DBR CALLS UPON TUNNEL BUILDER TO PROCEED WITH WORKS – STOPPING AGAIN BY BAMCO CONSORTIUM LED BY THE FRENCH VINCI IS ILLEGITIMATE

BAMCO consortium led by the French owned Vinci Construction with members of the Austrian Strabag and Hungarian Hídépítő suspended tunnel building and other works again today. Background of the issue is that the consortium submitted a claim with an unrealistically high amount of nearly 35 milliard Forints to DBR, while the whole work should be completed from approximately 62 milliard Forints as per the contract. Position of DBR is clear: the claim is deemed being without merit, therefore DBR calls upon the consortium to proceed with works. Provided the consortium does not perform within 14 days, DBR will be forced to terminate the contract. Irresponsible attitude of the consortium led by the French company compromises the jobs of several hundreds of Hungarian workers, thereby the living of several hundreds of Hungarian families.
As known, in its latest ultimatum BANCO Kkt. comprising Vinci, Strabag and Hídépítő demands some 35 milliard Forints, and gave 30 days for full compliance, otherwise envisaged termination of its contract of nearly 62 milliard Ft. DBR has been continuously examining the ever growing number of claims, of which almost 190 were submitted by the consortium, which is more than all the other claims together submitted by all the other contractors. The Company’s step now especially with the attitude used and the unreasonable as well as unfeasible conditions exceeds all limits according to the opinion of the Client.

DBR – in addition to that it denies the merit of claims referenced by the consortium, particularly their immeasurably exaggerated amount – clearly disputes that the stopping is justified. In accordance with the contract, if the consortium disagrees with decisions made by the Engineer, it has to turn to an arbitration board with reference to that “in case of dispute the arbitration board has to make the decision”. Further disputed issues eventually have to be settled by the verdict of chosen court of justice organized beside the Hungarian Chamber of Commerce and Industry. As to the position of DBR, through the fact that works have been stopped, the consortium provided ground for contract termination by the Client. The Contractor’s step now almost makes completion of the contract completely impossible.

Notwithstanding the above in case of inducing contract termination the Contractor is obliged to pay penalty and in addition is liable to reimburse damages over and above the penalty as per the regulations of the Civil Code. In other words all costs that arise due to its breach of contract should be borne by the consortium led by Vinci. The Client also noted that due to the failure by the consortium, and its numerous previous steps breaching the contract a claim and damage with a significant amount of several milliards have arisen on the Client's side, which will be put forward. The work program accepted by the consortium as well provided sufficient timeline to comply with the completion time period. The fact that the Contractor failed to comply and that it applied measures to speed up works in order to mitigate further delays do not mean the same as that the Client or the Engineer would have failed to update the work program. Obviously a comprehensive work program could be provided once the consortium declared the anticipated time period for tunneling, which constitute the basis for several additional work phases. Payments for items noted under the BAMCO contract are ensured, and in contradiction with news in the press DBR previously informed the consortium on this also.

With reference to the disputed issues, BKV and its DBR Metro Project Directorate asked the managers of BAMCO Kkt. led by Vinci several times that threats and alarming should not get to the foreground, but the constructive negotiation, with particular reference to the several hundreds of Hungarian workers concerned, and respectively their families. Nevertheless, BAMCO stopped the works again on 14th April.

More alternatives in DBR’s manuscript

There is a script for the case also, if the French contractor does not change its position. There are other companies, which can build the tunnel, and even BKV can also do it under its own authority. As per the contract the Contractor has to leave all its equipment here, and duly handover the works to the next Contractor, or to DBR. TBMs and other equipment would remain here, and in case of the breach or termination of contract a long litigation would likely commence between BAMCO and BKV. BAMCO’s possible leaving would create a very difficult and complicated situation from both legal and technical aspects, but it would not make the metro construction impossible at all, and respectively not compromise the EU aid either. Presumably it would be a much more irresponsible attitude from the aid awarder’s point of view to “throw away” the future aid, or now the taxpayer’s money upon blackmailing, than the legitimate and determined action.

In case of contract termination there are two options to complete the works

BKV/DBR starts a new public procurement procedure for finishing the remaining tunnel section, which would mean approximately one year halt in the tunneling works (not in the metro construction, as works would continue at other locations), but BKV/DBR could finish the work under its own authority, as it has right to build. This means that BKV would practically finish the project with its own employees, carry out public procurement, or rent all the necessary materials, equipment, plants, and human resources. This option is presumably cheaper and faster, than looking for a new contractor, the tunneling works may even continue in a few months.

Provided litigation would take place and the court declares the consortium liable (i.e. it would be confirmed that BKV did not violate the contract and BAMCO's stopping was illegitimate, and respectively induced termination of contract), then all cost arising as additional due to the termination of contract would have to be paid by BAMCO. Such could be for example: all penalties and/or additional costs arising for station builders, which occur due to the slow down of tunneling works, but such could also be the additional costs may associated with the finishing of tunneling works. Despite of the litigation procedure works could continue.

This is not an unusual attitude for Vinci.

The French Vinci with the highest influence in the consortium has worked in other countries also according to press news with similar means that are scratching the surface of blackmailing. As we know in Athens during the construction of tunnels to the metro intended for the Olympics Vinci came forward with an enormous claim that the management of Athens did not want to pay. The company stopped with works for one year, thus the metro could not be completed for the Olympics, it could be handed over only in 2000, and then with only a shorter section either.