Construction Contracts in Offshore Projects – Part II 

Offshore projects, due to their unique risks, require special protective mechanisms and clear settlement rules. Well-crafted provisions in these areas can make the difference between success and costly delays or legal issues. 

Therefore, in the second part of the article dedicated to construction contracts in offshore projects, we focus on the following aspects: 

• safeguarding the interests of the parties,
• the method of determining remuneration,
• procedural rules in the event of force majeure.

Safeguards, payment and force majeure 

When signing a contract for an offshore construction project, both the investor and the contractor must think about securing the completion of the work, setting precise payment conditions, and preparing for unforeseen situations. After all, every project at sea is not only a business venture but also an art of risk management. 

Securing the investor’s interests – the “anchor” of stability 

Complex and costly offshore projects require strong safeguards that protect the investor in the event of the contractor failing to fulfill their obligations. The contract may provide for various forms of security, with the most common being a bank guarantee. This mechanism acts like an “anchor” – allowing the investor to cover the costs of potential repairs or delays without the need to allocate additional funds. 

Payments – staged remuneration and transparency 

Payment is not just a reward for completed work, but also a way to continuously monitor the progress. Staged remuneration works particularly well in offshore projects, where each phase carries significant costs and risks. The contract should stipulate payments upon the completion of each stage, and they should be contingent upon the fulfilment of specific conditions, such as providing progress reports. 

Force majeure – winds, waves, and other surprises 

The situation at sea changes rapidly – the progress of work can be influenced, for example, by weather conditions or other unforeseen events. This is why it is important to include a force majeure clause in the contract. This safeguard allows for the suspension of work in exceptional circumstances, such as storms or environmental hazards. With such a clause, neither party will be burdened with additional costs for situations beyond their control. 

Conclusion 

A construction contract in the offshore industry is more than just a standard agreement. It is an action plan, a set of safeguards, and a compass that guides both parties through the complexities of maritime project execution. Careful attention to every element of the contract can determine whether the investment succeeds and help avoid unnecessary legal complications.