REUTERS | Gilles Adt
January 26, 2021

FIDIC the disruptor: Liquidated damages to compensate the contractor for employer delay

Whether it’s the electric motor to the combustion engine or cryptocurrency to currencies, every industry seems to have a disruptor – perhaps we’ve found one in FIDIC for the construction industry and its re-imagining of the use of liquidated damages (LDs) in the soon-to-be published Green Book.

The special pre-release version of the new edition Green Book was revealed to delegates at the virtual FIDIC 2020 International Contract Users’ Event. The Green Book is for relatively small value projects – the World Bank recommends its use in projects valued up to US$10m (FIDIC itself sets no upper-limit). The key provisions of the Green Book, together with other exciting announcements from FIDIC are summarised in my colleague, Natalie Wardle’s, excellent blog, FIDIC contracts – a preview of what is to come.

The new edition introduces LDs to compensate the contractor for employer culpable delay alongside traditional “delay damages” to compensate the employer for contractor culpable delay. Should we now expect to see as commonplace LDs for, as FIDIC put it, “Prolongation Costs”? Continue reading →

REUTERS | Heinz-Peter Bader
January 25, 2021

Time to split? Signing deeds during a pandemic

COVID-19 opened the eyes of many to full-time working from home. Yet absent the integrated hubs that occupational premises provide, the prospect of assembling, distributing and executing legal agreements in hard copy has become taxing. Unsurprisingly, businesses have sought electronic alternatives.

E-signature platforms have boomed, as have virtual signings. The first category can be poorly optimised for the construction industry. That’s because major projects necessitate a large number of agreements, while works contracts can run to thousands of pages. These contexts are not particularly catered for by software providers, which can make the task cumbersome. The penchant for contracts to be made as deeds with a limitation period of 12 years, as opposed to six (together with the formalities this entails), adds to the difficulty.

Where a vital deed must be concluded in short order, proceeding through a virtual signing can be appealing. In an era of social distancing, however, it can lead to situations in which “split execution” occurs. Continue reading →

REUTERS | Fadi Al-Assaad
January 19, 2021

Conditional payment clauses in the UK and Middle East

Managing and securing the cash flow of any business enterprise is of paramount importance, and contracting parties in the construction industry are no exception to this. If regular cashflow from the main contractor to its subcontractors and the supply chain is disrupted, parties to the project may soon find themselves in difficulty. The purpose of a conditional payment clause is to help a main contractor guard against a cash flow “crunch” by making the downstream payment obligation conditional on receipt of payment from the upstream party.

Conditional payment provisions, stipulating that payment can be made only “when” or even “if” the main contractor is paid or upon the occurrence of certain events or actions, are prohibited in the UK and various other jurisdictions around the world, including New Zealand, Malaysia, and certain provinces/states in Canada, Australia and the USA. However, in some jurisdictions, particularly in the Middle East, “pay when paid” and even “pay if paid” provisions play a significant part in allocating risk on construction projects. In the Middle East, such payment clauses remain enforceable, though parties need to be aware of how the respective Civil Codes in the region affect their operation. Continue reading →

REUTERS | Kevin Lamarque
January 19, 2021

TCC refuses to enforce adjudicator’s decision due to material natural justice breach

Happy New Year to you all.

Although we are only in January, the beginning of December seems a long time ago, not least because much of the country was still in Tier 2 at the time. Restaurants and bars remained open and 1,000 lucky spectators attended Anthony Joshua’s latest defence of his heavyweight belts at Wembley Arena in London. Meanwhile, at the Rolls Building in London, judgment in another heavyweight clash was handed-down, namely the adjudication enforcement case of Global Switch Estates 1 Ltd v Sudlows Ltd. I say “heavyweight clash” because both sides had top solicitors and prize fighting silks, there was over £5 million in dispute and the matter was in front of the Judge-in-Charge of the TCC, Mrs Justice O’Farrell.  Continue reading →

REUTERS | Jean-Paul Pelissier
January 13, 2021

FIDIC contracts – a preview of what is to come

Last month, in what feels like a lifetime ago (when there was no third lockdown or even Tier 4, no new COVID variant and no Brexit deal), I attended the digital FIDIC International Contract Users’ Conference from the comfort of my home. Top marks for effort by the organisers and for the virtual networking possibilities available, but it was very different! The content was however, in my opinion, excellent (and the audio significantly better in my office than in a big auditorium) and there are some interesting developments to report. Continue reading →

REUTERS | Jose Luis Gonzalez
January 11, 2021

Disputes across the horizon: arbitration in the United Arab Emirates

This post is the first part of a series covering issues that frequently arise in international arbitration, each with a specific regional focus. This post addresses issues in the United Arab Emirates (UAE) and looks at two issues that frequently arise in construction arbitrations conducted in the UAE:

Continue reading →

REUTERS | Hannah McKay
January 5, 2021

Welcome to 2021

As is customary, I’m starting the year with a look at what the year may hold for construction practitioners.

I did this last year too, musing then over what we should be calling the decade we’d just left as we arrived in the twenty-twenties. I also wondered what the next major event in construction law was likely to be (excluding the obvious elephant in the room). Who knew then that just a few weeks later we’d be in the grip of a global pandemic and our world would be turned upside down. By comparison, the end of the transition period came upon us rather suddenly and, although there was considerable chatter about the terms of any trade deal, even that sorted itself out in the end. In one sense, Brexit is over now. It feels a bit like it is yesterday’s news, today’s chip paper! We’ve left the EU and we all have to move on.

Now, if only the pandemic would go away… Continue reading →

REUTERS | Russell Cheyne
December 16, 2020

NEC4: 2020 amendments

NEC4 was published in 2017. The first set of amendments were published in January 2019 and now, in the space of three years, we have the second set, published in October. Most standard forms do not publish updates so prolifically and (certainly for this year with all its changes) you could argue more’s the pity.

Standard form updates to reflect legal developments are almost always welcome – it saves the parties from having to wield the red pen, helps standardise market approach to certain issues and reduces the likelihood of dispute.

But as for other types of update – well, it depends. NEC say that the 2020 update is based on feedback from users and industry experts that “have provided many constructive suggestions as to how the contracts could be further enhanced… “.  The problem with this of course is that whether you think the changes suggested are a good idea or indeed of any relevance to how you use the forms, will depend on who you are in the contractual equation and what type of project you use the NEC form for.

Below we take a closer look at some of the key changes. Continue reading →

REUTERS | Dominic Ebenbichler
December 15, 2020

Developments following Ground Developments… or not

Writing on this blog almost exactly four years ago, David Pliener noted a potentially interesting change in the TCC’s approach to enforcing adjudicators’ decisions. In the case of Ground Developments Ltd v FCC Construction, Fraser J signalled that, perhaps, a claimant applying for summary judgment to enforce an adjudicator’s decision might not need to meet the summary judgment test after all.

Now that Ground Developments has had time to mature, it might be a good time to check in and see how things have gone since. Has Fraser J’s judgment heralded a brave new world? Continue reading →