Background
Since 1999, the standard form construction contract most commonly used in Oman has been the 4th edition of the Standard Documents for Building and Engineering Works, especially for large, government-led infrastructure works. This year the Ministry of Finance and the Ministry of Legal Affairs published a new edition, which contains some noteworthy changes.
The Standard Form Contract for Building and Civil Engineering Works (the “
2019 Standard Form”) is based on the FIDIC Red Book (building and engineering works designed by the employer) in that it has an employer-design and contractor-build risk profile.
The 2019 Standard Form is based on the 1999 FIDIC Red Book, not the 2017 edition. Overall, this is a safer approach as the 2017 FIDIC Red Book is less used in the market than its 1999 counterpart.
Key changes
Defects liability
In relation to defects liability, the 1999 Standard Form provided for a ‘Period of Maintenance’ of 365 days, whereas the new ‘Defects Notification Period’ (“
DNP”) under the 2019 Standard Form must now be agreed between the parties, and also allows the employer to extend the DNP. The engineer’s role in determining the condition of the works has been limited.
Dispute resolution
With regard to dispute resolution, the 1999 Standard Form contained provisions for referral of disputes or differences to the engineer and thereafter to ad hoc arbitration. The 2019 Standard Form allows, where positively elected, for court-based litigation. The provisions relating to the Dispute Adjudication Board (“
DAB”), which appeared in the 1999 version, do not feature in the 2019 Standard Form.
Variations
The variations provisions have also been improved in the 2019 Standard Form, with value engineering built into the contract, providing greater scope for efficiencies and potential cost-savings to the employer.
Omanisation
There is also the option in the 2019 Standard Form for the contractor to undertake to engage Omani SME contractors in relation to supply and sub-contracts. Omanisation is also now explicitly referenced but with the details to be agreed between the parties.
Anti-bribery and corruption
Anti-bribery and corruption (“
ABC”) provisions feature in the 2019 Standard Form, bringing Oman in line with international best practice. The ABC provisions oblige, for example, the contractor to operate effective ABC reporting and disclosure controls and procedures.
Intellectual and industrial property rights
There is a new clause governing intellectual and industrial property rights (“
IP”), which places reciprocal obligations and indemnities on the parties in relation to IP infringements.
Force majeure
The ‘Special Risks’ regime has been replaced with ‘Force Majeure’ provisions and associated termination rights. Testing and Suspension mechanics, as well as Commencement, Delay and Extension of Time provisions, have also witnessed considerable changes.
