Globalization of Engineering and Construction Legal Issues

During the twenty-first century engineering and construction professionals will be dealing with challenges that they did not have to address in the twentieth century that are being created by the rapidly increasing globalization of the world. People throughout the world are now irrevocably linked by telecommunications systems and the media. In addition to innovative technical processes, political, social, and economic events are changing how engineers and constructors will interface with the rest of the world. Engineering and construction professionals (E&C) receive a solid scientific and engineering background during the college level educational process, but, during the twenty-first century, they also need to be familiar with the nuances of other cultures, especially legal issues, and how to effectively work in the global arena. Another major influence that is complicating legal issues that E&C personnel are required to address is increasing foreign investment in domestic firms. It is now becoming harder to distinguish between domestic and foreign firms because many domestic firms now have foreign partners, ownership, or stockholders.

Some of the major components of construction materials, such as steel, are only being produced in a few countries in the world; therefore, engineers and constructors may have to rely on purchasing materials in the global marketplace, which requires an understanding of how to negotiate and implement international contracts. Engineering and construction firms are no longer only competing against other domestic firms for construction materials, now they must compete against foreign firms for scarce materials. The price of structural steel members doubled during 2005, along with similar price increases for timber products. Now, steel is mainly being produced by Pacific Rim nations. The virgin forests of North America, as well as the forests in many other countries, have been denuded, and building materials are now being made of compressed wood chips (laminated wood), which are replacing virgin wood as a structural building component. The quality of construction materials is steadily declining, because of relaxed safety requirements in nations where construction materials are being produced or fabricated, and designs might have to be adjusted to accommodate these lower quality materials.

Because firms are forced to compete for scare resources that are produced by firms in foreign countries, they are influenced by global legal issues even if they are only domestic E&C firms. When domestic firms no longer produce or process the raw materials and components used in domestic construction projects, E&C firms have to compete for scarce materials in the global marketplace, which requires an understanding of the legal issues and contract implementation processes that surface when working with global suppliers, fabricators, and foreign E&C firms.

When E&C personnel work on construction projects in foreign countries, they work with personnel from the host nation as well as with personnel from other countries, because clients usually hire foreign nationals from several nations to obtain the technical expertise required to design or build projects. Global project managers and project management team members might be managing multicultural personnel and laborers and, in some situations, they might be managing workers from several different regions of the world. In these types of situations, project personnel may be required to oversee engineering and construction contracts that are with firms from various countries and that are being administered by courts from different legal jurisdictions.

Engineers and constructors that are only familiar with common law legal systems will have to develop an understanding of the differences between common law systems and civil law systems in order to operate in countries were civil law systems are the prevailing legal system.

Unless higher education institutions introduce engineering and construction courses that cover common law, civil law, and the legal systems of countries of East Asian countries, engineering and construction professionals will have to seek out additional references related to foreign legal systems and educate themselves on the differences between legal systems throughout the world. Having a basic understanding of legal systems worldwide helps to prepare engineers and constructors to work on global projects anywhere in the world.

The articles included in this edition of the Journal provide information on some legal issues that E&C professionals face while working globally. The first article, “Global Legal Issues for Engineers and Constructors,” by Yates and Smith provides an introduction to some of the different legal systems that are used throughout the world, and it includes information on the types of clauses that should be included in international E&C contracts. The article also provides reasons and explanations as to why these types of clauses should be included in international contracts.

The second article, “Liquidated Damages: A Comparative Study of the Law in England, Australia, New Zealand, and Singapore,” by John Twyford, provides more depth into the types of consequences that may result from some clauses when they are used in different legal systems. The authors use liquidated damages as an example to compare different legal systems.

The third article, “Developments in the Analysis of Extensions of Time,” by Tony Farrow, provides insight into the subject of delays and how they are addressed in different legal systems by using case studies to explain the results of legal cases related to construction delays.

The fourth article, “International Treatise on Construction Specification Problems from a Legal Perspective,” by Patrick T. I. Lam, Mohan M. Kumaraswamy, and T. S. T. Ng, uses specifications to demonstrate the importance of writing clear and concise contracts. The authors provide a review of specifications problems in North America, the European Union, the Middle East, Oceana, Africa, and the Asia-Pacific region, and they include case studies to demonstrate the types of problems that are created by unclear specifications.

The fifth article, “Legal Risks Faced by Foreign Architectural, Engineering, and Construction Firms in China,” by Florence Yean Yng Ling and Sook Ping Low, explains some of the legal issues and challenges that foreign E&C firms face when trying to procure and conduct work in China.

The sixth and seventh articles, “Legal Requirements and Challenges for e-Business within the Single Electronic European Market,” by Z. Ren and T. M. Hassan and “Legal Aspects of Information and Communication Technologies Implementation in the Turkish Construction Industry: Applicability of eLegal Framework” by Y. Nielsen, T. M. Hassan, and C. Çiftçi, both address some of the different aspects of using computerized e-commerce by using the European Union and Turkey as case studies to explain the problems associated with using e-commerce and eLegal across international boundaries.

Although each of the articles included in this edition of the Journal uses different approaches to explain the ramifications of legal issues as applied between different countries, they all have a central theme of the importance of knowing about the types of issues and challenges that arise when E&C professionals are working in a global legal environment.