The laws governing the construction market in Colombia depend on the type of construction that will be developed and the parties involved. Therefore, there are at least three principal groups of laws that apply, the last one applying to all construction practices:

For private and vertical construction:

• Law 388 of 1997;
• Decree 1077 of 2015;
• Law 84 of 1873;
• Decree 2090 of 1989;
• Decree 410 of 1971 (the Commerce Code); and
• Law 1796 of 2016.

For infrastructure and projects required by government entities:

• Law 80 of 1993;
• Law 1150 of 2007; and
• Law 1508 of 2012.

For the commercialisation and liability period of the real estate projects, Law 1480 of 2011.

In general, for labour issues and relationships between employers and contractors, the Substantive Labour Code.

The provisions listed above contain the main regulations for construction in Colombia, but it may be important to review each of the laws that modify the regime, even if the changes are already included in the most recent versions of the aforementioned provisions. Also, there are some other laws regulating more specific and technical matters in construction.

While the use of standard contracts is not mandatory within Colombia, two of the most frequent employers in construction in Colombia, at least in terms of infrastructure, are public entities: the National Roads Institute (INVÍAS) and the National Infrastructure Agency (ANI), which have incorporated standard contracts within their practice. In addition, although not mandatory, these standard contracts have been used by other actors in the market to fill in for issues not foreseen in their private contracts.

These standard contracts, when used, cover the employer-contractor relationship and contractor-designer relationship. They deal less with the contractor-subcontractor relationship, as this usually encompasses case-specific agreements and contractual regulations applicable only on a case-by-case basis.

The entities within Colombia that typically act as employers are, from a public perspective, INVÍAS, ANI and some government ministries such as the Housing Ministry. There are also other entities in the public sphere, such as the Institute of Urban Development (IDU), utility companies, and local authorities such as public works departments in cities.

On the other hand, from a private perspective, construction, infrastructure and real estate companies are the leading employers in construction projects.

Both infrastructure and real estate companies act as contractors in this jurisdiction. Regarding any relationship, from a labour perspective, there is independence between the employer, the contractor and the subcontractor. That is to say, there is no subordination or a labour relationship between them and each company will execute the contract with their own resources. Nevertheless, joint and several liability may arise when there is a breach of the provisions regarding illegal outsourcing. Regarding the financier, there is no risk because provisions regarding outsourcing only apply when the activities developed by the contractor or subcontractor could be seen as part of the object of the financier.

Both infrastructure and real estate companies can act as subcontractors in this jurisdiction.

Financiers of construction projects are typically: the State, through the entities intended to commission construction projects, private companies, or institutional investors such as pension funds. Usually, the obligations of the financiers are related to the following:

• the control of the execution of the project;
• the possibility of stopping or dividing payments in case of non-compliance;
• in the case of non-compliance by the contractor, the possibility of taking responsibility for the project and executing it itself or assigning it to a third party; and
• finally, and principally, providing the necessary resources for the project according to the contract.

Typically, there is a relationship between the financier and the contractor but none with the subcontractor. In any case, the relationship between the financier and the contractor relies upon the contract or agreements for the financier to provide the resources for the project.

Usually, the companies who develop this type of activity are private companies, sub-contracted by the infrastructure, real estate companies or even the financier. In that sense on real estate projects it is not common that exist an employer relationship with the designer but a contract for specific designer services.

The general provisions of the design contract are usually:

• the design drawings, specifications, calculations (which the competent planning authority must approve);
• engineering specifications (mechanical, electrical, plumbing);
• compliance with building codes, regulations, and industry standards (Urban Planning, Decree 1077/2015 and NSR10 codes); and
• the functional, technical requirements and aesthetic aspects for the development of the real estate project.

The designer usually prepares the designs and participates in the process itself aimed at approving the specific project in order to make the corresponding adjustments and respond to any observations that may arise.

For construction contracts between private parties, the purpose and scope of the works are determined depending on the conditions of the specific project. Therefore, the parties will define methods, technical requirements, work specifications and budget, amongst other relevant aspects.

