REUTERS | Russell Cheyne
September 9, 2020

Moral rights: why should developers care?

Question: What do the Oslo Picasso murals “The Seagull” and the “The Fishermen” and the Dutch De View Jaargetijden have in common?

Answer: They both have been subject to recent high cost, high profile litigation that dragged on for years and which concerned moral rights.

Yes “moral rights” caused all the trouble for these projects – not its more famous cousin, copyright which many regard as the chief culprit for construction IP disputes. Interestingly, moral rights don’t even get a mention in the commonly used standard form contracts such as JCT, NEC and FIDIC and yet they can often be a critical risk issue for many construction projects. Continue reading →

REUTERS |
September 1, 2020

A tough (PI insurance) market: why it matters, and what parties can do about it

In the UK, the professional indemnity insurance (PII) market is hardening. It is becoming increasingly common to find that contractors and consultants do not hold (or are struggling to obtain) PII at the level and on the terms that were negotiated and agreed with their employers.

At the same time:

  • There has been a proliferation of cladding claims against contractors following the Grenfell Tower tragedy in June 2017; and
  • Other economic headwinds have caused insolvency to become more prevalent in the construction industry.

The combination of these factors has led to a perfect storm for employers: where developments are found to contain substantial defects (whether relating to cladding or anything else), the road to recovery of the employer’s losses is more challenging and outcomes are more uncertain. If the contractor or the consultant becomes insolvent, the employer might not have available to it the full amount of PII that was agreed, or (in respect of more recent contracts) the agreed amount might, due to market forces, be manifestly inadequate. Continue reading →

REUTERS | Peter Cziborra
August 26, 2020

When can contractual limitation of liability clause limit third party’s tort claim?

This was the question the court was asked to answer in RSK Environmental Ltd v Hexagon Housing Association Ltd.

Amidst the summer recess and the ongoing pandemic, the case may have slipped past many practitioners. However, it raised two valuable points:

  • First, a heavy-weight legal question: can parties be bound in tort by limitation clauses in contract, in circumstances where no contract exists and the tortious duty is not concurrent? In other words, if and how a contractual clause can limit a free-standing tortious duty.
  • Secondly, a point of procedure: in this case, was part 8 the suitable way of resolving the issue?

Spoiler-alert: O’Farrell J answered the second question in the negative, leaving the first question unresolved. That said, the court carefully reviewed the relevant case law, providing readers with an up-to-date consideration of an issue that (at least one party said) was not decided. Continue reading →

REUTERS | Mohammad Ponir Hossain
August 19, 2020

Calculating the final date for payment under a construction contract

It isn’t unusual to see one party start Part 8 proceedings asking the court to determine what the parties have agreed in their contract and to grant declaratory relief to that effect. In the adjudication enforcement context, we’ve seen it multiple times. Sometimes it feels like one party is “appealing” the adjudicator’s decision, since it is asking the court for a final determination on an issue it thinks the adjudicator has got wrong.

In Rochford Construction Ltd v Kilhan Construction Ltd, that is pretty much what Rochford did, since it refused to pay the sums the adjudicator awarded and, instead, issued Part 8 proceedings asking the court for a number of declarations, all of which (if successful) would have had the effect of reducing its liability to Kilhan to zero.

However, as is often the case when matters reach the TCC, things didn’t go quite to plan. Continue reading →

REUTERS | Kim Hong-Ji
August 12, 2020

Supplier beware: the CIGA 2020

The Corporate Insolvency and Governance Act 2020 (CIGA 2020) came into force on 26 June 2020 after a fast-tracked consultation process. Intended to provide a lifeline to struggling businesses during the COVID-19 pandemic and beyond, it consists of temporary measures, meant to alleviate the short-term disruption caused by the pandemic and permanent measures, which are more broadly designed to assist companies in times of difficulty.

But while it may sit more comfortably with “traditional” contracts for the supply of goods and services, it pushes against the legislation, measures and standard terms that have evolved to combat the inherent cash flow challenges present in the construction industry and protect supply chains.

The CIGA 2020 not only has a significant impact on the Construction Act 1996 but also requires updates to construction standard forms such as the JCT and NEC (explored further in this post and in Practical Law’s practice note on the CIGA 2020). These changes demand that parties upskill on what the new rules entail at a time when (arguably) they may have more pressing concerns.  Continue reading →

REUTERS | Heinz-Peter Bader
August 4, 2020

TCC refuses to strike out claim where smash and grab decision not paid

Summer felt like it had come early in May, but much of June and July served to remind us that we don’t live in the Mediterranean. Although summer has now most certainly arrived, the judges in the TCC are still hard at it. A recent judgment that caught my eye was O’Farrell J’s in Kew Holdings Ltd v Donald Insall Associates Ltd. In it, she ordered a stay of proceedings pending payment of an adjudicator’s decision. She also ordered the claimant to provide £600,000 security for costs, but rejected the defendant’s strike out application.

I’ve seen a few articles on the judgment, many focusing on the stay pending payment. However, given that the parties agreed to the stay, I think the more interesting issue is the strike out application and that is what I’m looking at today. Continue reading →

REUTERS | Bob Strong
July 29, 2020

Wind of change – is NEC the future for wind projects in APeC?

COVID-19 is causing uncertainty for business and investment strategies worldwide, the energy sector included. Despite this, investors are increasingly looking to renewables as a way  to meet growing energy demand while decarbonising energy supply. While countries across Asia-Pacific have shown strong appetite for wind power, the risk of natural disasters, inadequate government support and the high costs of new technologies (both financially and in human resource requirements) mean they won’t all reach their potential.

There are clear risks to undertaking wind projects, particularly as the average size of each project increases in scale. For offshore wind projects in particular, projects are pushing boundaries by going further from shore, into deeper waters and contending with more severe marine conditions. Turbines are growing ever larger, such as Siemens-Gamesa’s 14MW giant, which will be deployed on Taiwan’s Hai Long project in 2024, and require installation vessels that are in short supply but needed in time limited construction windows. Yet the ambitious Asia-Pacific excluding China (APeC) market targets a combined 54GW in offshore wind projects by 2030, according to Asia Wind Energy Association forecasts in May 2020. It is clear then that in the wind sector, opportunities and risks are increasing hand-in-hand.

Continue reading →

REUTERS | Ronen Zvulun
July 21, 2020

Updated adjudication guidance from CIArb and the Adjudication Society

A couple of weeks ago I was part of the panel at the launch event for the updated adjudication guidance notes published by the Chartered Institute of Arbitrators (CIArb) and the Adjudication Society. The other panellists were Ciaran Fahy, Susan Francombe, Kim Franklin QC and Jeremy Glover. The event was moderated by Lewis Johnston.

In case you are unfamiliar with either the notes or the event, what follows are a few thoughts about both. Continue reading →

REUTERS | Thomas Peter
July 16, 2020

Not to be sniffed at… implied terms in the context of termination

Waste projects are sometimes perceived as the less glamorous side of our construction and infrastructure practice. That does them a disservice: they involve innovative technologies and the development of sustainable infrastructure solutions. The interface of those technologies with the allocation of risk for design and construction can present interesting and knotty contractual issues. For example, the failure to meet the contractual performance requirements is sometimes blamed on the plant being fed the “wrong waste”, leading to disputes over the allocation of design risk, interpretation of performance requirements, delay and termination.

Essex County Council v UBB Waste (Essex) Ltd (No.2) concerns such a project.  The council and UBB entered into a 25-year PFI contract for the construction and operation of a mechanical biological waste treatment plant to reduce the volume of household waste sent to landfill and to generate energy from the production of “solid recovered fuel”.  Continue reading →