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ZRVP Obtains a New Landmark Solution in an Arbitration Dispute Arising from a FIDIC Procurement Contract

Publication: ZRVP

ZRVP’s team, formed of Monica Strîmbei (partner) and Radu Noșlăcan (senior associate), represented a major local player in the civil construction sector, with over 50 years in the market, in a complex arbitration dispute arising from a FIDIC public procurement contract. The dispute ended with the client represented by ZRVP winning against a local contracting authority and the authority being ordered to pay a cumulative amount of several million euros.

The solution obtained by the ZRVP team addresses one of the problems often encountered in such FIDIC contracts, namely the placement of contractual liability if construction works are affected by natural phenomena such as flooding. The Arbitral Tribunal has also given a landmark ruling to the effect that the risk in the contract under consideration belongs to the beneficiary given the intervention of certain changes to the technical design after the date of submission of the tender.

In its reasoning for placing the risk on the beneficiary, the Arbitral Tribunal assessed the unforeseeable nature of the floods by reference to the date of submission of the tender by the contractor. Such an assessment of the concept of hardship is particularly important in situations where, as in the present case, certain changes to the construction project occur after the date of submission of the tender and for reasons relating to the authorities responsible for the tender.

At the same time, the method of adjusting the price of the public procurement contract was clarified by reference to ANAP (National Agency for Public Procurement) Instructions no. 2/2018 and no. 1/2019. Thus, it was ruled that ANAP Instruction no. 2/2018 must be applied by the contracting authorities and remains in force for the entire term of the contract, regardless of subsequent amendments to this instruction.
“In addition to the excellent result achieved by the ZRVP team, it is important to note that recourse to arbitration procedures has proven its effectiveness once again in a situation where the arbitration procedure lasted approximately two years, far less than the time required to resolve a dispute of such complexity by the common law courts”, said Monica Strîmbei.

In a context where many contracting authorities have refused to apply ANAP Instruction no. 2/2018 on the adjustment of the price of the public/sector procurement contract, ZRVP’s lawyers also managed to obtain an important solution on this point, in the sense that the instruction applies to ongoing contracts, thus settling a legal dispute related to the application over time of this instruction; namely that there remains an obligation, and not a faculty of the contracting authority to apply the updating of the contract price throughout the term of the contract, regardless of the intervention of new adjustment formulas through new ANAP instructions.

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