For construction projects involving government entities, the purpose and scope of the contract will be defined by the contracting entity before the opening of the selection process. Colombian law has diverse mechanisms for construction contracts involving government entities, such as those referred to in public procurement laws or those contemplated in regulations for public-private partnerships.

In Colombia, the scope and price for variations in construction contracts are typically determined and limited through private contractual agreements between the employer and the contractor. The specific terms and conditions regarding variations are usually outlined in the contract. Three types of contract are prevalent in Colombia:

• fixed lump sum contracts;
• unit price contracts; and
• hybrid contracts.

The variations are dealt with as follows:

• If the employer requests a variation, the scope and price are generally negotiated between the parties; the contractor may submit a variation proposal, including the anticipated changes in scope and associated costs.
• Similarly, if the contractor requests a variation, they typically submit a variation proposal to the employer, outlining the proposed changes in scope and associated costs; the employer reviews the proposal and has the right to accept, negotiate or reject the variation (for instance, an annex is usually attached to the contract through which a supply is established in contractual relationships).
• It is important to note that specific legal and contractual provisions may differ, and it is advisable to review the meaning under the law for the particular contract terms to fully understand the scope and price determination processes for variations in each construction project in Colombia.

The responsibilities regarding the design process in construction projects can be divided among multiple parties, including the employer, the designer, the contractor and other stakeholders.

The specific division of work can vary depending on the contractual arrangements and project specifics. However, the typical division of responsibilities is set out below:

The employer:

• defines project objectives and requirements;
• provides project briefs, including functional and technical requirements;
• engages and appoints the designer(s) and other consultants;
• approves and gives necessary information as part of the design process;
• reviews and approves the final design documents; and
• ensures compliance with applicable regulations and permits.

The designer:

• develops the design concept and prepares design proposals;
• prepares detailed design drawings, specifications and calculations (which the competent planning authority must approve);
• co-ordinates with other consultants, such as structural engineers and MEP (mechanical, electrical, plumbing) engineers, among others;
• ensures compliance with building codes, regulations, and industry standards (Urban Planning, Decree 1077/2015, and NSR10 codes);
• incorporates the employer’s feedback and obtains necessary approvals; and
• provides support during the construction phase, responding to design-related queries and providing clarifications.

The contractor:

• implements the design by executing construction activities;
• reviews the design documents for constructability and feasibility;
• may propose alternative design solutions or value engineering options; 
• procures the materials, equipment and labour required for construction; 
• manages subcontractors and oversees the construction process;
• collaborates with the designer to resolve design-related issues during construction; and
• ensures compliance with quality, safety and environmental requirements.

Notwithstanding the above, the widespread market practice in Colombia is for the employer to first issue the designs, which must then be revised and modified by the contractor to ensure the viability and correct execution of the project and no further delays due to errors or problems with the designs.

Following the provisions of the urban planning regulations, the project developer has the responsibility and obligation to execute residential public service infrastructure that allows the land’s adaptation, endowment and subdivision; that is, it must execute the local or secondary network. Likewise, the builder of the building must advance the construction of the internal or intra-domiciliary network of housing units, which is necessary for the effective connection and provision of public services to each housing unit.

The responsible developer oversees execution of the urban planning works, delivery and endowment of assignment areas contained in an urban development licence.

The responsible constructor (builder) is the ideal professional for load-bearing construction works, allowing human habitability under the terms of Colombian law. In this sense, the builder is the professional civil engineer or architect with responsibility for the construction of a building.

Pollution

The responsibility for preventing and mitigating pollution at the construction site is primarily governed by environmental regulations and laws established by the Colombian government, such as the Environmental Licensing Law (Law 99 of 1993) and its subsequent regulations. Therefore, the contractor is generally responsible for implementing measures to prevent pollution and comply with environmental regulations. This includes managing construction waste, implementing proper disposal procedures, controlling emissions and minimising environmental impact.

Underground Obstacles

How the presence of underground obstacles, such as utilities or archaeological sites, should be dealt with is regulated by various laws and regulations. For example, the Underground Utilities Protection Law (Law 232 of 1995) protects utility infrastructure during construction activities.

