In Angola, the contracts for execution of public works are mainly governed by the Public Procurement Law, enacted by Law No. 9/16 of 16 June 2016 with the corrections of the Rectification no. 23/16 of 27 October 2016 and the Presidential Decree No. 202/17 of 6 September 2017. Construction works that are procured by private (non-public sector) entities are governed by the Civil Code, approved by Decree-Law No. 47344, of 25 November 1966, as amended by Decree-Law No. 9/11, of 16 February 2011. Often, contracts for private works foresee the subsidiary application of the Public Procurement Law.
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In general, any construction activity can only be performed by the contractor if:
The access to and exercise of construction activity is regulated by the Regulations on Construction Activity enacted by Presidential Decree No. 63/16, of 29 March 2016. The registration title is valid for a ten-year period and the building contractor license for a three-year period, in both cases renewable for the same period.
Furthermore, the erection of a building itself requires a building permit, which is usually applied for by the owner or developer. The procedure for the request and issuance of the building permit within the urban perimeters is governed by the Regulations on Works Licensing approved by Decree No. 80/06 of 30 October 2006. The building permits are issued by the Provincial Governments or by the Municipal Administrations.
Other administrative authorizations may be required depending on the use of the building to be erected. For example, the erection of a building for tourism or for industry usually require additional authorization from the Central Government.
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In Angola the main rules relating to health and safety are in the following decrees:
Nevertheless, specific regulations on health and safety on construction sites are expected soon as, under Joint Dispatch No. 183/15, of 1 June 2015, a technical working group has been created for drafting regulations and a guidebook on health and safety on construction sites.
The health and safety requirements may vary depending on the use of the building (retail, industry or services). There are also some specific health and safety regulations regarding oil industry buildings. There are also specific rules depending on the location and type of construction.
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In Angola, the Framework Environment Law – Law No. 5/98, of 19 June 2015 – provides the basic principles of preserving and protecting the environment, of promoting quality of life and the rational use of natural resources, in accordance with Constitutional Law.
The main legislation dealing with environmental issues affecting building works and with promoting sustainable developments is the following:
There are also some relevant statutes on waste management, water pollution control, liability for environmental damage and environmental protection in the course of oil activities.
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Under Angolan law, land urbanization is a public function whose costs shall be borne by the state, although the execution of urbanization works foreseen in urban plans or other instruments may be of public or private initiative.
The execution of urbanization works of private initiative is regulated by concession or consultation and is subject to licensing. The license may be granted separately or may be contained in the concession or concertation contract. In addition, the license may cover the related allotment and construction operations.
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Yes.
Construction works procured by the public sector are governed by the Public Procurement Law. In general, the provisions of the said law cannot be amended or excluded by the parties. In contracts for the design and construction of works procured by a private-sector developer, the parties have greater freedom to agree their own terms and conditions, but there are some mandatory provisions in the civil code regarding, for example, variations, defects, warranty period against construction defects and work withdrawal.
In addition, in the case of subcontracting, the contract must clearly set out:
If the contract fails to include this information, its terms will be deemed null and void.
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In relation to public works, there are standard form contracts enacted by the Public Procurement Office (Gabinete da Contratação Pública), but the use of such forms is not mandatory.
In addition, some private associations of the construction and engineering sector provide auxiliary standard form contracts to their members.
Usually, FIDIC forms are only used by major contractors and in international contracts.
The Presidential Decree No. 201/16 of 27 September 2016 approved the Standard Terms of Reference to Public Works Contracts.
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The main parties involved in a construction project are:
This is the party procuring the work (typically, a landowner or developer).
A main building contractor is engaged by the owner to carry out and complete the works. This contractor will usually, in turn, engage sub-contractors to carry out and complete separate parts of the works. The contractor may also take on responsibility for design (either directly or through a sub-contractor).
The engineer or architect in charge of drawing up the plans and specifications for the implementation of the development.
