We've had Russia 2018 but what about Rome 2018?

The 2018 IBA Annual Conference will be held in Rome where the International Construction Projects Committee will hold five sessions dedicated to different issues surrounding construction law. Our director Bill Barton will be speaking at the second session entitled “Project Completion Handover Issues: When Final Closeout is Not Final”, which takes place on Wednesday 10 October at 9.30 at the Roma Convention Center. We’d love to see you in the crowd!

For more information click here

 

Below is a short summary of each of the five sessions:

             1. Consortium/Joint Venture Issues: When Friends Are No Longer Friends

This session explores consortium and joint venture issues from both legal and practical perspective focusing on issues arising; due to different jurisdictions, joint and several liability, disputes between members and after the award of a contract.

2. Project Completion/Handover Issues: When Final Closeout is Not Final

This session explores issues often encountered as a project nears completion. It pays particular attention to common terminology used in contracts, issues with warranties and defects arising after completion and handover, and a discussion surrounding the differences between jurisdictions.

3. Performance Security Alternatives and Effectiveness: Show Me The Money

This session examines the different types of security that are often required for construction projects. It will touch upon the differences between domestic and international project securities, the differences in recovery from a court, arbitrator or adjudicator, and the issues that arise from the improper call on security.

4. Use and Misuse of Experts

This session examines the effectiveness of expert evidence in construction disputes alongside the advantages and disadvantages of the appointment of experts in different jurisdictions paying attention to the cultural differences between lawyers from different jurisdictions.

5. Termination Issues:  Action for Damages vs. Action for Wrongful Termination

This session examines the termination of construction contracts focusing on the justification of termination for default and the consequences that can stem from such a termination.  It will identify how the term ‘material breach’ is defined in different jurisdictions and look at the race to commence action from both a legal and a practical perspective.

 

So, the goals of the updates to the FIDIC Form of Contract?

After the publication of the new JCT suite of contracts and NEC4 in 2016, in December 2017, FIDIC published new editions of their Red Book, Yellow Book and Silver Book Contracts. The Green Book was not updated and the current edition of this remains the 1999 one. FIDIC's aims were clarity, transparency and certainty to achieve successful end projects without disputes between the parties. Best practice procedures were addressed such as health, safety and quality, environmental issues and fraud and corruption. Winning matches without penalties!

Click here for brief summary

But what do these changes mean?

2017 Red Book – Conditions of Contract for Construction, Second Edition

The new Red Book continues to be suitable for projects where the design responsibility sits with the employer or the employer’s engineer and contracts where work is measured according to a bill of quantities or a lump sum basis. The 2017 publication is however, around 50% longer than the 1999 edition! While this may seem daunting, it is important to note that the 2017 edition has been restructured to ensure that the contracts are more user friendly and the insertion of additional defined terms has created greater clarity throughout.

The 2017 edition provides an enhanced role for the engineer alongside enhanced provisions for contract management. These enhancements not only clarify what is expected of each party but also when. Unlike the 1999 edition, the 2017 publication covers the consequences of non-compliance and places greater attention on claim and dispute provisions by spreading them across two clauses (clause 20 and 21).

 

2017 Yellow Book – Conditions of Contract for Plant & Design Build, Second Edition

As with the Red Book, the overall purpose of the Yellow Book has not changed – it is still to be used for projects where the main design responsibility sits with the contractor and payment is made in a lump sum. Additional terms have been added to provide greater clarity and the same enhanced role for the engineer and enhanced provisions for contract management have also been included.

There are changes to the termination provisions, for example the employer can terminate if the ceiling for delay damages is reached. And to avoid claims being time-barred, the contracts are equipped with many new time limits.

The 2017 edition of the Yellow Book also places greater attention on claim and dispute provisions by spreading them across two clauses (clause 20 and 21).

 

2017 Silver Book – Conditions of Contract for EPC/Turnkey Projects, Second Edition

The 2017 edition of the Silver Book is still intended for EPC contracting arrangements where the contractor assumes the time and cost risks, which are greater than those assumed under the Red and Yellow Books. 

In line with the changes implemented across the entire 2017 rainbow suite editions, the Silver Book’s amendments aim to increase the clarity and certainty of the contract, reflect current international best practice and encourage parties to avoid disputes.

 

Recent case law: English litigation – summary of each case

MT Hojgaard A/S v E.On Climate [2017] UKSC 59

In May 2006, MT Hojgaard tendered for the design and installation of foundation structures for two offshore wind farms and were successful. The tender documents included E.ON’s “Technical Requirements” which incorporated reference to a schedule to the construction contract requiring the works to be “fit for purpose”. The project failed shortly after completion and a dispute arose as to who should bear the remedial costs in the sum of €26.25m. This dispute went to the Supreme Court which upheld The High Court’s decision and concluded that the ‘fitness for purpose’ obligation required that the foundations should have a design life of 20 years. The courts are generally inclined to give full effect to a requirement that a product complies with the contractual criteria.

Scottish & Southern Electricity (SSE) v Hochtief Solutions AG (2018) Inner House of Court of Session

SSE, the employer, instructed Hochtief to design and build a hydro-electric scheme tunnel which shortly after completion collapsed. The NEC2 (ECC) contract was used and at Clauses 80 and 81, the Employer’s Risks are identified. The defects certificate hadn’t been issued when the tunnel collapsed and in addressing the liability of the remedial works which were in excess of £100m, one of the key issues related to whether a defect, as defined in the contract, existed at takeover. At the court of first instance, it was decided that the tunnel’s collapse was the SSE’s risk. However on SSE’s appeal, the design life of the tunnel as provided for in the Works Information amounted to 75 years being classed as “Civil Works” and SSE was awarded £109m in damages.