The contractor is typically responsible for identifying and managing underground obstacles during construction. In addition, they are expected to conduct surveys and take necessary precautions to avoid damaging utilities or other underground infrastructure.

Geotechnical Conditions

The responsibility for assessing and dealing with geotechnical conditions is commonly addressed through contractual agreements. The employer and the contractor negotiate and define the scope of geotechnical investigations, testing and any necessary mitigation measures in the contract documents. In addition, the employer often engages a geotechnical consultant to conduct studies and provide recommendations. The contractor relies on this information to plan and execute the construction work under the specified geotechnical requirements approved by Urban Planning Authority.

Archaeological Finds

Finally, in Colombia, archaeological finds are protected by the Cultural Heritage Protection Law and its regulations. These laws require the reporting and preservation of archaeological discoveries. Therefore, if archaeological finds are encountered during construction, the contractor is legally obligated to halt work, report the findings to the relevant authorities and co-operate in preserving the archaeological site as per the regulations. The responsibility for any associated costs or delays is typically negotiated and defined in the contract.

In Colombia, the permits required for a construction process can vary depending on the specific project, location and nature of the construction. However, some common permits typically required include the following:

• A construction licence – this permit grants authorisation to carry out the construction project and is usually obtained from the municipal or local authorities where the construction will take place.
• An environmental licence – projects with potential environmental impacts may require an environmental licence or environmental management plan; this permit ensures compliance with environmental regulations and mitigation measures.
• Urban planning and zoning permits – these permits verify that the construction project aligns with the local urban planning regulations, zoning ordinances and land-use requirements.
• Road occupancy permits – if the construction project involves any road or public space occupation, a road occupancy permit may be required to ensure public safety and minimise disruptions.

The responsibility for obtaining the necessary permits in Colombia is typically shared among multiple parties:

• The employer/project owner is often responsible for initiating the permit application process; they provide project information, engage consultants and co-ordinate with the relevant authorities.
• The designers and consultants (eg, architects, engineers and other design professionals) play a role in preparing the necessary documentation and technical reports required for permit applications.
• The contractors collaborate with the employer and designers to provide project-specific information, technical details, and construction plans required for permit applications.

Maintenance of the works during construction is usually the contractor’s responsibility. Once the construction is concluded, and depending on the schemes under which the employer hired the contractor, the parties may agree that the maintenance of the works falls within the scope of activities to be carried out by the contractor under a different and specific contract.

Additionally, construction permits issued in favour of contractors provide specific obligations regarding the maintenance of the works during the construction process, in which case, the permit holder would be the responsible party before the corresponding authorities.

It is common for the employer to instruct the contractor or third parties regarding other functions in the construction process beyond the scope of the physical construction work. The employer defines the requirements and expectations for these functions, and the contractor or third parties are responsible for executing them according to the given instructions.

It is worth noting that the specific instructions and requirements for operations, finance and transfer can vary depending on the project and the negotiated terms between the parties. However, the contractual agreements between the employer and contractor usually outline the responsibilities and obligations of these functions, ensuring clarity and accountability throughout the construction process and beyond.

The contractor usually carries out tests for completion based on a mutual agreement with the employer or the government entity commissioning for the project. For these purposes, the contractor will generally submit a testing execution schedule defining the items to be tested.

If, because of a test, any facilities, materials or execution are deemed defective or in contravention of the contract and its appendices, the employer may reject the completion by written notice to the contractor, which will either conduct the test again or take any necessary action to fix the defects.

Completion refers to the stage when the construction works have been finished following the agreed-upon contract documents and specifications. It signifies that the physical construction is deemed to be complete and the contractor has fulfilled its obligations.

Takeover, or handover, is the process by which the completed works are formally transferred from the contractor to the employer. It involves the employer assuming control and responsibility for the works, typically through a written agreement or a formal acceptance procedure.

Delivery refers to the act of physically delivering possession and control of the completed works from the contractor to the employer. It may involve handing over keys, access cards, documentation and other relevant items necessary for the employer to assume control and operate the facility.

