Giz Const Law TM

Training Material on Construction Law
Training Material on
Construction Law
Organized & delivered by:
Zewdu Tefera Worke
Engineering Contracts Lawyer
December, 2018
Organized & delivered by: Zewdu Tefera Worke, Engineering Contracts Lawyer Page 1
Training on Construction Law

Table of Contents
………………………………………………………………………………………
 Conceptual Background
 Laws of Ethiopia
 Constitutional Foundation
 Construction Demand Regulation
 Construction Delivery Regulation
 Construction Industry Regulation
 Construction Program Regulation
 Construction Project Regulation
 Construction Contract Regulation
 Laws of Other Countries
 Public International Law
Training Program
On
Construction Law
Trainer: Zewdu Tefera Worke
(Day 1) Monday, December 10/17, 2018
Morning
Introduction 9:00-9:15am Trainees with the Trainer
Training Overview 9:15-10:00 am The Trainer
Conceptual Background: Law & Construction 10:00-10:30am The Trainer
Law
Tea Break 10:30-11:00am
Constitutional Foundation 11:00-12:00 am The Trainer
Construction Demand Regulation 12:00-12:30pm The Trainer
Afternoon
Construction Delivery Regulation:
Construction Industry Regulation 2:00-2:30pm The Trainer
Construction Program Regulation 2:30-3;00pm The Trainer
Construction Project Regulation 3:00-3:30pm The Trainer
Tea Break 3:30-4:00pm
Construction Project Regulation 4:00-4:30pm The Trainer
Construction Contract Regulation 4:30-5:00 pm The Trainer
Reflections 5:00-5:15pm Trainees & the Trainer
1. Introduction & Objectives
Introduction to the Training
This training covers the following four areas: viz., conceptual background on law &
construction law; laws of Ethiopia as related to construction; laws of other countries; and
some aspects of public international law.
As related to conceptual background, the concept & scope of law & construction law shall
be explored;
As related to the laws of Ethiopia, the following three-layer issues as related to construction
shall be addressed: viz., constitutional foundation for construction; construction demand
regulation; and construction delivery regulation, which covers, in turn, the following four-
layer issues: viz., construction industry regulation; construction program regulation;
construction project regulation; and construction contract regulation.
As related to the laws of other countries, the training shall explore & address where the
connective factors lie between a given construction contract & the possible laws of other
countries, as applicable law to such construction contract.
As related to international law, the training shall focus on some aspects of public
international law as related to a given construction contract relative to the formation &
effects of construction contract and construction dispute management.
Objectives of the Training
At the end of the training, the trainees be able:
 to define & understand the concept & scope of law and construction law;
 to explore & understand the constitutional foundation for construction;
 to explore & understand the construction demand regulation regimes;
 to explore & understand the four-layer regulation of construction delivery: viz.,
construction industry regulation; construction program regulation; construction
project regulation; and construction contract regulation;
 to explore & understand the laws of other countries how they come to into
connection with a given construction contract & how they regulate same;
 to explore & understand some aspects of public international law how it comes into
connection with a given construction contract & how it regulates same;
Construction Contract & Law: Overview
………………………………………………………………………………………
The Formula
………………………………………………………………………………………………………………
D
KP and/or LP: ROLE
V…?
(Developed by: Zewdu Tefera Worke, Engineering Contracts Lawyer)
………………………………………………………………………………………………………
The Legend
L: Law
K: Contract
P: Persons
and/or: cumulative with/alternatively (K and/or L)
D: Delivery
R: Relationship
O: Obligation
L: Liability
E: Enforcement
V: Variability (context) of all the above concepts (viz., LKPDROLE);
…………………………………………………………………………………………………………………………………………………………………
The Application
LV: Law…?
KV: Contract…?
PV: Persons…?
DV: Delivery…?
RV: Relationship…?
OV: Obligation…?
LV: Liability…?
EV: Enforcement…?
V: Variability (context) of all the above concepts….?;
Training on Construction Law

………………………………………………………………………………
2. Conceptual Background
 Law: Concept & Scope
 Law may generally be defined, from domestic jurisdiction perspective, as a
normative social rule enacted by the state & enforced by the state;
 Law is therefore a state’s command coming in to picture in different forms:
viz., constitution; proclamation; regulation; directives and so forth;
 Based on regulation of some defined relationship, laws are classified in to
public laws & private laws;
 Public laws include public international laws (mostly they are the product of
exchange of sovereign wills and regulating relationship say between two
states (bilateral relationship) or more states (multilateral relationship)) and
national public laws;
 National public laws generally aim to protect public interest & are
regulatory in nature; like the law of procurement; the law of financial
administration; investment laws; tax laws; environmental laws; and so
forth;
 National public laws are regulating relationship between the federal
government & the national regional states including the federal government
& the two city administrations and among state organs at such different state
levels;
 Public laws also regulating relationship between the state (at its different
level) and its citizens; like through tax laws; administrative laws like
(construction companies/consulting firms) professional certification, licensing
& registration laws;
 Private laws include private international law (also known as conflict of laws
or choice of laws) and national private laws;
 National private laws (like the Civil Code…) are, in principle, regulating
relationship between citizens & their private interest; like through contract
law; like private construction contract (see Article 1675 cum 2610-2631 cum
3019-3040);
 Exception to this is the law of administrative contract (see the Civil Code
Article 3131-3306) where the state or one of its administrative authorities
enter in to contract like public construction contract (see Article 1675 cum
3131-3206cum 3244-3296);
 Contracting parties under a given construction contract may establish connection
with the law based on the following three criterion: viz., nationality of contracting
parties; scope of the law; and contract;
 Laws base themselves on certain system known as legal system; most renown world
legal systems are: the civil law legal system (also followed by Ethiopia) & the
common law legal system (followed by UK, Common Wealth countries and other
countries);
 Construction Law: Concept
 In literature, construction law has been defined as follows:
 Construction law is a body of law that deals with matters related to building
construction & related fields.
 It covers a wide range of legal issues including:
 contract law;
 bonds & bonding;
 guarantees & securities;
 liens & other security interests;
 tendering;
 construction claims; and
 related consultancy contracts; (Emphasis added)
 The items included in the definition of construction law are relevant for
construction but are not sufficient;
 There is no as such a single or unified law or code which regulates the whole
aspects or spectrum of construction process & its management;
 The nature of “construction law” is thus eclectic; viz., it brings all relevant
regime of laws (public & private law regimes) together to regulate the
construction process & its management as illustrated herein below;
 Therefore, we do have construction related laws and not construction law as
such;
 Construction Related Laws: Scope
 The scope of construction related laws may come from & broadly encompass
the following three area of laws; viz.,
 the relevant laws of Ethiopia;
 the relevant laws of other countries; and
 the relevant aspects of public international law:
 The relevance & application of such laws may be different depending upon
the specific issue to be regulated or the particular phase in which the
construction project reached;
3. Laws of Ethiopia: Background
 The relevant laws of Ethiopia related to construction management in general and
construction project in particular may include:
 constitutional law;
 statutory laws ; and
 non-statutory laws;
 These construction related laws may include, as the case may be:
 federal laws;
 specific regional laws; and
 specific local laws ( viz., relative to AA City Administration & Dire Dawa
city administrations);
 In terms of time, such relevant & applicable laws may encompass the following time
horizon;
 the laws of the Empire of Ethiopia (1934-1966 E.C);
 the laws of the Derg Regime (1967-1983 E.C);
 the laws of the Transitional Government (1983-1987 E.C); and
 the laws of the federal system ((Nehase/August) 1987-to date E.C);

