Practice Area
Construction Contracts
We draft, negotiate, and administer construction and engineering contracts — employer-side and contractor-side — including FIDIC-based forms as used in the Pakistani market, and the arbitration clauses that decide where disputes end up. For developers, contractors, and businesses building anything they cannot afford to see stall.
Construction is the business of pricing risk over time, and the contract is where the pricing happens. Ground conditions, escalation, delay, design error, non-payment — every one of these lands on somebody, and if the contract does not say who, the answer gets decided years later by an arbitrator reading a form nobody amended. Our practice does the deciding at the front end, and runs the machinery when disputes come anyway.
The Pakistani market has a distinctive shape. FIDIC forms — Red, Yellow, Silver — dominate donor-funded and major private projects as market practice, and the Pakistan Engineering Council's standard forms, themselves built on FIDIC drafting, are the norm on public works. But the forms are only the chassis. The Contract Act, 1872 supplies the governing law, and it does not always behave the way the forms assume: liquidated damages are assessed as reasonable compensation rather than enforced mechanically, and several standard-form positions need restating in particular conditions to survive contact with Pakistani law. Drafting a construction contract here means knowing both the form and the statute underneath it, as of the date you sign.
Disputes are shaped even earlier than most parties realise — in the arbitration clause. A Pakistan-seated arbitration proceeds under the Arbitration Act, 1940, a court-supervised model under which awards are filed and tested before they become decrees; a foreign seat routes the award home through the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011, on New York Convention grounds. Neither is abstractly better. Each behaves differently on speed, interim relief, and challenge, and the clause should be written by someone who has enforced under both — because the enforcement endgame, not the hearing, is where construction disputes are finally won.
Between signing and dispute sits the least glamorous and most valuable work: contract administration. Extension-of-time claims, variation records, payment certification, and notice regimes decide most construction disputes before any tribunal is constituted. We set clients up at commencement — notice calendars, records protocols, correspondence discipline — and support the determinations and claims as the project runs. Clients who do this rarely need us for the arbitration; clients who skip it usually do.
The practice serves developers and corporate employers building plants, hotels, and offices; contractors and specialist subcontractors bidding and executing; and the real-estate businesses whose projects sit on land our conveyancing practice has already cleared. Everything stated here is the position as of July 2026 — the arbitration statute in particular has been the subject of reform proposals, and we confirm the current framework at every engagement rather than assuming the law has stood still.
When Businesses Need This
The moments this practice exists for.
- 01You are about to sign a build contract for a plant, hotel, or office and the draft is the other side's standard form, untouched.
- 02You are a contractor bidding a FIDIC-based or PEC-form project and need the particular conditions reviewed before the bid locks you in.
- 03Your project is slipping: delay is accumulating, variations are being instructed informally, and nobody is serving the notices the contract requires.
- 04The employer is threatening to encash your performance guarantee, or you are the employer deciding whether to call one.
- 05A payment certificate is being withheld, or interim payments have stopped, and you need to know your suspension and termination rights before acting.
- 06A dispute is heading to arbitration under a clause drafted years ago, and you need to know what the Arbitration Act, 1940 actually means for timing and enforcement.
- 07You are structuring a project — EPC or split contracts, owner-supplied items, nominated subcontractors — and want the risk allocation decided deliberately.
How It Works
The process, stage by stage.
1
Project and risk scoping
We start with the project, not the form: procurement route, financing conditions, site and approvals status, and which risks — ground conditions, price escalation, delay, design — each party can actually carry. The contract form is chosen to fit that allocation, whether a FIDIC-based form, a PEC standard form, or a bespoke build.
2
Drafting and particular conditions
On FIDIC-based projects most of the real drafting lives in the particular conditions: payment terms and security, liquidated damages and their cap, extension-of-time machinery, variation and escalation rules, termination triggers, and the dispute clause. We draft these against Pakistani law — especially the Contract Act, 1872's treatment of liquidated damages — rather than importing positions the form assumes from other jurisdictions.
3
Negotiation
We negotiate with a priced view of risk: every clause conceded is a contingency someone must carry. For contractors we focus on payment security, notice regimes that are actually operable, and caps on liability; for employers, on performance security, delay damages that will hold up, and step-in and termination rights that work in practice.
