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  • Last updated: 23-04-2020

The COVID-19 pandemic and the measures taken in response have major implications for society and businesses, and PPP projects are no exception. This overview highlights the main ways in which a contractor's obligations under a Dutch or Belgian DBFM contract may potentially be affected by the current situation and the possibilities for relief.  

CoVID-19 measures in Belgium

The various measures taken by the Belgian government in order to prevent the spread of COVID-19 include social distancing rules, meaning that large gatherings are no longer permitted and that there should be a minimum distance of 1.5 metres between individuals at all times. If a company is unable to guarantee compliance with the above rules, it is required by law to cease its business operations for the duration of the relevant measures (currently these are in place until 3 May 2020). The government measures have also affected supply chains, with widespread difficulties and delays in the delivery of necessary supplies and resources. Most of the measures were introduced by means of the Ministerial Decree of 18 March regarding urgent measures to limit the spread of the coronavirus. It remains to be seen what the full extent of the measures' impact on the daily operations and management of Belgian PPP projects will be. The Belgian federal government has already decided to exercise more flexibility in the execution of federal public procurement contracts. 

PPP Projects in Belgium

For all federal public contracts, the federal government has announced that it will not penalise contractors for non-performance or a delay due to COVID-19 related measures. In principle, the same benefit extends to contractors in PPP projects that fall under the public procurement regime. It should be noted, however, that this regime does not cover all PPP projects and that exceptions are possible. The regional governments have taken similar decisions to that of the federal government and instructed their contracting authorities accordingly.

Where the pandemic leads to the unavailability of infrastructure or non-performance by the contractor under a DBFM contract, force majeure is the first ground that comes to mind when examining whether the contractor can obtain total or partial relief from its obligations. As there is no standard/model DBFM agreement in Belgium (unlike in the Netherlands), it must be assessed case by case whether the pandemic and the ensuing government measures qualify as a force majeure event under the relevant contract. The contract will often set out a limited list of events or circumstances that constitute force majeure events. Such events and circumstances must be insurmountable, unforeseeable and not attributable to the contractor. Based on an analysis of DBFM contracts typically used for PPPs in Belgium, it is unlikely that such contracts would explicitly provide for the pandemic and the ensuing measures. The effect of force majeure is also to be assessed based on the phase reached by the project (BAFO, awaiting permits, building process or O&M). 

It is possible that the contractor will be entitled to relief under the DBFM contract on the grounds of unforeseen circumstances. However, this must be assessed case by case as some contracts may explicitly exclude unforeseen circumstances as a ground for relief, whereas others may provide for some sort of compensation and/or extension of time. 

Some contracts may provide that a change in law qualifies as a compensation event. In most such cases, however, the change in law must have had an impact on the contractor or the works/services and have caused a disproportionate aggravation of the contractor's obligations. "Law" is typically defined very broadly and hence includes, for example, the abovementioned ministerial decree. 

Contractors may also find it worthwhile to review the relevant insurance policies as these might cover some of the damage suffered (although this is unlikely).

This article was also published for the Dutch market if you want to see the articles side by side, click here

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