 Most of the discussions during the training are basically related to federal laws in
terms of its constitutional law, statutory laws (like proclamations or their
equivalent) and some aspects of non-statutory laws (like regulations or their
equivalent);
 Based on such construction related laws, there are also other supportive technical
and/or administrative documents which help achieve the objective of the
construction project & its process;
 These supportive documents may include, but not limited to, the following which
are issued by competent government authority (ies):
 This gives us the whole legal framework as related to construction related laws.
 Directives; like the federal procurement directive issued by the Ministry of
Finance & Economic Development based on the federal procurement law
(i.e., Proc. No. 649/2009);
 guidelines; like the development project preparation guideline issued by the
Ministry of Finance & Economic Development;
 technical codes; like Building Codes issued by the Ministry of Urban
Development, Housing & Construction;
 safety regulations; like for buildings issued by the Ministry of Urban
Development & Construction; and relevant municipalities;
2.1 Constitutional Foundation for Construction
 Background
 supreme: The constitution of every country is the supreme law of the land
or country;
 policy source: The constitution is the source of all policy including
development policies;
 source of laws: The constitution is the source of all laws of the country;
 vertical power: The constitution distributes powers vertically between the
federal government and the regional states; see Article 50
 horizontal power: The constitution distributes powers horizontally among

the three organs of state: viz., the legislative, the executive; and the
judiciary; see Article 50;
 This is true for the FDRE Constitution;
 Scope
 As related to construction, the FDRE Constitution provides the following key
& fundamental constitutional base; Some of the issues are of the following:
viz.,
 development: the constitution provides social & economic development
objectives; see Article 77(6) cum Article 89 & 90; the means to achieve these
constitutional objectives, among other things is the construction project;
 sustainable development: the constitution recognizes that social &
economic development to be based on the principle of sustainable
development; se Article 92 cum Article 43; this is crucially relevant for
construction projects (be it public or private development projects) as they
are required to undergo the environmental impact assessment to ensure
sustainable development;
 environmental safety: to ensure the clean & healthy environmental
objective is embedded in the constitution; this is crucially important for
development projects to be realized through defined construction project
with a view to regulate environmental pollution; see Article 92;
 property rights: it provides the public ownership of land which is one of the
critical input to the development projects through construction project; see
Article 40;
 property rights: this is crucial for investment & business creation for
private citizens & corporate entities; see Article 40 cum Article 43; the
businesses so created become themselves employers or contractors or
consultants and so forth;
 consultation; the constitution provides peoples right for consultation as
related to development policies & development projects; see Article 92(3);
this is crucially important for development projects to be realized through

construction project specially during planning, study & design phase of the
construction project;
 compensation: this is crucially important for development projects not to
displace people from their areas but if displacement is unavoidable the right
to provide adequate prior compensation; see Article 44(2); this is part of the
socio-economic impact study of every construction project during planning
& study plus design phase;
 international agreements: the constitution provides the status of
international agreements to which Ethiopia is a party (bilateral or
multilateral) within the Ethiopian legal system; see Article 9(4); such
international agreements may have their legitimate implications in terms of
determining:
 the scope & method of construction project procurement (for physical
and/consultancy);
 the construction project delivery system (design-bid-build or
otherwise);
 the origin of supply;
 disbursement of funds;
 tax matters;
 public finance administration matters; and
 method of construction dispute resolution; and so forth..
 transparency & accountability: the constitution provides these
fundamental principles; see Article 12; this is crucially relevant with respect
to construction project procurement process;
 Focus
 The focus, as related to construction, shall then be on the following three
fundamental issues or constitutional objectives:
 social development objectives;
 economic development objectives; and
 environmental objectives as captured with sustainable development;
2.2 Construction Demand Regulation:

 Background
 Construction demand originates from the constitution itself in terms of the
stated social development objectives & economic development objectives;
 This constitutional foundation is also supported by specific public policy
direction & further by legal regulation & institutional framework;
 social development policy;
 economic development policy;
 environmental policy; and
 investment policy;
 From construction demand perspective two key issues are thus relevant: viz.,
 investment in social & economic development; and
 sustainable development;
 The social development policies; the economic development policies; and the
environmental policy are the means to achieve both development & its
sustainability plus its safety;
 Normative rules (the legal framework) & institutional framework are
playing key role to guide, regulate, realize & sanction the two stated
fundamental objectives; viz., development & its sustainability;
 Construction demand thus driven by development & its sustainability;
 Construction Demand Sources
 There are the following fourfold construction demand sources:
 public investment;
 corporate investment;
 investment by voluntary organizations; and
 investment by individuals;
 The concept of investment basically explained in terms of expending asset
(cash, property and/or technology…) aimed to generate profit (return on
investment); some investment discussed here may not necessarily aim to
generate profit;
 All such sources, however, provide market opportunity to the construction

industry & specific stakeholders;
 Public Investment
 Public investment in construction may come from two sources; viz., domestic
& international;
 Domestic Public Investment
 Domestic public investment as related to construction demand may
come from the relevant GTP at federal level; at regional level; and at
the two city administrations level (viz., Addis Ababa & Dire Dawa);
 The GTP is to be prepared & reviewed by the National Planning
Commission; further regulated by annual (capital) budget law; capital
budget management laws; and guided constitutionally by sustainable
development principles & other detail environmental laws including
international obligations pertaining to climate change &
sustainability;
 The GTP provides thus the need for (social & economic)
infrastructure development which is the basis for construction
demand;
 Domestic public investment may also originate from joint investment
by Ethiopian government and a given foreign public capital
(bilateral);
 This joint investment may trigger some form of construction demand
depending on the permitted investment areas;
 The latter public investment is to be governed by the host government
investment (joint venture) laws; and by international legal
instrument (if ratified) like the Washington Convention (1966), the
Convention which establishes the Center for Settlement of Investment
Disputes;
 Public Private Partnership (PPP) is another form of strategic public
investment first fully by private capital; the result of the private
investment finally becoming public asset in form of (economic and/or
social) infrastructure; PPP first invited by procurement regime (see

Proc. No. 649/2009 the federal procurement law) but also regulated by
investment laws; see also Proc. No. 1076/2018; Public Private
Partnership Proclamation;
 International Public Investment
 International public investment related to the construction demand
(mostly building related) may originate from the following
international institutions; viz., from
 from bilateral institutions like foreign embassies basing in Ethiopia);
 from regional institutions based in Ethiopia;
 from continental institutions (Africa) based in Ethiopia; and
 from global or multilateral institutions based in Ethiopia;
 Corporate Investment
 Corporate investment may originate from the following two sources;
viz., domestic capital and/or foreign capital;
 Domestic investment may originate from Ethiopian nationals or
otherwise as regulated by the investment laws of the country as
organized like in the form of share companies or private limited
companies or otherwise (Enterprise) and as regulated by the
Commercial Code of Ethiopia and other applicable laws;
 Foreign investment may originate from foreign direct investment
and/or joint investment by domestic & foreign capital in the permitted
investment sectors as regulated by investment policy & law;
 Such corporate investment may trigger some form of construction
demand like building for commercial purpose in the form of real
estate building or non-real estate building; or building for industrial
purposes; or building for agricultural purposes;
 This type of investment is regulated by the investment laws of the
country & institutionally by Ethiopian Investment Commission;
 Investment by Voluntary Organizations

 Voluntary organizations licensed, registered & operating in Ethiopia
may of two types: viz., local or international;
 Local voluntary organizations may take the following organizational
forms like non-governmental organizations (NGOs); associations (like
for professionals or otherwise) and so forth;
 international voluntary organizations may take various forms;
 Such local and international voluntary organizations may need
institutional buildings for their operations as construction demand; or
some form of building structure aimed to some defined social and/or
economic purpose in mind;
 Investment by Individuals
 Individuals may need construction for their private purposes at their
specific urban setting or otherwise;
 The investment may mainly go to residential building and other
ancillary structures like recreational or otherwise;
 Implications: Market vs. Opportunity
 key: demand for construction trigger market potential for construction
stakeholders like for contractors; designers; suppliers and so forth;
 scope: planning; study; design; construction; construction supervision;
and/or construction contract management; construction private financing
like in case of PPP;
 strategy: it is up to such respective stakeholders to be strategic, selective &
competitive in their market strategy;
2.3 Construction Delivery Regulation: Excellence vs. Challenges
 The above various construction demand is to be delivered (supplied) based on its
specific policy regime known as Construction Industry Development Policy & based
on the following four-layer regulations; viz.,
 The four-layer issues are of the following:
 construction industry regulation;
 construction program regulation;

 construction project regulation; and
 construction contract regulation;
 Based on constitutional foundation, construction delivery (supply) mainly regulated
thus by the following threefold interventions; viz.,
 policy: specifically by Ethiopian Construction Industry Development Policy
to provide key policy & strategic direction;
 laws: by required legal framework (normative rule) to guide, to regulate, to
empower, to facilitate & to sanction the construction delivery process &
stakeholders alike;
 institutions: by institutional framework set up for the implementation of
the stated policy objectives (integrated leadership & governance); like the
Ethiopian Construction Industry Development Council; the Ministry of
Urban Development & Construction; and the Ethiopian Construction
Project Management Institute; and so forth;
 Implications to the Stakeholders;
 stakeholders: threefold: viz., regulators; supporters; implementers like
employers; contractors; designers; suppliers; and so forth; being critical
stakeholders as supplier of stated engineering services to the construction industry;
 industry: partaking in a non-sectoral; an integrated national construction
industry leadership & strategic agenda setting process;
 program: being informed of key social and economic development program
shaping process at all government levels viz., federal, regional & local levels (Addis
Ababa & Dire Dawa);
 project; based on such social & economic development program, being informed
about key construction projects forthcoming and making itself
institutionally/organizationally & strategically ready, accordingly;
 contract; creating awareness on & sustaining an improved construction delivery
system, improved procurement method & improved construction contract structure
and making itself strategically & institutionally/organizationally ready, accordingly;
2.3 .1 Construction Industry Regulation

