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The International Construction Law Review Part 4 [2021] is now published

19th Oct 2021

The International Construction Law Review is the leading authority on international construction law and provides critical information in areas ranging from procurement, project partnering, subcontracting, environmental issues, delay and disruption in construction contracts, trends in dispute resolution and alternatives to the FIDIC conditions.

Edited by Chantal-Aimée Doerries QC and Professor Doug Jones AO of Atkin Chambers, along with a distinguished editorial advisory board, it provides comprehensive reports and articles which offer in-depth and incisive analysis of the key developments in construction law across the globe. ICLR’s genuinely global perspective is also supported by a team of dedicated international correspondents based in over 20 countries.

The International Construction Law Review is published by Informa.

Contents

Articles

“Recent French Construction Law Lessons – Good Faith and Implied Acceptance”, Pierre Harb, James Pickavance and Ryan Frye

“Regulatory Reforms for Residential Apartment Buildings Down Under – Getting it Right from Start to Finish”, Andrew Chew and Blake Osmond

“Covid-19 and Treaty Arbitration for Foreign Contractors in the International Construction Sector”, Seunghun Lee

“Is it Time for English Law to Consider Disruption Analysis for Site-overhead Claims? The Contrast of Costain v Haswell and Walter Lilly v Mackay, JB Kim and Mino Han

“The Cost of Cure and a Plaintiff’s Proprietary Interest”, Michael Elliott

Correspondent’s Report

UK – Part 2 : Country Review Nicholas Downing, Iain Suttie, Emily Blanshard, Susannah Davis and Noe Minamikata

Book Review

Contracts for Construction and Engineering Projects Second Edition – Reviewed by Charles O’Neil

Introduction

As we approach the final months of 2021, the world continues to face the challenge of, and challenges created by, Covid-19. The construction industry has, like many other industries, inevitably been impacted by the pandemic. However, in most countries infrastructure projects have continued, albeit often with periods of interruption or standstill, and disputes arising out of such projects, not only in connection with the virus, have also continued to arise. Consistent with this, we continue to include assessments on the ramifications of the pandemic, but also cover many other interesting topics, reflecting the wide range of issues thrown up by construction disputes.

Part 4 of 2021 kicks off with a stimulating analysis of the obligation of good faith and a recent French Court of Cassation decision finding that good faith cannot exclude the application of a liquidated damages clause, even when the employer is responsible for the delay. In “Recent French Construction Law Lessons – Good Faith and Implied Acceptance” Pierre Harb, James Pickavance and Ryan Frye review the significance of good faith and implied acceptance in France, before moving on to addressing recent French cases. The impact of réception tacite, or implied acceptance, is explored by the authors, in particular, by reference to four recent Court of Cassation decisions which provide guidance to the industry as to when implied acceptance will be found and how parties can protect against such a finding. An interesting comparison is drawn by considering the contrasting French approach with the position under English law.

High rise apartment building failures, particularly involving flammable cladding fires, have, tragically, occurred in a number of jurisdictions in recent years. While the focus of the next article is on developments in New South Wales, Australia, the issues raised by the authors will be of wider interest to practitioners, as the questions discussed are currently being debated across jurisdictions. In our second contribution, “Regulatory Reforms for Residential Apartment Buildings Down Under – Getting it Right from Start to Finish”, Andrew Chew and Blake Osmond review a suite of new legislation in New South Wales which has been introduced with the aim of addressing some of the significant challenges arising in the delivery of residential apartment buildings. Chew and Osmond address the focus of the legislative package, namely, to give the regulator better oversight and enhanced powers, to impose harsher sanctions on corporations and personal liability for senior management, and to encourage financial institutions to implement more prudent risk governance measures. The article considers the environment in New South Wales within which defective projects arose (and which on one analysis allowed them to occur), and the findings and recommendations of the various inquiries and parliamentary commissions into those projects, before considering the new legislative framework, as well as, digital platforms and ratings systems which provide enhanced transparency to allow better quality assurance, and the roles that other players such as financiers have in increasing accountability and implementing appropriate governance structures, and other protections such as decennial liability insurance to better safeguard building owners.

