Rwanda

Bruce Yves Kwisanga
ENS Rwanda, Kigali
ykwisanga@ensafrica.com

1. What is your jurisdiction?

The Republic of Rwanda.

2. Are the FIDIC forms of contract used for projects constructed in your jurisdiction? If yes, which of the FIDIC forms are used, and for what types of projects?

Yes. FIDIC forms of contract are used in Rwanda. The most widely used forms tend to be the Yellow Book, that is, design-build, and Silver Book, that is, EPC/turnkey for government works in the energy and transport sectors when a given project has a high level of complexity, there is a well-defined scope of work and the procuring entity does not have the means or capability to handle the project management services, but needs the works completed on time under a fixed budget.

The Red Book, that is, design-bid-build, is also used in the private sector for large-scale works, such as commercial buildings/complexes, public–private partnership (PPP) projects with the government and concession projects.

3. Do FIDIC produce their forms of contract in the language of your jurisdiction? If they do not, what language do you use?

The national language is Ikinyarwanda, and FIDIC does not produce their forms in this language. However, the Constitution of the Republic of Rwanda provides that in addition to Ikinyarwanda, the official languages shall be English and French. Therefore, FIDIC does produce contract forms in other languages used in Rwanda.

In Rwanda, FIDIC forms are mostly used in English.

4. Are any amendments required in order for the FIDIC Conditions of Contract to be operative in your jurisdiction? If yes, what amendments are required?

In the private sector, generally no amendments are required. However in government projects typically obtained after a public procurement process, some amendments are required in order for the FIDIC Conditions of Contract to be operative in Rwanda. See a few examples below.

The requirement to limit the subcontracting value in government projects to a maximum of 20 per cent

This amendment is in relation to Sub-Clause 5.1 of the 2017 Red Book, which prohibits the subcontracting value to a total accumulated value greater than the percentage of the accepted contract amount stated in the contract data. Under Rwandan laws, Law No 031/2022 of 21 November 2022 governing public procurement goes further and limits the subcontract value in public procurement contracts to a maximum of 20 per cent of the procurement contract value.

The limitation on price adjustment

Sub-Clause 13.7 of the 2017 Red Book allows the adjustment of the amounts payable to the contractor for rises or falls in the cost of labour, goods and other inputs to the works by the addition or deduction of the amounts calculated in accordance with the schedule(s) of cost indexation.

In Rwanda, and particularly in public procurement, the above sub-clause must be adjusted according to the approving authority. Article 58 of the public procurement law provides that: ‘Any contract that is planned to be executed within a period of eighteen (18) months is awarded as a fixed-price contract. However, in case a circumstance arises that leads to the exceptional rise in the prices quoted at the time of the bid, the Minister authorises the adjustment of prices.’ Therefore, there is a required amendment in any given FIDIC contract to include a clause addressing the above legal provision to indicate that price adjustment must be done with the approval of the minister in charge of public procurement in Rwanda for government contracts.

The change in the modalities and timelines for the return of performance security

Sub-Clause 4.2.3 of the 2017 Red Book provides that the employer shall return the performance security to the contractor within 21 days after the issue of the performance certificate and the contractor has complied with the clearance of site; or promptly after the date of termination if the contract is terminated at the employer’s convenience; by the contractor, under the optional termination sub-clause; or under the sub-clause for release from performance under the law.

In public procurement, the return of the performance security is done in two instalments. The first instalment consists of the return of half the security within 30 days of the date of provisional acceptance of the works, whereas the remaining instalment is returned within 15 days of the date of final acceptance of the works in accordance with Article 61 of the Public Procurement Law.

5. Are any amendments common in your jurisdiction, albeit not required in order for the FIDIC Conditions of Contract to be operative in your jurisdiction? If yes, what (non-essential) amendments are common in your jurisdiction?

In Rwanda, like many other countries, parties may amend the FIDIC Conditions of Contract to adapt it to the local reality.

Typically, parties consider using the court routes/litigation to leverage the multi-tier instances (up to two appellate levels in Rwanda) instead of non-appealable arbitral awards. In this case, the parties scratch the use of the dispute adjudication board (DAB) and arbitration in exchange for amicable settlement, failing which, parties can go directly to court.

Additionally, some employers make amendments in relation to the performance and/or bid securities to indicate that only securities issued by the authorised financial institutions in Rwanda shall be accepted.

Lastly, parties include clauses that give fair and reasonable opportunity for companies from Rwanda to be appointed as subcontractors. This trend is also seen where parties are encouraged, to the extent practicable and reasonable, to employ staff and labour with appropriate qualifications and experience from sources within Rwanda. All of this is to promote and develop local businesses and skill sets.

6. Does your jurisdiction treat Sub-Clause 20.2.1 of the 2017 suite of FIDIC contracts as a condition precedent to Employer and Contractor claims?

