Law and regulation of concurrent delay in Austria

Jurisdiction without developed jurisprudence

1. Is concurrent delay a well developed and understood concept?

In order to best grasp how the phenomenon of concurrent delay fits into Austrian law, a closer look at the general concept of delay is helpful. Under Austrian law, delay is one form of defective performance of contractual obligations. A party to a contract is in delay if it fails to perform its obligations by the agreed time, at the agreed place or in the agreed manner (§ 918 Austrian Civil Code ABGB). Unless agreed otherwise, the contractor of a construction contract is in delay if and as soon as it does not finish the agreed works within the time for completion. Missing an interim date is only considered to constitute a delay if agreed beforehand, i.e. if interim dates are agreed to be binding.

A party can be in delay until the employer takes over the works. After taking over, defects can lead to warranty claims or claims for damages. 

This legal definition of delay is slightly different from an economic or technical understanding, according to which delay usually means that already the progress of works (before the end of the deadline) is slower than planned. However, when measuring the duration of delay in hindsight, this difference is of minor importance.

In general, the responsibility for any case of delay can be attributed to one of the parties to the (construction) contract, depending on whether the delay was caused by a reason for which the employer or the contractor carries the risk. To better understand the contractual risk allocation, Austrian courts use the so-called “theory of spheres”, through which it can be determined whether any particular cause of a delay falls into the employer's or the contractors' sphere of responsibility. Each party's sphere of responsibility is defined by the scope of its tasks and the risks allocated to this party by the contract or by statutory provisions. However, Austrian law also uses a third category, the neutral sphere, which contains all risks that neither party can influence (e.g. natural disasters). Unless otherwise agreed, the contractor is also responsible for the neutral sphere.

A contractor is entitled to an extension of time for completion if and insofar as the cause of the delay comes from the employer's sphere or responsibility. This means that a contractor who claims not to be responsible for an additional time needed to complete the works (i.e. that he is not in delay) must prove a particular cause lying within the employer's sphere of responsibility and for how long this particular cause extended the time needed to perform his tasks in the agreed manner. Consequently, concurrent delay can occur if two separate causes, each arising in a different sphere of responsibility, result in additional time required for completion during the same time period.

However, there is no generally accepted definition of concurrent delay in Austria. Thus a broader understanding would also be possible. One could, for example, also classify scenarios as concurrent delay in which a cause for which one party would have been responsible has no effect because of the other party’s cause which exclusively results in the actual delay. Scenarios where two separate causes, each from a different sphere, only jointly resulted in a delay could also be considered concurrent

2. Is there a generally understood and accepted definition of concurrent delay and when it arises?

Concurrent delay is not defined in statutory legal provisions. Neither is it considered a specific legal phenomenon; it is just one form of delay. The term “concurrent delay” is more common among Austrian delay experts who use internationally accepted definitions – for example, the one in point 10 of the SCL Delay and Disruption Protocol (but excluding the legal consequences stipulated there).

The Austrian standard construction contract, the so-called ÖNORM B2110 (and its many derived forms), does not contain an explicit provision on concurrent delay. Instead it only allocates potential causes of delay to the employer’s or the contractor's sphere and by doing so.

Further, in Austria, freely negotiated constructions contracts rarely include specific provisions about concurrent delay issues.

3. How is the issue of concurrent delay treated?

The Austrian Civil Code ABGB contains general rules on the legal consequences of delay that apply to all contract types (§§ 918 - 921 ABGB). In addition, the ABGB also contains a few specific provisions for works contracts that deal with liability for additional costs caused by delay (§ 1168 ABGB). Although these rules do not explicitly mention an extension of time but only deal with additional costs, it is generally accepted that events in the employer’s sphere of risks entitle the contractor to an extension of the time for completion (or other agreed deadlines).

The Austrian standard construction contract at least explicitly states that the contractor is entitled to an extension of time, but does not explain how to calculate it. It presumes that this will be done by claim experts on a case by case basis.

There are no Supreme Court decisions or other published court decisions available that specifically deal with concurrent delay. This does not mean concurrent delay never occurs in Austria. Rather that (attorneys, experts and) courts usually manage to solve such disputes either by applying normal legal tools or by settling the case with a fair compromise.

Although the entitlement to additional time or payment has a completely different legal nature than a claim for damages, Austrian scholars and courts – as far as decisions are published – apply the same set of rules of causation. These tools Austrian law provides for solving causality issues in relation to claims for damages of causality say the following: No automatic mechanism or fixed formula applies, rather the actual effects of each cause in each single case are taken into consideration.

All cases in which there are two causes for delay but the effects of each can be separated can be solved by finding out which event resulted in the delay at hand so that no specific solution is needed.
If two causes, one from each sphere of responsibility, could only have jointly produced the delay, each party is liable for such a portion of the delay which is equal to its contribution.

If the share of responsibility cannot be determined, both parties are jointly liable for the delay and each is liable for an equal share of the additional time. 

4. Are there any general principles that apply to the treatment of concurrent delay?

The general principles of the Civil Code on delay, termination due to delay, and compensation for damages apply (as above: §§ 918 - 921 ABGB). Further, the do-ut-des principle (similar to quid pro quo) requires each party to perform its own obligations for being entitled to raise claims based on the other party’s allegedly defective performance.

Another general principle in Austrian jurisprudence applies (which is somewhat comparable to “time at large” under English law): If a cause of delay arising from the employer’s sphere of responsibility only results in additional time spans which are so short that a contractor usually has to expect them, it extends contractual deadlines accordingly. Contractual penalties or liquidated damages then remain applicable to the new deadlines. If, however, the additional time needed to complete the works exceeds what is proportional for the particular works and what can be expected from the contractor taking into account its economic standing, the contractual time for completion is not extended, instead the contractor simply has to finish the works within a time period appropriate for such work.

