Common contractual issues faced by Malaysian contractors operating in Middle East using FIDIC form of contracts

Abstract

Construction projects are called international when parties from different countries enter into an agreement to carry out the work. Usually, parties use FIDIC standard forms of contracts, as they are widely used globally for complex international projects. During construction, generally, issues occur between parties of the contract when a party contends that, although, the words of the contract, taken literally, seems to apply to the events or the circumstances encountered but within the contemplation of the other party, these events and circumstances seems to be applied differently according to the wording of the same contract and/or the provisions of the governing law of the contract. That would misdirect the parties as to what should happen, who should do what, and often who should bear the cost. Therefore, this study has been taken to identify and categorize the issues of the international construction contract i.e. FIDIC, and, also, to determine the effect of the factors (legal system, language, and application of FIDIC) that are causing the issues, from the experience and the point of view of the Malaysian contractors who worked in the Middle East, specifically, Saudi Arabia and United Arab Emirates. and point out the key issues for the unwary to consider. The methodology of the study includes extensive research and a survey, designed accordingly, with participation of Malaysian professionals who have a vast knowledge and direct involvement in construction project in UAE and Saudi Arabia. The result of this study identified and categorized the issues; focused on key issues; and determined the effects of the factors (the legal system/governing law, language, and application of FIDIC) and how influential each factor is on those issues.