A majority of South Korean builders’ overseas projects are exposed to potential risks and require extra scrutiny to avoid legal battles and losses from defeat, global law firm DLA Piper’s legal advisors recommended.

“About 70 percent of overseas contracts that Korean builders have signed with their clients are considered potentially hazardous,” Daniel W. Lee, the head of DLA Piper Korea, said during a seminar hosted by global law firm DLA Piper in Seoul on Monday.

Amid growing risks, the law firm advised Korean builders to be conscious about terms in their contracts and accept to those they are capable to carry out.

DLA Piper London Partner Edward Shaw said that given the growing desire by courts “to interpret contracts more literally, it is very important that all technical appendices and the contract itself are thoroughly reviewed before contracts are entered into.”

In particular, in case that project delays are attributable to both the constructor and the owner, it is often difficult to determine “which causes a delay” and only to lead to an evasion of responsibility, DLA Piper London Partner Mark Hilton also warned at the seminar.

The law firm also cited the persisting geopolitical risks in the Middle East and dwindling orders from Middle Eastern countries as major risks that could delay or cancel ongoing construction projects that Korean builders have been engaged.

The risk of construction delays is growing in the Middle East as countries in the region are focusing more on cost cutting due to still weak oil prices that have also led to the fall in construction orders in the region, Simon Palmer, office managing partner at DLA Piper Qatar office, said at the seminar.

Korea, a powerhouse in shipbuilding and infrastructure construction, received a series of overseas setbacks amid global oil slump and entered court disputes over terms with their clients that caused serious dent on their balance sheets in recent years.

DLA Piper Seoul office held the seminar after the sale of Daewoo Engineering & Construction recently flopped due to massive losses in overseas project that was not known during negotiation. At the seminar, its seven lawyers delivered speeches on legal risk factors and recent trends of global construction and development projects. About 200 officials from local construction companies attended the seminar to discuss how to take opportunities and avoid or address challenges in overseas projects, according to DLA Piper Seoul.

By Kim Gang-rae and Lee Ha-yeon

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