These processes are interconnected in the following ways:

• Completion and takeover – completing the construction works is a prerequisite for the takeover process. Once the works are complete, the contractor notifies the employer of the readiness for takeover. The employer, often in collaboration with the designer, inspects the works, verifies their compliance with the contract documents, and determines if they meet the acceptance criteria. If the works are satisfactory, the employer formally takes over the completed works.
• Takeover and delivery – takeover and delivery are closely linked. Once the works have been taken over, the contractor delivers possession and control of the completed works to the employer. This involves the physical handover of keys, documentation and other items necessary for the employer to assume control and commence operations or use the facility.

The contractor can be held liable over at least two different periods:

• the period of ten years of ordinary prescription foreseen in the Colombian Civil Code (Law 84 of 1873) for lawsuits against defects in construction, materials or designs; and
• for vertical construction, there is also special protection under the Consumer Statute (Law 1480 of 2011) and the Safe Housing Law (Law 1796 of 2016).

The method used to establish a contract price in Colombia is subject to the free will of the parties to that contract. However, three ways are the most common regarding this determination:

• fixed lump sum contracts;
• unit price contracts; and
• hybrid contracts.

The first transfers the risks of the execution of the contract to the contractor because the employer pays a total amount, not subject to change, for the whole construction process, having the contractor deal with any cost overruns and provide for all the materials, equipment, labour, supervision and any other expense required for the construction.

The second transfers the risk from the contractor to the employer, as the contract’s total price is divided into unit prices which may eventually suffer readjustments and affect the final cost of the contract.

Finally, the third combines the first two types, having part of the contract as a fixed lump sum contract but keeping certain elements that are known to be more volatile (eg, those tied to oil prices) under the form of a unit price contract, therefore sharing the risk of the contract between employer and contractor.

Any of these methods can include milestone payments upon completing certain activities or works determined in the contract once certified by the contractor to the employer.

Normally, in projects developed by private companies, price control is regulated by the financial model developed for the development of the project, making the indexation of costs and expenses an indispensable item for the calculation.

The risk of price fluctuation is managed contractually, transferring the risk of price increases between the parties, where an unforeseen increase is usually covered by the contractor or the financier, or under the unforeseen events theory.

The concept of “unforeseen events” can be applied if (i) the contract fulfils the necessary criteria for existence and validity, and falls within categories of “successive, periodic, and/or deferred execution” contracts; (ii) an external and entirely unpredictable event that involves the parties happens after the contract’s formation; (iii) this event notably disrupts the contract's financial performance; and (iv) the debtor was not in default of their obligations. If these conditions are fulfilled, the contract may be subject to judicial review for potential adjustments or termination.

The measures used in construction contracts to manage late or non-payment have changed over time. While early models often featured advanced payments, more current regulations have limited the use of this device because of the poor management of that money. Instead, these contemporary regulations prefer interim and milestone payments, in which the construction works are divided into functional units so that the employer pays the contractor once an available unit is finished.

To deal with non-payment or late payment from the employer, contractors usually file lawsuits in the jurisdiction of the contract to achieve recognition of pending interest and/or pending charges. The courts or arbitration panels with jurisdiction depend on the will of the parties and the clauses in the contract. The latter is particularly important because they can include dispute resolution agreements to exhaust negotiation processes before resorting to legal channels.

In Colombia, there is only one means of invoicing, which is regulated by the country’s tax authority, the National Tax and Customs Directorate (DIAN). Also, in Colombia, the accepted invoicing methodology is electronic invoicing to foster both greater agility in the commercial operations carried out in the country and the cross-checking of information carried out by DIAN.

Usually, the employer designs or independently hires someone to design the construction. Then, according to the design, a budget and a schedule are issued. Once the contracting process begins and the employer hires a contractor, these designs are given to the contractor, who has the obligation and exclusive responsibility to identify the adjustments, modifications and/or corrections it deems pertinent and necessary to the studies and detailed designs delivered to it, so that they incorporate those elements that will allow the total and satisfactory execution of the works under the technical specifications governing the contract.

Therefore, the planning is safeguarded by a two-way review of the designs by the parties who have the greatest interest in there being no cost overruns. The contractor, in particular, would be responsible for these if it did not review the contract with sufficient scrutiny. Milestone payments may be used, but that depends on the structure of the contract and the payment mode agreed upon.

