Pages

2/15/2014

Contracts in the 3rd World

Contracts and Environmental Law may not seem to be related, but as a is a written or spoken agreement, esp. one concerning employment, sales, or tenancy, that is intended to be enforceable by law it is a topic relevant to this discussion.

Contractual agreements that are funded by the International Finance Commission (IFC - World Bank), with the EU or USA, all require Environmental compliance as a prerequisite.  Actually the contracts will require environmental, safety, and health.  The IFC has a complete standard that must be complied.  Sounds daunting.  But it is not.  Just do the right things and you will be in compliance, and still make money doing so.  Not hard, really.  What is hard is dealing with the local contractors in these developing localities.

The level of business sophistication is just a hair above kindergarden.  A contract is not a bidding agreement to many of these businesses.  It is just suggestions, that can be ignore.  The bad part is that these businesses will ignore whole provisions of the contract, and yet expect to be paid as if they complied with the contract in full detail.  What to do then?


Normally we think the first step is to work it out with the contractor.  He'll understand that he has obligations under the contract.  It is a simple matter of communication, and working it out.  Yes that is one approach that can take months, which may or may not pay off.  What to do if that fails?  Go to court is the normal next step.


In the 3rd world the country government is formed by the extended family; ie the 'Tribe'.  This means the judges and those in position to make decisions are all related to the contractor in some method or form.  


In other words do not hold your breath that you have more than a 50% chance of winning a contract case that is clearly in your favor.  This extends beyond environmental (HS) into any contractual dispute.  There is a reason the country is labeled "3rd World".  

The rules of law, and in this situation contract law, is what separates a developed country from an undeveloped one.  The same issues face both countries such as bridery, favortism, etc.  The difference is that in a developed country the rules are enforced so that everyone has a semblance of a equal playing field without regard to family.

How does this apply to environmental (H&S)?  It applies because if your contract is funded with IFC $ then you are obligated to comply with their rules, even if you don't know any better.  No slack for people coming from the modern societies.   This is where people get into trouble.  Because these 'family' members will want to side with their family there is the option to buy back their neutrality or vote.  They will typically present the option in a coy and secretive manner that would not implicate them, nor yourself.  Slight of hand, a nod in reference to some discussion about money about some other topic there are all sorts of tactics used.  

A lot of foreign companies simply do not want t deal with the EHS requirements of these contracts.  The sad part is that it isn't that difficult.  Instead of ignoring the issue, why not face up to it directly and working a system to comply.  A system that includes sub-contractors that will or will not comply.

You do have the option of sticking your head in the sand.  Hope you can get in do the job and then get out.  But why?