Construction Law And Practice In Hong Kong Pdf

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2. Construction Law And Practice In Hong Kong Pdf 2017
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1.1 What are the standard types of construction contract in your jurisdiction? Do you have: (i) any contracts which place both design and construction obligations upon contractors; (ii) any forms of design-only contract; and/or (iii) any arrangement known as management contracting, with one main managing contractor and with the construction work done by a series of package contractors? ( NB For ease of reference throughout the chapter, we refer to “construction contracts” as an abbreviation for construction and engineering contracts.)The standard types of construction contract in Hong Kong differ for private and public projects. Please see question 1.3 below.In addition, there are contracts which place both design and construction obligations upon contractors, especially for specialised projects such as the construction of hospitals.One example of a design and build contract is the Government Standard Form of Contract for design and build projects. If NEC4 is used, there is no separate edition for design and build projects (although there is a Design, Build and Operate Contract) and the same standard form will be used; the design obligations will be set out in the “Scope” of the contract document. If a design-only contract is used, we will usually call it a consultancy agreement with the designer, who is usually either the architect or engineer. Employers in Hong Kong usually engage consultants to undertake the design of construction projects.

Design-only contracts are therefore common in Hong Kong.We do have management contracting arrangements in Hong Kong, although this is not common. In recent years, such arrangements are common in nearby Macau for casino projects.1.2 How prevalent is collaborative contracting (e.g.

Alliance contracting and partnering) in your jurisdiction? To the extent applicable, what forms of collaborative contracts are commonly used?Collaborative contracting is not common except in Government projects using NEC4. Clause 10.2 of the NEC4 requires the parties to act in a spirit of mutual trust and collaborative manner, which may entail good practices such as the setting up of a joint site office as suggested by the Government. Other mechanisms in NEC4 which promote collaboration include the Early Warning Procedure (Clause 15) and Contractor’s Proposal to reduce costs (Clause 16).1.3 What industry standard forms of construction contract are most commonly used in your jurisdiction?For private projects, the contracts mainly used are the Standard Form of Building Contract published by the Hong Kong Institute of Architects, the Hong Kong Institute of Construction Managers and the Hong Kong Institute of Surveyors. There are “with quantities” and “without quantities” editions. The former is for use when bills of quantities are used.

The latter is for use when bills of quantities are not used.For public projects, Government Forms are used. The forms for building and civil engineering works are slightly different. Moreover, since June 2018, the Water Supplies Department and Drainage Services Department of the Hong Kong Government have been tendering out NEC4 contracts.Regardless of which form is being used, consultants will make modifications to the form to suit each project’s needs.1.4 What (if any) legal requirements are there to create a legally binding contract (e.g. In common law jurisdictions, offer, acceptance, consideration and intention to create legal relations are usually required)? Are there any mandatory law requirements which need to be reflected in a construction contract (e.g. Provision for adjudication or any need for the contract to be evidenced in writing)?Hong Kong is a common law jurisdiction. Offer, acceptance, consideration and intention to create legal relations are all essential for establishing a legally binding contract.There are no special requirements for construction contracts.

Construction Law And Practice In Hong Kong Pdf Subway Map

They do not even need to be evidenced in writing. In fact, it is not uncommon for a formal construction contract not to have been signed even after completion of the project.1.5 In your jurisdiction please identify whether there is a concept of what is known as a “letter of intent”, in which an employer can give either a legally binding or non-legally binding indication of willingness either to enter into a contract later or to commit itself to meet certain costs to be incurred by the contractor whether or not a full contract is ever concluded.It is standard practice to have a letter of intent before signing the formal contract. It can be either legally binding, non-legally binding or partially legally binding (e.g. A commitment to pay actual costs incurred in the event that the employer decides not to engage the contractor to complete the project) depending on the precise wording of the letter of intent. The court will look into the substance of the letter of intent, rather than its label in determining whether it is legally binding on the parties.1.6 Are there any statutory or standard types of insurance which it would be commonplace or compulsory to have in place when carrying out construction work? For example, is there employer’s liability insurance for contractors in respect of death and personal injury, or is there a requirement for the contractor to have contractors’ all-risk insurance?It is compulsory for all employers in Hong Kong to take out employees’ compensation insurance for their employees. Contractors and sub-contractors are therefore required by law to take out such insurance for their workers.

