Gregerson Rosow Johnson & Nilan

UNIFORM LAWS REGARDING GLOBAL CONSTRUCTION PROJECTS

Although there are no international laws that have been enacted for global construction projects, there are some international uniform laws that may apply to the projects. These uniform laws include the International Restatement of Contract Law; the United Nations’ Model Law on Procurement of Goods, Construction, and Services; the Uniform Commercial Code; and the International Chamber of Commerce’s Uniform Customs and Practice for Documentary Credits and Uniform Rules for Contract Guarantees.

The International Institute for the Unification of Private Law (UNIDROIT) has drafted a document that is entitled the International Restatement of Contract Law (UNIDROIT Principles). The UNIDROIT Principles govern all commercial contracts, including construction contracts. The UNIDROIT Principles provide that all contracts are to be interpreted in accordance with the intention of the parties to the contracts. If the intention of the parties cannot be determined, the contracts are to be interpreted as reasonable persons in a similar situation would interpret the contracts. The UNIDROIT Principles set forth the obligations of the parties to contracts and include an implied duty to perform contracts in good faith and an implied duty to not interfere with another party’s performance. The UNIDROIT Principles excuse a party from performance for matters involving force majeure or acts of God. The UNIDROIT Principles also allow a party to recover liquidated damages, interest, and penalties in the event of default.

The United Nations Commission on International Trade Law (UNCITRAL) has adopted the Model Law on Procurement of Goods, Construction, and Services (UNCITRAL Model Law). The UNCITRAL Model Law seeks to promote competition and to give fair treatment to suppliers and contractors who are bidding on government projects. The UNICITRAL Model Law deals mainly with procurement and bidding. It does not address matters involving contract performance or dispute resolution. The UNICITRAL Model Law specifies criteria and procedures for qualifying bidders and sets forth various methods of procurement, such as two-stage tendering, requests for proposals, and competitive negotiation.

The Uniform Commercial Code (UCC) regulates letters of credit that are issued in the United States. The UCC requires that all documents strictly comply with a letter of credit and allows an issuer of the letter of credit a reasonable time in which to examine the documents. The UCC requires the issuer to observe standard practices for financial institutions. The UCC also allows the issuer to refuse payment in the event of fraud and provides a one-year statute of limitations for claims involving letters of credit.

The International Chamber of Commerce has promulgated a document that is entitled Uniform Customs and Practice for Documentary Credits (UCP). The UCP contains provisions regarding letters of credit. The UCP also contains provisions regarding documents that must be presented in order to trigger payment under a letter of credit.

The International Chamber of Commerce has also promulgated a document that is entitled Uniform Rules for Contract Guarantees (ICC Uniform Rules). The ICC Uniform Rules contain provisions regarding beneficiaries, principals, and guarantors. The ICC Uniform Rules clarify the rights of parties to a guarantee and address whether the guarantee is considered to be a primary or a secondary obligation. The ICC Uniform Rules provide for a six-month period in which to file a claim based on a guarantee if no time period has been set forth in the guarantee. The ICC Uniform Rules also provide that the claim must be in writing and must be supported by documentation.

Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.


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