TUNNELING WORKS OF METRO 4 CONTINUE – PARTIES SETTLE THE DISPUTE WITHIN CONTRACTUAL LEGAL FRAMES

BAMCO consortium continues works, after DBR Metro Project Directorate retained its previous position at the last day of negotiations held with participation of the leaders of BKV and the city of Budapest. As this morning the Project Supervisory Board comprising the leaders of the city of Budapest was informed by DBR that the parties agreed to settle the disputed issues within the legal frames provided by the contract, and the tunnel builder forthwith takes steps needed to proceed with works as soon as possible.
BAMCO consortium led by the French owned Vinci and comprising the Austrian Strabag and the Hungarian Hídépítő suspended tunnel building and other works done by the company on 14th April, after its claim of 35 milliard Ft was not fulfilled by DBR Metro Project Directorate within the 30 days timeline noted under its letter. The Client deemed the claim being without merit, and called upon the consortium to proceed with works immediately, otherwise envisaged termination of the 62 milliard Ft contract.

With regard to the seriousness of the situation so evolved DBR reinforced its negotiation position with organizational and personal measures, within the frame of which experts having national and international legal, technical and economic experiences were involved also. To prove its intention to negotiate the Client commenced parallel negotiations with the Contractor in three work-groups on the subjects of project work program, delays up to date and Contractor’s claims.

Finally the parties agreed that BAMCO returns to within contractual frames and settles disputed issues so evolved through the legal way provided under the contract. Claims will be assessed by a three-member independent arbitration board. The consortium has undertaken that it forthwith takes those steps, which are needed to proceed with works as soon as possible and thus avoid further delays.

BACKGROUND INFORMATION

About claims
BAMCO has submitted in total more than 200 claims up to now, i.e. much more than all the other large contractors together. Opinion of the involved international experts is that also that only a part of the above claims has merit. The Client cannot review claims without merit, but those with merit, just as it has been to date, will of course be paid in compliance with the contract.

About the contract
Contracts have been made in accordance with the so called FIDIC international engineering standards accepted internationally and thus applied in numerous other countries. In case of such type contracts the Client has two essential responsibilities: provision of financial coverage and work sites. It is understandable – and it is also like that in the case of similar international projects – that at the side of the Contractor such additional costs may arise, which emerge for reasons outside of the Contractor’s authority. Exactly conceding these did DBR pay the justified claims previously in compliance with the contract.

About the legal frames of the contract
The contract does not allow the Contractor to put forward unrealistic claims by leaving the contractual frames, suspend works with arbitrary action, or – for which unfortunately there was an example too – proceed with tunneling works neglecting the authority’s regulations, and eventually the Hungarian laws. According to the FIDIC type contracts if there is an account dispute between the Client and the Contractor with reference to a claim, the parties may turn to a three-member independent arbitration board. Provided one party disagrees with the decision of the arbitration board, then as a final appeal it may take the issue in front of a chosen court of justice.