Construction Law and Project Delivery Systems
Legal Challenges of Construction Projects in Iran
One of the most important points that foreign contractors should take into account before entering Iran and carrying out a construction project is construction rules and regulations. There is no specific set of laws about Construction law in Iran, but there are some pre-designed contracts that contractors should be considered in concluding contracts. However, many engineers, contractors, employers, and workers have problems in the execution of their contractual obligations. To mitigate such problems, our suggestion is to consult with expert lawyers or consultants before signing any contracts.
The next important legal challenge about contractual law in Iran is the forms of signing contracts and conditions included in them.
Many employers neglect the legal points and after signing contracts with the contractors, they face legal challenges that may result in suspension or cancellation of projects. On the other hand, sometimes contractors have difficulties in enforcing their right because of force major or changes in the nature of obligations.
If they sign a complete and comprehensive contract before undertaking responsibility of implementation of a contract, they can defend their rights and provide mutual satisfaction. Despite the importance of writing a detailed and accurate contract between employers and contractors, there are still many legal claims about performing contractual obligations.
having a lot of experience in designing and writing construction contracts, ESK Law Firm is ready to assist all employers and contractors of the construction industry.
ESK Internationla Law Firm
Our team is composed of highly skilled and versatile lawyers who combine practical experience and academic knowledge of their field. Most of our practitioners have worked in different professional environments, often outside their home jurisdiction.
Types of project delivery Systems
One of the most important things that should be noticed in construction projects is to design and forecast an appropriate system for the delivery of projects that include specific models such as: EPC, BOOT, BOO, EPCF.
1. Build, Operation, and Transfer Contracts (BOT)
Based on FIPPA, one of the main contractual arrangements is building, operation, and transfer contract known as BOT. This investment method is used in large infrastructure projects like power plants, telecommunications, airports, and highways. In a BOT, a governmental organization grants the right of building and operation to a consortium and it takes over the responsibility of financial supply, design, equipment supply, construction, installation, experiment, set up and operation of the project in a specific period. During the operation, Consortium receives its investment costs and benefits from selling the products or services. Upon expiration of operation phase, all of the equipment and facilities will be transfered to the Government without any costs. BOT is a common arrangement between government and private sector for implementation of large projects.
ESK law firm support its clients as a consultant and international lawyer in designing and signing BOT contracts.
2. Investment in Construction Projects in Iran
Foreign investors focuse on Iran’s real estate market is a sign of a safe and standard market. On the other hand, contractors and consultants always focus on supplying real estate for tourists and local residents. investors have always been eager to participate in these projects because of the market growing demand and retrieving the invested money in a short period of time. Growing in construction projects has found its way into infrastructures. Iran’s government supports constructions and renovations in the public sector and this provides more opportunities for investment by BOT or Joint Venture methods.
3. Construction Contracts
Choosing a contract type in Iran’s construction industry depends on the employer’s position. If the employer is an individual or a private company, using any contract models is possible. in this case, contracting parties can agree about project delivery systems such as design, tender, construction, design and construction, EPC, and Turnkey. On the other hand, if an employer represnets a state company or organization, there are some restrictions on choosing the type of construction contract. Government and governmental sectors in Iran have to use some pre-designed contracts depend on the subject and project goals.
4. Pricing Methods
Parties in a contract can choose any flat pricing methods, hourly rate, estimations as well as profit, for project implementation. In government and public sectors, employers apply pricing methods based on unit price. This contractual method is determined by estimating the work values on a project and each work unit’s price. The project’s final price will be determined by the required amounts for the execution of works.
5. Dispute Resolution
Like many other countries, dispute resolution systems in Iran’s construction contracts is designed on the basis of ADR techniques. The first step in this method is solving a dispute by negotiation or mediation. If the two sides of the contract could not reach a consensus about the occurred problem at a certain period of time, the next step is resorting to arbitration. There are ADR techniques in both public and governmental construction contracts, however, there are differences in comparison with the private sector that makes it inevitable to consult with legal experts.
ESK Law Firm and Construction Law Services
ESK Law Firm provides representation to public and private owners, contractors, subcontractors, suppliers, architects, and engineers in all facets of the construction and design industry. Whether you are building, developing, managing, designing or financing a construction project, ESK offers the full spectrum of legal services to serve you.
ESK has established a long and successful record of advocating the interests of owners, contractors, subcontractors, suppliers, material manufacturers and design professionals. The projects we are involved with include luxury high-rise condominiums, theme parks, resort hotel complexes, hospitals, and multi-billion-dollar energy generation facilities.
We have represented industry participants in all forms of construction, design and governmental disputes, including defective construction claims; errors and omissions design claims; default terminations; impact, delay and acceleration claims; and building code disputes before civil courts and arbitration panels.
Our construction practice consistently delivers pragmatic and innovative advice to clients in all aspects of construction and real estate development projects. Our lawyers counsel clients from conception to the completion of a construction project.
During the pre-construction stage, we anticipate the types of risks that will arise and determine the appropriate means of allocating or resolving the risks throughout the contracting process. This proactive approach enables all parties to handle any financial and technical contingencies prior to construction, which can result in significant cost savings.
We advise employers, contractors and engineers regarding various aspects of construction law, such as drafting construction and engineering contracts, construction claims and solving related disputes. In addition, ESK Law Firm’s partners advise on all forms of project delivery systems, including BOT, BOOT, BOO etc.