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Generally, the contractor assumes risks concerning the execution of the works in accordance with the owner specifications, with the applicable regulations and without defects, as well as risks related to the imposition of variations. Also, the contractor usually assumes the risk of damage or destruction of the works until the delivery of the completed building to the owner. The contractor may also take on responsibility for design, being, in this case, responsible for errors or omissions in the construction project.
In private works contracts, the allocation of risk is more subject to negotiation.
In relation to force majeure, the law provides that a party that is unable to perform its obligations because of an unforeseeable event outside its control can avoid liability for delay or non-performance of the contract. Factors of force majeure can include earthquakes, floods, fires, epidemics, sabotage, strikes, embargoes or international blockades, acts of war or terrorism and government impositions. The Public Procurement Law foresees an extension of the deadline to perform the works in case of force majeure and the right to terminate the contract if the execution is suspended due to force majeure for more than 1/5 of the deadline to perform the works. The party invoking force majeure has 8 days, counting from the date where it became aware of the triggering event, to notify its counterpart. All obligations arising from the contract are temporarily suspended so as to ascertain to what extent the event triggering force majeure hindered the execution of the contract.
Construction contracts usually contain a force majeure clause setting out what sorts of events may qualify as force majeure and the contractual consequences of those events occurring.
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In Angola, public-private partnerships (PPPs) are governed by Law No.11/19 of 14 May.
PPPs have been encouraged by the government, which aims that by 2017 10% of public investment is made through PPPs. However, the use of PPPs is still in its early stages.
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Under Angolan law, the parties are entitled to enter into fixed price contracts. Fixed price is the rule in public works contracts. In such cases, the contractor carries out construction works (as detailed in one or more plans and/or specifications) against a fixed price agreed prior to the execution of the works. However, the contract must provide for price revision after one year of works in the event of a worsening of material and employment costs.
In principle, the contractor is not entitled to request additional payments. However, the agreed price may vary where the owner instructs variations in the works.
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In private works contracts, it is mandatory for the contractor to take out insurance in respect of employment accidents, covering all hired personnel, but the owner may also require additional insurances.
In public work contracts, the contractor is required by law to take out the following insurances:
Additional insurances may be required by the public entity in the tender documents.
Consultants involved in the works, in particular architects and designers, usually take out professional liability insurance.
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It is common for the owner to demand from the contractor a performance guarantee to ensure compensation in the case of failure to perform its contractual obligations and against defects, the guarantee is mandatory in public works contracts.
The guarantee is given by the contractor by way of an independent ‘on first demand’ bank guarantee, insurance bond contracts, cash deposit or state securities.
The amount of the guarantee is indicated in the tender documents, up to a maximum of 20 percent of the contractual price. Additionally, the owner is entitled to retain an amount of 5 percent (or other percentage indicated in the tender documents) from each partial payment due to the contractor to reinforce the guarantee.
In public works contracts no instalments may be paid to the contractor unless a guarantee is in place.
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Payments under a construction contract are normally made against the certification of partially completed works by the works supervisor, which usually happens monthly. In fixed price contracts, the works to be delivered and payments to be made are normally set out in a works and payment schedule.
In public works contracts, the tender documents usually provide the method of payment.
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It is common to impose a time frame for completion of the works and in public works contracts it is mandatory to indicate the time frame for completion.
A delay in completion of the works may lead to the contractor having to pay contractual fines (usually a percentage of the contract price for each day of delay), possibly payment of damages and, ultimately (the worst case scenario), to the contractor being replaced by another contractor or termination of the contract altogether.
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The owner is allowed to change the scope of the works provided that its variations do not exceed 20 percent of the total price of the works, that the associated costs are paid to the contractor and that the date for completion of the works is extended. If the variations exceed 20 percent, they have to be agreed between the parties. If the changes result in a decrease of cost or work, the contractor is entitled to the agreed price with deduction of the amount saved on expenses.
Variations requested by the contractor require the owner’s consent or acceptance and the owner will not be liable for any additional costs arising from variations if they are attributable to the contractor.