In case of delays, the contractor must often make a contingency plan to remedy such delays. Similarly, any negligent execution of the contract by the contractor, which delays the construction and/or makes the construction more expensive, is contractually assumed by the contractor.

Regarding concurrent delays, Colombian jurisprudence has asserted that the unfulfilled contract exception applies in such cases. This means that if both parties simultaneously delay compliance with their obligations, neither is liable. However, if one of them breaches the contract or delays first, the other party is not obliged to fulfil its obligations while being able to enforce compliance from the other party.

In case of delays, the most common remedies available to the employer are:

• injunctions;
• notices to correct;
• imposition of fines;
• application of the penalty clause; and
• the possibility of the employer to reassume control of the construction and open bidding for a new contractor.

However, this order is generally progressive because the employer can apply more than one of the above. For example, remedial periods must usually be opened first to use the penalty clause.

Extension of the terms are usually made by the mutual agreement of the parties and, even more, when they involve facts of public knowledge. However, if the circumstances that generate the extension of the term are due to external events in which the parties cannot reach an agreement, they can seek a judge in order to determine it.

As the contracts and designs usually include a two-way review and the possibility for the contractor to change the initial terms made by the employer, there is little possibility for the contractor to request an extension on time without patrimony and liability consequences. Indeed, the contractor, according to its revised designs, issues an operational plan with the time extension of each activity and that of the construction as a whole.

However, the contractor might change the working plan, but only for specific activities, without affecting the deadline of the construction as a whole. Therefore, unless otherwise provided in the contract, only under circumstances of force majeure and unforeseeable circumstances can the contractor request an extension of time without damages. In any other event, the contractor will assume any costs and expenses caused by a delay. The extension of time is usually established according to the time it took for the circumstance and their effects, which caused delays to the agreed timetable, to disappear. In that sense, the extension could be settled at the exact time that the working plan was been delayed.

Finally, the period established for the extension cannot be standardised since discussions in this regard depend on both overcoming the circumstances that generated the request for the extension, and also on the term required to start such activities. therefore, it is necessary to analyse each specific case to be able to determine an extension period.

As defined by the Colombian Supreme Court and Colombian statutes, events of force majeure constitute unforeseen events that cannot be resisted, usually coming from irresistible natural events such as earthquakes, tsunamis, shipwrecks or the action of a third party. The key element of such events is that they combine unpredictability with irresistibility by any human means, being external to the party affected. However, it is sometimes possible to exclude events ordinarily considered force majeure from their legal effects, given the specific nature of construction activities. It is also possible to contractually nuance the effects of force majeure. Nevertheless, as the law gives this definition and prevails against contractual clauses, it is impossible to complexly exclude or limit events that can constitute force majeure.

In addition, Colombian law foresees what are commonly known as fortuitous events, whose only difference from force majeure is that the unforeseeable events considered in the latter come as external to the business ordinarily carried out by the affected party, while the events considered in the former are within the activities ordinarily carried out by the affected party. In any case, both force majeure and fortuitous events are regulated in Colombian law and the typical consequences for these events imply an obligation for the contractor to mitigate the effects of the damage to the construction project and to continue to execute those contractual activities not affected by the event. Contractually, the parties can agree on an additional obligation for the contractor to notify the event considered to be force majeure. Eventually, this type of event might entail the suspension of the contract as a whole or of the contractual activities it affects until the force majeure is overcome. Exceptionally, however, the contract can be terminated if the obligations of any party become legally impossible. Finally, the delays for force majeure events exclude liability for the non-compliance of the party affected.

Similarly to force majeure events, those involving unforeseeable circumstances have effects on the execution of the contract. Some of them, such as regulatory changes (in obtaining authorisations, environmental licences or prior consultation), have the virtue of changing the schedule of the activities and, eventually, an adjustment in the price of the contract. However, others can be contractually dealt with by assigning the risks of such events.

Disruption is a legal ground for the extension of time or adjustment in the consideration on a contract only if a third party causes it and has the potential to delay the execution of the project and affect the prices in the contract; in this case it is not possible to apply the breach of contract provisions. If the disruption is attributed to any party, breach of contract provisions will apply.