 Background
 The construction industry is a regulated industry;
 The construction industry has its own policy: Construction Industry
Development Policy
 By construction industry regulation it means the regulation of the industry
as a whole, at cross development sector level, to provide leadership to the
industry in an holistic & integrated manner both at the federal & regional
level/local levels;
 Scope:
 The construction projects which are an integral part of the Ethiopia
construction industry are: building; water & energy; transport &
communication;
 With respect to issues to be considered at the construction industry level
providing regulatory framework is one.
 Regulatory framework includes laws which is the subject of this part of the
training;
 Ownership:
 The following institutions are relevant in providing construction industry
level leadership & regulation;
 The Ethiopian Construction Industry Development Council (overall &
integrated leadership to the industry);
 Ministry of Urban Development & Construction (registration & professional
certification, development of standards for construction works …);
 Ministry of Finance (development of standard conditions of contract for
works & consultancy services; standard bidding documents; regulating
procurement process for works;..); through PPPAA;
 Ministry of Finance: regulating the overall public private partnership (PPP)
arrangement & its overall (like procurement & contract or project)
management;
 The Ethiopian Construction Project Management Institute (building

construction project management capacity & certification of construction
professionals ;…);
 the comparable regional and local (Addis Ababa, Dire Dawa) institutions
related to construction;
 Legal Framework: existing & future laws
 The industry awaits the development, adoption & enforcement of those cross
sectoral & industry-wide applicable laws which regulate the construction
industry as a whole;
 The following are those laws which identify those institutions for the overall
leadership of the construction industry;
 Reg. No. 419/2017, which establishes & empowers the Construction Industry
Council;
 Proc. No. 1097/2018 the statutory instrument which re-establishes the
Ministry of Urban Development & Construction;
 Proc. No. 649/2009: the statutory instrument which re-establishes &
empowers the Public Procurement & Property Administration Agency; the
Agency being accountable to the Ministry of Finance;
 Proc. No. 1076/2018: the statutory instrument which provides the complete
legal framework for the management of PPP in Ethiopia as spearheaded by
Ministry of Finance;
 Reg. No. 289/2013: the non-statutory legal instrument which establishes &
empowers the Ethiopian Construction Project Management Institute; the
Institute being accountable to the Ministry of Urban Development &
Construction;
 Draft Proc. No. /2013: Construction Industry Registration draft Law;
 the applicable regional and local (Addis Ababa, Dire Dawa) laws: statutory
or otherwise, if any;
2.3.2 Construction Sector Development Program Regulation

 Background
 Social & economic development is a declared constitutional objective of the
country;
 Respective public institutions are created to realize these social & economic
development objectives;
 A regulatory environmental protection institutions have also been established
to ensure the sustainability & safety aspect of such development processes;
 Development institutions develop their respective social & economic sector &
sub-sector development programs;
 Such public social & economic development programs are based on their
respective development policy and the GTP;
 Such public social & economic sector & sub-sector development programs,
with respect to their physical facility/infrastructure development requirement,
are the basis for such respective construction projects;
 The private sector, as far as the investment policy & law of the country
permits, may also participate in such social & economic development
process;
 Such private investment, domestic and/or foreign, may take, based on the
applicable investment law & other relevant laws, different form;
 Such private sector development investments or programs, with respect to
their physical facility development requirement, are the basis for such
respective & specific construction projects;
 The following discussion shall however focus on public social & economic
development process & its management;
 Social Sector Development Program Regulation
 Scope
 Social sector development program regulation may encompass the following
areas:
 agricultural development program;
 housing development program;

 water supply infrastructure development program;
 health sector development program;
 sanitation facilities development program;
 education sector development program;
 sports infrastructure development program;
 Such broad sectoral development programs cut across diverse institutions;
 Some of them may have their own sub-sector development program under
them;
 Ownership
 The following institutions are legally mandated for social sector development
program;
 These are of the following:
 Ministry of Agriculture;
 Ministry of Urban Development & Construction;
 Ministry of Water, Irrigation & Electricity;
 Ministry of Health;
 Ministry of Education;
 Ministry of Science & Higher Education;
 Under each of such federal institutions, there are also specific other
institutions which participate in the realization of such social development
objective;
 Respective & specific institutions:
 of the regional states; and
 of the two city administrations;
shall take also their respective social sector development program;
 Legal Framework
 The applicable legal framework for social sector development program
regulation shall be of the following:
 Proc. No. 1/1995: the FDRE Constitution: Article 90 cum 43 cum 92:
Social Development Objectives with environmental safety &
sustainable development objectives, respectively;
 Proc. No. 1097/2018:
 Ministry of Agriculture;
 Ministry of Urban Development & Construction;
 Ministry of Water, Irrigation & Electricity;
 Ministry of Education;
 Ministry of Science & Higher Education;
 Ministry of Health;
 Proc. No. 769/2013: the Investment Proclamation;
 Proc. No. 624/2009: the Ethiopian Building Proclamation;
 Proc. No. 197/2000: the Ethiopian Water Resources Management
Proclamation;
 Proc. No. 200/2000: the Public Health Proclamation;
 Charter Proc. No. 361/2003; the Addis Ababa City Government
Charter Proclamation;
 Charter Proc. No. 416/2004: the Dire Dawa City Government Charter
Proclamation;
 Reg. No. 243/2011: the Ethiopian Building Regulation;
 Reg. No. 115/2005: the Ethiopian Water Resources Management
Regulation;
 The legal framework encompasses;
 constitutional law;
 the applicable statutory laws;
 the applicable non-statutory laws;
 The legal framework thus provides:
 fundamental & constitutional base;
 institutional creation and/or ownership & mandate; and
 detail subject matter (i.e. the development itself) regulation;
 Economic Sector Development Program Management

 Scope
 Economic sector development program regulation may encompass the
following areas:
 transport development program;
 energy development program;
 industry development program;
 real estate development program;
 irrigation development program;
 communication infrastructure development program;
 Such sectoral development programs cut across diverse institutions;
 Some of them may have their own sub-sector development programs; like
 under transport sector development program;
 road sector development program;
 rail way sector development program;
 air port infrastructure development program;
 energy sector development program;
 hydropower development program;
 geothermal power development program;
 wind power development program;
 solar energy development program;
 Ownership
 The following institutions are legally mandated for social sector development
program management;
 These are of the following:
 Ministry of Agriculture;
 Ministry of Urban Development & Construction;
 Ministry of Transport;
 Ministry of Water, Irrigation & Electricity;
 Ministry of Trade & Industry;
 Ministry of Mines, Petroleum & Natural Gas;

 Ministry of Innovation & Technology;
 Under each of such federal institutions, there are also specific other
institutions which participate in the realization of such social development
objective;
 Respective & specific institutions:
 of the regional states; and
 of the two city administrations (Addis Ababa, Dire Dawa);
shall take also their respective share for such economic sector
development program;
 Legal Framework
 The applicable legal framework for economic sector development program
management shall be of the following:
 Proc. No. 1/1995: the FDRE Constitution: Article 89 cum 43 cum 92:
Economic (Development) Objectives with environmental safety &
sustainable development objectives, respectively;
 Proc. No. 1097/2018 : which mandates the respective ministries
mentioned;
 Ministry of Agriculture;
 Ministry of Trade & Industry;
 Ministry of Transport;
 Ministry of Innovation & Technology;
 Ministry of Urban Development & Construction;
 Ministry of Water, Irrigation & Electricity;
 Ministry of Mines, Petroleum & Natural Gas;
 Proc. No. 624/2009: the Ethiopian Building Proclamation;
 Proc. No. 197/2000: the Ethiopian Water Resources Management
Proclamation;
 Proc. No. 1076/2018; the Public Private Partnership Proclamation;
 Charter Proc. No. 361/2003; the Addis Ababa City Government

