18 June 2019
Svitlana Teush, head of the real estate, construction and renewable energy focus practices at Redcliffe Partners, spoke at the International Construction Contract Conference held in Prague in May, one of the industry’s largest events with over 500 registered attendees. The event followed the release of the second edition of the book entitled "International Construction Contract Law" by Lukas Klee, published by Wiley-Blackwell, which for the first time included an essay on Ukraine written by Svitlana Teush.
She spoke on the topic "The Use of FIDIC Contracts in Ukraine: Regulatory Developments and Evolution of the Court Practice". She discussed recent developments facilitating the use of FIDIC contracts in Ukraine, including the introduction of the regulatory framework for the enhanced role of consulting engineers in Ukraine, particularly in road construction, and the liberalisation of industry regulation.
Svitlana also talked on the publication of the Ukrainian translations of FIDIC's 1999 "Red Book" (Conditions of Contract for Construction) and 2016 "Blue-Green Book" (Form of Contract for Dredging and Reclamation Works), as well as of the FIDIC Procurement Procedures Guide, which was prepared with the support of engineering industry associations.
She also covered the transfer from an annual to a three-year public budgetary planning, an important step towards long-term planning required for the implementation of infrastructure projects.
The approaches of local Ukrainian courts are evolving towards recognition of the role of an engineer as the employer’s representative, and of the binding nature of engineer's instructions. This was exemplified by presenting the comparison of two court cases, from 2007 (reconstruction of the Dnipro water supply station) and 2017 (the Beskyd tunnel). In a recent case, the court maintained that the engineer would not require validation of its instructions by the employer, or amendments to the contract to ratify its decisions, and that engineer's instructions are binding on the parties. Despite these positive developments, the local courts' practice on FIDIC contracts remains limited and variable, and international arbitration continues to be a preferred option.
Of all the contract forms, Svitlana noted the "Silver Book" as being increasingly used now in Ukraine as the basis for full-wrap EPC contracts in the rapidly growing renewable energy sector, particularly in projects with international financing.
Constraints remain due to mandatory laws. One should be particularly wary when contracting with a public employer, especially in a public procurement procedure, which is rather unwelcoming of FIDIC contracts. Risk allocation and management practices are not well-developed and require improvement. The use of DABs is still limited, although better than previously.
Redcliffe Partners would like to thank Lukas Klee, of Klee Consulting, for arranging this conference, and for the opportunity to speak on Ukraine.