event)

– Impossible or unlawful to perform obligation

• Physical and legal impossibility (e.g. no engineeringsolution)

• Notice to Employer

• Release or discharge from performance of contract

• Termination and cost of termination under Clause 19.6



Remedies under Qatar Civil Code

Force Majeure and Impossibility-Articles 188, 402 & 704• No definitions

• The Contractor is released from further performance of

its obligation if it is impossible to perform the obligation

as a result of force majeure or unexpected eventbeyond its control

• Termination or Suspension

• Qatari law position on FM arguably more favourable to

contractor • No case law or guidance in Qatar - unpredictable




EOT and Cost for FM/Impossibility• Termination cost under Article 704(2)

• Contractor not required to pay compensation to

Employer (Article 204)

• Contractor may seek relief from liquidated damagesunder Articles 257 and 266

• No case law or guidance in Qatar - unpredictable




Onerous Terms - Article 171(2)• Court to reduce an excessively onerous obligation

• Contractor may be allowed to suspend work

• This Article requires there to be a “public or general and

exceptional incident”• Contractor to put forward arguments to

establish/persuade the court that this Article applies

• Difficult to predict how the court will apply this Article –

no precedence or guidance




Misrepresentation - Articles 134 to 136• Applies if:

– Employer intentionally withholds any site information

or data during tender stage

– Contractor would not have entered into contract had itbeen aware of the withheld information or data

• Contract will be declared void

• Contractor will be reinstated to the position it was prior to

date of contract• Alternatively, Contractor might be awarded damages for

any loss incurred - Article 164(1)




Fraud - Articles 152 and 155 of Law no. 11 of 2004

• There is a potential criminal liability for public officers

and other parties for fraud or deceit for failure to disclose

information or data during tender stage

• Employer cannot exclude or limit its liability for fraud

(Article 259)



Conclusion

• Generally, current Qatar practice is that bidders(Contractors) are invited to accept the risk of

unforeseeable ground condition risk (including ground

water and environmental contamination)

• Bidders should consider the position of ground condition

risk and their appropriateness on a project by project

basis

• Bidders should consider if any site investigation reports

have been obtained by the Employer



Conclusion

• If so, is the Contractor entitled to rely upon them if theinformation is inaccurate or does not adequately reflect

the conditions encountered on Site?

• What should bidders be expected to do?

– gamble on encountering less favourable groundconditions and expect the worse?

– amendments to the conditions to deal with project

specific ground risk (time and money or time only?)



ANY QUESTIONS?

[email protected]

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