Questions for tariffs quarterly bulletin: Sweden

Describe the taxes and duties regimes in your location's standard form contracts

What are your standard form contracts?

The three main standard agreements are:

• General Conditions for Contracts – AB 04 is intended for contracts where the employer is responsible for planning and design and the contractor is responsible for the execution.
• General Conditions for Contracts – ABT 06 is intended for turnkey contracts where the contractor is responsible to the employer for both design work and execution.
• General Conditions for Contracts – ABA 99 is intended for contracts related to deliveries of industrial facilities.

Which party bears the risk of taxes and duties?

• Before the contract is entered into:

The contractor.

• After the contract is entered into:

The contractor.

 

If taxes and duties change after the contract is entered into, what relief, if any, is available under your location's:

Standard form contracts? eg change in law provisions, force majeure

The standard contracts, AB 04/ABT 06, contain a rule in Ch. 6 § 3 that allows for price changes in certain situations. The provision is designed to protect the contractor in the event of significant changes affecting the costs of the works, which may be events of a “force majeure” nature, ie events beyond the control of the parties. A change in the agreed price can be done in any of the following situations:

• The change in cost is due to action by the authorities
• The change in costs is caused by war or other crisis conditions having a similar effect and relates to supplies or services necessary for the contract
• The change in costs is due to abnormal changes in the price of materials included in the contract

The party requesting the price change must be able to demonstrate a causal link between the change in cost and the situation causing the change in cost.

However, the change in the contract price shall only be made if the change in cost was unforeseeable and significantly affects the total cost of the total works. What constitutes an unforeseeable cost change must be assessed on a case-by-case basis. To determine whether something is unforeseeable, one should consider what was foreseeable at the time the tender was submitted. The significance of a cost change must be assessed on a case-by-case basis.

Laws – statutes, case law

There is no general law on construction works in Sweden. Instead, standard agreements are used almost exclusively. However, all provisions in a contract can be challenged under provision 36 of the Swedish Contracts Act (Sw. Avtalslagen) and can be deemed unreasonable by a court. Having said that, the provision is very rarely applicable, especially not between two commercial entities.

 

For particular market segments in your location, what changes, if any, have employers or contractors made recently to the usual risk allocation?

The contracts tend to include more reservations and conditions regarding price changes due to war, pandemic, tariffs, etc (ie changing conditions).