Reference is made to the Onshore Contract signed between xxx (the “Employer”) and xxxx (the“Onshore Contractor”) datedxxxxx (with all attachmentsand schedules thereto identified therein) as amended from time to time(collectively the “Contract”) for xxxx (the “Project”) located at xxxxx.
Unless defined, indicated or the context required otherwise, all capitalized terms used in this letter will bear the meaning ascribed to them in the Contract.
Reference above-captioned subject and the previous letters exchanged thereon as citedabove in particular the Employer’s letter dated Dec. 07, 2023,rejecting the Onshore Contractor’s claim for the ‘Additional Cost due to Change in Law’ with the statement that there was insufficient evidence submitted by the Onshore Contractor to support its Claim.
Pursuant to the Employer’s letter, the Onshore Contractor expresses his disagreement with the Employer’s rejection.
The Onshore Contractor reiterates its stance on the claimed additional cost incurred due to the Change in Law under Clause 13.6 of the Onshore Contract with reference to the notices including letters referred above.
As per the definition of 'Base Date' in accordance with the specialprovisions of Sub-Clause 1.1 Definitions of the Contract,'Base Date' means the Contract Date and the Contract Agreement. The Contract Agreementclearly states that it is effective from signing date of the Contract, and Clause 13.6 of the Contractstates that the Contract Price shall be adjusted to take account of any increase or decrease in Cost resulting from a change in… made and/or officially published after the Base Date….. [Emphasis added].
Therefore, the Contract Agreement as of the Base Date, obligates both the Onshore Contractor and the Employer to adhere to the terms, specifications, and regulations of the Contract. If any Change in Law is applicable, the Clause 13.6 Change In Law is triggered.
Furthermore, it’s noted that the Article 5 of Law on Making Legislation (Amendment) No. 06/NA, dated Nov. 16, 2021, is relevant, and provides that:
“Legislation of specific application is legislation that governs administrative activities that focus on a certain organization or individual.”
Legislation of specific application includes:
(1) Presidential Decree on the Promulgation of a Law,
Ratification of convention or treaty, Decision on Amnesty;
(2) Presidential Decree, Resolution,Decree,Decision or other legislations on the award or promotion of forcearmy, appointment, transfer or removal of a certain position or specificactivity;
(3)Notice.”
[Emphases in bold and underline added].
In terms of the Onshore Contractor’s claim for the ‘Additional Cost due to Change in Law’, the supporting documents clearly justify the claimed Change in Law event.
1. Additional Cost via xxxr Border
The additional Cost via xxx Border for xxx to xxxx transportation of equipment comprises of (a)xxxx Port Charges Difference (b) Toll Gate Fee Difference.
xxxx Port Charges
Firstly, the Onshore Contractor has submitted evidence of the xxxx Port, in the form of a notice issued by the Government of xxx from the Prime Minister’s Office dated Aug. 31, 2022, which is before the Base Date. Additionally, the service fees for the Foreign heavy trucks have become applicable to the Project implementation since Feb.01, 2023, defined in the above-mentioned notice issued after the Base Date.
Toll Gate Fee
Secondly, the Onshore Contractor has submitted evidence of the Toll Fee, in the form of a notice issued by the Government of xxx from the Ministry of Public Works and Transport dated Sep. 05, 2023 as it has been issued under the instruction of the Ministry on Sep. 04, 2023, which is also after the Base Date, which constitutes legislation or law pursuant to Article 5 (3) of the Law on Making Legislation.
The toll way fee letter with reference no. 29025 dated Oct. 23, 2023, from Ministry of Public Work and Transportation subjecting to the toll way fee of xxx for transporting equipment of xxxx (the “Toll Way Fee Letter”), it’s obvious that the toll way fee letter is issued after the aforesaid issuance of notice by the Government of xxx from the Ministry of Public Works and Transport dated Sep. 05, 2023. Provided with the supporting documents from Onshore Contractor, it’s pertinent that the additional toll fee has been charged after the notice dated Sep. 05 2023. Furthermore, as the toll fee which is still under discussion between local company and government authorities, the Onshore Contractor shall keep updating all related supporting documents and the final determination towards the toll fee.
2.Additional Cost via xxxx Border
Given that the Onshore Contractor has submitted evidence of the xxx Boarder, in the form of a notice issued by the Government of xxxx from the Governor of xxx Province dated May 18, 2023, which is after the Base Date, the notice would constitute legislation or law pursuant to Article 5 (3) of the Law on Making Legislation. The service charge rate for the xxx Boarder has been revised and enforced from May 18, 2023, defined a notice issued after the Base Date.
The invoices provided by the Onshore Contractor clearly demonstrate that the necessary payments have been made dated Mar. 30, Sep. 07, and Sep 25, 2023, in accordance with the amounts specified in the notices issued after the Base Date, it means that such Change in Law has become enforced. As a result, it has imposed and will continue to impose a burden on the Onshore Contractor during the implementation of the Project. As the Onshore Contractor is actively involved in transporting equipment and materials across the border and utilizing the toll roads, the Onshore Contractor operations have been directly affected by the Change in Law imposed by the Government Authorities, due to which, the Onshore Contractor has paid the new rates for all the trips since the official publishing date of the government regulation.
In the light of all above, it is fully evident that the submitted evidence by the Onshore Contractor has been issued from the Authorities of the xxx and already become enforced. It holds legal significance as the notices and decisions were made by the competent authorities aligning with the law of the xxxx Government. Provided that the dates specified in these notices clearly indicate that the revising of the regulation all happened after the Base Date, such changes have materially constituted Change in Law cases. Hence, the Employer's rejection of the Onshore Contractor's claim under the Contract is not justified.
Based on the aforesaid contractual provisions and supporting documents from relevant local authorities, the Clause 13.6 Change In Law shall apply.
The Onshore Contractor kindly requests that the Employer review the evidence and references provided and reconsider your decision to the Onshore Contractor's additional cost incurred due to the mentioned Change in Law cases.
The letter is without prejudice to the Onshore Contractor’s rights, interests, and remedies under the Contract, other ancillary agreements, and the applicable law, and all such rights are hereby reserved. All legal rights are fully reserved.
Yours Faithfully,
For and onbehalf of
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