1.1 1.1.

Implied Terms In addition, the laws of the Kingdom of Saudi Arabia require that the following terms are implied into the Contract:

i)

That Saudi Aramco its servants or agents shall not do anything to prevent or hinder the Contractor in carrying out its obligations in accordance with the terms of the Contract and from executing the work in a regular and orderly manner.

ii)

That Saudi Aramco, its servants or agents agree to do all that is necessary to be done in respect to its or their obligations for the carrying out of the Contract, though there may be no express words to that effect.

iii)

That Saudi Aramco, its servants or agents shall provide or arrange for the provision of such full, correct and coordinated information as is known or ought reasonably to have been known by Saudi Aramco to be required by the Contractor in such a manner and at such times as is reasonably necessary to enable the Contractor to carry out its obligations under the Contract.

iv)

That Saudi Aramco shall discharge all its duties under this Contract in a manner consistent with good faith and the tenants of Sharia Law requiring fairness, honesty and good faith towards the Contractor.

1.1.2 1.1.3

Employer Acts of Prevention - Principles of Saudi Arabian Law One extrinsic factor which must be considered in interpreting the conduct of Saudi Aramco is the Prevention Principle. Whilst this is a common law development it does have an equivalent provision within the Laws of Saudi Arabia. It is a widely established international principle that an implied condition of any contract is that one party shall not prevent the other party from fulfilling their obligations under that contract; this is no different under the laws of the Kingdom of Saudi Arabia. Under the doctrines provided by the sharia law the principle is described as Gharar which prohibits the risk of uncompensated loss to one party to a contract and corresponding gain to the other due to uncertainty of contractual obligations or unforeseen circumstances. For this reason it is imperative an Amendment is entered into as soon as practicable to confirm the new Project Completion Date and the Contract Sum.

1.1.4

The Prevention Principle comes from an internationally recognised stated legal principle that a party cannot benefit from its own wrongdoing or unjustly enrich himself at the expense of others. A typical example of the application of this principle in the context of a construction

contract is where the employer (or the employers consultants), through their own acts, omissions or defaults, prevent the contractor from achieving the completion date but nonetheless the employer seeks to enforce its rights by insisting on completion by the completion date. Under these circumstances the Contractor can argue that Saudi Aramco cannot benefit from its acts of prevention. This principle is laid down in the Sharia Law as prohibited1. 1.1.5 In allowing for the Prevention Principle to function in the current Contract the Contractor believes the Laws of Saudi Arabia operates in a similar manner to prevent a wrongdoer relying on his own wrongdoing. Similarly with the time at large principle where the employer has not operated the limited extension of time provisions in accordance with the Contract then the employer cannot rely on the set time for completion and may have instead to allow the Contractor a reasonable time to complete the works. Saudi Law provides for the release of one party from its obligations where the other party does not perform its obligations. Performance should be limited by the principle of la darar or no harm2. In Islamic contract law, the principle of la darar is based on equity and equal bargaining power of the contracting parties. The principle of la darar conveys the ideas that no one shall be harmed and that there will be no abuse of rights in a contractual relationship. For Saudi Aramco to assert a right wherein it refused to award the Contractor an extension to the Project Completion Date, where the events giving rise to delay are caused by the Saudi Aramco would offend the principle of la dara. 1.1.6 The Law of Saudi Arabia also requires all contracts to be performed in good faith and in accordance with the terms of Contract. The Contractor can show it was prevented from performing the works on time by reason of the Saudi Aramcos conduct therefore there is an argument available to support the Prevention Principle concept under the Law of Saudi Arabia. 1.1.7 Fairness and Good Faith

Principles of fairness are enshrined in the Saudi Law and are derived from principles of Sharia law, which includes a duty of good faith.

ABDUL-RAHIM AL-SAATI, The Permissible Gharar (Risk) in Classical Islamic Jurisprudence, King Abdul Aziz University, Jeddah, Saudi Arabia: Islamic Econ. Vol. 16, No. 2, pp. 3-19 (1424 A.H / 2003 A.D)
2

la darar wala dirar or Let there be no harm or reciprocating harm.

1.1.8

Good faith affects the exercise of contractual obligations. The obligation is also likely to be applied to evidence or in support of an allegation of breach of obligation. By way of example a later reliance on a time bar clause (i.e. which seeks to prevent what would otherwise be a right to compensation on the basis that the time for presenting the claim has passed) where earlier the party had waived the right to rely on the time bar or perhaps, had previous knowledge of the existence of the claim may amount to a breach. In that event the duty of good faith would, in all likelihood, prevent the guilty party from relying on the strict application of the contract.

1.1.9

Equally, a duty of good faith generally requires a party seeking to enforce a contractual or legal right to appear before the court (or tribunal) with 'clean hands'; a party cannot expect the full support of the law, if that party, had itself, been in breach or otherwise at fault. So, for instance, the court might reject an express entitlement to terminate a contract due to delay in performance if the aggrieved party was itself partly responsible for the delay. The Contractor does not believe the Saudi Aramco can demonstrate that it has not caused the delays complained of.

1.1.10 The governing law is not concerned with the perceived fairness or otherwise of a properly negotiated deal and recognises the sanctity of the contract (subject, always, of course, to issues of public policy, good morals and the laws of the Saudi Arabia). The law will however interfere where circumstances suggest that the employers conduct has been improper or designed to mislead. There are many examples of how the duty of good faith might be applied which we can glean from various sources of Sharia and Arabic civil law. The effect of good faith on Saudi Arabian commercial transactions is certainly not something to be dismissed lightly. The Contractor can show a lack of good faith on the part of Saudi Aramco in its dealings with the Contractor and is prepared to do so. Change Orders 1.1.11 The sharia law principle of Gharar prohibits the risk of uncompensated loss to one party to a contract and corresponding gain to the other due to uncertainty of contractual obligations or unforeseen circumstances. For this reason it was recognised as an imperative in the Contract that a Change Order shall compensate the Contractor for the extra time in carrying out changed works and an Amendment should be entered into as soon as practicable to confirm the new Scheduled Date for Completion and the revised Contract Sum. Saudi Aramco will be in breach of

its contractual obligations if it does not compensate the Contractor for both time and cost of the changes.