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October 21, 2020
The impact of COVID-19 has profoundly affected all business sectors around the world, including the construction industry.Building projects in numerous countries have ben effected by the pandemic episode due to multifarious reasons such as limited labour resource and disturbance in supply chains. Furthermore, the construction industry has been confronting delays in acquiring imported materials and segments, cost overwhelms and changes to scope of works, which in certain examples may even prevent the performance of construction contracts signed by the developers.
FIDIC (Federation Internationale des Ingenieurs Conseils) standard types of agreement are regularly utilized in most construction projects all over the world, including UAE. The country govern these contracts via federal laws. There has been an amendment in 1999 FIDIC rules by virtue of 2017 amendment. Nevertheless, corporate lawyers of Dubai have not experiences any significant changes in the contract except for a better clarity regarding the relationship between all parties involved in the contract.
The 2017 release of the FIDIC Rainbow Suite supplanted the expression “force majeure“ with “exceptional event“. Whereas, both the FIDIC rules define 'force majeure' or 'exceptional event' as an occasion or condition which:
The FIDIC Conditions of Contract set out a non-exhaustive list of events or conditions which might be classed as force majeure. Pandemics or scourges are not explicitly included, notwithstanding, COVID-19 is probably going to be classed as a force majeure or exceptional occasion since it seemingly still falls into the over four standards.
A contractor might have the option to claim relief under the Exceptional Event/Force Majeure arrangements as long as it can present that the government has set up measures or restrictions which had made it impossible for the contractor to fulfil his contractual obligations. It will be hard to contend that post removal of the restrictions imposed by the government, the works will be finished on time. Albeit, the government restrictions has been removed in most countries, the construction industry is still facing the wrath of the disease as preventing the spread of virus and simultaneously working in a construction site is a difficult situation to maintain.
In a nutshell, it is questionable that where a contractual worker has endured issues in acquiring resources (work) or materials then it won't be qualified as Force Majeure as the agreement has not become impossible even though it is not commercially benefitting. This circumstance would all the more effectively fall under a case for delay.
Furthermore, where Covid-19 is causing issues on the project site, the contractor is supposed to alleviate measures to have minimum impact on commercial benefits. Importantly, for any construction contract seeking relief under COVID-19 being a force majeure event should be able to indicate that Covid-19 made it impossible for the contractor to carry out the works.
However, the Contractor may not be able to seek relief on the grounds that the contractual works have become more troublesome and costly to complete and this may be considered a different ground for seek claim or relief, yet not under force majeure.