4
Contract administration support
During execution we support the notices, records, and determinations the contract requires — extension-of-time claims, variation instructions, payment certificate disputes — because construction claims are won and lost on contemporaneous records and served notices, not on advocacy after the fact.
5
Claims and dispute strategy
When a dispute crystallises we run the contractual machinery first — engineer's determinations and any dispute-board tier — then arbitration under the clause. We advise on interim measures, security for the claim, and the enforcement path for the eventual award before the first notice of dispute is served, because the endgame should shape the opening.
The Legal Framework
The law this work runs on.
- Contract Act, 1872
- The governing law of construction contracts in Pakistan. Its treatment of liquidated damages and penalties — reasonable compensation not exceeding the stipulated sum, rather than automatic enforcement — reshapes how delay-damages clauses drafted on foreign assumptions actually operate here.
- FIDIC forms of contract (market practice)
- FIDIC's Red, Yellow, and Silver Books are widely used in Pakistan on donor-funded, private, and energy projects — as market practice, not statute. The forms apply only as incorporated, as amended by particular conditions, and as read subject to Pakistani law. Which edition governs a given project is a drafting choice, confirmed contract by contract.
- Pakistan Engineering Council standard forms and framework
- PEC prescribes standard bidding documents and contract forms, themselves based on FIDIC drafting, which are the norm on public-sector engineering works, and PEC licensing governs who may undertake construction of engineering works. The precise mandate and current form editions are confirmed per project [SCOPE OF PEC REQUIREMENTS — TO BE VERIFIED BY REVIEWING LAWYER].
- Public procurement rules (federal and Punjab)
- Public-employer projects sit under procurement regimes — the Public Procurement Rules, 2004 federally and the Punjab Procurement Rules, 2014 provincially — which constrain bid processes, negotiation, and contract amendment. Relevant whenever the employer is a government body [CURRENT RULES — TO BE VERIFIED BY REVIEWING LAWYER].
- Arbitration Act, 1940
- The statute governing domestic arbitration as of July 2026: arbitration mostly seated in Pakistan runs through its machinery, including court filing of awards before enforcement and challenge grounds invoked through the courts. Reform legislation has been under consideration; until enacted, clauses must be drafted for the 1940 Act as it stands [STATUS OF REFORM BILL — TO BE VERIFIED BY REVIEWING LAWYER].
- Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011
- Gives effect to the New York Convention: foreign-seated awards are enforced through the High Courts on the Convention's limited grounds. This is why seat selection in the arbitration clause is a genuine strategic decision on cross-border projects, not boilerplate.
- Stamp Act, 1899
- Works contracts and related instruments attract provincial stamp duty, and an insufficiently stamped contract can face admissibility objections in proceedings. Duty on the contract and on securities is budgeted at signing, at the rates current for the province [RATES — TO BE VERIFIED BY REVIEWING LAWYER].
Statutory references are stated as of the page’s as-of date and flagged where verification is pending; the law moves, and the current position should be confirmed before relying on it.
Common Mistakes
The errors we see most — and their price.
- Signing the general conditions unread because "it's standard FIDIC," when everything that matters was moved into the particular conditions.
- Treating notice provisions as formalities — time-bar clauses are enforced, and an unserved notice can extinguish a valid claim.
- Keeping no contemporaneous site records, then trying to prove delay and disruption a year later from memory and photographs.
- Drafting liquidated damages without regard to the Contract Act, 1872, and assuming the stipulated figure will be awarded automatically.
- Giving an unconditional, first-demand performance guarantee without pricing the risk that it can be called before the merits are ever decided.
- Allowing variations on verbal instructions, so the final account becomes a dispute about what was ordered rather than what it costs.
- Copying an arbitration clause between contracts without deciding seat, rules, language, and appointing authority — the cheapest clause to draft and the most expensive to litigate.
- Ignoring subcontract back-to-back terms, so the main contractor carries obligations downstream that its subcontracts do not pass on.
Representative Scenarios
The shape of the work.