Charter Proclamation; and their respective economic development
institutions;
 Charter Proc. No. 416/2004: the Dire Dawa City Government Charter
Proclamation; and their respective economic development
institutions;
 Reg. No. 243/2011: the Ethiopian Building Regulation;
 Reg. No. 115/2005: the Ethiopian Water Resources Management
Regulation;
 The legal framework encompasses;
 the constitutional law;
 the applicable statutory laws; and
 the applicable non-statutory laws;
 The legal framework thus provides:
 fundamental & constitutional base;
 institutional creation and/or ownership (of the respective
development objective) & mandate in respect thereof; and
 detail subject matter (i.e. the development itself) regulation;
2.3.3 Construction Project Regulation
 Background
 Construction project is derivative of specific (social or economic)
development program;
 Construction project unlike development program, which is a planning
process, is specific intervention & action-oriented;
 Construction project management is thus characterized by the following
fundamental features:
 Features
 type: it is project based & project type specific (either being building or
engineering);
 institution: it is institution (as owner or client) specific;
 party: it is contracting parties specific;

 delivery: it is project delivery system specific(or it has to be specific);
 payment: it is pricing mechanism & payment system specific;
 method: it is project procurement method specific;
 location: it is project location/site specific (rural or urban with some
interface of both);
 time: it is project time requirement (duration) specific;
 cost: it is project cost requirement specific (budget);
 source; it is project finance source specific (domestic and/or international);
 quality: it is project quality requirement specific;
 input: it is project input intensive & input specific;
 contract: it is construction contract type specific (based on the selected
delivery sub-system & payment system);
 stakeholder: it is stakeholder intensive & stakeholder specific;
 law: in terms of regulation, it is applicable (governing) law specific;
 phase: its regulation also construction project phase specific;
 Focus; twofold
 To make it systematic, the application of such construction project related
statutory & non-statutory laws are to be analyzed based on defined
construction phase;
 planning & study phase;
 design phase;
 procurement phase;
 construction phase; and
 post-construction phase;
 In all such construction phases, those statutory and/or non-statutory laws
may, generally, regulate the following aspects of the construction project
phase & process, as the case may be;
 regulatory requirements;
 input regulation;
 information regulation;
 requirements regulation;
 safety regulation;
 services regulation; and
 process regulation;
 Now, let us examine each, in turn.
 regulatory requirements;
 planning & zoning regulation (land use plan); as related to urban master plan;
structure plan; local development plan, if any;
 environmental regulation; in terms of undertaking environmental impact
assessment (EIA for projects); strategic impact assessment(as related to Policy;
Plan; and Program); risk assessment; …
 resource utilization regulation: like permit for use of water resources;
 quality & standards regulation: as related to construction equipment/plant &
construction materials;
 building permit regulation; by respective municipalities;
 building construction process inspection/regulation; by respective municipalities;
 building occupancy permit regulation; by respective municipalities;
 foreign exchange permit regulation; by the National Bank of Ethiopia;
 equipment finance lease regulation; by the National Bank of Ethiopia & by Ministry
of Trade;
 expatriate staff & labour permit regulation; by the Ministry of Labour & Social
Affairs;
 immigration related regulation; as related to expatriate staff & labour for residence
permit purpose; by the National Intelligence & Security Service;
 input regulation;
 design input; as related to employment of design consultants;
 land input; acquisition of rural or urban land;
 financial input; capital budget for the construction project from domestic and/or
foreign source;
 labor input;
 considered at design phase (in terms of specification);

 considered at procurement (tendering) phase (in terms of estimating bid
price); and
 considered at construction phase (in terms of achieving specified quality
requirements as related to workmanship);
 construction materials input;
 considered at design phase in terms of specification;
 considered at procurement (tendering) phase in terms of estimating bid
price; and
 considered at construction phase in terms of achieving specified quality
requirements;
 construction equipment input;
 considered at design phase (in terms of specification);
 considered at procurement (tendering) phase in terms of estimating bid
price; and
 considered at construction phase in terms of achieving specified quality
requirements;
 information regulation;
 social & economic development information; from Central Statistics Agency; under
Ministry of Finance;
 demographic information; from Central Statistics Agency;
 hydrological information; from Ministry of Water, Irrigation & Electricity;
 geological information; from Ethiopian Geological Survey; under the Ministry of
Mines, Petroleum & Natural Gas;
 metrological information; from National Meteorology Agency under the Ministry
of Water, Irrigation & Electricity;
 geo-spatial information; from Ethiopian Geo-spatial Information Agency under
National Planning Commission; see Proc. No. 1079/2018;
 requirement regulation;
 public consultation; as related to project design & implementation; it is
constitutional requirement;
 payment of compensation; as related to acquisition of rural and/or urban land;

including affecting other economic interests; like farmers interests; pastoralists
interest; building; fences; public utilities;
 consideration of tax; VAT; income tax; customs duty; turn over tax;
 consideration of public holidays & rest days; re: for construction program purpose;
 safety regulation;
 natural environment safety;
 scope; biosphere & physical environment;
 at planning; design; and implementation phase;
 heritage environment safety;
 human environment safety;
 scope; staff & labour working on the project; the general public around the
project area; and end users of the project;
 built-environment, as related to neighboring structures;
 scope: the project under construction; neighboring structure, if any; and
any structure within the country;
 public utilities environment safety;
 scope; water distribution network; waste water network telecommunications
network; and power network;
 seismic & other design safety codes; codes & guidelines; specially at design phase;
 service regulation;
 consultancy service; for project supervision & contract administration;
 equipment lease service input; operative or hire purchase lease service;
 technical investigation services;
 testing services; as related to soil; material; chemical;…
 transportation services; by sea; by land (truck & rail); by air;
 insurance services; as to bid security; performance security; retention money
security; property insurance; liability insurance; life insurance; including
professional indemnity insurance;
 banking services; bid security in form of certified payment order (CPO); advance
payment guarantee; letter of credit services (for importation of construction
equipment and/or construction materials);
 customs security services; as related to customs bond; as related to tax exempted
foreign contractor;
 customs clearance services; warehousing services; dry port services;
 pre-shipment inspection services, if any;
 forensic engineering services; as related to structural failure assessment of causes of
same;
 claims expert services; specially for complex construction claims; and international
contractor’s and/or consultant’s claims request;
 dispute settlement services; as related to alternative dispute resolution (ADR)
system; as related to construction mediation; construction conciliation;
 dispute resolution services; as related to alternative dispute resolution (ADR)
system; as related to adjudication (Dispute Board); and as related to
arbitration;
 process regulation; i.e., procurement laws;
 for procurement of works; in case of public procurement;
 for procurement of services; like consultancy services in case of public
procurement;
 for procurement of goods; like procurement of construction materials and/or
construction equipment in case of public procurement;
 Let us examine each of the construction phase from construction related laws
perspective;
 Design Phase: Background
 Design phase assumes that the planning & study phase of a construction project has
been done and the construction project under consideration has been found feasible
or necessary;
 The relevant laws are of the following;
 Input Regulation
 The inputs to the construction at this stage may include: design; finance; land and
information;
 Design input;
 procurement law: Proc. No. 649/2009 (the Public Procurement & Property
Administration Law) cum The Federal Government Procurement Directive
cum the Standard Bidding Document for Consultancy Services;
 the law of contract; see Article 1675-2026; of the Civil Code
 the law of professional services; see Article 2632-2638 cum Article 2610-
2631; of the Civil Code;
 the law for professional liability: see Article 2626 cum 2031; of the Civil
Code;
 international agreement: If the source of finance being international, the
procurement process may be regulated based on that specific international
financial agreement;
 financial input;
 the budget law: of each fiscal year; for capital budget
 see like Proc. No. 1047/2017 (the 2010 (E.C)) Fiscal Year Federal
Government Budget Law);
 the financial administration law; see Proc. No. 648/2009 (the Federal
Government Financial Administration Law) cum 1097/2018 (the Ministry of
Finance);
 the water resources fund law: (for water resources development projects);
see Proc. No. 268/2002 (Ethiopian Water Resources Development Fund);
 the bilateral or multilateral financial international agreement; see the
specific ratification proclamation; as related to loan or aid to form the
capital budget of the project;
 land input;
 rural land acquisition (through expropriation proceeding) & management
laws;
 see Proc. No. 1/1995 cum 31/1975 cum 455/2005 cum 456/2005; plus the
specific region or city administration applicable laws;
 urban land acquisition (through expropriation proceeding) & management
laws:
 see Proc. No. 1/1995 cum 47/1975 cum 721/2011; in all urban setting federal
& regional;
 see Regulation No. 135/2007 compensation related issues; see also the
establishment legal instrument of the Federal Infrastructure Integration
Agency (re: mandate on quantum of compensation);
 information input
 social & economic development information;
 see Proc. No. 442/2005 from Central Statistics Agency; demographic
information;
 hydrological information; see Proc. No. 1097/2018 cum Proc. No. 197/2000;
from Ministry of Water, Irrigation & Electricity;
 geological information; see Proc. No. 194/2000: from Geological Survey of
Ethiopia;
 geo-spatial information; from Ethiopian Geo-spatial Information Agency;
 Meteorological information: see the establishment of the National
Meteorology Agency;
 Regulatory Requirement
 planning & zoning regulation:
 master plan or structure plan laws of a given urban setting; like Proc. No.
361/2003 (the Charter Proclamation of the City of Addis Ababa) cum
(master) structure plan of the city of Addis Ababa;
 Proc. No. 624/2009 for building projects in all urban setting federal &
regional;
 Reg. No. 243/2011: the Ethiopian building regulation;
 environmental regulation:
 the constitutional law: Proc. No. 1/1995; stating environmental safety &
sustainable development;
 Environmental organs law:
 see Proc. No. 295/2002 (Environmental Organs Law which re-establishes
empowers the Environmental Protection Authority of Ethiopia EPA) cum
Proc. No. 916/2015 (which establishes the Ministry of Environment & Forest
& Climate Change);
 environmental impact assessment laws: see Proc. No. 299/2002 cum all other
sectoral environmental laws; see also other applicable guidelines;
 environmental pollution control laws: see Proc. No. 300/2002 cum all other
sectoral environmental laws;
 resource utilization regulation