Although the possibility of limiting or excluding certain liabilities in the contract is the rule and not the exception under Colombian Law, therefore admitting the modification of liabilities according to the will of the parties, there is a specific liability that cannot be excluded. This liability is future “wilful misconduct” (the Colombian equivalent of gross negligence), which according to Article 1522 of the Colombian Civil Code, cannot be excluded by an agreement between the parties or a contractual clause. In addition, another vaguer exception limits the possibility of agreeing to clauses that exclude liability but are contrary to good faith, public order or morals.

Wilful misconduct and gross negligence concepts exist under Colombian law and are defined in Article 63 of the Colombian Civil Code. Colombian legal doctrine and jurisprudence regard these concepts as essentially the same and prohibit any agreement or pact between the parties with the effect of excluding or limiting future wilful misconduct and gross negligence that might result in liability for the parties.

The Colombian Civil Code authorises the parties to modify the criteria to impose liability according to their will and convenience. Therefore, the principle of total or integral compensation becomes nuanced. Although Article 1616 of the Colombian Civil Code establishes general rules for the liability of a contracting party that has caused damages to the other, it also states that those rules can be modified through contractual provisions.

The liabilities are usually limited contractually, to the degree and in the cases agreed upon by the contracting parties. However, usually, to guarantee the quality of the construction, the liability of the contractor is rarely limited.

Indemnities depend on the type of contract agreed between the parties. Traditionally, however, the designer is not responsible for the execution of the project, or indemnities are generated concerning the information given for the fulfilment of a given task (for example, design or construction). Moreover, some indemnities can emerge depending on the risks contractually taken by one party or the other, such as those regarding real estate management, social management or environmental issues. These risks are most evident in infrastructure projects, with environmental issues also crucial in real estate construction because of the land where the project is developed.

Guarantees vary from public to private works. From a public perspective, there is a crucial one called the Garantía Única de Cumplimiento, or single performance guarantee, which entails a guarantee for the correct management of advanced payments, compliance with the contract in the strictest sense, stability in the works and quality in the designs. There are also relevant guarantees regarding the labour obligations of the contractor and non-contractual civil liabilities, which are usually dealt with through insurance and apply to private and public works.

The following are the forms of insurance typically taken out in construction contracts in Colombia:

• insurance for compliance with the contract, for the time of execution of the contract and guaranteeing all of the damages caused by the partial or total non-compliance of the contractor;
• insurance of good management of advanced payments, for at least the time of execution of the contract, guaranteeing the correct investment of the total value of the advanced payment;
• insurance for wages, social benefits and labour indemnities to ensure the labour obligations of the contractor;
• insurance for the stability and quality of the construction, guaranteeing any defect or damage within the work;
• insurance against all-risk, insuring any damage in the constructions and machinery; and
• insurance for non-contractual civil liability, guaranteeing the damages that can occur affecting third parties.

If the contractor becomes insolvent, the employer usually keeps the possibility of reassuming the contract to give it to a solvent third party to continue its execution. Contractual provisions regarding the employer’s insolvency are not usually foreseen and are rare in practice.

Typically, risks are undertaken individually and independently in the contract arrangement. However, one widespread practice within the Colombian market is to prepare a matrix of risk in advance to the contracting process. This matrix analyses the risks and states the party that will eventually take each one. It is also crucial because the risks assigned to the parties may determine or affect the contract’s price. Therefore, no general provision establishes the risks to be taken by one party or the other. Still, the possibility of assigning the risks as independent or shared between the parties depends on the analysis made in the contracting process. Therefore, which risks are eventually shared depends on the contracting parties will. In that sense, the risks are not usually shared, but in the case that the parties were interested in it, they could arrange this as they please during the contracting process, taking into consideration the longer construction time, higher value of the project, and change in project conditions.

The employer has a contractual relationship with the contractor governed by civil and commercial law, not labour law. The agreement is therefore not a labour one. In turn, for the performance of the contract, it is usually stipulated that the contractor shall have adequate, suitable and sufficient personnel for the execution of the contract. The personnel have no relationship with the employer, only the contractor.

