GILS Construction and Infrastructure: Belarus
BELARUS
1. What types of design and construction work require a licence in your country?
In Belarus, construction projects are divided into 5 classes of complexity depending on their purpose, size, complexity of structures, number of people who may present at the same time, hazards to people and the environment and other criteria, moreover the most critical projects are considered as belonging to 1st class of complexity.
A certificate of compliance is required to carry out work on projects of complexity classes 1-4 that affect operational safety and reliability. The government approves the list of such works.
In the case of design, for example, the functions of a general designer, work on the development of the master plan, architectural and construction solutions, solutions for water supply, sewerage, heating and several others are subject to certification.
The Certificate of compliance is required to perform the functions of a general contractor for projects costing more than 5000 basic units (approximately 60000 euros), construction of bases, foundations of buildings and structures, monolithic concrete and reinforced concrete structures, installation of prefabricated concrete and reinforced concrete structures, roofing, external and internal networks of water supply, sewerage, heating and other types of works.
2. Can legal entities registered in foreign countries obtain a licence for design or construction?
Foreign design and contracting organisations can obtain certificates of compliance in Belarus to participate in construction projects in Belarus without establishing a local legal entity and employing local staff.
The basic requirements to be fulfilled to obtain a certificate of compliance of a particular category are:
(a) Having a staff comprising a certain number of employees with qualification certificates confirming their compliance with the educational and work experience requirements, who have successfully confirmed their knowledge in the course of the examination;
b) availability of material and technical facilities, including fixed assets in the amount not lower than the required one;
c) the organisation has experience in similar activities as a general contractor or subcontractor.
For foreign organisations, there are rules for confirming the education of their employees, passing qualification examinations, assessing the material and technical facilities and other procedures, whereby certificates of compliance can be obtained even without experience in implementing construction projects in Belarus.
3. Which foreign licences and permits in the field of construction and design can be recognized in your country?
Foreign licences and other permits issued to foreign contractors in their states of registration or third countries cannot be applied in Belarus as a basis for performing the work specified in these documents.
In exceptional cases, edicts of the head of state defining special conditions for the implementation of an investment project with the participation of foreign contractors may specify the possibility of not obtaining a Belarusian certificate of compliance.
4. Is it necessary to register a legal entity in your country to carry out design or construction work?
A foreign contractor does not need to establish a separate legal entity in Belarus to carry out design or construction and installation works. However, the obligation to register a permanent establishment of a foreign organisation, which may be applicable by tax law, should be borne in mind in connection with the presence in Belarus of a construction site, installation or assembly facility for more than 180 days in any twelve months beginning or ending in the relevant calendar year.
A double taxation treaty (hereinafter - DTA) with the country of location of a foreign organisation may set a different duration of such period - for example, in a DTA with the Federal Republic of Germany, the period for the set-up of a permanent establishment is 12 months.
The set-up of a permanent establishment requires the foreign organisation to register with the tax authorities, file tax returns and pay taxes in Belarus (VAT, corporate profit tax).
5. What requirements are imposed on construction contracts and design and survey contracts, including when one of the parties is a non-resident of your country?
Contracts for design and survey work and construction contracts, if they regulate relations on the creation of a construction project on the territory of Belarus, are subject to the rules established by local legislation, including technical normative legal acts - mandatory for application (as a rule, related to reliability and safety) and recommendatory ones, regarding which the parties to the contract have established their binding effect on their relations. This condition also applies in cases where one of the parties is a non-resident.
Legislation does not establish forms of contracts, stipulating only the conditions that are essential and must be regulated by the contract in a mandatory manner.
6. In what cases should construction contracts and design and survey contracts be concluded following a special procurement procedure?
The main criterion determining the need for procurement procedures in construction, including when determining contractors for design and survey, and construction and installation works, is the funding source.
In the case of the purchase of goods (works, services) during construction by recipients of budgetary funds and (or) funds of state non-budgetary funds, the general rules of legislation on public procurement apply.
If the purchase of goods (work, services) during construction is carried out at the expense of non-budgetary sources of financing, the procurement procedures are not regulated by law and may be determined by the business entity independently in a local legal act.
Requirements on the procurement procedure for the construction of a certain construction project may be reflected in the terms of the contract (e.g., approval with the building owner of the equipment purchased by the general contractor, subcontractors engaged by it, etc.).
7. What are the features of hiring local and foreign personnel in the implementation of construction and design and survey activities?
Hiring of personnel by a non-resident of Belarus will be regulated by Belarusian legislation only if the non-resident has a representative office in the Republic of Belarus - in this case, the non-resident will have the status of "employer of the Republic of Belarus", which will entail the need to obtain special permits for hiring foreign personnel.
Otherwise, peculiarities will exist only when hiring specialists who, according to the legal provisions governing the procedure for obtaining certificates of compliance and ensuring the requirements imposed on the holders of such certificates, must have qualification certificates issued following a knowledge test. Accordingly, it will be necessary to hire specialists either holding qualification certificates issued by an authorised organisation in Belarus or to allow them to perform functions requiring a qualification certificate only after the specialist has undergone training and successfully passed a qualification examination.
8. Is it possible to use foreign standard construction contracts?
As mentioned in the answer to question 5, Belarusian legislation establishes several requirements that a contract must fulfil.
Contractual relations between the building owner and the contractor, if they agree, may be regulated by applying international model contracts of the International Federation of Consulting Engineers (FIDIC), taking into account the need to comply with legal requirements, including the Rules for Conclusion and Execution of Construction Contracts, Rules for Conclusion and Execution of Contracts for Design and Survey Work approved by the Government.
Before using a clause from a FIDIC model contract, the Parties shall check whether it can be applied to the conditions of a particular transaction and whether it complies with the mandatory provisions of law; if there are contradictions, the clause shall be amended by adding the relevant provisions to the Special Conditions of the model contract.
About other model contacts, Belarusian legislation does not contain separate references to the possibility of their use; we believe that the parties may use them, ensuring compliance with mandatory provisions like that described above for FIDIC model contracts.
9. Is it possible to use foreign law and foreign courts when concluding construction contracts and design and survey contracts?
The establishment in a contract of foreign law as applicable law, as well as a foreign court as a competent way to resolve disputes between the parties, is not prohibited by Belarusian legislation, therefore it is allowed.
It is advisable to consider all the arguments for and against before entering into any particular contract, taking into account the regime of recognition of judgments of the courts of a particular State and their enforcement in the State of the other party, the conformity of the contract terms with the applicable law, and other considerations.
Author: Maxim Lashkevich (Partner)
