Foreword
Hamish Lal, Parner, Akin Gump Strauss Hauer & Feld, Partner, Adjunct Professor, UCD Sutherland School of Law, and Chair, Society of Construction Law
THE Construction Law Review continues to be an excellent publication and I am delighted that I have been afforded a kind opportunity to make a small contribution.
Patently, readers will see that the publication has attracted a number of compelling articles covering noteworthy and important issues for all of us involved in construction law (whether in the UK or in the context of international arbitration).
I congratulate and thank warmly all the authors for giving us a set of articles that one wants to read, keep to hand and make use of in submissions (whether in adjudication, arbitration, dispute boards or formal litigation). A lot has happened since the last review and I want to highlight five specific and fundamental issues:
- In November 2022, the Adjudication Society in a seminal collaboration with King’s College London issued the 2022 Construction Adjudication in the United Kingdom: Tracing Trends and Guiding Reform. This report examined an array of issues related to construction adjudication in the UK. It is an excellent report and has received widespread approval. Some of the analysis will not surprise readers but some results will.
For example:
- Claims for extension of time being the most common head of claim.
- Claims for professional negligence/liability sits at 5%.
- The median hourly fee of adjudicators is between £251 and £300.
- The median of total fee charged by adjudicators falls between £12,001 and £14,000.
- 58% of respondents feel that adjudicators’ decisions should not be published but 30% replied that they should, with redactions, following the Singaporean model.
The report also signalled further potential developments. In Singapore, adjudicators’ decisions are redacted and then made publicly available. Since 2022 in Queensland adjudicators’ decisions have been published without redaction.
I congratulate and thank warmly all the authors for giving us a set of articles that one wants to read, keep to hand and make use of in submissions (whether in adjudication, arbitration, dispute boards or formal litigation). The publication of adjudicators’ decisions may create an informal system of ‘precedent’, affording consistency or certainty and may encourage adjudicators to maintain high standards.
The publication of adjudicators’ decisions may create an informal system of ‘precedent’, affording consistency or certainty and may encourage adjudicators to maintain high standards2. In the world of arbitration, Radisson Hotels APS Danmark v Hayat Otel Isletmeciligi Turizm Yatirim Ve Ticaret Anonim Sirketi (2023) EWHC 892 (Comm) looked at the time limit for challenging an award under section 70(3) of the Arbitration Act 1996 and whether s.70(3) applies to a partial award.
Readers should note that a challenge to an award on the ground of serious irregularity affecting the tribunal ought to be issued almost immediately or ‘promptly’ when it believed it had grounds for objecting. Otherwise there are tangible risks. In the present case, the court found that, on the precise facts, the claimant was precluded by s.73 from raising its objection to the partial award. Time-scales can be relatively short.
In this case, the claimant issued its claim form on 27 January 2022. The court found that by 13 January 2022 Radisson knew there were grounds for objection and that it could have sent a letter raising the objection immediately but for strategic reasons it chose not to do so. This meant that Radisson failed to show that it did not have knowledge for the purposes of s.73 of the grounds for objection at the time it continued to take part in the proceedings.
3. Conditions precedent continue to be debated in construction law. Panther Real Estate Development LLC v Modern Executive Systems Contracting LLC (2022) DIFC CA 016 is an important case from the Court of Appeal of the Dubai International Financial Centre Courts. The DIFC Court of Appeal looked at a delay claim and termination dispute arising out of a construction project on a FIDIC 1999 ‘Red Book’ contract.
Readers should note that a challenge to an award on the ground of serious irregularity affecting the tribunal ought to be issued almost immediately or ‘promptly’ when it believed it had grounds for objecting.
The court considered a number of grounds of appeal and cross appeal of wider interest to users of FIDIC contracts (irrespective of the bespoke amendments that had been made by the parties), including:
- When time starts for the purposes of giving notice under FIDIC clause 20.1 (i.e. ‘28-day notice requirement’ ). This involved consideration of Obrascon Huarte Lain SA v Attorney General for Gibraltar (2014) EWHC 1028 (TCC)
- Whether the ‘42-day detailed claim requirement’ under Clause 20.1 is a condition precedent
- The prevention principle and whether Gaymark Investments Pty Ltd v Walter Construction Group Ltd (1999) NTSC 143 was good law under DIFC Law
- The interface between (1) the parties’ duties of good faith under DIFC law and (2) the operation of contractual conditions precedent barring an otherwise valid claim.
The court held that a notice of the claim must be given as soon as practicable and not later than 28 days after the contractor became aware, or should have become aware, of the event or circumstances relied on as giving rise to the actual or likely delay. The focus is not so much on the delay but on the event or circumstance giving rise to the delay; and the 28 days for giving notice of the claim runs from the time the contractor becomes aware, or ought reasonably to have become aware, of that event or circumstance and its potential to delay completion. Obrascon Huarte Lain SA v Attorney General for Gibraltar was not followed.
Further, that the ‘42-day detailed claim requirement’ under clause 20.1 is not a condition precedent. The penalty for failing to do some or all of this is spelled out in the last paragraph of subclause 20.1: ‘any extension of time and/or additional payment shall take account of the extent (if any) to which the failure has prevented or prejudiced proper investigation of the claim, unless the claim is excluded under the second paragraph of this subclause’.