 like water:
 securing permit (from the Ministry of Water, Irrigation and Electricity) to
develop water resources as related to water resources development projects
like irrigation; power; water supply;
 see Proc. No. 1/1995 cum 1097/2018 cum 197/2000 (water resources
management law) cum Regulations No. 115/2005 (for water resources
management regulation);
 quality & standard regulation;
 as related to construction materials & equipments;
 see Proc. No. 413/2004; the law which establishes the quality & standards of
Ethiopia;
 see also the legal instruments establishing the quality infrastructure in
Ethiopia;
 Requirements Regulation
 public consultation:
 see Proc. No. 1/1995 cum 299/2002 (Environmental Impact Assessment Law)
cum 455/2005 (Expropriation of Landholding for Public Purposes &
Compensation Law); as related to development & environmental
consultation;
 compensation:
 see Proc. No. 1/1995 cum 455/2005 cum Regulations No. 135/2007; see also
state assistance based on socio-economic study; and consider also
international financial institutions requirement for Resettlement Action
Plan (RAP);
 tax matters: the tax laws of the country;
 see Proc. No. : 285/2002 (VAT) & applicable regulations;
 see Proc. No. : 979/2016 (Federal Income Tax) & applicable regulations;
 see Proc. No. : 308/2002 (TOT) & applicable regulations;
 see Proc. No. : 622/2009 (Customs Duty) & applicable regulations, if any;
 Safety Regulation
 built-environment:
 see Proc. No. 624/2009 cum Regulations No. 243/2011 (the building proclamation &
regulation) and other relevant laws;
 public utilities:
 see Proc. No. 624/2009 cum 464/2004 (power & telecommunication networks) cum
10/1995 (water & waste water networks);
 seismic & other design safety considerations; codes & directives;
 Procurement Phase: Background
 This phase is mainly characterized by procurement, negotiation & contract;
 The procurement process may have three aspects: consultancy services & the
procurement process itself & the tax requirement;
 consultancy input
 the employer (client) now requires consultancy services to prepare tender
documents and to manage the subsequent procurement process including
advising the client on the evaluation & selection of contractors; related laws
are of the following;
 the law of contract; see Article 1675-2026; of the Civil Code
2631; of the Civil Code
Code;
 international agreement; If the source of finance being international, the
 financial input
 the budget approved for design may not swerve for procurement &
subsequent implementation in this case the following construction related
law may apply;
 the budget law of each fiscal year; for capital budget like Proc. No.
1047/2017 (the 2010 (E.C)) Fiscal Year Federal Government Budget Law);
 the financial administration law; Proc. No. 648/2009 (the Federal
Government Financial Administration Law) cum 916/2015 cum 1097/2018
(the Ministry of Finance);
 the water resources fund (for water resources development projects); Proc.
No. 268/2002 (Ethiopian Water Resources Development Fund);
 the bilateral or multilateral financial international agreement; like the
specific ratification proclamation; as related loan or aid to form the capital
budget of the project;
 Procurement Regulation
 procurement law:
 see Proc. No. 649/2009 (the Public Procurement & Property Administration Law)
cum The Federal Government Procurement Directive cum the Standard Bidding
Document for Works;
 this law regulates the procurement process: from invitation for bids up to contract
award;
 If the source of finance being international, the procurement process may be
regulated based on that specific international financial agreement;
 see Proc. No. 1076/2018: the law which regulates the procurement process &
contract management process of PPP Projects in Ethiopia;
 Requirement Regulation
 The participation of bidders in the procurement process may require to fulfill
certain requirements; considering
 tax obligations;
 securing bid security;
 securing performance security (for winner bidders);
 tax laws;
 see Proc. No. : 285/2002 cum 609/2008 (VAT);
 see Proc. No 286/2002 cum Reg. No. 164/2009 (Income Tax); 308/2002 cum
 see Proc No. 611/2008 (TOT);
 see Proc No. 622/2009 (Customs Duty); see also amendment laws;
 security related laws:
 bid security from insurance companies or banks;
 performance security from insurance companies;
 customs security;
 Construction Phase: Background
 The construction phase is the most central point with respect to legal regulation of a
construction project;
 The regulation encompasses the following diverse areas:
 contract regulation: as to its effects;
 input regulation as to the construction project like: consultancy; land;
finance; labor; construction material; construction equipment;
 regulatory requirements: as related to planning & zoning; quality &
standard; construction process(as related to building); and permits as to
foreign currency; equipment finance lease; immigration; and so forth;
 safety regulation: as related to: the natural & cultural (heritage)
environment; the human environment; the built environment; and the
public utilities environment;
 requirement regulation: as to tax matters; rest days & public holidays;
 security regulation: as related to insurance; banking and customs security;
 disputes regulation: as related to negotiation; conciliation; arbitration; and
litigation;
 Let us examine each, in turn;
 Contract Regulation
 Background
 the Law of Contract:
 see the Civil Code: Article 1731-2026; regulates basically effects of the signed
construction contract and its interpretation; performance; variation; and non-
performance including proof of same;
 the Law of Public Construction Contract;
 see the Civil Code: Article 3131 ff (Administrative Contract) cum 3244 ff (the law of
contract for public works);
 the Law of Private Construction Contract;
 see the Civil Code: Article 1675 ff cum 2610 ff cum 3019 ff;
 Consultancy input
 the employer (client) now requires consultancy services for continuous
design services; for project supervision; contract administration; related
laws are of the following;
 the law of contract; see Article 1675-2026 of the Civil Code;
2631; of the Civil Code
Code;
 international agreement; if the source of finance being international, the
 Land input
 this related to the contractual obligation of the employer under the
construction contract to provide site & access thereto (i.e., from time to
time); construction related laws are of the following;
 rural land acquisition (through expropriation proceeding) & management
laws; Proc. No. 1/1995 cum 31/1975 cum 456/2005; plus the specific region
applicable laws;
 urban land acquisition (through expropriation proceeding) & management
laws: Proc. No. 1/1995 cum 47/1975 cum 721/2011; in all urban setting:
federal & regional;
 financial input:
 the budget law: for capital budget like Proc. No. 1047/2017 (the 2010 (E.C))
the current Fiscal Year Federal Government Budget Law);
 the financial administration law; Proc. No. 648/2009 (the Federal

