General Contractor and Subcontractor: Managing Risks in Belarusian Construction Projects

You’ve won a construction contract. The deadlines are tight, the project is complex, and your own team can’t handle everything. So you bring in a subcontractor – a specialized firm to do part of the job. Seems straightforward, right?

Not quite. In Belarus, the relationship between a general contractor and a subcontractor is full of legal nuances that can turn a promising project into a costly nightmare. Courts are filled with cases where things went wrong: unpaid work, poor quality, unexpected liabilities, and even void contracts.

Let’s look at what every general contractor needs to know before signing that subcontracting agreement.

When hiring a subcontractor can backfire: a real example

Think about this case that was heard by Belarusian courts. For the installation of paving tiles in a Minsk residential yard, a general contractor engaged a subcontractor. After completing the work and signing the acceptance acts, the subcontractor anticipated payment. However, the general contractor declined to make the payment.

Why? due to the poor quality of the work. Only 93 meters of the 200 meters of curbstones the subcontractor claimed to have installed were actually there, according to an expert examination. The installation of an additional 13 meters of paving was done improperly. Both the general contractor and the subcontractor were present at the meeting where the client, the housing maintenance organization, had already brought up these concerns.

The subcontractor initiated legal action seeking payment and penalties for delayed compensation. However, the court ruled in favor of the opposing party. The judge emphasized that, according to the contract, work that is inadequately performed is not eligible for payment. Since the subcontractor failed to rectify the defects, they were not entitled to claim the funds.

The lesson? Quality matters. And courts will look beyond signed paperwork to determine what work was actually done and whether it meets standards.

The 2025 rule changes: more flexibility, new questions

In May 2025, Belarus implemented substantial amendments to the Rules for Concluding and Executing Construction Contracts (Resolution No. 266). These modifications impact the collaboration between general contractors and subcontractors.

Good news: you no longer need separate permission. Previously, general contractors needed written approval from the client each time they intended to engage a subcontractor; this stipulation has been removed. Currently, unless the contract with the client explicitly prohibits subcontracting, general contractors are permitted to hire subcontractors freely. It remains essential that the primary contract specifies whether the contractor will perform the work personally or involve third parties.

But there’s a catch. If your client wants to control who you hire, they’ll need to spell that out in the contract. So when negotiating with clients, pay attention to how subcontracting is addressed. Vague language can create problems later.

The trap of “doing it yourself” contracts

Here’s a situation that trips up many contractors. You sign a contract promising to do the work yourself – with your own forces. Then, to meet deadlines or because you're overloaded, you quietly bring in a subcontractor. What’s the harm?

There are significant implications to consider. Belarusian legislation is stringent in this regard. If your contract stipulates that you must personally perform the work, and you engage a subcontractor without obtaining written approval from the client, such a subcontracting arrangement may be deemed void. According to Article 169 of the Civil Code, this type of transaction is regarded as null and void from its inception. The ramifications are that both parties are required to return all benefits received under the contract. Should it be impossible to return the actual work performed, monetary compensation will be necessary, potentially resulting in substantial financial losses.

Payment terms: the “subject to client payment” trap

Another common pitfall involves how subcontractors get paid. Many general contractors include a clause saying they’ll pay the subcontractor only after receiving money from the client. This seems reasonable – why pay before you have the funds?

But Belarusian courts have taken a firm position on this. Such clauses are often treated as not actually establishing a payment deadline. Why? Because they make payment dependent on an event that may never happen or may be delayed for reasons beyond the subcontractor’s control.

What happens then? The court applies a different rule: the subcontractor can send a written demand for payment, and the general contractor must pay within seven days. If you don’t, you’ll owe not just the debt but also penalties and interest.

So if you’re a general contractor, think carefully before including such “subject to payment” clauses. They may not protect you the way you expect. If you’re a subcontractor, knowing about this rule gives you leverage when payments are delayed.

The subcontractor’s mistake, your problem

General contractors are largely accountable for the work of their subcontractors under Belarusian law. The general contractor is accountable to the client for any subcontractor failures, as stated in Article 660 of the Civil Code. Additionally, the subcontractor holds the general contractor accountable for the client's shortcomings.

