2016 – Page 3 – Construction Law

FIDIC Update: The Employer’s Claim to Liquidated Damages and Performance Security under the Yellow Book

Jun 01 2016

The English courts have recently considered a number of cases involving the FIDIC suite of contracts (see here, here, and here for our previous blog posts). The most recent case of J Murphy & Sons Ltd v Beckton Energy Ltd [2016] EWHC 607 (TCC)arises out of a contract based on FIDIC Conditions of Contract for Plant and Design Build for Electrical and Mechanical Plant and for Building and Engineering Works designed by the Contractor First Edition 1999 (FIDIC Yellow Book) with amendments.

The court was required to consider the relationship between two clauses in the Contract, namely Sub-Clause 2.5 (Employer’s Claims) and Sub-Clause 8.7 (Delay Damages and Bonus) with reference also to Sub-Clause 3.5 (Determinations) and 4.2 (Performance Security). The issue in dispute was whether determination by the Engineer of the contractor’s liability for liquidated damages was a pre-requisite to recovery of liquidated damages by the Employer. The court held that the clause entitling the Employer to liquidated damages operated outside of the regime in Sub-Clause 2.5 and therefore the Engineer’s determination was not a pre-requisite to the Employer’s entitlement. This case also confirms the traditionally held view that obtaining injunctive relief preventing a beneficiary from calling on a performance bond will rarely be possible.

Design life warranties and fitness for purpose in Construction Contracts: the position in Australia and England

May 23 2016

By Sandra Steele, Belinda Montgomery, and Julia Kingston

Although Australian construction contracts quite commonly provide for design life warranties in respect of plant, equipment, building or structures, the concept of a ‘design life warranty’ has not been the subject of extensive commentary by the Australian legal profession or interpretation by the courts in Australia.

Sydney Partner Sandra Steele Named Lawyers Weekly Construction and Infrastructure Partner of the Year

May 17 2016

Sydney Partner Sandra Steele was recently named as Construction and Infrastructure Partner of the Year at the inaugural 2016 Lawyers Weekly Partner of the Year Awards. Sandra has more than 20 years’ experience advising on contentious and non-contentious construction law matters. She has extensive experience in contract drafting and negotiation as well as litigation and alternative dispute resolution in the project management, construction, engineering and infrastructure project sectors. Sandra’s civic activities include serving as the National President for the National Association of Women in Construction, a member of the Australian Legislation Reform Committee for the Society of Construction Law, the Law Society of New South Wales, and the Resolution Institute and is on the editorial panel of the Australian Construction Bulletin.

Please join us in congratulating Sandra on this well-deserved accolade!

The Lawyers Weekly Partner of the Year Awards recognize outstanding performance by partners in law firms across 21 practice area-based categories. The finalists represent the leading partners in their field and were selected by Lawyers Weekly from an overwhelming number of nominations. Twenty-two high-profile judges took on the task of choosing the winners.

Preparing for a New Era in the Design and Construction Industry

Apr 26 2016

By Justin L. Weisberg, K&L Gates, Chicago

The construction industry is currently on the precipice of substantial changes impacting all participants involved in the design and construction of modern projects. Economic volatility has resulted in significant pressure on all participants to increase efficiency and deliver projects at reduced costs. New technology, including BIM, is impacting the very responsibilities and interactions of project participants. Over the past decade, environmental and sustainable design considerations have gone from nonexistent to a driving factor in the design and construction of numerous projects.

While Design Bid Build (“DBB”) was historically the leading method of project delivery, progressive methods have made substantial gains over the last decade. Progressive project delivery methods include Design Build (“DB”), Construction Manager at Risk (“CMAR”), and Integrated Project Delivery (“IPD”). These progressive methods take advantage of construction expertise during the design phase of the construction project.

How Are Your Construction Activities Regulated under OSHA’s Final Silica Rule?

Mar 28 2016

By Barry M. Hartman, K&L Gates, Washington, D.C. and Stephen J. Matzura, K&L Gates, Harrisburg

On March 24, 2016, OSHA issued the prepublication version of the final rule regarding occupational exposure to respirable crystalline silica, including one standard for the general industry and maritime, and another standard for construction work (“Final Rule”). The rule applicable to construction work will be codified at 29 C.F.R. § 1926.1153. It becomes effective June 23, with compliance obligations beginning at least a year later (June 23, 2017). The more stringent permissible exposure limit (“PEL”) of 50 μg/m³ and the “action level” of 25 μg/m³are the same as in the proposed rule that OSHA issued in 2013.