Under Sub-Clause 20.2.1, any claiming party has the right to give a notice of claim to the engineer, describing the event or circumstance giving rise to the cost, loss, delay or extension of time for which the claim is made as soon as practicable, and no later than 28 days after the claiming party became aware, or of the event or circumstance, failing which, the claiming party shall not be entitled to any additional payment, contract price reduction or extension, and the other party shall be discharged from any liability in connection with the event or circumstance giving rise to the claim.

In addition, the answer is yes; the Rwandan laws treat this sub-clause as a condition precedent for the admission of either employer and contractor claims if it is stated in the contract. Therefore, Sub-Clause 20.2.1 will be binding on the parties in accordance with Article 64 of Law No 45/2011 of 25 November 2011 governing contracts provides the following: ‘Contracts made in accordance with the law shall be binding between parties. They may only be revoked at the consent of the parties or for reasons based on law. They shall be performed in good faith.’

Additionally, under Rwandan procedural laws, a claim filed beyond the legal and/or contractual time limits may be subject to a plea of inadmissibility from the respondent seeking to have such a claim declared inadmissible without being heard on the merits in accordance with Article 83 paragraph 4 of Law No 22/2018 of 29 April 2018 relating to the civil, commercial, labour and administrative procedure, which provides the following:

‘The plea of inadmissibility of a claim is any plea seeking to have the other party’s claim declared inadmissible without being heard on the merits considering such other party as having no right to act such as lack of standing, capacity and interest to sue, prescription of the claim, expiry of the prescribed period for filing a claim, the effect of res judicata or failure to pay court fee deposits, case of amicable settlement agreement or that of formalities provided for by law which have not been complied with.’

The above procedural article is mostly used in litigation, that is, courts but it may also be used mutatis mutandi in arbitration in the case in which the rules governing the latter are silent on such an issue.

7. Are dispute boards used as an interim dispute resolution mechanism in your jurisdiction? If yes, how are dispute board decisions enforced in your jurisdiction?

Yes, if a contract provides for dispute boards, then such boards are used as an interim dispute resolution mechanism on matters pertaining to and within the limits of the contract. Notably, Rwanda has been implementing a policy of encouraging and facilitating alternative dispute resolution mechanisms. Therefore, even in circumstances where a contract does not provide for dispute boards, the parties may opt to use such dispute boards following the rise of a dispute.

As for the enforcement of dispute board decisions, two routes may apply. The first and easier one is that the liable/losing party can voluntarily enforce the decision, either directly or through the assistance of a court bailiff.

The second and, understandably, tougher one is forced execution in the case in which the liable/losing party has neither voluntarily enforced the dispute board decision nor submitted a Notice of Dissatisfaction (NOD) in accordance with the contract. In this case, the interested party may refer the matter to arbitration and request an order in accordance with Sub-Clause 21.7 of the 2017 Red Book.

8. Is arbitration used as the final stage for dispute resolution for construction projects in your jurisdiction? If yes, what types of arbitration (ICC, LCIA, AAA, UNCITRAL, bespoke, etc) are used for construction projects? And what seats?

Yes, if the contract provides arbitration as the dispute resolution mechanism agreed by the parties, then it will be the final stage of dispute resolution for construction projects in accordance with Article 50 of Law No 005/2008 of 14 February 2008 on arbitration and conciliation in commercial matters, which provides the following: ‘An arbitral award, irrespective of the country in which it was made, shall be recognized as binding’. Therefore, the arbitral award is final and binding, unless challenged through a set-aside application (on procedural irregularities without going into the merits) before the Commercial High Court.

The most widely used arbitration type/centre in Rwanda is institutional arbitration under the Kigali International Arbitration Centre (KIAC). However, on construction projects involving foreign parties, the international arbitration types (International Chamber of Commerce (ICC) and United Nations Commission on International Trade Law (UNCITRAL)) are predominantly used.

As for the seat, Rwanda is the most used seat in arbitration involving parties affiliated with Rwanda, that is, Rwandan companies, government entities and projects executed in Rwanda. This is common both in arbitration handled by KIAC, as well as other international centres of arbitration, such as the ICC, London Court of International Arbitration (LCIA), American Arbitration Association (AAA) and UNCITRAL for ad hoc arbitration.

9. Are there any notable local court decisions interpreting FIDIC contracts? If so, please provide a short summary.

None to the best of my knowledge.

10. Is there anything else specific to your jurisdiction and relevant to the use of FIDIC on projects being constructed in your jurisdiction that you would like to share?

A notable point is the use and trust of FIDIC contracts, but a deviation from the golden principles governing them. In Rwanda, the utilisation of FIDIC contracts has become increasingly prevalent, providing a structured framework for medium and large construction and engineering projects. Both employers and contractors/subcontractors in Rwanda trust their ability to establish clear responsibilities, mitigate risks and foster cooperation among stakeholders.

However, a notable challenge continues to be seen where parties, especially in superior positions, such as the government and large investors, deviate from the golden principles governing these agreements. In some instances, they may seek to insert clauses that favour their interests disproportionately, undermining the equitable distribution of risks and rewards.