Zhejiang Construction Investment Group recently announced that the company is embroiled in four lawsuits related to Algeria, all stemming from disputes over the construction general contract of the Stadium in Douera project.
Due to disputes over the project contract, Zhejiang Construction Investment Group’s contract was unilaterally terminated by the owner, leading to a series of legal proceedings. Zhejiang Construction Investment Group officially disclosed this information in a statement on March 24, 2024.
It is reported that all four cases have been formally filed by the court but have not yet entered the trial stage. One party in the cases is the Algerian Minister of Housing, while the other is Zhejiang Construction Investment Group.
In the first case, the Algerian Minister of Housing claimed approximately 528 million RMB from Zhejiang Construction Investment Group. Algeria alleges that Zhejiang Construction Investment Group caused delays in the construction process, subpar quality, and improper employment practices, thus demanding corresponding economic compensation.
The second case mirrors the first, with the Algerian Minister of Housing once again claiming approximately 528 million RMB from Zhejiang Construction Investment Group. In addition to issues with delays and quality, this claim includes expenses for re-tendering due to contract termination and other administrative losses.
In the third case, roles are reversed, as Zhejiang Construction Investment Group filed a lawsuit against the Algerian Minister of Housing, demanding a whopping 1.2 billion RMB. Zhejiang Construction Investment Group alleges multiple breaches of contract by the Algerian side during contract performance, including failure to timely provide necessary construction drawings, failure to pay according to the contract, and failure to confirm work outside the contract.
Zhejiang Construction Investment Group believes these actions constitute a serious violation of the contract, and Algeria’s request for termination under these circumstances amounts to an abuse of power. Therefore, Zhejiang Construction Investment Group demands payment for completed work and losses incurred due to termination.
In the fourth case, Zhejiang Construction Investment Group once again sued the Algerian Minister of Housing, this time claiming approximately 94.64 million RMB. Zhejiang Construction Investment Group argues that Algeria’s termination of the contract constitutes an abuse of power, thus requesting a suspension of related guarantee payment procedures until the main lawsuit is judged, at which point a decision will be made based on the outcome.
Zhejiang Construction Investment Group emphasized in its official statement that the company had exerted its utmost effort in executing the construction general contract for the Stadium in Douera project in Algeria and had not actively breached the contract. The company has been actively pushing for contract fulfillment. Facing the lawsuits brought by Algeria, Zhejiang Construction Investment Group stated it would vigorously respond through legal channels.
As the Belt and Road Initiative continues to advance, an increasing number of Chinese companies are venturing abroad to undertake large-scale infrastructure and engineering projects in regions like the Middle East and North Africa. However, Chinese enterprises face numerous challenges and risks in this process, with disputes and compensation claims arising primarily from delays in project completion.
In engineering contracts in the Middle East and North Africa, Chinese companies often encounter delays due to insufficient understanding of local environments, cultures, and legal regulations, leading to project setbacks. These delays not only affect project progress and efficiency but also risk disputes and substantial economic compensation with owners or partners.
To avoid such situations, Chinese enterprises should pay close attention to the risk of project delays and take effective measures to prevent and address them. At the outset of project acceptance, companies should establish a professional risk assessment team to conduct in-depth research and understand the actual conditions of the project location. This includes comprehensive analysis of local construction environments, government policies, labor laws, and potential socio-cultural factors.
In particular, it is essential to reasonably assess local construction characteristics, such as the drawing approval process, availability of water and electricity supply, management capabilities of subcontractors, stability of raw material supply, and the difficulty of permit processing. These factors may directly or indirectly affect project progress, thereby increasing the risk of project delays.
Furthermore, Chinese companies must take comprehensive measures to prevent legal risks. When signing engineering contracts, both parties’ rights and obligations, especially core terms such as project duration, quality, payment, and breach of contract liability, should be clearly defined. It is also recommended that Chinese and local lawyers jointly provide legal consultation services to ensure the legality and effectiveness of contract terms, reducing the likelihood of future disputes.
Moreover, Chinese enterprises should establish a sound project management system to monitor project progress in real-time and promptly identify and resolve issues. By strengthening communication and collaboration with owners, subcontractors, and suppliers, all parties can efficiently advance the project according to contract requirements.
In summary, when undertaking engineering contracts in the Middle East and North Africa, Chinese enterprises must fully recognize the risks of project delays and take comprehensive measures from project assessment, legal risk prevention, and project management to enhance their risk response capabilities.