Government Financial Administration Law) cum 1097/2018 (the Ministry of
Finance);
 the water resources fund (for water resources development projects); Proc.
No. 268/2002 (Ethiopian Water Resources Development Fund);
 the international financial agreement; (either bilateral or multilateral) if the
source of finance being international, the project financing (disbursement)
process shall follow that specific international financial agreement, as
ratified by domestic statutory law; see also Proc. No. 1097/2018 cum
648/2009 the role of the Ministry of Finance in such financing process;
 labor input:
 labor is a critical input to the construction process, which determines the
direct cost of the construction project;
 its regulation may have domestic & international dimensions;
 The Labor Law; see Proc. No. 377/2003 (the labor law proclamation) cum
466/2005 (its amendment);
 International dimension: see the relevant ILO Conventions to which
Ethiopia is a party;
 construction materials input: see below
 construction equipment input: see below
 Regulatory Requirements
 planning & zoning;
 master plan or structure plan cum local development plan laws of a given
urban setting;
 like Proc. No. 361/2003 (the Charter Proclamation of the City of Addis
Ababa) cum structure plan of the city of Addis Ababa;
 Proc. No. 624/2009 for building projects in all urban setting federal &
regional;
 construction regulation:
 the building law: see Proc. No. 624/2009 cum Reg. No. 243/2011:
 this time the regulatory intervention may include: issuing building

construction permit; construction process inspection; issuing occupancy
permit if the building is completed; plus any building height regulation;
 standard & quality:
 as related to construction materials & machineries;
 see Proc. No. 413/2004; the law which establishes the quality & standards of
Ethiopia;
 permits:
 the Central Bank Law; regulation & issuance of foreign currency permit by
the National Bank of Ethiopia;
 the Law of Financial Lease: the National Bank of Ethiopia & the Ministry of
Trade to regulate the operation & management of financial lease; see Proc.
No. and Proc. No. 1097/2018 (as related to Ministry of Trade & Industry);
 the Labor Law; Proc. No. 377/2003 cum 1097/2018; the Ministry of Labor &
Social Affairs to issue work permit for expatriate staff & labor;
 the Immigration Law; see Proc. No. 354/2003; to issue resident permit for
expatriate project staff & labor;
 Safety Regulation
 natural environment:
 non-sectoral environmental laws; to ensure sustainable
development & environmental safety;
 see Proc. No. 295/2002 cum 803/2013 cum 299/2002 cum 300/2002 &
related laws;
 Sectoral environmental laws; see, for example:
 Forestry Conservation, development & Utilization Proclamation, Proc. No.
94/2002;
 Mining Operation Council of Ministers Regulations No. 182/1994;
 Research & Conservation of Cultural Heritage Proc. No. 209/2000;
 Fisheries Development & Utilization Proc. No. 315/2003;
 the Ethiopian Water Resources Management Proc. No. 197/2000;
 A Proclamation to Promote the Development of Mineral Resources, Proc.
No. 52/1993;
 Institute of Biodiversity Conservation & Reserve Establishment

Proclamation, Proc. No. 120/1998 cum 381/2004 cum Reg. No. 291/2013;
 Awash National Park Order No. 54/1969; Simien National Park Order No.
59/1969;
 Council of Ministers Regulations to Declare Ethiopian Standards-Drinking
Water Specification, Regulations No. 12/1990;
 Federal Rural Land Administration, Proc. No. 456/2005;
 Radiation Protection Authority Establishment Proc. No. 79/1993;
 Urban Zoning & Building Permit Proc. No. 316/1987, if applicable;
 Federal Urban Planning Institute Establishment Proc. No. 450/2005, if
applicable;
 international environmental agreements;

 Article 9 (4) of Proc. No. 1/1995 cum ratified international environmental
agreements like:
 Convention on the Prohibition of the Development, Production, Stockpiling
and Use of Chemical Weapons and on Their Destruction Ratification Proc.
No. 30/1996;
 UNs Convention to Combat desertification in those Countries Experiencing
Serious Drought and/or Desertification, Particularly in Africa Ratification
Proc. No. 81/1997;
 Basel Convention on the Control of the Trans boundary Movement of
Hazardous Wastes and Their Disposal Ratification Proc. No. 192/2000;
 Rotterdam Convention Ratification Proc. No. 278/2002; (NB: the
proclamation is meant for the ratification of the Rotterdam
Convention on Prior Informed Consent Procedure for certain hazardous
Chemicals & Pesticides in International trade;);
 The Stockholm Convention on Persistent Organic Pollutants Ratification
Proc. No. 279/2002;
 The International Treaty on Plant Genetic Resources for Food and
Agriculture Ratification Proc. No. 330/2003;
 Implementation of the Convention on the Prohibition of Chemical Weapons
Proc. No. 331/2003;
 Ratification of the Convention for the Pacific Settlement of International

Disputes (1899) Proc. No. 348/2003;
 Bamako Convention Ratification Proc. No. 355/2003; (NB: this Convention
is meant to Ban the Import in to Africa and the Control of Transboundary
Movements & Management of Hazardous Wastes Within Africa.)
 Basel Convention Amendment Ratification Proc. No. 356/2003;
 Basel Protocol Ratification Proc. No. 357/2003; Catagena Protocol on
Biodiversity Ratification Proc. No. 362/2003;
 The Convention for the Protection of Cultural Property in the Event of
Armed Conflict and its First Protocol Accession Proc. No. 373/2003;
 Kyoto Protocol Ratification Proc. No. 439/2005;
 Other relevant laws:
 the investment laws; as related to environmental clearance for investment;
see Proc. No. 769/2012;
 the business registration & licensing laws; as related to administrative
liability (like suspension or revocation of business license); see Proc. No.
686/2010;
 the Civil Code; as related to civil liability;
 the Penal Code; as related to penal liability;
 the human environment;
 the Labor Law: Proc. No. 377/2003 cum applicable international
construction related safety regulations; as related to construction project
labor;
 the Public Health Law: see Proc. No. 200/2000, health proclamation;
 the Law of Extra- Contractual Liability; see the Civil Code Article 2027ff
cum Proc. No. 624/2009 cum Reg. No. 243/2011; as related to the safety of
the general public;
 the built-environment;
 see the Law of Extra-contractual liability; the Civil Code Article 2027 ff cum
 see Proc. No. 624/2009 cum Reg. No. 243/2011; building related;
 the utilities environment;
 Scope:
 water lines;
 sewerage lines(waste water network);

 telecommunications network;
 power network;
 the Law of Extra-contractual liability; the Civil Code: Article 2027 ff;
 the Building Law; Proc. No. 624/2009 cum Reg. No. 243/2011 cum Article
2027-2161of the Civil Code;
 the Power & Telecommunications Network Protection Law; Proc. No.
464/2005 cum 2027-2161 of the Civil Code;
 the Water & Waste Water Network Law; see Proc. No. 10/1995 issued by
the Addis Ababa City Government cum Article 2027-2161 of the Civil Code;
 Requirement Regulation
 tax laws:
 see Proc. No.: 285/2002 cum Proc. No.609/2008 (VAT);
 see Proc. No.: 979/2016 cum Reg. No. 164/2009 (Income Tax);
 see Proc. No.: 308/2002 cum Proc. No.611/2008 (TOT);
 see Proc. No.: 622/2009 (Customs Duty); the contractor, unless exempted is
required to comply with its fiscal obligations as related to the construction
project;
 holidays & rest days laws:
 see Proc. No. 16/1975 cum Proc. No. 29/1996;
 which is relevant for the preparation of construction program by the
contractor;
 Security (Business) Regulation
 insurance & security
 performance security: see the Law of Contract Article 1675-2026 cum 1920-
1951 (the Law of Suretyship or guarantee);
 insurance for works; see the Law of Contract Article 1675-2026 cum Article
754-712 (the Law of Insurance) the Commercial Code;
 insurance for equipment; see the Law of Contract Article 1675-2026 cum
Article 754-712 (the Law of Insurance) the Commercial Code;
 workmen compensation; see the Law of Contract Article 1675-2026 Article
754-712 (the Law of Insurance) cum the Commercial Code; cum the Labor
Law; Proc. No. 377/2003;
 property insurance; see the Law of Contract Article 1675-2026 cum Article
754-712 (the Law of Insurance) the Commercial Code;
 bank security
 advance re-payment guarantee; see the Civil Code1675-2026 cum 1920-1951
(the Law of Surety ship or guarantee); cum Article 896 ff (the Law of
Banking ) the Commercial Code;
 retention money guarantee; see the Civil Code 1675-2026 cum Article 896 ff
(the Law of Banking) the Commercial Code;
 customs security
 customs duty law: as related to the tax obligation of the foreign contractor to
deposit security in cash to insure the fiscal privilege provided to it in relation
to construction equipment & spare parts thereof ;
 see Proc. No. 622/2009 (Customs Duty Proclamation);
 see also Clause 14.1 (e) MDB-FIDIC;
 Post-Construction Phase
 Background
 This phase is basically characterized by legal regulation of some processes.
 However, the law of contract may also come in to application;
 The legal regulation may encompass both domestic & international law, as the case
may be;
 Domestic Laws
 dispute resolution laws; arbitration related laws; and/or court laws;
 such laws are related to the laws as related to domestic arbitration or
litigation related to the construction disputes arising under the construction
contract which has been initiated due to termination or after completion of
the construction project;
 this is valid for domestic arbitration or litigation;
 construction warranty law;
 see the Civil Code; as related to public & private construction law Article
3282 or 3039, respectively;
 the contractor may become liable for latent construction defects for 10 years
after final acceptance of the works or possession of same;
 if there were decennial liability insurance it may be called by the employer;

