Presentation to Turkish Construction Contractors Association Ankara, 15 January, 2016

Transcription

1 Legal framework to Administrative Contracts. 1. Administrative Contracts Regulation. - The currently applicable ACR is the one issued pursuant to former GPC Resolution 563/ Civil Code. 3. Commercial Code. 4. Supplementary laws and regulations; such as: - Tax Laws, - Labor Laws, - Customs Laws, - Environment Protection Law etc.

2 Administrative Contracts Regulations: 1. Definition and criteria of an Administrative Contract. a) Contracts concluded by administrative unites (Government Ministries, their subdivisions or departments, municipalities...etc.)that contain exceptional terms unfamiliar in civil/commercial contracts; b) Contracts concluded for the execution of development projects funded through the public treasury regardless of the contracting party. c) Council of Ministers may exempt certain public entities and or projects from the application of the ACR. d) Following contracts are deemed Administrative Contracts when they meet the above criteria:

3 Administrative Contracts Regulations: Public Works Contracts; Supply Contracts and Supply and Installation Contracts; Contracts for the maintenance and operation of public facilities and public projects; Management contracts for public facilities, public projects, and industrial or tourist facilities; Contracts for the disposal of obsolete material and items; Consultancy Contracts; and Contracts for the execution of projects funded from outside the public budget.

4 Administrative Contracts Regulations: 2. Unique features of an Administrative Contract. a) Approval of Contracting by an Administrative Authority. Certain contracts have to be approved by the Council of Ministers such as contracts concluded with foreign companies or entities or contracts the scope of which falls within the jurisdiction of more than one sector. b) ACR constitutes part of the contract. c) Contracting methods are: Public Bidding; Limited Bidding; Negotiations; Direct Assignment and Public Auction d) Adherence to pre-approved forms of contracts. (Art. 23).

5 Administrative Contracts Regulations: e) Contracts are made in the Arabic language. They may be made in another language in addition to the Arabic language, in such case the Arabic language shall prevail. f) Termination or withdrawal of contract: Administrative Party may terminate contract for convenience (Public Interest) Article 107 of the ACR. Administrative Party may terminate or withdraw contract in following cases (Art. 103): 1. Delay or slowdown in performing contract that indicates inability of contractor to complete on time.

6 Administrative Contracts Regulations: 2. Ceasing performance for a period of 1/24 of total contract period. 3. If contractor withdrew from work. 4. In case of delay of performance during the grace period. 5. In case contractor committed fraud or corruption. 6. Illegal dealings with a public employee to the detriment of public interest. 7. Bankruptcy or settlement with creditors. 8. Committing a gross negligence in performing the contract or omitting one of contractor s main obligations without remedying same within 15 days from being notified of them.

7 Administrative Contracts Regulations: 9. Violation of the rules of Israeli boycott. 10. Assignment of all or part of the contract. 11. Failure of contractor to top-up the final guarantee or failure to pay an amount due within 7 days from being notified to do so.

8 Administrative Contracts Regulations: g) Applicable law and dispute resolution. National courts or international arbitration. Contracts are subject to all Libyan applicable laws. Libyan competent courts have jurisdiction over any disputes arising out from performing or interpreting the contract. Exceptionally, the contract may contain an arbitration clause provided that: a. the contracting party is a foreign entity; b. obtaining a pre-approval from the Council of Ministers; and c. No agreement on sole arbitrator.

9 Administrative Contracts Regulations: h) Change of scope of work. The Administrative entity may change the scope of work, increase or decrease, within 15% of the original contract value without change of the price (meaning the unit price). i) Penalties, liquidated damages and interest. Delay penalty imposed on the contractor. Penalty for delay in payment imposed on the Administrative Party. Effect of Law 1/2013 prohibiting usury.

10 Force Majeure under Libyan Law: Article 106 of the ACR reads: The contractor shall be relived from performing his obligations if force majeure occurs and renders their performance impossible. 1. Definition of force majeure under Libyan law and application by Libyan Courts. Article 360 of the LCC introduced the concept of force majeure by stipulating that an obligation is extinguished if the debtor establishes that its performance has become impossible by reason of causes beyond his control.

11 Force Majeure under Libyan Law: The courts in Libya have developed this concept further and, as a result of their case law, an event must have the three following characteristics in order for it to qualify as force majeure and thus to constitute a valid reason for nonperformance of an obligation: i. as specified in Article 360, the event must be beyond the control of the party claiming force majeure; ii. the event must be unforeseeable at the time of contracting; and iii. it must render performance objectively impossible, i.e. not only for the party invoking force majeure but for any person who might be put in the position of that party.

12 Force Majeure under Libyan Law: 2. Is giving notice of force majeure a pre-requisite to the existence of force majeure? - Giving notice of force majeure by a contracting party to another is not a legal condition imposed or required by law to establish or prove the occurrence or existence of the force majeure events. We believe that a notice would be required in case an event of force majeure is particular to a certain EPSA party and is not common to other parties. Such notice will be required to establish knowledge of the other contracting party of the occurrence of force majeure. Where, however, the occurrence is of a general nature affecting a whole country, such as the 2011 events in Libya, there would be no requirement for officially sending notice as knowledge is established beyond doubt and recognized for all other companies put in the same standing. To say otherwise would not be consistent with good faith principles.

13 Force Majeure under Libyan Law: 3. What is the effect of force majeure? 4. Can the contracting parties waive the effect of force majeure or shift the burden thereof? Article 220/1 of the Libyan Civil Code provides The debtor may by agreement accept liability for unforeseen events and for cases of force majeure.

14 Responsibility for damages and losses accruing during the FM period: 1. Responsibility of contracting parties. Public Works Contract imposes responsibility on contractor to protect the site, the equipment and the works. 2. State responsibility. Public International Law.

15 Change of Circumstances: Art. 105 of the ACR: If general unexpected exceptional circumstances occur and render performance of an obligation onerous threatening the contractor with gross loss without making performance impossible, contractor is entitled to compensation restoring the financial equilibrium of the contract to a reasonable extent. If the existence of these circumstances persists without hope of their end the contract may be terminated. Art. 147 of the Libyan Civil Code: 1. The contract makes the law of the parties; it can be revoked or altered only by mutual consent of the parties or for reasons provided for by the law.

16 Change of Circumstances: 2. When, however, as a result of exceptional and unpredictable events of a general character, the performance of the contractual obligation, without becoming impossible, becomes excessively onerous in such way as to threaten the debtor with exorbitant loss, the judge may, according to the circumstances, and after taking into consideration the interests of both parties, reduce to reasonable limits the obligation that has become excessive, any agreement to the contrary is void.

17 Change of Circumstances: Art. 657/4 of the Libyan Civil Code: When, however, as a result of exceptional events of a general character which could not be foreseen at the time the contract was concluded, the economic equilibrium between the respective obligation of the master and of the contractor breaks down, and the basis on which the financial estimates for the contract were computed has subsequently disappeared, the judge may grant an increase of the price or order the resiliation of the contract.