The court clarified that Gaymark Investments Pty Ltd v Walter Construction Group Ltd (1999) NTSC 143 does not represent the law as applied in the DIFC. Parties are free to contract out of the prevention principle, but for obvious reasons clear words are needed for this to be effective. Finally, the court made clear that the obligation of good faith in article 57 implied obligations and article 58 co-operation between the parties of the DIFC law cannot be implied in circumstances where the terms of the contract are clear (in this particular case subclauses 20.1 and 3.5 are clear).
Parties are free to contract out of the prevention principle, but for obvious reasons clear words are needed for this to be effective4. The practical application of The Society of Construction Law protocol on delay and disruption was examined in Thomas Barnes & Sons Plc v Blackburn with Darwen Borough Council (2022) EWHC 2598. In this case there was criticism by delay experts of the selection of a delay analysis method and deviation from the chosen method but the court noted that the protocol itself states that:
- Its object is to provide useful guidance
- It is not intended to be a contract document nor to be a statement of the law
- Its aim is to be consistent with good practice rather than a benchmark of best practice
- Its recommendations should be applied with common sense
- Irrespective of which method of delay analysis is deployed, there is an overriding
- Objective of ensuring that the conclusions derived from that analysis are sound from a common sense perspective.
The court said it would be wrong to proceed on the basis that, because the SCL protocol identifies six commonly used methods of delay analysis, an expert can only choose one such method and any deviation from that approach renders their opinion fundamentally unreliable. The common objective of each method is to enable the assessment of the impact of any delay to practical completion caused by particular items on the critical path.
The court did, however, accept that, if an expert selects a method which is manifestly inappropriate for the particular case, or deviates materially from the method which they have said they are following, without providing any, or any proper, explanation, that can be a material consideration in deciding how much weight to place on the expert’s opinions.
The common objective of each method is to enable the assessment of the impact of any delay to practical completion caused by particular items on the critical path.The court also referred to the approach to delay claims set out in Walter Lilly & Company Ltd v Mackay that:
- The court is not compelled to choose only between the rival approaches and analyses of the experts; ultimately it is for the court to decide, as a matter of fact, what delayed the works and for how long
- If one is seeking to ascertain what is delaying a contractor at any one time, one should generally have regard to the item of work with the longest sequence
- It is not necessarily the last item of work which causes delay
- In relation to a contemporaneous concern in Lilly v Mackay (that the lift shaft was out of alignment), such a complaint is irrelevant to a delay analysis if it was never agreed upon, established or implemented and, in logic also, the fact that one side (wrongly) perceives that a particular problem is more serious than it turns out to be is in itself unlikely to be relevant in ascertaining whether that problem caused delay.
5. Sudlows Ltd v Global Switch Estates 1 Ltd (2022) EWHC 3319 (TCC) is an important decision looking at the binding nature of adjudicator decisions in the context of further follow-on adjudications. Sudlows sought summary enforcement of an adjudicator’s decision that Global should pay a total of £1 million plus VAT. This was the sixth adjudication between these parties. Global argued that the adjudicator had acted in breach of natural justice by taking ‘too narrow a view of’ his jurisdiction by holding that he was bound by certain findings made by a different adjudicator in adjudication 5.
In adjudication 5, the adjudicator extended the completion date for the s.2 works to 4 January 2021 and said that Global Switch was not entitled to withhold or deduct LADs. The relevant events leading to this EOT were defective ducting, Global being responsible for any delays by taking the new cable out of Sudlows’ scope of work and Sudlows being entitled to refuse to terminate, and energise the new cables.
Construction law is complex, compelling, and continuously changing. I note that the ‘collateral warranty’ case Abbey Healthcare (Mill Hill) Ltd v Simply Construct (UK) LLP is heading to the Supreme Court.Following adjudication 5, Global Switch omitted the energisation from Sudlows’ scope of work and certified practical completion as being achieved on 7 June 2021. Sudlows then sought a final EOT (and related costs) from 19 January 2021 to 7 June 2021. The adjudicator asked the parties to confirm if they should consider alternative decisions in connection with the extent to which they were bound by decision 5. Only Sudlows accepted the suggestion.
The main issue for the judge was whether the adjudicator was bound by the decision in adjudication 5 in the sense that he was bound to grant the further 133 days EOT (and with it, the prolongation and other costs) which would flow if the relevant events found in adjudication 5 continued to apply. If the adjudicator was so bound, they obviously could not take account of the new evidence or, indeed, assess the matter differently.
The jurisdictional question involved an analysis of what both disputes were about, and whether they were the same or substantially so. Here, the decision in adjudication 5 was for an EOT for a prior period. Further, the new material was significant. It was more than argument – it was new evidence. Therefore, adjudication 6 could not be enforced. This left the alternative decision which was severable such that the court held both that the adjudicator had jurisdiction to formulate the decision on an alternative basis and that part was severable and enforceable.
Construction law is complex, compelling, and continuously changing. I note that the ‘collateral warranty’ case Abbey Healthcare (Mill Hill) Ltd v Simply Construct (UK) LLP is heading to the Supreme Court.
I would encourage readers to join The Society of Construction Law not least because 2023 marks The society’s 40th birthday and so now is a super time to join.
Hamish Lal, Partner, Akin Gump Strauss Hauer & Feld, Adjunct Professor, UCD Sutherland School of Law, and Chair, Society of Construction Law