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Construction Law/Environmental Liability Insurance in Construction Sector

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Question
Dear Florin,

I have been working in a prestigious suspension bridge Project in Turkey. I have a question regarding Insurance policies that I have very limited knowledge as I am only familiar with CAR and TPL.
In accordance with our EPC Contract some of insurances shall be procured by the Employer  including CAR, TPL and Liability insurance for the Damage to Environment as EPC Contractor’s cost reduced due to this set up during tender stage. Construction operation has already been commenced by the Contractor in order to mitigate any potential delay as the Project shall be continued with  “fast track” nature since considerable delay penalties has been set forth in the Contract.
However, none of above mentioned insurances have been provided by the Employer. And they requested some of amendments in order to minimise cost of premium for the insurances.
One of amendment they offered us to cancellation of Environmental (Ecology) Liability Insurance requirement, stating that requirement will be covered under TPL policy with a particular clause providing coverage for pollution”…. insurance against a damage caused by a sudden or unexpected pollution”

Our job site is within the forest as considerable amount of trees have been removed in order to construct the bridge and other portions of the motorway. If It is possible, I will some quarries to identify extent of Environmental (Ecology) Liability Insurance.
-Can you please tell me, In general practice whether this type of insurance includes deforestation risk from the Contractor, Employer or a third party (government)?
-Does this type of insurance policies covers only “pollution” risk or any other associated risk can be covered by Environmental Liability Insurance policy.
-If deforestation has already occurred, providing this insurance (with a considerable amount of premium), does this policy cover cost of remedy “plantation” after completion of the Permanent Works?

Thank you very much in advance.

Utku Yönter

Answer
Dear Utku,


Thank you for your question.

Firstly, please note that insurances cover a risk that may or may not happen/ occur.

In your case, deforestation is a certainty, it must have been clear from first moment that it will happen, sooner or later.

In such case, we do not discuss about an insurances, but about acquiring the eventually needed permissions to cut the trees, make necessary arrangements for the Forestry Authority to collect the wood, etc and eventually plan some environmental mitigation measures, including planting trees somewhere else, or anything like that, for which a cost must have been included in the contract.

Such permit and arrangements might have been acquired by the Employer, or Contract should indicate that Contractor is to deal with.

With no such permission, I do not know the law in Turkey, but assume, you might face a penalty by the Forestry Authority (Ministry of Environment, or similar)and you'll be obliged to do some environment protection actions, e.g. planting other trees.

As such, please have a look at your Contract and see if it is indeed about insurances, or something else along above lines.

If you still need help, do come back to me.

Hope that helps.

Construction Law

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Florin NICULESCU

Expertise

Questions related to Civil Engineering Contracts, using FIDIC or other Conditions of Contract, concerning Procurement procedures and documents (pre-qualification, tendering and contracting) and Services/ Works Contracts implementation matters including Determinations, Payments, Time Extensions, VOs, Claims/Disputes. Additionally, questions related to dealing with International Financing Institutions. Can also answer questions in Romanian. Can not answer improperly formulated questions.

Experience

Over 20 years of experience in the field of design, works supervision, construction, management of aid funds and technical assistance for various types of contracts implementation, including severe conflictual contractual situations leading to Claims and disputes. Claims/ Contract management, Disputes adjudication, Arbitration.

Organizations
Member of Romanian Professional Association of Roads and Bridges; Listed on President's List of Adjudicators of Romanian Association of Consulting Engineers www.aric.org Former member of the Disputes Resolution Board Foundation (DRBF) of United States – nominee on DRBF President’s Disputes Board Members List www.drb.org and of DRBF Chapter for Eastern Europe http://dabdrb.googlepages.com Former member of Polish Association of Consulting Engineers (SIDiR) – nominee on SIDiR President’s Disputes Board Members National List http://www.sidir.pl/sidir/index.php?action=czlonkowie&a2=r Member of “AllExperts.com” volunteers pool http://www.allexperts.com/user.cgi?m=4&expID=85358&catID=914 Member of the "Constructions Disputes Resolution Services” International Panel of Construction ADR Specialists" of United States www.constructiondisputes-cdrs.com

Education/Credentials
- Graduate in 1994 the Construction Institute - Graduate of several FIDIC,Procurement and other courses - Graduate of first Disputes Board Members Mentoring Scheme (http://www1.fidic.org/resources/adjudicators/pupilage.html) - FIDIC Accredited Adjudicator

Past/Present Clients
- Several State organisations/Ministries , such as Ministry of Transport, National Admistration of Roads, Ministry of Regional Development (former Ministry of European Integration), Public Works and Housing, Central Contracting and Financing Unit in Romania and also in Turkey, Croatia and Macedonia - Numerous Western based private consultancy companies - full CV and other relevant information available at www.abinitio.ro

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