49 MAY 2022 | WWW.LAWYER-MONTHLY.COM EXPERT INSIGHT In addition, cultural and customary conflicts are also complicating factors. For instance, Chinese parties tend to participate in international construction projects as contractors and they are familiar with Chinese standards. Local subcontractors and labour know local standards well and many consultants from western countries are comfortable with applying developed regimes. These inevitably cause problems – usually delays in clarifying different understandings and customary practices – during the process of implementing the project. Another typical instance is related to the baseline programme. The baseline programme is usually part of a construction contract and is supposed to be regularly updated to reflect actual progress so that the employer or the engineer can monitor the contractor’s progress. However, Chinese contractors value merit over procedure and are accustomed to acting flexibly within an overall plan rather than an accurate and detailed programme as long as milestones are met. What common pitfalls can arise as a result of this? Exposure to a larger spectrum of risks and different industry, legal and cultural backgrounds unsurprisingly complicate construction contracts, especially management of interfaces in separate contractual documents. Though almost all construction contracts will include a well-drafted interpretation clause for reducing repetition and avoiding ambiguity of terms in the body of the contract, it is still very common to find conflicting or competing clauses, which always raises legal issues in the dispute resolution process. In terms of technical standards, participants naturally tend to be influenced and guided by their backgrounds and domestic experiences, meaning that it is challenging to make use of standard terms, as these could be understood differently. Thus, it is normal for certification on contract compliance to be slow, which sometimes causes significant delays. Another observation is that in manydomestic projects, parties favour litigation or arbitration to resolve disputes directly over an escalating dispute resolution mechanism, despite the fact that this mechanism is recommended by domestic model forms for construction contracts. By contrast, to tackle differences and constructively build a good working relationship over years, parties to international construction contracts would have more initiative to invoke the multi-tier dispute resolution mechanism than domestic projects. What can parties negotiating on a construction agreement do to mitigate issues before they arise? Whatever the complexity of the project and the sophistication of its key players, contractual mechanisms in the construction contract surround three core elements: the project itself, time to complete and amounts to pay. There are many sayings about pursuing a fair and equitable risk allocation and measures for managing exposure of risks to avoid future commercial disputes at the negotiation stage. However, whatever mitigation measures are taken, disputes and differences
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