Some musings on dispute boards, causes of disputes and their resolution, and the troublesome issue of concurrent delay.
I regularly act as a dispute board member in international contracts which often requires me to spend time overseas. A recent trip saw flights from Florence to Amsterdam, Amsterdam to Johannesburg, and Johannesburg to Harare. I attended a project meeting with my fellow Dispute Board members.
The projects are always suited to the range of skill sets offered by the three-member board. In turn, the meetings are designed to allow open discussion and understanding of the range of issues from differing perspectives.
From my experience, I sit well placed to understand the Employer and Contractor views on contractual claims. These invariably lead to time and money discussions, and I am able to fulfil my role successfully.
Avoiding Disputes
The FIDIC 2017 contract offers guidance on the constituent parts of claim submissions. When considered with the DAAB guidelines, the parties involved in a project are always the best placed to resolve and discuss their issues.
Invariably the agreement and resolution of certain provocative issues do find themselves heading to the dispute board. This, despite the best efforts of everybody concerned.
It is often the case that this may be because of the degree of understanding of certain clauses in the contract. Moreover, how those clauses interact with the governing law of the contract can be a source of difficulty.
In many international contracts, the governing law of the contract is often that of England and Wales. This may be because England is the most articulated and established of all when it comes to certain topical issues.
Issues Discussed in Detail
For example, there can be few places where concurrency and delay have been discussed at such length in the courts. If we consider Simmons and Simmons’ article, back in 2018, it offered a summary of the permutations of concurrency.
Concurrent delay was defined as ‘where a construction project is delayed by two events at the same time. One is an event for which the employer takes responsibility under the contract. The other for which the contractor takes responsibility.’
What does that mean for each party? Well, simply put, the contractor claims for an extension of time and possibly damages for delay caused by an employer risk event. The employer claims liquidated damages for delay caused by a contractor risk event.
A default position for this definition has been found in John Marrin’s paper delivered to the Society of Construction Law in 2002,
“a period of project overrun which is caused by two or more effective causes of delay which are of approximately equal causative potency”.
The principles debated today still focus on the same cases that have been discussed at length since Marrin’s paper. I am a regular listener to references to Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd [1999] 70 Con. L.R. 32A which focused on the contractual aspect. In that case, no provision existed in the contract to cover concurrent delay.
Different Forms, Different Rules
The standard forms of construction contract used in the UK, such as JCT and NEC do not refer to concurrent delay. In contrast, the FIDIC 2017 rainbow suite of contracts does include a sub-clause on concurrent delay. FIDIC leaves it to the parties to set out rules and procedures to cover this situation in the Special Provisions.
The question is then ‘What do the parties place into the subclause and how does that fare when considered in respect to English law?’
This leaves the parties to set out an express provision in the contract to deal with concurrency. North Midland Building Ltd v Cyden Homes Ltd [2017] EWHC 2414 (TCC), the Technology and Construction Court (TCC) clarified that the parties to a contract are free to allocate the risk of concurrent delay.
If they don’t and they leave this open to interpretation, then what follows is a regurgitation of some of those well-articulated issues.
The hurdles of the Royal Brompton Hospital NHS Trust v Hammond (2001) 76 Con. L.R. 148, where debate was had as to the two events starting and finishing at the same time, was subsequently criticised as too narrow.
Simmons & Simmons On Concurrency
Simmons and Simmons’ view is that in,
“Walter Lilly & Co Ltd v Mackay [2012] EWHC 1773 (TCC), the Malmaison approach was taken and the judge was of the view that where two or more events caused delay and one of them was a relevant event, the contractor was entitled to a full extension of time on the terms of the extension of time clause, in this case under the JCT Standard Form of Building Contract, Private Without Quantities, 1998 edition.”
The principle of ‘time but no money’ appears sensible. It exists in situations where:
- The contractor is entitled to an extension of time (during a period of concurrent delay).
- But the contractor is not entitled to a payment for loss and expense in respect of an employer risk event.
In such circumstances, this accords with certain provisions set out in the Society of Construction Law Delay and Disruption Protocol.
This general principle (or maybe rule) was outlined in De Beers UK Ltd (formerly Diamond Trading Co Ltd) v Atos Origin IT Services UK Ltd [2010] EWHC 3276 (TCC).
The Joy of the Return
The joy of travelling from place to place is that it allows an opportunity to learn and reflect on these issues. Many other issues leading to disputes exist. They are well documented and need to be considered in terms of the contract. But on evenings in the Zimbabwean sunset, enjoying dinner in a restaurant named ‘The Bishop’s Mistress’ and reciting the words of Kipling with my colleagues,
“If England was what England seems
An’not the England of our dreams,
But only putty, brass,an’paint,
‘Ow quick we’d drop ‘er! But she ain’t!”
Returning to England to the late autumn of the black tie dinners of the Worshipful Company and the TCC anniversary, I carry the words of Kipling’s poem ‘The Return’ with me.
As always, if you would like to discuss any of the issues raised in this article, give the team a call or get in touch today.