If the variations are necessary and are caused by a third party or due to technical requirements, parties must agree on the price and time for completion of works, otherwise the court will decide. The contractor may terminate the construction contract if the cost of the variations exceeds 20 percent of the total works price.
The additional works ordered by the owner must be the result of unpredictable circumstances and
The contractor is required to execute additional works unless he exercises the right to terminate the contract. The owner can also determine the reduction of the works scope. When, as result of variations, there is a decrease of more than 20 percent of the initial price, the contractor may terminate the contract.
Variations requested by the contractor require the owner’s consent. If those variations result in savings, the contractor is entitled to half of its value.
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Completion of the building works is assessed and certified through a process known as handover of the works (recepção da obra), which may be requested by the contractor or at the owner’s initiative once the works are completed.
The handover is recorded in certificates of completion (autos de recepção) signed by both parties. First, there will be a provisional handover and once the warranty period against defects (that starts to run from the provisional handover date) has elapsed, a final handover takes place.
If relevant defects are detected, partial handover minutes are signed and the contractor is obliged to repair the defects within a short period of time, the length of which may vary depending on the extent of the defects.
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The general limitation period to a party to bring a claim in the courts for breach of contract is 20 years. However, claims for works defects are time-barred, a limitation period of three years following the date of completion of public construction works and a limitation period of five years following the date of completion of private construction works of buildings are the rule.
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Under the consumer protection laws, the end user of a building benefits from a warranty period against construction defects of five years after delivery date. This right cannot be excluded by contract.
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Due to lack of a direct contractual relationship between the end user and the architect, designer, contractor and/or sub-contractor, as a general rule, no direct claims can be made by the end user against these parties, except in the circumstances where the conditions for extra-contractual liability are fulfilled. For example, architects and engineers would only be liable to the end user of a building in the event of a tort being committed alongside a breach of the technical and safety rules that have to be complied with as part of the design process. This liability cannot be excluded before the damage occurs.
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Due to the lack of a contractual relationship between third parties (such as purchasers, tenants and lending banks) and the contractor, the rules of extra-contractual liability generally apply. These rules mean that no direct claims can be made by these parties against contracting parties, except where the conditions for extra-contractual liability are fulfilled in accordance with the rules of tort.
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In Angola there are no specific construction courts. Civil courts have jurisdiction to determine disputes concerning construction works, but there are specialized sections to decide disputes involving public administration. As a rule, the parties have a right of appeal to a higher court in order to have the first decision overturned.
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In Angola, construction contracts usually include arbitration clauses if foreign companies are involved. Arbitration proceedings are more flexible than litigation through the courts and less time is required to obtain a resolution. Additionally, appointed arbitrators are often experts in the matters in dispute and, as such, the decisions are of higher quality. However, arbitration proceedings are sometimes more expensive than judicial proceedings.
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Under the Public Procurement Law in the case of a dispute related to the termination of a public works contract, before the judicial proceeding takes place it is mandatory that an extrajudicial conciliation attempt be made. The extrajudicial conciliation attempt takes place before a committee composed of one representative of each of the parties and chaired by the President of the Superior Council of Public Works or a member designated by him for this purpose, within 30 days after the written application and answer of the parties. If the attempt to conciliate is successful, the written terms and conditions must be submitted to the approval of the Minister of Public Works, and are then valid as enforceable title.
Other means of alternative dispute resolution are not mandatory by law and, therefore, not commonly used in construction disputes.
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Is it possible for parties to enter into a construction contract where the price to be paid to the contractor is fixed?
Under Angolan law, the parties are entitled to enter into fixed price contracts. Fixed price is the rule in public works contracts. In such cases, the contractor carries out construction works (as detailed in one or more plans and/or specifications) against a fixed price agreed prior to the execution of the works. However, the contract must provide for price revision after one year of works in the event of a worsening of material and employment costs.
In principle, the contractor is not entitled to request additional payments. However, the agreed price may vary where the owner instructs variations in the works.
Last modified 1 Aug 2019