International Construction Law Review
MANAGING LEGAL RISK TO MINIMISE DISPUTES: DESIGN RISK, UNFORESEEABLE GROUND CONDITIONS AND TIME FOR COMPLETION – THE BRAZILIAN LAW OVERVIEW1
ALEXANDRE AROEIRA SALLES
MARIANA BARBOSA MIRAGLIA
Founding Partner and Partner, Aroeira Salles Advogados2
I. INTRODUCTION
This article provides an overview of the legal background and key principles for risk management involved in construction law under the perspective of Civil Law, and, more specifically, Brazilian law.
Before the main topics are considered it is important to first make a very important distinction. Brazilian construction law is essentially divided into two different systems – public and private. In Brazil, the public system is generally more relevant due to the strong participation of the State in the national development. In fact, there are several examples of public construction contracts among the major projects developed in Brazil during the last 40 years.
The key principle that should be understood in relation to public contracts in Brazil is that the regime grants the Public Administration the power to modify several aspects of the contract in benefit of the public interest, for example, to terminate the contract or to modify its scope.3 The Federal Constitution does, however, protect the original economic-financial balance of the contract, which must be maintained, even if the Public Administration exercises one of its prerogatives of modification.4 This regime, therefore, establishes the need for an equivalence of
1 Presentation given at the International Construction Law Association – ICLA Bi-annual Conference 2017, held on 26 January 2017 at the British University in Dubai, Dubai (UAE).
2 The views expressed herein are those of the authors and not necessarily those of the law firm or organisation with which they are affiliated. The authors are grateful to Francisco Freitas de Melo Franco Ferreira, John Oyama and Rodrigo Domingues Almeida Reis, their colleagues at Aroeira Salles Advogados, for their comments on this paper in draft. However, only the authors are responsible for its contents.
3 Federative Republic of Brazil. Law no 8.666. Regulates article 37, XXI, of the Federal Constitution, establish rules for bids and contracts with the Public Administration. (1993) Brasília: The Presidency of the Republic of Brazil. Available from http://www.planalto.gov.br/ccivil_03/leis/L8666cons.htm. (Last accessed: 15 November 2017). Article 58, I.
4 Federative Republic of Brazil. Constitution of the Federative Republic of Brazil. (1988) Brasília: The Presidency of the Republic of Brazil. Available from http://www.planalto.gov.br/ccivil_03/Constituicao/Constituicao.htm. (Last accessed: 15 November 2017). Article 37, XXI.
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