These principles are another reason why well-advised parties usually analyse such cases from the legal and technical perspective and then try to settle them – either before they even go to court or at least after some preliminary results from the court/tribunal become apparent.
Numerous court decisions about delay in general exist, in particular relating to the ground risk, permit risk, defects in the design or the defective work of other contractors and damage to the works before handover. However, these decisions only provide a reference point because there are no (Supreme Court) decisions that explicitly refer to concurrent delay. 

Unlike the extension of time, a contractor's claims for additional payment are covered by explicit provisions of the Civil Code ABGB. The contractor may base such claims either on the specific statutory provisions (i) for additional payment under works contracts or (ii) for claims for compensation of damage. 

In order to claim extra costs (i.e. additional contractual payments for additional efforts caused by events in the employer’s sphere of responsibility), the contractor needs to fully perform his own contractual obligations. This is not the case if he is in (concurrent) delay. 

The contractor may have better chances when he bases his claims on the rules for damage compensation. However, the contractor’s claims will be proportionally reduced if he is at fault in performing his own contractual obligations

5. How is the question of evidence as to causes and periods of delay dealt with?

A contractor who denies responsibility for a delay must prove that the delay was caused by a particular event in the employer's sphere of responsibility and demonstrate how long the event extended the amount of time needed to perform his tasks in the agreed manner. Further, the contractor has to prove that he was ready and willing to perform these tasks (i.e. he was not himself delayed at this time).

If the contractor claims additional payments, he must also prove that the actual delay resulted in the claimed amount.

The employer has a counter-claim against the contractor's claims for additional payment if there are costs and expenses the contractor did not incur because of the delay or if the contractor could have taped other sources of income. The employer carries the burden of proof for these facts. 

It would not be sufficient to prove a cause, compare the as-planned time schedule with the actual time needed after this cause appeared and claim the difference as extension of time for completion. Neither would it be sufficient to compare planned costs with actual costs during a certain period and just claim the difference as additional costs. However, the statutory rules for the evidence concerning delays and additional payments caused by a particular event are often extremely difficult to fulfil. For this reason, an intensive discussion among experts in Austria is going on. In 2019, the Austrian Construction Law Society (ÖGEBAU) commenced developing a set of guidelines how expert reports on delay and additional costs should be drafted. 

As a solution, state courts can estimate the amount of additional payments whenever proving this is inappropriately burdensome for the claimant.

For these reasons, success in Austrian construction disputes not only requires competent lawyers, but also experts to determine delays and the extension of time/costs. Fulfilling the agreed documentation requirements is essential. In Austrian state courts, a court-appointed expert is the most common solution. The judge usually discusses the questions to be put to the expert with the parties or gives them an opportunity to comment. In any case the parties can ask the court expert questions and request additional issues be dealt with. Parties also appoint their own experts in addition to court experts, if the amount in dispute and the complexity of the case justify the additional expenses. In arbitration, party-appointed experts are more common.

Neither claims for additional time nor additional payment require either party to be at fault. However, when claiming compensation for damage, one must prove the other party is at fault (at least negligence).

The contractor carries the burden of proof for the cause of the delay and its precise effects. There is no clear jurisprudence about the details of how an extension of time or an additional payment ought to be calculated. Delay is usually measured in days, if no other way is agreed how events and their effects at the site shall be documented.

6. Would a contract term which provides that one or other party will take the risk of concurrent delay be effective in your jurisdiction?

The statutory rules on delay are not mandatory, so parties may deviate from, or add details to, these provisions. It is well accepted in Austrian jurisprudence that a party to a construction contract may accept full responsibility for a risk that the law normally allocates to the other party. The only limits to such agreements are aspects such as good faith or agreements that are unreasonably burdensome due to unbalanced negotiation power or errors made by one party.

Individual agreements allocating risks have a particularly high practical relevance for the risks associated with ground conditions and defects in the employer's design. Careful contract drafting helps to avoid disputes and uncertainties.

The parties can agree on the legal consequences of a concurrent delay and also how additional time or payment will be calculated (e.g. whether actual costs or additional payments based on the original contractual prices are used). Contractual provisions such as the clauses of the FIDIC Books on delayed drawings or instructions, right of access to the site, unforeseeable physical conditions or on commencement, delays and suspension would in principle be valid under Austrian law

7. The SCL Protocol scenario

An event that is at the Contractor’s risk under the contract (a “Contractor Risk Event”) will result in five weeks delay to completion, delaying the contract completion date from 21 January to 25 February. Independently and a few weeks later, a variation is instructed on behalf of the Employer which, in the absence of the preceding Contractor Risk Event, would result in delay to completion from 1 February to 14 February. 

7.1 Is the Contractor entitled to an extension of time in respect of the variation? If so, for how long?

In this case the concurrent delay amounts to 14 days. If it can be determined what portion of the 14 days the contractor and employer are each responsible for, the 14 days must be allocated accordingly. If this is not possible, each party is responsible for 7 days.

If the employer's instruction would only theoretically have caused delay but did not actually have any delaying effect, the contractor is responsible for the whole period. The employer would only have to pay the price of the variation

7.2 Assuming the Contractor is contractually entitled in principle to recover delay-related costs relating to the variation, for what period (if any) could it recover those delay-related costs?

As the contractor would in any event have been in delay for the whole duration of the 14 days, generally he would not be entitled to additional payments for delay related costs.