Illustrative scenarios, not case reports — composites drawn to show how matters of this kind run.
- —A developer building a Lahore hotel engaged us at tender: the contractor's FIDIC-based draft was rebalanced through particular conditions on delay damages, payment security, and a two-tier dispute clause — illustrative of employer-side front-end work.Illustrative
- —A contractor on an industrial project preserved a major extension-of-time claim because its notice regime and daily records had been set up at commencement; the claim resolved at determination stage without arbitration.Illustrative
- —An employer facing a stalled project used the contract's termination machinery — notices, cure periods, certification — in strict sequence, then completed with a replacement contractor while holding the performance security.Illustrative
- —A cross-border equipment-supply-and-installation dispute proceeded under a foreign-seated arbitration clause; the award was enforced in Pakistan under the 2011 Act, on the path that had been designed into the clause at drafting.Illustrative
Questions, Answered
What clients ask about construction contracts.
Only as a contract. FIDIC forms are private standard forms, not legislation; they bind because the parties incorporated them, as amended by their particular conditions, and they are read subject to Pakistani law — notably the Contract Act, 1872. In practice the forms are common on donor-funded and major private projects, and PEC's standard public-sector forms draw on FIDIC drafting. The legal question on any project is what your contract says, not what the book says.
Not automatically. Under the Contract Act, 1872, a party claiming under a liquidated damages clause is entitled to reasonable compensation not exceeding the stipulated amount, and courts and arbitrators assess reasonableness rather than rubber-stamping the figure. As of July 2026 that remains the settled approach. We draft LD clauses — genuine pre-estimates, records of how the figure was built — so the stipulated sum is defensible, not just stated.
Seat, rules, number of arbitrators, appointing authority, language, and what happens before arbitration — engineer's determination, dispute board, negotiation tiers. Seat is the big one: a Pakistan-seated arbitration runs under the Arbitration Act, 1940 with its court-supervision model, while a foreign-seated award comes back for enforcement under the 2011 Act on narrower grounds. Both routes work; they behave differently, and the choice should be made deliberately at drafting.
Rarely, and only in narrow circumstances. Pakistani courts treat unconditional, first-demand bank guarantees as independent of the underlying contract and are reluctant to restrain encashment absent fraud or special equities — a consistent line of authority as of July 2026. The realistic protections are negotiated at drafting: conditioned guarantees, reducing amounts, and expiry mechanics. If a call is imminent, timing and evidence matter and advice should be immediate.
Not necessarily, but assume the time-bar will be argued seriously. The outcome turns on the clause's wording, the conduct of the parties, and how the tribunal treats conditions precedent under Pakistani law. The honest advice is preventive: set up the notice calendar and records discipline at commencement, because rescuing time-barred claims is uncertain work, and preserving them costs almost nothing.
On large or long projects, usually yes. A standing board or adjudicator produces decisions while the project is alive, which keeps cash moving and prevents every disagreement maturing into arbitration. On smaller domestic projects a lighter tier — engineer's determination plus senior-management negotiation before arbitration — often gives most of the benefit at less cost. The wrong answer is a clause that jumps straight to arbitration for every certified-payment quarrel.
Domestic arbitration under the 1940 Act commonly runs one to three years to award, and the award then passes through the courts — filing, objections, and a decree — before execution; contested cases take longer. Foreign-seated awards are enforced under the 2011 Act on the New York Convention's limited grounds. These are as-of-July-2026 patterns, not promises; the clause design and the tribunal's case management are the biggest variables you control.
Both, though never on the same project. Employer-side work is typically front-end structuring, tender documents, and administration of delay and termination; contractor-side work weights toward bid review, payment security, claims preservation, and guarantee protection. Seeing both sides' files is precisely what makes the risk-allocation advice on either side realistic. Fees are set by engagement letter [FEE STRUCTURE — TO BE CONFIRMED BY THE FIRM].
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Prepared by The First Counsel · As of 2026-07-12 · Pending professional review — statements flagged in the text are being verified
This publication is provided for general information only. It is not legal advice, and neither reading it nor corresponding with the firm about it creates a lawyer–client relationship. The position stated must be verified against current law before it is relied upon.