REUTERS | Thomas Peter
June 14, 2017

Rise of the “big sheds”: construction of industrial floor space

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 uptake 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.
Continue reading →

REUTERS | Shailesh Andrade
June 13, 2017

Adjudicator’s decision enforced and no stay pending separate Part 8 hearing

It often feels like it is feast or famine when it comes to cases to write about on this blog. We appear to be in a stage of famine at the moment, and I’m not exactly sure why. Certainly it isn’t because parties have stopped adjudicating (because, if your recent experience is anything like mine, you will know that they haven’t) or because paying parties have started paying up (because I’m sure that leopard hasn’t changed its spots either). The current drought therefore leads me to cover a case that is very short (only 18 paragraphs) and dates from February: Structure Consulting Ltd v Maroush Food Production Ltd. Continue reading →

REUTERS | Jason Cairnduff
June 6, 2017

Incorporating main contract terms into a sub-contract

There are a number of interesting aspects to HHJ Keyser QC’s judgment in Dawnus Construction Holdings v Amey LG Ltd, not least that during the course of the project, the parties referred four separate disputes to four different adjudicators. That makes it a really good example of serial adjudication, if ever I saw one. It also demonstrates some of the difficulties that can arise on construction projects, particularly when parties seek to incorporate main contract terms into a sub-contract. Continue reading →

REUTERS | Toru Hanoi
June 5, 2017

FIDIC White Book: A step in the right direction

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 →

REUTERS | Yuya Shino
May 31, 2017

May 2017 digest: adjudication and eclectic comment

Shakepeare, Sonnets:

“Shall I compare thee to a summer’s day? Thou art more lovely and more temperate: rough winds do shake the darling buds of May.”

It isn’t often that we resort to Shakespeare on this blog and, given the wind and rain of early May, something from the Tempest may have been more apt. However, temperatures are rising as the sun is shining and so it seemed apt to start on a sunny note! Continue reading →

REUTERS | Jean-Paul Pelissier
May 31, 2017

Joint insurance and rights of subrogation revisited

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 →

REUTERS | Jason Lee
May 26, 2017

What does the duty to act “in the spirit of mutual trust and co-operation” really mean?

In Costain v Tarmac, the TCC set out useful guidance on the application of the duty of good faith and clause 10.1 of the NEC3 conditions.

The court found that Costain had not made out its case on estoppel in relation to Tarmac’s limitation defence, but it went on discuss whether the existence of a mutual trust and cooperation obligation (which the court likened to an express duty of good faith) affected that assessment. In this case on the facts it did not, but it shows that the court will consider such duties.

The judgment is of interest because although NEC3 is one of the most prevalent forms of contract in the construction industry (particularly as far as government infrastructure projects are concerned), there has been relatively little case law showing how the courts will apply the duty to act “in the spirit of mutual trust and co-operation” and/or express obligations of good faith generally. Continue reading →

REUTERS | iStockphoto
May 24, 2017

Increased emphasis on ADR in commercial actions in Scotland

The Court of Session has issued new requirements for commercial actions. These requirements took effect from 27 March 2017 and highlight a change in emphasis for alternative dispute resolution in Scotland.

The new requirements only apply to commercial actions in the Court of Session. The definition of a commercial action is wide. Broadly speaking, a commercial action includes any transaction or dispute of a commercial or business nature. Construction disputes would usually be classified as commercial actions.

Under the Rules of the Court of Session, there is a specific procedure governing commercial actions. The purpose of this procedure is to streamline the court process to allow more management by the judge, which will hopefully result in a quicker and more cost effective resolution of the dispute. Continue reading →