In terms of the reach of its influence, architecture has always been a global profession. As communications and building technology make the world ever smaller and more accessible, however, recent years have seen an explosion of interest in international practice. Although working abroad is cause for special consideration in many areas, none may be more important than contracts, the formal agreement between the architect and owner/client that deals with the scope of work, schedule, payments, liability, and other matters.
As many U.S. architects have learned, the benefits of international practice are many, including access to untapped markets, the development of multicultural expertise, and increased branding and name recognition. In addition to established architectural markets in Europe, Asia (especially Japan), and the Middle East, emerging markets can be found in South America, Africa, and elsewhere. Although the AIA’s Contract Documents are used for most contractual agreements in the United States, overseas architects are more likely to work with FIDIC contracts, published by the International Federation of Consulting Engineers, based in Geneva. (Sometimes clients draw up their own unique contracts, and certain countries have their own, but FIDIC and AIA contract documents are widely used.)
The first consideration for American architects working abroad is to nail down their own employment contracts, says Tiffany Melançon, Int’l. Assoc. AIA, current president of AIA Continental Europe. Architects are likely to initially be employed by an existing architecture firm before opening their own practice, which in Europe would provide some legal cover and a relatively safe learning opportunity for professionals working in a new land. “I did exactly this when I moved to Switzerland many years ago to work for a Basel-based international company,” says Melançon, who now runs her own Basel-based practice, Melancon & Co.
Once overseas, architects would do well to learn the local language, applicable building codes and laws, and general contractual requirements for doing business there, she says. If most projects use a certain kind of contract, it is probably the safest bet for architects new to the region to follow that lead until their practice is more established. Melançon, for her part, works primarily with contracts issued by the Swiss Society of Engineers and Architects (SIA).
To help architects understand contractual concerns, the AIA recently published the AIA Global Practice Primer, which outlines the major areas of concern that architects should include in their contracts. These include liability issues, payment schedules, roles and responsibilities, intellectual property rights, dispute resolution, and collateral warranties, which are used to extend recovery rights to a third party. All these areas must be carefully studied and negotiated—preferably with the help of legal counsel, a tax adviser, or an insurance broker—before architects sign on the dotted line.
In terms of liability, for example, some countries (such as France and parts of the Middle East) impose strict liability clauses— often called “decennial liability” because it dates to 10 years after project completion—for defects that affect the stability or safety of a structure. Contracts should address limitations of liability, which might include stated fees or the amount of required insurance. Even so, in some countries liability limitations are unenforceable.
Working in Japan, Indonesia, and China, George T. Kunihiro, FAIA, director of the AIA International Region, says that he employs a combination of local and AIA contracts, depending on the situation. He says that AIA contracts can serve as an important reference from which he can create bespoke agreements that suit a particular project or place. In China, for example, where his role has often been as a consulting partner or subcontractor, he has tended to go along with whatever Chinese agreements the project leads are using (although he makes sure to vet them against his own needs and requirements).
For architects working elsewhere, however, developing a custom contract might go against local practice or laws. In those cases, learning about FIDIC contracts would be not just worthwhile but a necessity.
Generally speaking, FIDIC contracts tend to be more detailed than AIA contracts and favor the owner/client, with strict standards, definitions, and clauses that can cause headaches for architects unaware of their pitfalls. “FIDIC is the king of the hill here,” says Thierry Paret, FAIA, first vice president of the AIA International Region, who is currently based in Jeddah, Saudi Arabia. “The AIA contracts are well-tested and proven in the U.S., but legally one would have to be cautious using them [in the Middle East], because it doesn’t work as well in the legal framework of this region.”
A few years ago, Paret was negotiating a contract with a major client in Qatar that began with boilerplate language from FIDIC but was then compounded by additional clauses that were difficult to swallow—such as a requirement that the designer forfeit a portion of his fee for delays (“liquidated damages”). Delays can be caused by a number of complex factors, and it is problematic for the architect to automatically assume fiscal responsibility for them. FIDIC and AIA contracts differ slightly, too, in terms of the kinds of entitlements to delay the project that are allowed; AIA documents generally give contractors more leeway. Architects might also be expected to include some kind of performance bond, to help protect clients from U.S. architects who decide to pull up stakes and head home.
“Generally, my experience with FIDIC is that you have standard boilerplate, and then the client will add their specific requirements, which tend to be rather client-friendly and onerous for the architect and contractor,” Paret says. “Sometimes you almost are afraid to sign the contract because you are responsible for everything under the sun.” In the Middle East, Paret says, project schedules tend to be aggressive, and clients often expect design work to be performed very quickly. He notes that architects should understand the differences in expectations from region to region. For example, in the United States, when construction documents are drafted, they are usually considered a final workable product.
In the Middle East, construction documents are at about 80 percent completion compared to what would be produced in the United States, with more back-end detailing expected from contractors through shop drawings, which are then approved by the architects and engineers. These are all things that need to be spelled out contractually so that the architect is covered and doesn’t waste effort.
As one architect working abroad said in an interview, the AIA contract documents are among the Institute’s most highly valued offerings, but opportunities exist for the AIA to gain even more global market share through greater education about its contract documents and advocacy for their global use. To this end, AIAU, the AIA’s continuing education portal, offers several courses related to global practice, such as its “When Change Means Going International” series, which often deals with contractual issues.
“Architecture students are not usually taught how to negotiate contracts in school,” says Robyn Baker, associate general counsel of CallisonRTKL and co-author (with CallisonRTKL general counsel Robyn Miller) of the “Legal issues” chapter of the AIA Global Practice Primer. “The best risk-management tool you have is a good contract. Architects need to put in the time and energy to get appropriate terms.”