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Construction Contract Disputes

Can I stop construction due to non-payment?

Yes, the Civil Code grants the contractor the right to suspend works if the client breaches payment obligations, but prior written notice is mandatory.

What if the work performed is of poor quality?

The client has the right to demand defect rectification, price reduction, or compensation for damages. If the defect is substantial, contract termination is possible.

Is expert testimony mandatory in court?

In construction disputes requiring special technical knowledge (e.g., determining quality or volume of work), the court almost always appoints an expert examination.

How do FIDIC contracts work in Georgia?

FIDIC contracts operate as an agreement between parties, but they must not contradict mandatory Georgian laws. In disputes, Georgian courts apply both the contract and the Civil Code.

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Construction Contract Disputes: Risk Management and Legal Defense

The construction sector is one of the most dynamic parts of Georgia's economy, yet it is also characterized by a high frequency of disputes. Construction Contract Disputes arise when parties — the client and the contractor (or subcontractor) — fail to agree on the quality of performance, deadlines, costs, or other essential terms of the contract. Such disputes are often complex as they involve legal, technical, and financial aspects. Mismanagement of a dispute can lead to project suspension, freezing of financial assets, and damage to a company's reputation.

Disputes may concern payment delays, volumes of work performed, violation of construction deadlines, or interpretation of force majeure circumstances. In many cases, the root of the problem lies in an imperfectly drafted contract that does not properly allocate risks. Legal.ge offers access to experienced lawyers specializing in construction litigation. Our goal is to help you resolve conflicts quickly and effectively, whether through negotiation, mediation, arbitration, or court proceedings.

What Does Construction Contract Dispute Service Cover?

Specialists on Legal.ge offer full legal support, which includes:

  • Contract Analysis and Risk Assessment: Detailed examination of the existing contract to establish the fact of breach and the scope of liability of the parties.
  • Payment Disputes: Demanding payment for work performed, return of advance payments, or final settlement.
  • Delay Claims: Compensation for damages caused by construction delays, imposition of penalties (liquidated damages), or requests for Extension of Time (EOT).
  • Variations: Disputes regarding the performance and payment of additional works not included in the original budget.
  • Contract Termination: Preparing legal grounds for unilateral termination of the contract and managing accompanying procedures.
  • Bank Guarantees: Attaching or calling on performance or advance payment guarantees in case of non-fulfillment of obligations.

Common Scenarios and Real-World Examples

Construction disputes are diverse and often occur in the following situations:

  • Covered Works Acts: The contractor requests payment for work that is already covered (e.g., reinforcement under concrete), while the client refuses payment because timely inspection did not occur.
  • Price Escalation: The contract was signed with a fixed price, but materials became more expensive due to inflation. The contractor requests a price review, which the client refuses.
  • Defective Work: The client refuses to accept the facility due to defects, while the contractor claims the defects are minor or due to the project design.
  • Funding Cessation: The investor faced financial problems and stopped funding the construction, while the contractor demands compensation for idle time.

Georgian Legal Framework

Crucial for resolving construction disputes is the Civil Code of Georgia, specifically the norms regulating the works contract ("Nardoba," Articles 629-656). The law establishes that the contractor is obliged to perform the work with the agreed quality, and the client is obliged to pay the remuneration.

Additionally, FIDIC (International Federation of Consulting Engineers) standards are important, often used in large infrastructure projects. If the contract is based on the FIDIC model, dispute resolution often requires the involvement of a Dispute Adjudication Board (DAB/DAAB) before arbitration.

The Civil Procedure Code defines the rules for litigation in court, including the necessity of appointing expertise, which is often decisive evidence in construction disputes.

Step-by-Step Service Process

Collaboration with a lawyer from Legal.ge includes:

  1. Situation Audit: Detailed study of the contract, correspondence, acceptance acts, and construction logs.
  2. Strategy Development: Choosing the optimal way to resolve the dispute (negotiation, mediation, or court).
  3. Claim Preparation: Sending a legally substantiated letter to the opposing party.
  4. Expertise: If necessary, appointing engineering or audit expertise to confirm factual circumstances.
  5. Representation: Defending interests in court or arbitration until a final decision is reached.

Why Choose Legal.ge?

Construction disputes require specific knowledge that goes beyond general jurisprudence. A lawyer must understand construction technical processes, cost estimates, and schedules. Legal.ge gives you access to professionals experienced in both local and international construction disputes. We will help you protect your investment and ensure contractual fairness.

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