The Contract Forms used by the

Development Agencies , with particular

reference to Africa – the ENAA Form
Tony Marshall

Sunday, 8th May, 2016

Introduction

• Background on ENAA and the adoption of the

ENAA form by the Multilateral Development Banks
for Plant Design and Construction
• ENAA’s unamended Process Plant form:
– the broad scheme
– key features
• The African context
– the variety of legal systems
– enforcing arbitral awards
• Distinctions between the MDB forms – FIDIC
Pink/ENAA (MDB version)
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Background (1)

• What is ENAA?
• The various ENAA forms:
– 1986: Process Plant Form (EPC)
– 1992: Process Plant Form (EPC), 2nd Edition
(Appendix 4, sample Work Procedures, and Appendix 5, version
without process licence, added)
– 1996: Power Plant Form (EPC)
– 2007: Engineering, Procurement & Supply Form (EPS)
– 2010: Process Plant Form (EPC), 3rd Edition
– 2012: Power Plant Form (EPC), 2nd Edition
– 2013: Engineering, Procurement & Supply , 2nd edition
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Background (2)

• International acceptance of the ENAA form:

– January 1996: World Bank adopts an adjusted version of
the 1992 edition for its Standard Bidding Documents for
Supply and Installation of Plant and Equipment
– (copy at:
http://web.worldbank.org/WBSITE/EXTERNAL/PROJECT
S/PROCUREMENT/0,,contentMDK:21760159~menuPK:8
4284~pagePK:84269~piPK:60001558~theSitePK:84266~i
sCURL:Y,00.html – in English, Spanish or French)
– Other Multilateral Development Banks follow suit,
including African Development Bank

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Background (3) – User’s Guide (ADB version)

• “The General Conditions in the “Standard Bidding

Documents – Plant” are based on the Model Form
of International Contract for Process Plant
Construction published by the Engineering
Advancement Association of Japan (ENAA). The
Multilateral Development Banks (MDBs) and
International Financing Institutions (IFIs)
participating in the procurement harmonization
process gratefully acknowledge the contribution of
ENAA to the advancement of good contracting
practices in their member countries.”
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The ENAA Process Plant Form – the broad
scheme (1):

• Contractor to design and build plant according to

the Specifications in Appendix 9 (Part 3, GC7 and
Appendix 9)
• Mechanical Completion to be achieved by a
specified date (if not, liquidated damages payable)
("Mechanical Completion" = plant completed mechanically
and structurally and put in clean and tight condition, and
pre-commissioning done)
(Art. 5, GC 8 and Appendix 9-7)

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The ENAA Process Plant Form – the broad
scheme (2):

• Risk of damage: with Contractor till Acceptance

(GC32)
• Ownership of materials passes to Owner on delivery
(if materials coming from overseas: on loading)
(GC31)
• Owner pays a lump sum price (a price adjustment
provision is optional)
(Articles 3 and 4; GC 11 and 12; and Appendix 4)

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The ENAA Process Plant Form – the broad
scheme (3):

• Defects Liability Period: 12 months from acceptance

No further liability after DLP (GC27.8)

• Limitations on liability:

– An overall cap (Article 9; GC30.2)

– No liability for losses of profit etc (GC30.1))

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Key features of the Process Plant Form (1):

• Ease of use
– clear language
– grouping into convenient parts
– key elements all included in the Agreement
– sample Appendices (forms of letter, etc) and Procedures
– full Guide Notes
• Process-related provisions
– Contractor's scope includes provision of process licence
(GC15.1)
– Contractor responsible for satisfactory working of process,
but NO fitness for purpose obligation (GC28; GC3.6)
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Key features of the Process Plant Form (2):

• No “Engineer”/third party supervisor

• Liquidated damages attached to time for
mechanical completion (Article 5.6, GC26.2)
• No liability for late Commissioning/Acceptance or
other delay (GC 26.2)

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Key features of the Process Plant Form (3):

