Analysis And Countermeasures Of The Owner’s Legal Risk In The EPC Contract

EPC contract is a contract which is concluded by the determination of the obligations and rights of both the owner and the contractor in the EPC process in order to complete the agreed construction projects. The main obligations of the owner in the contract is to pay the funds, the contractor is responsible for engineering, procurement, construction, commissioning, and so the whole process services, finally delivering the accepted and "turn the key" construction which is implementable to the owner. Therefore, EPC contract is also known as "turnkey contract." EPC contract model, with its advantages in many aspects of risk control, has become an internationally accepted general contracting mode. In the last thirty years, the implementation in China has achieved rapid development, widely used in large-scale, high degree of process complexity infrastructure projects. Meanwhile, as the proposal of "One Belt And One Road" development strategy in China, the share of domestic companies in the international engineering market continues to expand, and the role of EPC contracts play an increasingly prominent in the field of international and domestic projects.EPC contract model organically integrates the various stages of project implementation, operated by the general contractor, which overcome the shortcuts caused by respectively concluding and implementing in the design, procurement and construction contracts in the traditional contract model, such as heavier coordination responsibilities associated with higher default risk. It is beneficial for the owner on the risk allocation of the in EPC contract. Therefore, the owner of the EPC contract is usually easy to overlook the legal risk of contract control. Due to the incomprehension of the law characteristics of the EPC contract and unacquaintedness with laws and regulations, the owner could not be capable of understanding the complex and professional contracts, paving the risks when the contract is signed. Owner could encounter economic losses, civil claims and compensation, and even be liable for administrative and criminal penalties caused by breach of laws and regulations, loss of rights due to contractual unknown cause, and unilateral breach of contract in implementing of the contract. Therefore, given that the owner is responsible for the quality of the project, prevention and control of EPC contract legal risk are the most fundamental issues to be addressed by the owner in the project contracting, construction, project implementation and contract guarantee as well as the interests of the owner.In order to study the Owner legal risks and prevention in the EPC contract, this paper is divided into four levels of analysis. First, according to the concept, the legal characteristics, and the background of the EPC contract, combined with the introduction of main contents of the international and the domestic common contract, the aim is to primarily understanding of the framework and the core. After, in the aspect of the contract owner, the type of legal risk and legal consequences in the EPC contract are summarized and analyzed, giving a clear meaning of studying the legal risk of the contract owner. Then the legal risks of the contract owner in each stage are analyzed to propose the legal advice according to specific issues occurring in the implementation of the EPC contract combined with the biding of the EPC contract, selection of model contract, the control of the content, the implementation of the contract, and the practical operational cases. Finally, the important theoretical issues involved in the prevention of legal risks in the EPC contract are explored according by the contract in order to provide useful reference in the study of building engineering law and improvement the relevant laws and regulations of the EPC contract to the legal research practitioners.