Cultural and political issues in the Middle East as they relate to infrastructure projects.

1. Cultural and Political Issues in
the Middle East
Francis Ho, Senior Associate Energy & Infrastructure Projects in the
Middle East
e-mail: fho@kslaw.com
Hilton Abu Dhabi, UAE
Phone: +971 2 652 3426
18 February 2010
Mobile: +971 50 557 0446

2. Local Sponsors
• May be bound by local laws regarding jurisdiction and
dispute resolution forum (e.g. Board of Grievances in
Saudi Arabia)
• Public policy requirements
– Prohibition of speculation
– Prohibition of gambling
– Other forbidden practices under Shari’ah law
• May be influenced by politics - e.g. embargo on use of
Israeli goods and services

3. Local Contractors
• Local content requirement may necessitate joint
ventures with local parties
– Advantages and disadvantages
– Risk of lack of expertise
– Cultural incompatibility - differing localised business practices
• Appropriate security for performance required
• Consider religious festivals and holidays:
– Eid al-Fitr
– Eid al-Adha
– Ramadan
– Summertime working hours

4. Split EPC Contracts
• Splitting EPC contract into on and off shore works can have tax
advantages
• Where there is a split EPC developer/ owner will generally request
“wrap” or “bridging” agreement which:
– takes precedence over split contracts
– provides for joint and several liability of on and off shore
contractors
– contains liquidated damages provision for the late performance
of entire EPC works
– contains overriding dispute resolution clause
• Imperative for parties to obtain local law advice to ensure contract
structure is compliant with local laws

5. Contract Administration and Expectations
• Consider relevant legal regime - applicability of
notices as condition precedent to claim
– Guillotine provisions?
• Civil law jurisdictions
– Obligations of good faith and cooperation

6. Managing Claims
• Evidentiary issues in international projects
– Without prejudice privilege
– Local rules of evidence
– GCC civil code jurisdictions - only disclose those documents requested
by other side
– Disclosure during mediation may be used in subsequent proceedings
• Managing contractual security
– Performance bonds and standby letters of credit
• Notice?
• Evidence?
• When to call?
• On demand?
• Revocable/irrevocable?
• Enforcement of arbitral awards and court judgments