Construction Law

What You Need to Know About International Construction Law featured image

What You Need to Know About International Construction Law

As the world becomes more globalized, the construction industry is growing to match. More construction companies are operating internationally, which means that your company may need to work in an international capacity. If you do, then it’s important that you understand the laws that apply to international construction operations. In this article, a Houston construction mediation lawyer discusses international construction law and what your company needs to know to protect itself. 

What Language Should I Use?

International construction contracts, or contracts that are signed outside of the United States, require that the documents be in both languages in order for them to be considered legally binding. In other words, if you’re going to build a new building or complex in the United States, you need to have contracts in English and Spanish, and any other documents that are required for it must be translated before they are executed. The fact that many construction companies don’t know how to do this well or even know that they need to hire someone to do this translation for them can lead to problems down the line. Not only does it delay the completion of the project, but it also creates legal complications for both parties.

Related: How to Build Stronger Legal Contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

What Governing Law Should Be Used?

There is a common misconception that construction contracts are governed strictly by local or regional construction laws. While construction contracts between states and nations differ in some aspects, such as construction costs, construction timeline, type of contract (such as an operating agreement), and other important details, the construction law governing the construction industry is actually international. It is not restricted to any particular region. What sets it apart from other areas is that the construction law for the construction industry regulates construction contracts between countries, and all construction contracts entered into prior to one signing a construction contract in that country will be governed by the same construction law. 

The main function of construction law is to set the standards for all construction contracts so that the construction industry may function as smoothly as possible, regardless of the place where construction contracts are being signed. For example, all construction contracts that are executed in Canada must comply with the International Traffic Organization Act, which sets out the criteria for the transportation of goods. All documents that are required to be provided to a foreign company for construction purposes must be provided to the contractor as well. Similarly, all documents that are required to be provided to a foreign company for the purpose of obtaining a construction permit must be provided to the contractor.

Related: Common Construction Contract Mistakes

What Is the Impact on the Local Community?

International construction contracts are not only subject to the same constraints as domestic contracts, but they also impact the local community in many ways. One of the most important things that impacts the local community is an international construction contract. Most of the contract awards in the construction industry focus on long-term construction projects that will create jobs for the local workforce for several years into the future. Projects like these require considerable resources from local municipalities and schools in order to be developed and operated.

A major concern that is raised when discussing construction contracts with foreign companies is the impact of an international construction contract on the local economy. Many times the concerns expressed are valid; however, the reality is that these problems are much different than what occurs during a local construction project. For example, during a local construction project, the impact of a construction contract is limited to the extent that certain taxes and licensing fees are collected by local government entities. Taxes and licensing fees do not impact the long-term economic development of the company that awards the contract. Contract awards impact the local economy by diverting limited resources and spending toward the operation and maintenance of the construction project.

These diversional efforts result in lower returns on investment and less time and money devoted to improving the local infrastructure. This, in turn, can have a negative impact on the local economy. By evaluating the impact of an international construction contract on the local economy before construction begins, it becomes possible to determine the range of acceptable losses and invest accordingly. In the construction industry, this may include delaying the construction or awarding the contract to another firm. When looking at this issue from a global perspective, it is important to remember that construction contracts are subject to U.S. law and can be terminated based on violating the terms of the contract.

International construction operations can lead to complex legal issues for any company. Fortunately, your company can get help from one of our Houston construction lawyers to ensure that your operations comply with all applicable laws. If you have questions about international construction laws, contact a Houston construction attorney.

If you would like to speak with a Houston construction law attorney, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.