International construction contracts

When advising on construction and engineering contracts for projects overseas, there are many additional practical and commercial factors that lawyers need to consider and alert their clients to. These factors can be grouped into commercial and political considerations and include the following issues:

Commercial and political considerations

Practical considerations arising from the location of the project include:

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different legal systems
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language difficulties
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negotiating practices
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different ethical codes
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time zones
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communication

The sources and types of funding for international projects can vary considerably, depending on the nature of the project and the territory. Funding in emerging markets, where there may be an element of political risk, will be different from that in the developed world where most project financing is fairly similar. In emerging markets funding can be obtained from various organisations including development finance institutions (DFIs) like the World Bank, commercial lenders, export credit agencies (ECAs) and local commercial banks.

In addition to the sources of funding, lawyers also need to consider the problem of security for payment, which is often raised by contractors, and issues that arise from multi-jurisdictional lending.

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