This means you can’t simply point fingers when something goes wrong. If your subcontractor does poor work, you’re the one the client will come after. If the client doesn’t pay, your subcontractor will demand money from you.

A cautionary tale: when arbitration goes wrong

This intricate case demonstrates how complicated things can become. In order to recoup roughly 27.5 million rubles in withheld payments from a client, a general contractor filed for international arbitration. They won the arbitral tribunal’s decision. However, everything fell apart after that.
Why? because the subcontractors had already received that money directly from the client. The arbitrators failed to take into account what had actually occurred on the ground, and the general contractor continued to demand payment. More significantly, despite the fact that the subcontractors’ rights would be impacted by the outcome, the arbitration went forward without their involvement.
The arbitration award was ultimately overturned by Belarusian courts.

Here’s a complex case that shows how tangled things can get. A general contractor went to international arbitration to recover about 27.5 million rubles in withheld payments from a client. The arbitral tribunal ruled in their favor. But then everything unraveled.

Why? Because the client had already paid that money directly to the subcontractors. The general contractor still demanded payment, and the arbitrators didn’t properly consider what had actually happened on the ground. More importantly, the arbitration proceeded without involving the subcontractors – even though the decision would affect their rights.

The arbitration award was ultimately overturned by Belarusian courts. They concluded that it went against basic civil law precepts, such as fair dealing and good faith. The key lesson: when subcontractors’ interests are at stake, they need to be part of the process. The entire legal outcome may be compromised if they are left out.

Practical tips for general contractors

• Secure the contract correctly.Ensure your accord with the client clearly addresses whether you may employ subcontractors. If you have the authorization, your subcontracting agreements ought to be comprehensive and legally solid.
• Record everything. Maintain logs of all work phases, not solely the ultimate outcome. Pictures, oversight reports, and written correspondence can be crucial if disagreements emerge.
• Do not exclude the client.If your agreement mandates you perform the labor personally, obtain written consent before bringing in secondary contractors. Otherwise, your subcontracting understanding could be nullified.
• Mind those payment stipulations.Consider carefully before making payment to subcontractors contingent upon receiving funds from the client. Tribunals might interpret such terms differently than you anticipate.
• Oversee, oversee, oversee.Frequent checks assist in spotting issues promptly, before they become costly conflicts. Verify both the excellence and extent of work.
• Obtain specialist views when necessary.If quality is challenged, an impartial construction expert’s evaluation carries much greater significance than personal judgments.
• Involve everyone in conflict resolution.If you are proceeding to mediation or litigation, verify that all impacted entities – including subcontractors – are correctly included. Otherwise, the decision may be reversed.

Working with subcontractors in Belarus offers many benefits – specialized expertise, flexible capacity, and sometimes lower costs. But it also comes with real risks. Understanding the legal landscape, documenting your work carefully, and structuring contracts properly can make the difference between a successful project and a courtroom battle.

The 2025 rule changes give general contractors more flexibility, but they also require more attention to contract details. With the right approach, you can build strong relationships with subcontractors while protecting yourself from liability.

The law firm “Economic Disputes” has been providing B2B legal services since 2019, with a core specialization in tax law and transfer pricing disputes. Our team of 15 lawyers and specialists brings 15 to 25 years of practical experience in defending clients during tax audits and litigation. The firm’s director, Sergey Belyavsky, has a unique 20-year background in economic courts, including a decade serving as a judge, which provides us with strategic insight into how tax authorities and courts approach TP cases. We are members of international professional associations and maintain a partner network in over 160 countries. We have helped clients recover and safeguard 1.95 billion Belarusian rubles, supported by more than 100 client reviews with an average rating of 4.95 out of 5. We work in Russian, Polish, and English and are prepared to handle even the most complex transfer pricing disputes. For the convenience of our international clients, we maintain a bank account with PKO Bank Polski to facilitate efficient cross-border settlements.

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