• Dispute resolution
– Mutual consultation (GC6.11)
– Arbitration (Article 13; GC6.1.2-5)
– Expert determination as an option (GC6.2)

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The African context: a mix of legal systems (1)
Tunisia

Morocc
o Algeria
Libya Egypt

Mauritania
Mali Eritrea
Senegal Niger Sudan
Chad
The Gambia Djibouti

Cote B.
Guinea Ethiopia
Faso Nigeria South Ethiopia
Bissau Guinea C.A.R.
d'Ivoir Sudan
Sierra Liberia e Somalia
Leon Ghana Togo Beni Keny
Cameroo
e n Ug a
Equatorial Guinea n
Democratic Rw
Gabon Republic of Bu
Tanzania
Republic of the Congo the Congo
Seychelles
Malawi
Angola Comoros

Zambia

Namibia Zimbabwe Mozambique Madagascar

Botswana
OHADA civil law jurisdictions

Swaziland
South
Common law jurisdictions Africa Lesotho Mauritius

Other civil law jurisdictions

Mixed Roman-Dutch/English common law jurisdiction

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The African context: a mix of legal systems (2)

• Common law countries:

– English law-based systems, but without statutes
introduced since independence – still citing cases from
England and other Commonwealth countries as authority
– South Africa – a mix of English and Roman-Dutch
common law
– Rwanda: transitioning to a common law system?

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 The Francophone countries: the OHADA
Organisation pour l'Harmonisation en Afrique du Droit des Affaires

– Created by the Treaty of Port

Louis on 17 October 1993
– Adopted by 17 countries of West
and Central Africa (originally 7
countries were party)
Benin
– Membership is possible for all Burkina Faso
Cameroon
African countries Central African
Republic
– Goal: Update, harmonise and Chad
Comoros
simplify business law in African Congo
states to reinforce the rule of law DR Congo
Equatorial Guinea
Ivory Coast
Mali
and encourage business activity Gabon
Guinea
Niger
Senegal
Guinea-Bissau Togo

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The OHADA Unifying Acts
• The Unifying Acts are directly applicable in the 17 member
countries
• The 9 areas of unified law are:
1. General commercial law
2. Corporate law
3. Securities
4. Enforcement and execution proceedings
5. Insolvency proceedings
6. Harmonisation of business accountancy
7. Contracts for the transportation of goods by road
8. Co-operatives law
9. Arbitration law

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The OHADA institutions
• OHADA institutions
1. Council of Ministers, comprised of Finance and Justice Ministers of the State Parties
2. Common Court of Justice and Arbitration (Ivory Coast)
3. Permanent Secretary Office (Cameroon)
4. Regional High Judiciary School (Benin)

• The CCJA – Supreme Court and arbitration institution

– Procedural language is French
– Institutional arbitration under the CCJA and ad hoc arbitration under the Uniform Act
on Arbitration – gives the choice between the predictability and structure of
institutional arbitration and the flexibility and freedom of ad hoc arbitration
– The last resort for all legal questions relevant to the application of OHADA
– Parties seeking to arbitrate need not be registered in OHADA Member States or even
in Africa
– Seven OHADA nationals elected by the Counsel of Ministers for renewable seven-
year terms appoint arbitrators and supervise proceedings
– CCJA decisions can overrule national courts

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PALOP - towards a Portuguese OHADA?

• Países Africanos de Língua Oficial Portuguesa:

– Angola
– Cape Verde
– Guinea-Bissau
– Mozambique
– São Tomé and Príncipe
– [Equatorial Guinea - Portuguese colony,1474–1778;
Spanish colony, 1778–1968 - adopted Portuguese as its
third official language, 2011 – also in OHADA!]
• No current plan for an OHADA equivalent, but
common legal heritage and approach
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Enforceability of arbitral awards in Africa (1)
Tunisia

