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Over the next decade, the construction sector in Qatar will continue to witness a boom in major infrastructure projects, both in preparation for the 2022 football World Cup and in other fields. Many voluminous and rather complex construction contracts have already been concluded or will be concluded in the near future – which means a substantial increase in complex construction disputes.
As construction activities continue to expand in Qatar, the implementation of the new Green Building Code presents both challenges and opportunities for companies hoping to participate in Qatar's forecasted growth. Although moving to sustainable construction practices will initially entail higher costs, the expectation is that it will also bring both short and long-term savings.
Following the announcement that Qatar will host the 2022 FIFA World Cup, significant growth is expected in the country, especially in the construction and infrastructure sectors. Several major projects are envisioned for the event. Therefore, the Qatari government has made important changes in its legal system.
There are four alternatives for foreign investors that wish to undertake construction-related activities in Qatar. They may set up a local company under the Commercial Companies Law, register a foreign branch, establish a local or an international engineering consultancy office or establish a trade representative office.
The statutory time limit for warranty claims has been extended from one to two years. The two-year time limit is mandatory only for consumer contracts. Contracts between businesses may still provide for shorter limitation periods for warranty claims. In addition, a recent revision of the Unfair Competition Act allows tribunals to invalidate general terms and conditions that are unfair towards consumers.
The Federal Supreme Court recently confirmed that a main contractor can align the contractual time bars for warranty claims against its subcontractors with the time limits applying to warranty claims that the owner has against the main contractor. This decision is relevant for both main contractors and subcontractors involved in large construction projects.
The controversial issue in a recent court of appeal case was whether the contractor still had a claim for compensation, despite its failure to submit progress reports and have them signed by the owner. The court ruled that in the absence of the contractually agreed progress reports, the contractor was still entitled to compensation but should establish (the amount of) its claim by other means of evidence.
The Supreme Court recently confirmed that an owner may rescind a contract for works if the contractor is in default. Before doing so, the owner must put the contractor on notice and grant it a reasonable grace period. In the present case, the contractor failed to reach agreed-upon output requirements and its delivery of the works was late. The court held that no prior notice or grace period was required in these circumstances.
It is expected that the upper house of the Swiss Parliament, the Council of States, will approve an amendment to the Code of Obligations which will align Swiss law on warranties with the UN Convention on Contracts for the International Sale of Goods and the EU Sale of Consumer Goods Directive. Since the rules on warranties applicable to the sale of goods under Swiss law also apply to contracts for works, the extension of the time limit will also impact on Swiss construction law.
The scope of liability between owner and contractor with regard to subsoil conditions that affect the location where works are performed is often a source of dispute. The Supreme Court recently applied the duty of care in a case where a contractor's equipment was damaged by obstacles on the ground. The court's findings may be applied to construction contracts in general.
In the aftermath of the Japanese earthquake and the accidents that ensued at the Fukushima nuclear power plants, the Swiss Federal Department of Environment, Transport, Energy and Communications has suspended the authorisation process for the construction of new nuclear power plants in Switzerland. The suspension will be in effect "until safety standards have been carefully reviewed and if necessary adapted".
While Qatar recognises many of the mechanisms used in construction project financing, there is likely to be some uncertainty as to the effectiveness of those mechanisms. In addition, there is no long set of precedents either in commerce or before the courts. Therefore, any construction project financier ought to be cautious, but optimistic, in approaching the Qatar market.
The Gotthard Base Tunnel is part of the Sfr20 billion AlpTransit project to build a new rail link through the Alps, with the objective of creating a direct and level route for high-speed passenger and freight trains. The Gotthard tunnel project was one of the first in Switzerland where foreign contractors were admitted to bid, and they were actually awarded many of the lots.