For our third contribution, we return to the still highly topical subject of the challenges posed to the industry and to dispute practitioners by Covid-19. Governments across the world have taken steps to prevent the spread of virus. Some of these steps would, until recently, have been considered extreme, such as border closures, lockdowns, suspension of construction activities, and travel restrictions. These preventative measures have caused significant economic damages to those involved in the construction industry, including, amongst others, foreign contractors. Seunghun Lee’s comprehensive article considers the impact of host states’ emergency actions, or perhaps more commonly, failures to take proper measures, in response to the pandemic and the potential negative impact on international construction contracts as investments. In “Covid-19 and Treaty Arbitration for Foreign Contractors in the International Construction Sector” Lee examines whether construction contracts are covered investments under international investment agreements, the legal basis of treaty arbitration claims for foreign contractors and the possible defences host states may advance when faced with investor claims.

Next, we turn to the approach to and proper calculation of claimed prolongation costs or additional site-overheads. In the peer reviewed article, “Is it Time for English Law to Consider Disruption Analysis for Site-overhead Claims? The Contrast of Costain v Haswell and Walter Lilly v Mackay, JB Kim and Mino Han offer a detailed critique of the quantification of prolongation costs by calculating daily time-related site-overheads multiplied by the compensable delay days pursuant to the delay analysis. The authors identify a number of flaws and limitations with the approach and offer an alternative method of calculation and proof, focusing on additional resources at project activity level. The article analyses the consequences of this approach against three possible scenarios, full suspension, partial suspension, and the concurrent delay scenario. The approach to assessment is analysed against a backdrop of a review of various approaches to the issue of additional site-overheads, including by reference to two landmark English court judgments of Costain and Water Lilly and various approaches used in the US. In “The Cost of Cure and a Plaintiff’s Proprietary Interest”, Michael Elliott grapples with the challenge faced by courts in reconciling established compensatory principles for breach of contract with the proposition that an employer should receive the cost of remedial works in circumstances where the awarded monies will not in fact be used for the purpose of remedying the defective building work. This issue arises most starkly in cases where the claiming party has disposed of its interest in the defective property. Elliott, in this thought-provoking contribution, examines how Australian courts have approached this issue and identifies points that are likely to require consideration upon any development of the law. Of particular interest is the discussion of the divergent path which the law of damages for breach of a building contract has taken, partly in recognition of the absence of a market into which claiming party can turn to, to sell and then procure the building it was promised. The author concludes that to ensure that damages achieve their compensatory purpose, a limited degree of subjective enquiry, as to the claiming party’s proprietary interest, should be permitted.

Our penultimate contribution is Part 2 of the UK Correspondent’s Report. Recent years have seen a wealth of cases proceeding through the English courts of relevance to construction practitioners, including two Supreme Court cases of particular interest. Nicholas Downing, Iain Suttie, Emily Blanshard, Susannah Davis, and Noe Minamikata begin Part 2 of this UK Report with a discussion of the Supreme Court’s judgment in Bresco Electrical Services Ltd (In Liquidation) v Michael J Lonsdale (Electrical) Ltd. The court addressed the not always easy interrelationship between statutory adjudication and the UK insolvency regime. The authors conclude with the long awaited and more hotly debated appeal in Triple Point Technology, Inc v PTT Public Company Ltd. The Supreme Court judgment restored the conventional approach to liquidated damages which accrue prior to termination, reversing the surprising Court of Appeal decision, which the Supreme Court justices described as a “radical re-interpretation of the case law on liquidated damages”. Also, of interest to ICLR readers will be the authors’ discussion of the Court of Appeal decision in Secretariat Consulting PTE Ltd, Secretariat International UK Ltd and Secretariat Advisors LLC v A Company. The Court of Appeal upheld an injunction against an expert witness consultancy firm, on the basis that it had breached its contractual duty to avoid any conflict of interest, and concluded that it was therefore precluded from providing expert services to a third party against an existing client in separate, but related and concurrent, arbitration proceedings.

We finish with book review by Charles O’Neil of the second edition of Dr Donald Charrett’s Contracts for Construction and Engineering Projects.

CHANTAL-AIMÉE DOERRIES QC

PROFESSOR DOUGLAS JONES AO





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