July 03, 2018
The Asian International Arbitration Centre launches its new Standard Form of Design and Build Contracts
The Asian International Arbitration Centre (the “AIAC”) is delighted to introduce its Standard Form of Sub-Contract for Design and Build Contracts (the “Design & Build SFC”), released in furtherance of a suite of Standard Form of Contracts (the “SFC”) in August 2017.
By launching the Design & Build SFC, the AIAC reacts to the increasing popularity of design and build contracts. Successful coordination of construction projects significantly depends on the effective and efficient administration of the contractual chain, including the design and build contracts entered into by the Contractors and Sub-Contractors. The Design and Build Contracts are designed to complement the initial set of the SFC and provide smooth administration of contractual relationships.
The Design & Build SFC addresses the problems in the construction industry from its grassroots. The Design & Build SFC incorporates the principles of contractual predictability as well as time and cost-efficiency. This will prevent deadlocks in construction projects and encourage the continuity of works and working relationships in spite of any differences arising during a construction project. In other words, at every phase of the contract, the focus remains on the project itself – not ancillary disputes that may arise.
Some of the key features of the Design & Build SFC include:-
- the possibility to maintain “Single-Point Responsibility” on the D&B Contractor;
- the Contractor’s responsibility for all aspects of the works, such as quality of materials, quality of workmanship and standard of design, etc.;
- the Employer’s responsibility for the general contract administration and auditing of the Contractor’s works;
- the finalisation of the Account on an elemental basis; and
- compliance with the Construction Industry Payment and Adjudication Act and, applicable GST provisions.
The free of charge Design & Build SFC can be easily adjusted to the needs of a particular user or project either within Malaysia or abroad. Prepared by an Expert Advisory Committee comprised of distinguished professionals in the industry, it reflects the best international standards.
The Design & Build SFC guarantees the quality of the contract as being both legally sound and practically usable by the various players in the construction sector. It is yet another milestone for the AIAC in its process of vertical integration and its push for dispute avoidance.
The Official Launch of the Design and Build SFC was attended by 300 construction professionals, lawyers, quantity surveyors, academicians and other interested stakeholders. In his Special Address, YA Dato' Lee Swee Seng mentioned that the Design and Build SFC is more user friendly than its predecessors, drafted in plain English and contains a number of novel provisions, such as clearer consequences upon termination and corruption as one of the grounds to terminate. YA Dato' Lee Swee Seng also expressed his appreciation to the drafters and emphasized that the Design and Build SFC helps the courts in the development of the law.
In the coming months, the AIAC will further expand its range of standard form contracts. Most significantly, the AIAC will be releasing internationalised standard form contracts. This will address the demand from the Centre's international users, hundreds of whom have downloaded standard form contracts in previous months.
To download a free copy of AIAC's SFC, please visit http://sfc.aiac.world.