Cultural and Political Issues in

Emerging Markets

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
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
– forbidden practices under Shari’ah law

• Bureaucracy
– delayed payment

• May be influenced by politics - e.g. embargo on use of

Israeli goods and services
• Perception of corruption
Local Contractors

• Local content requirement may necessitate joint

ventures with local parties
– 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
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
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
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 / standby letters of credit
• notice?
• evidence?
• when to call?
• on-demand?
• revocable/ irrevocable?

• Enforcement of foreign arbitral awards and foreign court judgments