Law and regulation of concurrent delay in Serbia

Serbian law does not recognize legal concept of concurrent delay and, hence, does not prescribe a mechanism for resolving these situations. Additionally, case law and jurisprudence on this issue are practically non-existent.

There is no generally accepted definition of concurrent delay, as Serbian regulations, case law and jurisprudence do not deal with this concept.

Even though the Serbian law does not establish specific rules for handling concurrent delay, the issue of concurrent delay may be dealt with by using general rules for delay and damage compensation stipulated by Serbian Law on Contracts and Torts, as well as rules on extension of time prescribed by Specific Customs on Construction (Posebne uzanse o građenju). Specific Customs on Construction are collection of construction customs that are applied to construction agreements only if contractual parties have specifically agreed to their application. 

The Law on Contracts and Torts differentiates between debtor’s and creditor’s delay and sets out consequences of those delays. 

Namely, under the said Law, a debtor’s delay occurs if the debtor fails to perform its obligation at due time. A debtor’s delay may occur even without debtor being at fault. Accordingly, if the delay was caused by circumstances that were outside of debtor’s control, the debtor will not be responsible for damages suffered by the creditor. However, if the debtor’s fault exists, the creditor will be entitled to damages. 

On the other hand, a creditor will be in delay if it refuses, without justified ground, to accept performance by the debtor or if it prevents performance through its conduct. A creditor will also be in delay if, although ready to accept performance of a debtor's simultaneous or dependent obligation, it fails to offer performance of its due obligation. At that moment, the creditor is considered to be in delay both as creditor and as debtor. However, creditor’s delay will not occur if it proves that, at the time the debtor offered its performance, or at the time set for performance, the debtor was unable to perform its obligation.

Hence, under the Law, creditor’s delay prevents occurrence of debtor’s delay. Once creditor’s delay takes place, the debtor’s delay ceases and the risk of loss or damage is transferred to the creditor. Additionally, the creditor is obliged to compensate the debtor for damages suffered due to its delay. 

As seen from the above, the delay provisions of the Law on Contracts and Torts are most suitable for resolving issues of delay in case of simultaneous obligations of debtor and creditor. As concurrent delay does not have to imply delay in simultaneous obligations, but also obligations that are due independently of each other, the below presented provisions of the Specific Customs on Construction may be more useful for resolving concurrent delay issues. 

Under the Specific Customs on Construction, a contractor would be entitled to seek extension of time, in case it was prevented from performing the works due to changed circumstances or employer’s failure to fulfil its obligation. The Specific Customs on Construction envisage a list of circumstances that can be considered as circumstances giving right to extension of time - natural events (fire, flood, earthquake, etc.), unforeseen works that could not be anticipated by the contractor at the time of conclusion of the contract, delay in delivery of equipment (if the employer or person appointed by employer is responsible for such delivery), etc.

The contractor would not be entitled to seek an extension of time in case the relevant changed circumstance occurred after completion date (note that, under the Specific Customs on Construction, completion date implies not only final completion date but completion date of each phase of the works). But, the contractor would be granted an extension of time if it proved that the changed circumstance would occur even if the works had been performed within the agreed deadline. 

The Specific Customs on Construction do not regulate contractor’s entitlement to damage compensation in case of extension of time. But, based on the above described rules of the Law on Contracts and Torts, the contractor would be entitled to additional payment if the reasons for delay can be attributed to the employer. 

Further on, the Specific Customs on Construction allow a contractor to suspend construction works if performance of works is hindered or prevented due to the employer’s actions (i.e. due to employer’s non-fulfilment or delay in fulfilment of obligations) and the employer failed to fulfil the relevant obligation within an additionally provided period of time. Note that such employer’s actions are considered as a circumstance that entitles contractor to the above mentioned right to seek an extension of time.  

Additionally, the Specific Customs on Construction envisage that the party responsible for suspension of works has to compensate the other party for the damages suffered due to such suspension.

There are no general principles that would apply to treatment of concurrent delay and each concurrent delay dispute has to be analysed and resolved on a case by case basis.

Principally, under the Serbian civil procedure rules, in case of dispute brought before a court, calculation of delay would be performed by the court with the help of an expert(s) proposed by parties and appointed by the court. However, as already mentioned, Serbian regulations, case law and jurisprudence do not deal with the concept of concurrent delay. Hence, there is no officially determined method of calculation and each such calculation would depend on an approach adopted by the acting court/judge.

Considering the lack of relevant statutory provisions dealing with concurrent delay, such term would be given effect to the extent such term does not produce effects that are contrary to mandatory provisions of the Serbian Law on Contracts and Torts. Moreover, exactly because of lack of statutory provisions, it is advisable that a contract (governed by Serbian law) specifies, as unambiguously as possible, how concurrent delays are to be resolved.   

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?

Given the above described rule of Specific Customs on Construction on extension of time, the Contractor is likely to be entitled to an extension of time corresponding to the time period needed for implementation of the variation. It may be possible for the Employer to argue that no additional delay to completion had been caused by the Variation, because with or without the Variation the completion date would still be 25 February. However, the Employer should only be able to raise such an argument if it is actually possible for the Contractor to address both events (the Contractor Risk Event and the Variation) at the same time, which should be assessed on a case to case basis, without undue burden for the Contractor.

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 for the contractor’s / employer’s entitlement to delay related costs and damage compensation – the damage would have to be calculated based on the respective degree of default and causation, at all times having in mind the above described rules of Law on Contracts and Torts on damage compensation in case of delay.