Back-to-Back Principle: Theoretical Aspects and Issues from Practical Experience

Mario Petti, Legal Counsel - Global Water Utility Projects, Grundfos, Denmark

It is common, within the framework of major projects, such as EPC, to deal with the so-called “Back-to-Back” mechanism, consisting in the alignment of “Main Contractor´s” several subcontracts and supplies with the contents of the “Main Contract” entered into by the latter with its final “Client”. The implementation of this mechanism appears to be interesting, both in its theoretical and practical implications, under a certain number of profiles, such as but not limited to the “Risk Management” so dealt with by each of the involved parties, the “sharing” or “shifting down” of obligations and liabilities, the commercial leverages which actually lead and control the stipulations (as well the imbalances and inconveniences arising thereof), the practical features related to many provisions. The focus of the analysis would be to investigate the aforesaid profiles, in order to outline each party´s interests, expectations and entitlements, all in view of those which normally result to be the key-winning factors of any commercial relationship, prior to any relevant agreement: clarity, reasonableness and fairness.

The Grundfos Group is the biggest pumps manufacturer in the world. In addition to pumps, the Group also manufactures electric motors and several further components and pieces of equipment for a wide scope of applications in almost every industrial field. The Grundfos Group is also expanding in projects development in the Water Utility field (e.g. wastewater treatment plants, anti-flooding stations, desalinates, etc.) worldwide. The Grundfos Group is represented by more than 80 companies in more than 55 countries. In addition Grundfos products are sold in a large number of countries by local distributors.