REALWorld Law

Apart from the contract are any other documents commonly entered into by way of security – such as a guarantee from a building contractor's parent or ultimate holding company or a bond from a third-party surety?

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.

Last modified 1 Aug 2019

Apart from the contract are any other documents commonly entered into by way of security – such as a guarantee from a building contractor's parent or ultimate holding company or a bond from a third-party surety?

In general, any construction activity can only be performed by the contractor if:

• Same holds a registration title (título de registo) and, for works with value higher than AOA 3,000,000, a building contractor license (alvará de construção), issued by the Institute for Construction and Public Works Control (IRCCOP), and
• The works to be performed are in accordance with the type and value of works that the referred title/license allows

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.

Last modified 1 Aug 2019

Apart from the contract are any other documents commonly entered into by way of security – such as a guarantee from a building contractor's parent or ultimate holding company or a bond from a third-party surety?

In Angola the main rules relating to health and safety are in the following decrees:

• Decree No. 13/07 of 26 February 2007, which approved the General Regulation of Urban Buildings
• Executive Decree No. 40/86, of 13 October 1986, which approved the General Regulations on Health and Safety at Workplace
• Decree No. 31/94, of 5 August 1994, which approved the Workplace Health and Safety System, and
• Executive Decree No. 6/96, of 2 February 1996, which approved the General Regulations on Health and Safety Services at Companies Workplace

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.

Last modified 1 Aug 2019

Apart from the contract are any other documents commonly entered into by way of security – such as a guarantee from a building contractor's parent or ultimate holding company or a bond from a third-party surety?

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:

• Environmental Impact Assessment Law – Decree No. 51/04, of 23 July 2004, as amended by Executive Decree 241/16, of 25 May 2016, which lays down the rules and procedures related to the environmental impact assessment of public and private projects
• Environmental Licensing Law – Decree No. 59/07, of 13 July 2007 – which governs environmental licensing of activities which, by their nature, location or size are likely to cause significant environmental and social impact, and
• Regulation on Liability for Environmental Damage – Presidential Decree No. 194/11 of 7 July 2011

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.

Last modified 1 Aug 2019

Apart from the contract are any other documents commonly entered into by way of security – such as a guarantee from a building contractor's parent or ultimate holding company or a bond from a third-party surety?

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.

Last modified 1 Aug 2019

Apart from the contract are any other documents commonly entered into by way of security – such as a guarantee from a building contractor's parent or ultimate holding company or a bond from a third-party surety?

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:

• The parties’ identification
• The contractor’s license number
• The scope of the works
• The contract price and the works price
• The time frame within which the works are to be completed, and
• The payment terms

If the contract fails to include this information, its terms will be deemed null and void.

Last modified 1 Aug 2019

Apart from the contract are any other documents commonly entered into by way of security – such as a guarantee from a building contractor's parent or ultimate holding company or a bond from a third-party surety?

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.

Last modified 1 Aug 2019

Apart from the contract are any other documents commonly entered into by way of security – such as a guarantee from a building contractor's parent or ultimate holding company or a bond from a third-party surety?

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.

Last modified 1 Aug 2019

Apart from the contract are any other documents commonly entered into by way of security – such as a guarantee from a building contractor's parent or ultimate holding company or a bond from a third-party surety?

Private works contracts

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.

Public works contracts

The additional works ordered by the owner must be the result of unpredictable circumstances and

• Non-technical or capable of being costed separately under the contract, or
• Necessary to the completion of the works

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.

Last modified 1 Aug 2019

Apart from the contract are any other documents commonly entered into by way of security – such as a guarantee from a building contractor's parent or ultimate holding company or a bond from a third-party surety?

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.

Last modified 1 Aug 2019

Apart from the contract are any other documents commonly entered into by way of security – such as a guarantee from a building contractor's parent or ultimate holding company or a bond from a third-party surety?

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.

Last modified 1 Aug 2019

Apart from the contract are any other documents commonly entered into by way of security – such as a guarantee from a building contractor's parent or ultimate holding company or a bond from a third-party surety?

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.

Last modified 1 Aug 2019

Apart from the contract are any other documents commonly entered into by way of security – such as a guarantee from a building contractor's parent or ultimate holding company or a bond from a third-party surety?

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.

Last modified 1 Aug 2019

Apart from the contract are any other documents commonly entered into by way of security – such as a guarantee from a building contractor's parent or ultimate holding company or a bond from a third-party surety?

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.

Last modified 1 Aug 2019

Apart from the contract are any other documents commonly entered into by way of security – such as a guarantee from a building contractor's parent or ultimate holding company or a bond from a third-party surety?

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.

Last modified 1 Aug 2019

Apart from the contract are any other documents commonly entered into by way of security – such as a guarantee from a building contractor's parent or ultimate holding company or a bond from a third-party surety?

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.

Last modified 1 Aug 2019

Apart from the contract are any other documents commonly entered into by way of security – such as a guarantee from a building contractor's parent or ultimate holding company or a bond from a third-party surety?

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.

Last modified 1 Aug 2019