Construction Law And Practice In Hong Kong Pdf 2017

2.1 Is it common for construction contracts to be supervised on behalf of the employer by a third party (e.g. An engineer)? Does any such third party have a duty to act impartially between the contractor and the employer? If so, what is the nature of such duty (e.g. Is it absolute or qualified)? What (if any) recourse does a party to a construction contract have in the event that the third party breaches such duty?Yes, almost invariably, construction contracts are supervised on behalf of the employer by a third party, except for Government projects, where an in-house architect or engineer may be designated by the employer.

In the latter case, the contract should make this known to the contractor and set out under what situations the architect or engineer is required to act in accordance with the employer’s instructions, rather than impartially.As mentioned above, whether the third party has a duty to act impartially depends on the terms of the construction contract, although the third party is generally required to act independently and honestly, which may overlap with acting impartially, but they are not synonymous. In other situations, such as issuing instructions on behalf of the employer, there is no duty for them to act impartially. 3.1 Is the employer entitled to vary the works to be performed under the contract? Is there any limit on that right?The employer is entitled to vary the works to be done under the contract. 4.1 How are construction disputes generally resolved?They are mostly resolved by arbitration. However, a small proportion of main contracts and sub-contracts (in particular of low tier) may not contain an arbitration clause.

In such cases, disputes will be resolved by way of court proceedings.Some construction contracts provide for a multi-tiered dispute resolution mechanism. For example, in the Hong Kong Standard Form of Building Contract and Government Forms, the parties have to go through mediation first before commencing arbitration.4.2 Do you have adjudication processes in your jurisdiction (whether statutory or otherwise) or any other forms of interim dispute resolution (e.g. A dispute review board)? If so, please describe the general procedures.There is no adjudication process in Hong Kong currently, but in the consultation paper for implementing security of payment legislation in Hong Kong in 2015, statutory adjudication has been proposed for resolving payment disputes in construction contracts.There is mediation. Either party to a dispute may serve a mediation notice on the other party proposing a mediation.

Construction Law And Practice In Hong Kong Pdf Download

If the other party agrees to mediate, they will agree in writing on the procedures and identity of the mediator. During the mediation, the mediator will identify the dispute(s) between the parties and persuade them to move their positions. If the parties eventually reach an agreement, they will record the same by a written settlement agreement.There is also dispute review board for larger Government projects. A board of three impartial reviewers is organised before construction begins. The board will attend site meetings regularly to review the status of the project. When a dispute arises, it may be referred to the board. The board will then issue a recommendation (which is usually non-binding) on how to resolve the dispute, after hearing from both parties.4.3 Do the construction contracts in your jurisdiction commonly have arbitration clauses?

If so, please explain how, in general terms, arbitration works in your jurisdiction.As mentioned above, the arbitration clause will usually require the parties to first attempt to resolve their disputes by mediation and if that fails, either party may commence arbitration by serving a notice of arbitration on the other party. The procedures for conducting arbitration should be similar to those in other jurisdictions. Parties will usually instruct lawyers to represent them in arbitration and the procedures tend to be relatively formal and not much different from court procedures (although often simplified, with fewer interlocutory hearings).4.4 Where the contract provides for international arbitration, do your jurisdiction’s courts recognise and enforce international arbitration awards? Please advise of any obstacles (legal or practical) to enforcement.Hong Kong is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, by China’s accession to the Convention. Hong Kong Courts are very supportive of arbitration and adopt an “enforcement-biased” approach in dealing with applications to enforce foreign awards. Enforcement may only be refused if a party can establish one of the grounds set out in the New York Convention.