Morocc
o Algeria
Libya Egypt

Mauritania
Mali Eritrea
Senegal Niger Sudan
Chad
The Gambia Djibouti

Cote B.
Guinea Ethiopia
Faso Nigeria South Ethiopia
Bissau Guinea C.A.R.
d'Ivoir Sudan
Sierra Liberia e Somalia
Leon Ghana Togo Beni Keny
Cameroo
e n Ug a
Equatorial Guinea n Rw
Democratic
Gabon Republic of Bu
Tanzania
Republic of the Congo the Congo
Seychelles
Malawi
Angola Comoros

Zambia

Namibia Zimbabwe Mozambique Madagascar

Botswana

Swaziland
South
OHADA Treaty only Africa Lesotho Mauritius

New York Convention only

Both OHADA Treaty & New York Convention

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Enforceability of arbitral awards in Africa (2)

• New York Convention – non-members:

– Southern Africa:
Angola, Malawi, Namibia, Swaziland, Seychelles
– West and Central Africa:
Cape Verde, Chad, Congo, Equatorial Guinea, Guinea-
Bissau, The Gambia, Sierra Leone, Togo
– East Africa:
Burundi,Comoros, Eritrea, Ethiopia, Somalia, South
Sudan, Sudan
– North Africa: Libya

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Enforceability of arbitral awards in Africa (3)

• Washington (ICSID) Convention

– All African countries have signed and ratified, except:
Angola, Djibouti, Equatorial Guinea, Eritrea, Libya, South
Africa
– The 15 member countries of the Southern African
Development Community (see next slide) have signed
258 Bilateral Investment Treaties
– However, 140 of the 258 either not in force or terminated
(in 2014 South Africa announced it was cancelling its
treaties with Belgium, Luxembourg, Spain, Germany,
Switzerland, Netherlands)

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Enforceability of arbitral awards in Africa (4)

• The Southern African Development Community:

– Established 1992
– Member States: Angola, Botswana, Democratic Republic
of Congo, Lesotho, Madagascar, Malawi, Mauritius,
Mozambique, Namibia, Seychelles, South Africa,
Swaziland, Tanzania, Zimbabwe
– Investment Protocol of SADC: prohibits expropriation and
guarantees fair and equitable treatment
– SADC Tribunal – 21 cases to 2010, but then operation
suspended (after several judgments against Zimbabwe)
– Proposed new Tribunal Protocol would eliminate tribunal’s
jurisdiction over human rights and investor/state cases
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Distinctions between the Forms – Design (1)

• FIDIC Pink:
– “The Contractor shall design (to the extent specified in the
Contract), execute and complete the Works in accordance
with the Contract and with the Engineer’s instructions, and
shall remedy any defects in the Works” (GC 4.1.1)
– If the Contract specifies that the Contractor shall design
any part of the Permanent Works, then unless otherwise
stated in the Particular Conditions … the Contractor’s
Documents for this part shall be in accordance with the
Specification and Drawings and … this part … shall, when
the Works are completed, be fit for such purposes for
which the part is intended as are specified in the Contract
(GC 4.1.6)
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Distinctions between the Forms - Design (2)

• ENAA (African Development Bank version):

– “…the Contractor’s obligations cover the provision of all
Plant and the performance of all Installation Services
required for the design and the manufacture … of the
Plant and the installation, completion and commissioning
of the Facilities in accordance with … the Employer’s
Requirements …” (GC 2.1.1)
– “The Contractor shall design, manufacture including
associated purchases and/or subcontracting, install and
complete the Facilities in accordance with the Contract.
When completed, the Facilities should be fit for the
purposes for which they are intended as defined in the
Contract.” (GC 2.3.1) [departs from ENAA approach]
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Distinctions between the Forms – Defects (1)

• FIDIC Pink:
– “After the Performance Certificate has been issued, each
Party shall remain liable for the fulfilment of any obligation
which remains unperformed at that time. For the purposes
of determining the nature and extent of unperformed
obligations, the Contract shall be deemed to remain in
force” (GC 11.10.1)
• ENAA (ADB version):
– “Except as provided in GC 5.2 and 5.4, the Contractor
shall be under no liability … in respect of defects … that
appear after Completion … except where ... the result of
… gross negligence … of the Contractor” (GC 5.2.9)
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Distinctions between the Forms – Defects (2)

• But beware GC 5.2.1 in the ENAA (ADB version):

– “The Contractor warrants that the Facilities … shall be
free from defects in the design, engineering, materials and
workmanship of the Plant supplied and of the work
executed.”
– Does this add back liability for breach if defects
discovered post-Completion?

