Opinion

International opportunities for consultants – what to look out for

Ben Mullard, Beale and Company

Overseas opportunities must be approached with "eyes open", says Beale & Company associate Ben Mullard

We are seeing increasing opportunities for UK consultants and contractors looking to work overseas, particularly in the Middle East and Africa.  These new opportunities bring many potential benefits, but parties need to ensure they approach them ‘eyes open’, as there are often fundamental differences in the way projects are procured and managed in other jurisdictions.

Local legal systems differ between jurisdictions and are typically very different from that familiar in the UK.  Resolving disputes in local courts is therefore likely to be difficult for overseas parties for a variety of reasons.

Overseas contracts can be significantly more onerous than those typically found in the UK. For example, a consultant’s obligations often extend further than clients commonly accept back home, including strict obligations, liquidated damages for failure to achieve deadlines, bonds and other such provisions.  In addition, many provisions which are typically regarded as "market standard" in the UK, such as limits on liability, are often resisted by clients.  

A particular issue for both consultants and contractors is their exposure to some form of decennial liability.  The nature of the liability varies between jurisdiction, but in general terms provides for contractors and consultants to be jointly liable for the building or structure for a period of 10 years following completion in the event of total or partial collapse and in respect of any dangerous or structural defects. 

Decennial liability operates as a strict liability; the client does not need to prove negligence and contractors and consultants will be liable even where the client consented to the defective construction or the defect or collapse results from outside causes, such as ground conditions.

In addition, parties are likely to have much more limited options to enforce payment obligations than they would in the UK.  For example, there is no statutory protection as in the UK under the Construction Act and "pay when paid" clauses are commonly included in agreements.   

Local legal systems differ between jurisdictions and are typically very different from that familiar in the UK.  Resolving disputes in local courts is therefore likely to be difficult for overseas parties for a variety of reasons.  For example, some Middle Eastern jurisdictions offer no system of judicial precedent, meaning judges are not bound to decide matters consistently with prior decisions.  In addition, potential language and procedural barriers significantly increase the risks.

It is therefore generally preferable for contracts to provide an appropriate dispute resolution procedure outside the local court system, typically in the form of arbitration in accordance with internationally recognised rules, such as those published by the ICC.  However, even following a successful award there remain risks, as enforcement is also likely to be more difficult.

Notwithstanding the issues outlined above, there remain many attractions to working overseas, particularly given the many large and exciting projects being developed around the world.  Provided that UK companies are properly prepared to deal with and manage these risks they will be well placed to take advantage of these opportunities.

Ben Mullard is an associate for Beale & Company