Practical Law

Big sheds (by which I mean warehouses, logistics hubs, fulfilment centres and the like) are hot property right now. Industrial floor space is in short supply due to the slowdown in construction during the last recession, and demand is exceptionally high due to the rise of e-commerce and online retailers promising ever-shorter delivery times. Recent reports suggest that over 1.3m sq ft of additional industrial floor space is required each year in London alone, where just eight months’ of supply remains based on current levels of take-up.

This unprecedented demand coincides with a weak pound, which has caused an uptick in overseas investment, and prevailing market uncertainty (whether due to the EU referendum, the general election or simply our position in the economic cycle) that appears to be driving investors towards “safer” alternative assets such as light industrial, build to rent and student housing.
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The FIDIC Client/Consultant Model Services Agreement (fourth edition, 2006) – usually known as the White Book – was a rather frustrating form for lawyers. Happily, the new White Book (fifth edition, 2017) addresses some of the frustrations and is a more balanced starting point.

The form was particularly frustrating for those advising employer clients, who assumed that it would be consistent with the FIDIC construction contracts and therefore was practically plug-and-play with the 1999 Rainbow Suite. This view was often encouraged by consultants who advised a FIDIC procurement route and then proffered the White Book as the appropriate form of contract for their own appointment.

Employers were surprised that it was not consistent and that their liability to the contractor for any poor performance of the engineer, could not be passed on to the party actually responsible. In addition, they were surprised at the sheer volume of amendments required to protect their legitimate interests. “What, then, is the use of a standard form?”, they would ask. A perfectly reasonable question. Continue reading →

A couple of years ago I blogged about the Court of Appeal’s decision in Gard Marine and Energy Ltd v China National Chartering Company Ltd, a rather complicated charterparty case. In that blog I noted that the Court of Appeal agreed with my view that insurance and subrogation can be a tricky business. The Supreme Court has now given its decision in this case and it seems they too are of the same view: the judges were split 3:2 on the issue.

Co-insurance is particularly relevant to the construction industry because of the multi-party nature of building projects and the many different insurable interests that co-exist in the same asset(s). As Lord Sumption pointed out in his judgment:

“The business context in which this has most commonly arisen is the co-insurance of employer, contractor and subcontractors under standard forms of building contract.”

The judgment means that the courts are more likely to interpret insurance clauses as relieving a party of liability for matters within the scope of the policy, even if insurance is not effected or there is a shortfall in insurance proceeds. Continue reading →