Law and regulation of concurrent delay in Russia

Jurisdiction without developed jurisprudence

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

No, concurrent delay is not a well-developed concept in Russia. Russia belongs to the civil law (continental law) family, and the Russian Civil Code that is the main source of civil legislation does not recognise the concept. To the best of our knowledge court practice does not widely recognise or deal with this issue as well. To some extent this issue is covered by the parties in more advanced contracts drafted under the Russian law, but based on the foreign law standard forms, e.g. FIDIC silver book or a mix of different standard forms based on contractor’s or employer’s level of expertise and country of origin.

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

No, for the reasons stated above there is no generally understood and accepted definition of concurrent delay.

3. How is the issue of concurrent delay treated?

In case of concurrent delay (or any delay in general), the court will review the contract and the statutory law, and to some extent will take into account a previous relationship between parties that was established during the contract performance. Imperative rules (if any) of the statutory law will always prevail, and all other issues will be governed by the contract. In general, there could be three reasons that would grant the contractor a pardon and sometimes provide a right for reimbursement or right to claim damages/penalties in case of the delay: (a) default on the behalf of the employer, (b) force major event, or (c) another reason stipulated by the contract. The history of relationship is important because the parties most likely shall treat similar cases in the same manner and the court may pay attention to it.

In most cases, the contractor must suspend the work, notify the employer about such suspension and reasons thereto, and then the contractor and the employer would most likely sign an additional agreement to the contract or will have to settle a dispute in court or via other means.

If there are two or more (concurrent or not) reasons for delay, each party will need to prove the event, which it refers to, and, what is more important, will need to prove the whole period of delay and extension of time requested, as well as damages/penalties (if applicable).

The contractor will be entitled to receive the amount of reimbursement, damages and / or penalties from employer in the amount that the contractor will be able to prove. Thus, the situation may differ from case to case. For example, if the employer failed to deliver the materials timely to the contractor, the contractor had to declare a delay and would be entitled for reimbursement of damages for idle time. In case, any force major event affecting the contractor starts later, and during such event the employer delivers the materials, we might assume that the contractor will be able to claim damages for the whole or most period of the delay (including force major that would otherwise be not reimbursable), in case the contractor will be able to prove, that he could finish the works before force major event, in case the employer had delivered the materials on time. However, the positive outcome of such claim for contractor is not guaranteed in case of court dispute.

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

First, the contractor should suspend the works if he believes that there are grounds for delay and extension of time. Otherwise, he may lose his right to claim extension of time and damages / penalties, if he continues to work.

Second, the contractor must notify the employer and state all the reasons for delay that the contractor envisages.

Third, the contractor shall be ready to prove all the time extension and damages / penalties he claims, thus it is important to gather all related documents and other evidence in the process to be ready when the time comes (e.g. notice or certificate of suspension of works, expert opinions, reference letters from authorities confirming events causing the delay, if possible, etc.). Usually, the contractor never receives any automatic extension of time, unless otherwise specified in the contract, and in most cases, the contractor is at risk that he will not be able to prove that he had valid grounds for an extension time.

The most common delays, where contractor has a right for reimbursement, are the delays caused by the employer’s failure to perform obligations that in turn prevents the contractor to perform his respective obligations. The Russian Civil Code and jurisprudence thereto generally cover these situations. Concurrent delays would be an additional factor to consider in that scenario on a case-by-case basis.

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

There are two general types of evidence: (a) documents (including expert opinions and results of technical expertise), and (b) witnesses (including, expert witnesses). In practice, opinions of experts and expertise results often differ from one another. Usually, each party will bring their own experts, supporting such party’s point of view. In that case, the court may appoint its own expertise to clear out the confusion. However, none of the evidence will have a pre-set prevailing force, and the court must decide the case on its merits.

There is no such requirement that there must be a direct link between the cause and the delay, however, the claimant must prove the event itself, the outcome and the causation. The more remote/indirect the cause, the harder it will be to prove that it somehow caused the delay/damages.

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

Yes, the parties do have a freedom of contract and contract rules governing the risk on concurrent delay will be acceptable and enforceable. However, this would not change the general principles stated above, that (a) imperative rules (if any) of the law will prevail, (b) the contractor must notify the employer, and (c) the contractor must prove whatever events he is referring to or claims he is making.

In terms of imperative rules, for example, we believe it would be impossible to set out in the contract, that the employer in all cases is not responsible for defaults on his side, e.g. late delivery of materials. However, we believe that it may be valid to state in the contract that in case another non-compensated event outside of employer’s control occurs on par with late delivery of materials, then the contractor may be entitled to reimbursement for the period of delay (if any) purely (excluding overlapping time) caused by the employers default, and not by such other event

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?

As there are no direct regulations governing this situation, it is difficult to assess the exact impact and many factors will have effect on the outcome. However, if we assume there are no defaults on either side, then most likely no additional time will be granted, if the process is parallel (i.e. the contractor can deal with his delay and variation at the same time and not in sequence). 

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?

The question of delay costs compensation, without having regard to other potential variation related costs, will depend on the fact, whether the variation itself causes any variation specific delay costs (i.e. idle time for delivery of materials necessary for variation that would not be required otherwise), or if only the additional time, not exceeding the Contractor Risk Event delay, is necessary. The contractor may be entitled for compensation of variation specific costs that contractor would incur regardless of the Contractor Risk Event. In the end such costs reimbursable by the employer might be set off against potential penalties payable by the contractor for the delay.

In the above example, if no additional time is granted for the variation because the work related to the Contractor Risk Event and the variation will be done in parallel, there should be no entitlement for general delay costs for the time taken to implement the variation. However, the contractor shall retain the right to claim other costs caused specifically by the variation, if applicable, for example, cost of extra materials or cost of re-doing the already completed works.