Sanral’s Force Majeure Clause Has Changed – Watch out!

The South African National Roads Agency (“Sanral”) started rolling out tenders for the upgrades to the N2/N3 last year; contracts that are worth millions, which is great news for contractors in what seems like a never-ending slump in the industry right now.

However, take note that these new tenders include a new form of Sanral Works Contract. The contract is still based on the FIDIC Conditions of Contract for Construction, 1999 edition (the Red Book) but there have been some changes made to the particular conditions, most notably, clause 19.1 – Force Majeure.

This clause is relied on by contractors when dealing with strikes and riots (including construction mafia type circumstances) but Sanral has added five conditions which make it more difficult for contractors to do so.

Clause 19.1 lists the kinds of events that constitute a Force Majeure. Item (iii) of this list includes strikes, riots and the like.

The latest particular conditions list five pre-conditions before the events included under this item (iii) may be considered a Force Majeure. These conditions are:

1. The Contractor has engaged with the persons responsible for the riot, commotion, disorder, strike or lockout; has met with the persons or leaders; and has recorded the persons or leaders details, their grievances, the organisations involved, all threats made; and has requested the persons or leaders to cease all unlawful conduct; and
2. The Contractor has obtained proof of the riot, commotion, disorder, strike or lockout, and of any unlawful conduct; and
3. The Contractor has reported all threats and unlawful conduct to the South African Police Service; and
4. The Contractor has brought an urgent application to the court on an ex parte basis that correctly identify the respondents and define the unlawful conduct to be interdicted; and
5. The Contractor has ensured that the court order is enforced

So why should contractors care about these amendments? Well, these days, there is a very high possibility of their works coming to a grinding halt due to “local communities”, “business forums” and the like. This could mean very prolonged delays and possibly the inability to proceed – remember the Mtentu bridge saga? Contractors need these events to fit the definition of Force Majeure so that 1) they can obtain an extension of time (to avoid being held liable for delay damages / penalties) and payment of any Cost or 2) they have a reason to terminate should the disruptions get completely out of hand.

Contractor’s already had it tough trying to get their events within the definition of Force Majeure and now Sanral has upped the ante – A risk to carefully manage if you are awarded one of their lastest contracts.  

Author: Kelly Meijers, Senior Associate