Construction contracts include the possibility of subcontracting in the contract’s performance to fulfil the obligations derived from the agreement. Usually, this possibility is limited in certain aspects, such as requiring previous approval from the employer or being subject to a percentage of the total value of the construction.

Construction contracts can include clauses related to intellectual property that emerges from the performance of the contract. For example, parties can decide who is entitled to ownership and exploitation rights or royalties. Generally, it is agreed that the employer will own those rights, notwithstanding the author’s moral rights, which shall remain vested in the creator of the work.

In the event of a breach of the construction contract, the following remedies can be applied:

• fines or penalties that the contractor must pay; and
• contingency plans which detail the steps to rectify arrears in the performance of the contract.

The ability to contractually limit the remedies available for the contracting parties is vast due to the possibility foreseen in Article 1604 of the Colombian Civil Code to exclude or reduce the exposure to liability of any of both parties, except for the cases in which the parties wrongfully agree to condone future wilful misconduct or gross negligence.

Sole remedy clauses for the complete scope of disputes that may arise from the execution of the contract are rare. However, arrangements may contain clauses obliging the party to resort to a specific remedy if a dispute arises.

Colombian law categorises damages as (i) property damages and (ii) non-pecuniary damages. The former include consequential damage and loss of profit, which must be specific and quantifiable.

Construction contracts do not include non-pecuniary damages, a concept that refers to the injury suffered by a person regarding their feelings, emotions, honour, reputation or physical or mental health, which the judge quantifies to compensate for the damage experienced by that person.

Retention clauses are not excluded in this jurisdiction.

Construction contracts can include suspension clauses that restrict the occurrence of certain events, such as:

• force majeure;
• mutual agreement between the parties; and
• other causes established by law.

Nevertheless, other clauses can be included depending on the nature of the parts involved, such as unilateral termination.

The legal and contractual possibilities for termination of a construction contract can include:

• the expiration of the term foreseen for the execution of its object;
• the fulfilment of the contractual object;
• the absolute impossibility to comply with the contractual object;
• mutual agreement between the parties;
• a legal and/or judicial order of the last instance against which no appeal is allowed; and
• other causes established by law.

Construction contracts may also include clauses of anticipated and unilateral termination, where the parties determine, case by case, the specific reasons that make these terms applicable.

The consequences of such termination are that:

• economic recognition is limited to the amount owed to the contractor for the works constructed until the contract’s termination date; and
• a penalty clause in favour of the employer, paid by the contractor for the anticipated termination of the contract due to causes attributable to the contractor.

Colombian procedural law establishes criteria to determine jurisdiction, depending on certain aspects such as the place of execution of the contract or the parties involved.

Civil jurisdiction is competent to adjudicate disputes between private parties in disputes governed by civil and commercial law.

Otherwise, when disputes arise out of contracts executed with government entities under Colombian law, they will be brought before the administrative jurisdiction.

Within these jurisdictions, other factors can affect each court’s competence, known as objective, subjective, territorial, functional and connectivity factors.

• Objective: related to the object of the dispute, either in terms of its nature (ratione materiae) or its amount (value of the claim).
• Subjective: generated by the characteristics of the persons involved in the litigation (ratione personae).
• Functional: derives from the tasks or functions the judge performs; it refers to the different instances, such as the judge that decides an appeal.
• Territorial: defined as the result of the country’s division by law into judicial districts so that within the limits of its territorial boundary, an organ may exercise jurisdiction over a specific matter.
• Connectivity: related to the circumstance that a judge, notwithstanding not being competent to handle a case or some of the claims formulated in the lawsuit, may hear them by their accumulation with others where they are competent.

Colombian law has recognised diverse mechanisms for alternative dispute resolution (ADR), such as arbitration, conciliation and amicable settlement. These mechanisms can be included in construction contracts, executed between private parties or with government entities, taking into account certain restrictions that apply to the latter. However, in practice, contracting parties usually determine one or more particular types of ADR depending on the specifics of each case due to the differences between each mechanism that can be more suitable or convenient for resolving the dispute.