Law and regulation of concurrent delay in Brazil

Jurisdiction without developed jurisprudence

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

There is no established concept of concurrent delay under Brazilian law. 

There is, however, the concept of concurrent fault, defined by article 945 of the Brazilian Civil Code (BCC):

If the victim has concurred with fault to the event causing the damage, its indemnification will be determined taking into account the extent of its fault compared to the fault of the person causing the damage.

Concurrent fault is a broader concept than concurrent delay. It applies generally when there is any action of the victim that contributes to its own damage, resulting in a reduction of its indemnification to be determined by the court taking into consideration the specifics of each case.

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

No. By applying the concept of concurrent fault, as mentioned above, a court will look at the particularities of each case. There is no established case law on how to apply the concept of concurrent fault to causes of delay in construction contracts.

3. How is the issue of concurrent delay treated?

In Brazil the issue of concurrent delay is treated by the terms of the contract and by general rules on contractual liability defined by the law. Construction contracts are regulated in Brazil by articles 610 to 626 of the BCC. Those articles, however, do not deal with the situation of delay. 

In addition to that, article 476 of the BCC establishes that if one of the parties to a contract fails to perform its obligations, it may not demand the performance of the other, and this principle can be applied in cases of concurrent delay. Articles 389 to 420 of the BCC also contain general rules on contract default. Another contract principle is good faith, which in Brazil is derived from the law, specifically article 422 of the BCC. The principle of good faith is applicable during contract negotiation and during contract performance. Therefore, in case of a dispute around concurrent delay, a Brazilian court or the arbitrators applying Brazilian law will also consider whether the delay claim was made in good faith. 

Finally, according to article 396 of the BCC a party may only be liable for delay if the delay results from an action of omission of that party.

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

Specifically in relation to liability for delay when an event of force majeure starts after the party is already in delay, according to article 399 of the BCC, the liability of the party in delay shall not be excused by the force majeure event, unless it can prove that the delay does not result from its fault or that the damage would still occur if the obligation was timely performed.

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

In Brazil, if the dispute is being dealt with in litigation, it is likely that the court will appoint a court expert to evaluate the causes of delay.

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

According to article 392 of the BCC, a party to an onerous contract (where both parties to the contract have rights and obligations towards one another) is liable for its fault, except if the law provides otherwise. A contract term whereby a party takes the risk of concurrent delay may be understood to result in that party being liable for events that do not result from its own fault (but from the other party’s fault), and the exclusion of the other party’s liability for its own faults. Brazilian courts, however, tend not to accept the exclusion of liability clauses in contracts. Although we have not found a court precedent dealing specifically with this type of contract term, there are reasons to believe that the effectiveness of such contract term may be challenged by Brazilian courts.

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?

N/A

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?

Brazilian law and Brazilian case law do not provide any specific guidance on the above issues. However, the concepts of good faith, concurrent fault, and article 396 of the BCC, discussed above, could lead a court or arbitrators to allocate the delay (and any associated costs) proportionally between the parties.