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Distinctions between the Forms - Payment

• “The Works shall be measured, and valued for

payment, in accordance with this GC Clause. The
Contractor shall show in each application … the
quantities and other particulars detailing the
amounts which he considers to be entitled under the
Contract” (Pink Book, GC 12.1.1)
• “ …the Contract Price shall be a firm lump sum not
subject to any alteration, except in the event of a
Change ... or as otherwise provided in the Contract”
(ENAA, ADB form, GC 3.1)

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Distinctions between the Forms - Programming

• FIDIC Pink
– “Unless the Engineer, within 21 days after receiving a
programme, gives notice to the Contractor stating the
extent to which it does not comply with the Contract, the
Contractor shall proceed in accordance with the
programme, subject to his other obligations under the
Contract” (GC 8.2)
• ENAA (ADB version)
– Programme/Schedule to be submitted, and revised “when
appropriate”, but not binding – only the Times for
Completion are binding

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Distinctions between the Forms - Completion

• FIDIC Pink
– Completion is achieved when the Works are ready for
handing over and all Tests on Completion have been
done; risk transferred on Taking Over (GC8.2 and 17.2.1)
– Liquidated damages payable if late (GC 8.7)
• ENAA (ADB version)
– “Completion” is achieved, and risk transferred, once
Facilities “completed operationally and put in a tight and
clean condition … excluding minor items” and
Precommissioning complete (GC 4.8 and 6.2.1)
– Liquidated damages payable if late (GC 5.1.2)
– Commissioning and Operational Acceptance follow
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Bibliography: Articles on the ENAA Model Forms
in the International Construction Law Review (1)
• Sasaki, T., E.N.A.A. model form of contract, (1987]) 4 ICLR 93-105
• Gould, Nicholas, Some comments on the policies and drafting of the
E.N.A.A. model form international contract for process plant construction,
(1988) 5 CLR 205-231
• Westring, Gosta, Turnkey heavy plant contracts from the owner's point of
view, (1990) 7 ICLR 234-249
• Furuya, Kunihiko, ENAA revised model form of contract (1992 edition),
(1993) 10 ICLR 5-15
• Jaynes, Gordon L.,Turnkey contracts: Japan's model forms, (1993) 10
ICLR 251-287
• Gould, Nicholas, Comments on the ENAA Model Form international
contract for process plant construction (revised 1992), (1994) 11 ICLR
498-525
• Wiwen-Nilsson, Tore, A brief review of the 1992 edition of the ENAA
Model Form - international contract for process plant construction
(turnkey lump sum basis), (1994) 11 ICLR 526-548

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Bibliography: Articles on the ENAA Model Forms
in the International Construction Law Review (2)
• Wakame, N., An overview of major issues on ENAA Model Form
International Contract for Process Plant Construction, 1992 edition - a
drafter's view, (1995) 12 ICLR 98-122
• Niwa, Kazuhiko, Force majeure in Japan - law and practice, (1995) 12
ICLR 179-181
• Hoshi, Hiromi, New ENAA model form of contract, (1996) 13 ICLR 482-
487
• Hoshi, Hiromi, ENAA model form of contract for power plant construction,
(1997) 14 ICLR 61-70
• Wiwen-Nilsson, Tore, The 1996 edition of the ENAA Model Form -
international contract for power plant construction - a brief review (1997)
14 ICLR 273-288
• Marshall, A R (Tony), Process Plant Construction: the ENAA Model
Form of Contract (2010 Edition) – Comments and Comparisons (2011)
28 ICLR 138-171
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