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 DBFM contract may potentially be affected by the current situation and the possibilities for relief.
COVID-19 measures in the Netherlands
On 23 March 2020, the Dutch government announced additional, more stringent measures to combat the spread of CoVID-19, such as a ban on most gatherings and a requirement that individuals keep a distance of at least 1.5 metres from each other. However, gatherings required for the continuation of a company's daily operations are permitted, subject to a maximum of 100 people and provided that the 1.5 metre distance rule is observed. A survey among members of the trade union confederation FNV revealed difficulties in compliance with the above distance rule on construction sites, primarily due to the frequent need for workers to work in closer proximity to each other. In response to calls for customised measures for the industry, the government and the construction sector have adopted "Samen veilig doorwerken", a protocol on safe working practices on construction sites during the COVID-19 crisis.
PPP Projects in the Netherlands
The current Model DBFM Agreement (version 5.0 dd. 18/6/2018) lays down a restrictive definition of "Force Majeure Event". Only in a limited set of situations, specified in that definition, will a Force Majeure Event be deemed to have occurred and the contractor be entitled to relief on that basis. As a result, consequences of the COVID-19 pandemic are in principle not covered by the force majeure provisions of DBFM contracts drawn up in accordance with the above model agreement. By contrast, under the Dutch Civil Code and the regimes governing most other construction contracts in the Netherlands, circumstances that are beyond the contractor's control may be considered as constituting force majeure and hence entitle the contractor to relief from its contractual obligations.
With respect to unforeseen circumstances, clause 24.8 of the Model DBFM Agreement provides, in brief, that "parties agree that they have entered knowingly and willingly into this long-term agreement and that the mechanisms included in this agreement are already intended to overcome the consequences of any unforeseen circumstances that may arise". Therefore, where a DBFM contract is drawn up in accordance with the model agreement, the contractor is in principle precluded from seeking relief on the grounds of "unforeseen circumstances". However, given the pandemic's vast and unprecedented impact, the contractor might succeed in arguing that COVID-19 is not among the circumstances covered by the provision.