Challenges facing the Middle East construction industry: performance bonds – part two

Construction is recognised as both a major driver of economic growth and a fundamental instrument in the eradication of poverty. However, there is still an infrastructure deficit in many countries. Over the last 50 years, this has led an increasing number of contractors to look at opportunities in new jurisdictions. In doing so, they must be alive to the inherent differences between regions and their associated risks. This includes, arguably, one of the most significant risks, a principal’s right to cash performance related bonds.

Our podcast series focuses on the key challenges facing the construction industry in the Middle East. In this two-part episode, Andrew Archer, Duncan Miller SC and William Marshall discuss the commercial purpose behind cash performance bonds and the differing approaches local Courts have taken to intervening in a relationship between a contractor and a principal. They identify when, how and why the approaches differ using real life examples from multiple jurisdictions, and analyse what learnings contractors might be able to take away so as best to protect their position moving forwards.

In the second and final part of this episode, Andrew, Duncan and William look at real life cases across different jurisdictions whereby the Courts have intervened in the calling of performance bonds.

They analyse why the particular Court has made that decision and discuss the differing approaches each have taken to key issues such as unconscionability, the impact of arbitration clauses on performance bonds, and the precautionary attachment remedy.

Contractors will leave the episode with a clear understanding of the jurisdictional differences and some key learnings they can take away to minimise their risk of a wrongful call moving forwards.

Listen to part one of the episode