The Final Rule essentially creates three categories of construction activities that are regulated differently depending on levels of exposure to respirable silica: (1) activities excluded from regulation; (2) activities listed in Table 1 that are afforded a “safe harbor” from the requirement to conduct an exposure assessment; and (3) activities that require an exposure assessment. Any employers that perform “construction work” – which may also include employers outside of the construction industry – must consider where their activities fall within the construction standard for silica.

Allocating and Managing Risk in Major Rail Projects: International Railway Summit 2016

Mar 14 2016

Nicola Ellis, Special Counsel in the London office, recently presented at the International Railway Summit 2016 in Vienna. The International Railway Summit provides a meeting ground for senior decision makers from the world’s key rail operators, transport ministries and solution providers.

K&L Gates served as the Legal Sponsor for the annual event.

Nicola’s presentation covered the common risks which should be carefully considered at the outset of procuring a major rail projects. To view a copy of Nicola’s presentation titled “Allocating and Managing Risk in Major Rail Projects,” please click here.

Implementing Building Information Modelling (BIM) in Germany

Mar 07 2016

By Christoph Mank, K&L Gates, Berlin

In recent years, numerous issues have accumulated in connection with the realisation of large building projects planned and financed by the public sector, such as the new international airport in Berlin, the Elb-Philharmonie in Hamburg and the Stuttgart 21 train station project. In particular, issues included delays, huge cost increases and communicating the projects and the attendant problems affecting the public. The ensuing discussions in the German public triggered the formation of a reform commission by the Federal Ministry of Transport and Digital Infrastructure (Bundesministerium für Verkehr und digitale Infrastruktur), called “Bau von Großprojekten” or “Large-Scale Construction Projects”. One recommendation in the reform commission’s final report is that Building Information Modelling (BIM) should be implemented in Germany.

Pennsylvania Superior Court Holds that Economic Loss Doctrine Does Not Shield Design Professionals from Liability for Faulty Information Implicitly Represented in Design Documents

Feb 29 2016

By Michael P. Cotton, K&L Gates, Pittsburgh

In its July 8, 2015 opinion, the Superior Court of Pennsylvania held that design professionals are potentially subject to liability for negligent misrepresentation claims when it is alleged that their design documents negligently included false information via implicit representations. Gongloff Contracting, L.L.C. v. L. Robert Kimball & Associates, Architects & Engineers, Inc., 119 A.3d 1070 (Pa. Super. 2015). In so doing, the Superior Court clarified the scope of Section 552 of the Restatement (Second) of Torts and found that the Section does not require a design professional to make an explicit negligent misrepresentation of a specific fact for a third party to recover economic damages.

Suspension and Termination Under the Civil Law, Part 2

Feb 22 2016

By Alex Brightman, K&L Gates, Doha and Donal Scott, K&L Gates, Dubai

In a previous blog post, we looked at suspension and termination of a construction contract under a Civil Code system. We focused, in particular, on the FIDIC form of contract and looked at how that would be treated under the Qatar Civil Code.

In this article, we will continue that review, but look at how suspension and termination would operate under the UAE Civil Code.

FIDIC Update: Termination and the Employer’s Obligations under the Red Book

Feb 10 2016

By Mike R. Stewart, Mary E. Lindsay, and Nita Mistry, K&L Gates, London

A Privy Council case last year provided some important guidance on the provisions in the FIDIC Red Book in relation to Employer’s financial arrangements and claims. Whatever your perspective might be, when negotiating or managing a contract based on the FIDIC Books, employers and contractors should be aware of the Privy Council’s findings in NH International (Caribbean) Ltd v National Insurance Property Development Company Ltd (Trinidad and Tobago) [2015] UKPC 37.

The Contract
National Insurance Property Development Company Ltd (Trinidad and Tobago), the Employer, employed NH International (Caribbean) Ltd, the Contractor, to construct a hospital in Tobago under a contract in the form of the FIDIC Red Book.

On 2 November 2006, the Contractor terminated the contract pursuant to Clause 16.2. The Employer did not agree the termination was valid but the parties proceeded as if the contract had been terminated. A number of issues arose during the Engineer’s assessment of the work to the date of termination and these matters, including the validity of the termination, were referred to arbitration.

The arbitrator’s decisions in relation to Clauses 2.4 and 2.5 and Clause 16.1 were later appealed first to the High Court and the Court of Appeal in Tobago and then to the Privy Council.

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