there is no such kind of insurance in Ethiopia yet;
 the Law of Contract: 1675 -2026;
 the Law of Professional Services: 2632-2638 cum 2610-2631;
 the Procurement Law Proc. No. 649/2009 cum the Federal Procurement Directive
and/or Manual;
 if the structure under consideration encounters serious structural failure
within such 10 years, the employer may need the services of a forensic
engineer to establish the root cause (s) of the structural failure;
 this needs a contractual agreement between such forensic engineering
expert(s) & the client or the owner of the facility;
 the Law of Contract: Article 1675 -2026; the Civil Code;
 the Law of Professional Services: 2632-2638 cum 2610-2631; the Civil Code;
 the Procurement Law Proc. No. 649/2009 cum the Federal Procurement Directive;
 if the contractor denies such claim of the employer as the failure related to
construction, the employer may be compelled to hire claims expert &
specialized lawyer to bring an action against the contractor;
 the Law of Contract: 1675 -2026;
 the Law of Professional Services: 2632-2638 cum 2610-2631;
 the Procurement Law Proc. No. 649/2009 cum the Federal Procurement Directive;
 if the case brought against the contractor at the court of law, the employer
may need to hire an expert witness to testify about the failure of the structure
under consideration;
 this is the case where the forensic engineering experts themselves not act as
expert witness for the employer before the court of law or due to the need
for additional expert witnesses;
2.3.4 Construction Contract Regulation:
 Background
 Scope of regulation of construction contract & related contracts may come in the
following ways: viz., regulative, protective and facilitative;
 By regulative role of law to contracts means that the law provides conceptual
foundation of contract & legality requirement;
 By protective role of law to contract means that the law provides recognition &
enforcement of contract which fulfills legality requirements;
 By facilitative role of law to contract means that the law fills the gap, if any, in the
contract to facilitate the deal;
 Legal regulation of contract may come in to picture with respect to the following
three basic categories of contracts viz.,
 contract of services; like design services;
 contract for the supply of goods; and
 works contract;
 Without prejudice to the special provisions of the law governing such special types
of contract(see Article 1676 of the Civil Code), the general law of contract (see
Article 1675-2026) basically regulates the formation, effect & proof of such service,
goods & works contract between the relevant contracting parties, viz.,
 service contract: between service provider & service receiver;
 supply contract: between goods supplier & goods purchaser; and
 works contract: between employer & contractor; between main contractor
& sub-contractor;
 Service Contract
 service contract may traverse & include, as the case may be, many types of
laws: like the Civil Code; Commercial Code; Maritime Code; labour law;
and so forth; and
 service contract may encompass services of different nature: commercial
services; technical or engineering services; scientific services; and ordinary
or civil services; the nominated sub-contractor may find itself here if such
sub-contractor provides special services like design services;
 Supply Contract: Goods

 supply of goods contract may focus on construction materials &
construction equipments; the nominated sub-contractor may find itself here
if such sub-contractor supplies goods of special nature;
 Works Contract
 works contract mainly focus on the regulation of the formation & effect of
main works contract between the employer & the main contractor; the sub-
contracts formed between the prime contractor & the sub-contractor

(domestic or nominated);
 The nominated sub-contract is thus a unique arrangement which may find itself in
the three categories of contract;
 Let us examine, each in turn;
 Works Contract
 This part of the law regulates the formation construction contract between the
employer & the contractor; between the main contractor & the sub-contractor;
 The applicable laws are of the following;
 The law of contract: see the Civil Code: Article 1675-1730; which regulates the
exchange of consent; determination of object; and consideration of form;
 The law of public construction contract: the Civil Code: Article 3131-3206 cum
Article 3244-3296;
 The law of private construction contract: see the Civil Code Article 2610-2631 cum
Article 3019 cum 3040;
 Contract approval: see procurement or other administrative laws or procurement
directives: as related to contract approval; or
 International agreement: the specific international financial agreement to secure go
ahead (for contract approval);
 Services Contract
 Services are critical input to the construction process;
 Construction project thus requires services of different nature;
 The following services are acquired through contractual arrangement with the
respective service providers;
 The services are arranged, depending on the specific project phase, either by the
employer or the contractor or in the name of both as the case may be;
 The following are some of the services:
 project planning & study services;
 project design or engineering services;
 project supervision & contract administration services;
 testing services; (soil; chemical; material ;…)
 investigation services; (soil investigation; geophysical investigation;
geotechnical investigation; …)
 construction equipment lease services;

 insurance services;
 banking services;
 pre-shipment inspection services;

 transportation services;
 maritime & transit Services;
 custom clearance services;
 dry port services;
 labour services;
 claim expert services;
 dispute resolution services;
 forensic engineering services;
 Supply of Goods Contract
 Construction project requires goods of different nature as input;
 The following are some:
 construction materials; and
 construction equipment;
 Construction Materials
 The construction material, as a critical input, to the construction project
may involve the following construction related laws;
 Construction material either be naturally grown or available or
manufactured;
 In case of manufactured construction materials, it may have domestic &
international dimensions; in case of its international dimension the relevant
import regulation regime shall also apply; The following are some of the
relevant applicable laws:
 the Law of Contract: see Article 1675-2026 of the Civil Code;
 the Law of Sales; see the Civil Code: Article 2266-3267 i.e., the Law of Sale;
 the Law of Banking: the Commercial Code of Ethiopia; See Article 896 ff
for letter of credit (L/C) purpose;
 the Law of Insurance: the Civil Code Article 1675-2026; cum the
Commercial Code of Ethiopia; see for inland insurance Article 654 ff; the
Maritime Code of Ethiopia for marine insurance; Article 288 ff; cum Proc.
No. 746/2012, the law which regulates the insurance business;
 The Law for Multi-Modal Transportation: this includes transportation of
such construction materials by sea & by land; the Maritime Code of
Ethiopia (for marine transport by sea): see also Proc. No. 547/2007 (a
proclamation which amends the carriage of goods by land) cum 548/2007
(i.e., the law for multimodal transportation of goods); cum Proc. No.
588/2008 (the law which defines the liability of the dry port to the
consignee);
 the Law of Pre-shipment Inspection: see Proc. No. 173/1999 cum Reg. No.
56/1999 (the regulation which determines the pre-inspection fee); if
applicable;
 INCOTERMS: the international commercial terms (INCOTERMS) as
developed by the International Chamber of Commerce (ICC) shall also
apply to the contract of sale or supply of goods with a view to allocate
respective rights, obligations and liabilities as related to the goods delivery
point (risk); cost of insurance & freight and other respective obligations;
 Construction Equipment
 The construction equipment is one of the critical input to the construction
process, which determines the direct cost of the construction project;
 Construction machinery or plant or equipment could be secured either:
 by lease: like through operative lease; hire purchase lease or
financial lease (in this case the service contract shall apply); or
 by purchase; in such case the relevant laws for construction
materials as related to import (of construction equipment) shall
apply;
 the Law of Contract; see Article 1675-2026 of the Civil Code;
 the Commercial Law; the Commercial Code of Ethiopia cum Article 18 of
Proc. No. 103/1998;
 the Law of Capital Goods Leasing: see Proc. No. 103/1998 cum Proc. No.
807/2013 (the law which amends the Capital Goods Leasing Proclamation
103/1998 & which introduces the separate business management of financial
lease; it is both regulated by the National Bank of Ethiopia & by the
Ministry of Trade);
 the Law of Construction Machineries Registration & Control: Proc. No.

