Construction Law
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Our FIDIC trained construction lawyers have extended experience in drafting multi-million construction contracts, obtaining construction permits and specific construction law consultancy.
Relevant to the nature of construction law itself the Azerbaijani legislation does not provide easy solutions to the problems in this sphere. Being a combination of contract, employment, tort, administrative and other areas of law, issues arising out of construction and design engage professional approach and experience to be solved with quality. It is worth to mention that construction and design undertakings probably the most administrative works demanding field of legal functioning.
Azerbaijan construction law is relatively newer regulation, with complexities that require specific knowledge and experience. Nonetheless, all complexities of the design and construction of the tasks is narrow expertise of our team. Understanding of all corners of construction and design works that accumulated over the years by being involved in various projects helps our team to assist you in every case of this process starting from negotiations phase up to the implementation of works. Experience is the main weapon of our legal team that can help you to learn from previous mistakes and choose the best possible solutions to implement.
Many provisions that need to be considered and addressed while construction projects and drafting of construction contracts are not only present in the Civil Code which is the ground norm for rights and obligations of parties, but other legislative acts related to construction, such as Urban Planning and Construction Code of Azerbaijan, Regulations of the Cabinet of Ministers.
Urban Planning and Construction Code specifies general and specific obligations for the designer, contractor, employer and technical consultants that need to be considered while engaging in contractual negotiations and drafting contracts. For example, designing a construction project that requires the issuance of the construction permit is a licensed activity. Commercial construction projects and the majority of constructions require such permit (with exception of smaller houses for personal use). Designer, by law, has a duty to prepare design documentation in accordance with local standards and shall review and update design documentation during the construction period upon the instruction of state authorities. Furthermore, the designer shall provide design review (authorship control) over the construction and monitor that the construction is conducted in accordance with the design documentation. Where the designer finds a breach of local rules or non-compliance of the ongoing construction works with the approved design documentation, it shall notify the employer and contractor of such deficiencies and request reasonable steps to be taken. If neither the employer, nor contractor takes reasonable steps to address such deficiencies, then the designer has a duty to duly inform relevant regulatory authorities of such concerns.
For a long period including the present times, obtaining a construction permit for a construction project has been among the most difficult tasks a project owner or a construction lawyer may ever face in Azerbaijan. The same applies to the issue of occupancy permission and acts after full completion of the construction project.
With regard to construction permits, the types of the construction projects are as follows:
Failure to comply with the construction permits are severely punished, which may include criminal liability and harsh administrative penalties. Therefore, at the outset, any project owner, contractor or subcontractor shall consider mandatory construction rules from the perspective of work coordination, timing and financials.
International construction contract forms, particularly FIDIC construction contract forms are relatively new in Azerbaijan. Although not endorsed or approved by any legal instrument, it is used in construction industry mainly by government-funded large public projects or projects with involvement of a foreign party, such as international contractor, engineer or construction management service provider.
The reasons of special caution in the application of FIDIC contracts are not only the lack of practice or experience of domestic stakeholders, but also interpretational questions and lack of clear guidance regarding applicable or sometimes conflicting local rules.
The Civil Code specifies provisions and rights for parties related to amendment and termination of the contract. It shall be noted that these are applicable in addition to the conditions and cases specified in the construction contracts. For example, where circumstances have significantly changed after the conclusion of the contract, any of the parties are allowed to amend the contract to meet the concerns of the changed circumstances or terminate the contract in totality, unless otherwise provided for by the contract. A circumstance is considered as significantly changed if parties reasonable predicting such change would not have entered into the agreement at inception or would have agreed on significantly different terms. In practice, these provisions are “neutralized” by waiving such rights and clearly excluding such opportunities for parties in particular conditions.
Another interesting example of statutory provisions might be contractor’s mortgage right over the land where the building is being constructed against the obligations of the employer.
Any FIDIC based construction project shall involve properly experienced professionals, preferably at initial procurement and bidding terms stage, until the drafting of the construction contract and full implementation of the construction project.