177/1999 cum the relevant directives issued by the Ministry of Urban
Development, Housing & Construction;
 international law: Financial Lease is also internationally regulated; see
Unidroit Convention on International Financial Leasing (May 20, 1988);
4. Laws of Other Countries
 Background
 The construction contract expressly recognizes the possible application of the laws
of other countries (jurisdictions); see Clause 1.4 (Law & Language) MDB-FIDIC if
stated in the contract data;
 see also Clause 8 (Governing Law) PPA 2011 cum the SCC;
 These countries could be the country of origin or transit countries, if any;
 The scope of the laws of other countries may encompass the following areas;
 Scope
 The application of the laws of other countries to the construction project may come
in to picture due to the following reasons; viz., due to:
 choice of the forum for dispute resolution specially as related to arbitration;
 choice of the forum for the enforcement of foreign arbitral award;
 bilateral agreement between Ethiopia and that specific country;
 banking transaction to effect payment to the supplier in that country as
related to letter of credit;
 contract of sale of goods between Ethiopian national institution (employer or
contractor) and the seller in that particular country;
 as related to ensuring environmental safety; as related to the country of
origin or transit with respect to importation & transportation of explosives
or dangerous chemicals;
 dispute resolution laws:
 based on the doctrine of lex fori arbitri, (the place of arbitration) the law of
arbitration and the procedural law of that forum country shall apply;
 this is the case in relation to international arbitration; for example, if the
arbitration were held in Paris, the law of arbitration & the procedural law
of France shall apply to govern such arbitration process;
 banking law;
 the banking transaction law of that country govern the transaction based on
international standard;
 this is clear in case of contract of supply based on letter of credit
arrangement for payment;
 environmental regulation laws:
 this is the case as related to the movement of some dangerous or hazardous
items like explosives or special chemicals;
5. International Law
 Background
 Neither the MDB-FIDIC nor the PPA 2011 specifically envisage the possible
application of international law;
 The possible application of international law may be implied in case of MDB-
FIIDIC as the agreement to finance a given construction project in Ethiopia
requires a prior international loan and/or aid agreement between Ethiopia and that
specific multilateral international financial institution;
 see Clause 2.4 Employer’s Financial Arrangement;
 see Clause 8.1 (c) Commencement of Works: Financial Arrangement;
 see Clause 16.1 Contractor’s Entitlement to Suspend Work; Financial
Arrangement;
 see Clause 16.2 Termination by Contractor: Financial Arrangement;
 see Clause 15.6 Corrupt or Fraudulent Practices; serves as a ground to
terminate the contract by the employer also to suspend disbursement by the
specific MDB;
 The possible application of international law specially that of public international
law may thus come in to picture as related to construction project due to the
following connection between the construction project & an international legal
instrument;
 Such international laws may or may not be ratified by Ethiopia;
 If it is ratified it constitutes an integral part of the Ethiopian legal framework as per
Article 9 (4) of the FDRE Constitution;
 The power to negotiate & sign including to ratify international agreements is the
power of federal government under the FDRE Constitution;
 Scope
 international financial agreements; see Proc. No. 1/1995 cum 916/2015;
 such agreements could be bilateral or multilateral;
 such agreements are negotiated & signed by the Ministry of Finance & Economic
Development & ratified by the House of Peoples Representative;
 such international agreement provide the required financial input to the
construction project in whole or in part;
 the following are illustrative international legal instruments for illustrative
purposes;
 International Development Association for Financing the Water Supply
Development & Rehabilitation Project Ratification Proc. No. 46/1996;
 OPEC Fund for International Development Loan Agreement for Financing the
Addis Ababa Bole Air Port Development Project Ratification Proc. No. 59/1996;
 ADF Loan Agreement for Financing the Addis Ababa Bole Air Port Development
Project Ratification Proc. No. 62/1997;
 Arab Bank for Economic Development in Africa Loan Agreement for Financing the
Addis Ababa Bole Air Port Development Project Ratification Proc. No. 78/1997;
 Nordbanken Loan, for Partly Financing the 7th Telecommunications Development
Program, Guaranteeing Agreement Ratification Proc. No. 71/1997;
 European Investment Bank Loan Agreement for On-Lending Through the
Development Bank of Ethiopia, to Small & Medium-Sized Private Sector
Enterprises, Ratification Proc. No. 85/1997;
 Nordic Development Fund Credit Agreement for Partly Financing the Road Sector
Development Program Ratification Proc. No. 143/1998;
 international environmental agreements; see Proc. No. 1/1995 cum Proc. No.
916/2015;
 this has been discussed under environmental safety regulations above;
 the ratified international environmental agreements may have their own legitimate
implications on the construction project with a view to ensure sustainable
development & environmental safety;
 the best example will be the Climate Change & the Climate Resilient Green
Economy Strategy of Ethiopia (2011) based on such agreement;
 the power to negotiate international agreement now rests with the Ministry of
Environment & Forest;
 The ratification of such international agreements rests with the House of Peoples
Representative;
 foreign arbitral award enforcement law:
 As related to recognition & enforcement of foreign arbitral award, the 1958 New
York Convention (international law) is in point;
 Ethiopia is not a party to such Convention;
 However, a foreign arbitral award could be recognized & enforced in one of the
convention ratified country where the asset of the award-debtor situated;
 The court of that country shall guide its procedure based on the Convention & its
judicial procedure law;
Reference Materials for

Construction Law
………………………………………………………………………………
A. Constitutional Laws
1. The FDRE Constitution; Proc. No. 1/1995
2. The Nine Regional Constitutions;
3. The Charters of the two City Administrations;
3.1 Charter Proc. No. 361/2003: for the City of Addis Ababa
3.2 Charter Proc. No. 416/2004: for the City of Dire Dawa;
B. Policy Documents
4. Social Development Policies;
5. Economic Development Policies;
6. Environmental Policy;
7. Investment Policy;
8. Construction Industry Development Policy;
C. Statutory Laws (Proclamations or their equivalent)
9. Codes
9.1 The Civil Code;
9.2 The Commercial Code;
9.3 The Maritime Code;
9.4 The Criminal Code;
9.5 The Civil Procedure Code;
9.6 The Criminal Procedure Code;
10. Other Statutory Laws
10.1 All other Proclamations cited in the Lecture Notes;
D. Non-Statutory Laws (Regulations or their equivalent)
11. All relevant Regulations cited in the Training material;

Giz Const Law TM

Uploaded by

Copyright:

Available Formats

You might also like

Giz Const Law TM

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Giz Const Law TM

Uploaded by

Copyright:

Available Formats

Training Material on Construction Law

Organized & delivered by:

Zewdu Tefera Worke

Engineering Contracts Lawyer

Training on Construction Law

Trainer: Zewdu Tefera Worke

(Day 1) Monday, December 10/17, 2018

Introduction 9:00-9:15am Trainees with the Trainer

Training Overview 9:15-10:00 am The Trainer

Conceptual Background: Law & Construction 10:00-10:30am The Trainer

Tea Break 10:30-11:00am

Constitutional Foundation 11:00-12:00 am The Trainer

Construction Demand Regulation 12:00-12:30pm The Trainer

Construction Delivery Regulation:

Construction Industry Regulation 2:00-2:30pm The Trainer

Construction Program Regulation 2:30-3;00pm The Trainer

Construction Project Regulation 3:00-3:30pm The Trainer

Tea Break 3:30-4:00pm

Construction Project Regulation 4:00-4:30pm The Trainer

Construction Contract Regulation 4:30-5:00 pm The Trainer

Reflections 5:00-5:15pm Trainees & the Trainer

1. Introduction & Objectives

Introduction to the Training

Objectives of the Training

At the end of the training, the trainees be able:

Construction Contract & Law: Overview

and/or: cumulative with/alternatively (K and/or L)

V: Variability (context) of all the above concepts (viz., LKPDROLE);

V: Variability (context) of all the above concepts….?;

Training on Construction Law

 the laws of the federal system ((Nehase/August) 1987-to date E.C);

 horizontal power: The constitution distributes powers horizontally among

this is crucially important for development projects to be realized through

2.2 Construction Demand Regulation:

 All such sources, however, provide market opportunity to the construction

social) infrastructure; PPP first invited by procurement regime (see

 Investment by Voluntary Organizations

 construction program regulation;

2.3 .1 Construction Industry Regulation

 The Ethiopian Construction Project Management Institute (building

2.3.2 Construction Sector Development Program Regulation

 housing development program;

 Economic Sector Development Program Management

 Ministry of Mines, Petroleum & Natural Gas;

 Charter Proc. No. 361/2003; the Addis Ababa City Government

 party: it is contracting parties specific;

 considered at design phase (in terms of specification);

 payment of compensation; as related to acquisition of rural and/or urban land;

 resource utilization regulation

 the financial administration law; Proc. No. 648/2009 (the Federal

 this time the regulatory intervention may include: issuing building

 Institute of Biodiversity Conservation & Reserve Establishment

 international environmental agreements;

 Ratification of the Convention for the Pacific Settlement of International

 sewerage lines(waste water network);

 if there were decennial liability insurance it may be called by the employer;

 Supply Contract: Goods

contracts formed between the prime contractor & the sub-contractor