Articles and Publications – Page 4

German Caselaw: When will warranty claims for rooftop solar power stations be time-barred?

Sep 19 2016

By Christoph Mank, K&L Gates, Berlin

The question of when warranty claims are time-barred according to the German Civil Code, may differ from contract to contract. Often, warranty claims are time-barred two or three years after transfer of risk; however, for construction works, longer periods of four or five years may be applicable, starting with the completion and acceptance of the works.

The civil division of the German Federal Supreme Court (“BGH“), which is ─ inter alia ─ in charge of construction law, had to decide a case recently in which rooftop solar panels were installed subsequently on the roof of an indoor tennis center. Three years ago, another civil division of the BGH ─ which is in charge of the law related to sale and purchase agreements ─ had to decide a very similar case in which rooftop panels were installed on a barn. In the case of 2013, the BGH ruled that warranty claims for the solar panels, which were only delivered and not installed by the vendor, are time-barred two years after delivery. According to that decision, the rooftop solar power station is not a building or a “structure,” which it needs to be considered to qualify for the five-year warranty period. Only the barn is a building, and the solar power system is not relevant for the construction and the continued existence of the building; the solar power system is only used for generating electricity.

Considerations for Construction Industry Employers as They Continue to Prepare for New Salary Thresholds Under White-Collar Overtime Exemptions

Sep 16 2016

By Amy L. Groff, K&L Gates, Harrisburg and Matthew D. Duncan, K&L Gates, Raleigh

Employers in the U.S. construction industry should act now to address recent changes to the overtime exemptions for “white-collar” employees. On May 18, 2016, the U.S. Department of Labor (DOL) published its highly anticipated final rule, which more than doubles the salary threshold required for certain executive, administrative, and professional employees to qualify for an exemption from overtime pay under the Fair Labor Standards Act (FLSA). The new rule will take effect on December 1, 2016. In this relatively short time frame, employers must review their current practices, determine which positions should be reclassified and how they should be classified and paid, consider related policies that should be revised, and plan how to communicate changes to employees.

Proposed Security of Payment Legislation in Hong Kong

Sep 13 2016

By Sacha M. Cheong and Dominic C. Lau, K&L Gates, Hong Kong

A prominent feature of the construction industry is its pyramid structure with long chains of contracts and sub-contracts from developers down to small sub-contractors and suppliers.

The inclusion of conditional payment terms (favorable to the paying party), frequent disputes at all stages of the projects, and cumbersome dispute resolution processes can often result in substantial delay in payments to the smaller sub-contractors and suppliers. On the one hand, these sub-contractors and suppliers are usually dependent on the parties higher up in the contracting hierarchy for new work, and they often lack the financial means and resources to engage in protracted disputes. On the other hand, delayed or nonpayment could adversely affect their cash flow, resulting in difficulties in ordering and securing goods and services, paying employee wages, and sometimes even the suspension of work.

To address these problems, the United Kingdom pioneered the statutory adjudication scheme for security of payment in 1996, which has since been followed (with slight variations) by several other countries, including Australia, New Zealand, Singapore, and Malaysia.

Building from the Sky Down: New FAA Rules Affect Use of Drones in Construction Industry

Aug 29 2016

By Gregory R. Andre, K&L Gates, Chicago and Thomas R. DeCesar, K&L Gates, Harrisburg

On August 29, 2016, the Federal Aviation Administration’s (FAA) long-awaited final rules regarding the commercial operation of small unmanned aircraft (a.k.a. drones) become effective.[1] The FAA’s new rules, which will primarily be codified under Part 107 of the Federal Aviation Regulations, are a major step for the eventual integration of unmanned aircraft into business operations nationwide. Part 107 represents the FAA’s first comprehensive regulation of unmanned aircraft operations.

Before Part 107, companies had to obtain preapproval through the lengthy Section 333 exemption process (named for Section 333 of the FAA Modernization and Reform Act of 2012) before conducting commercial unmanned aircraft operations. The Section 333 exemption process imposed significant restrictions on unmanned aircraft operations and required operators of unmanned aircraft to have a pilot’s certificate. The new rules, however, generally permit companies to use unmanned aircraft in commercial operations without obtaining preapproval from the FAA and with fewer restrictions than were required under Section 333 exemptions. In addition, the rules create a new class of pilot’s certificate specific to unmanned aircraft that is easier to obtain than a typical pilot’s certificate.

The construction industry will stand to benefit from Part 107, as unmanned aircraft can be employed in a variety of operations helpful to construction companies, including: topographical surveys, access to hard-to-reach locations, job progress tracking, videography/marketing, building and structure inspections, site security, safety, and general construction site troubleshooting. In fact, in an early survey of companies seeking FAA authority to use unmanned aircraft, nearly half of applicants identified the construction industry as a field where they would use their device.[2] This post summarizes the new FAA rules and highlights a few issues of particular importance in the construction industry.

Modern Slavery and Human Trafficking in the Construction Industry

Aug 01 2016

By Camilla A. de Moraes, K&L Gates, London

Background

With an estimated 35.8 million people enslaved today,[1] it is undeniable that modern slavery and human trafficking is a significant global problem. The construction industry in particular, with its high demand for migrant labour and complex procurement processes, has the potential for exploitation, and there have been high-profile cases such as in relation to the construction work for the 2022 football World Cup in Qatar. However, in recent years, steps have been taken, both domestically and internationally, to tackle such human rights abuses.

In the United Kingdom, the Modern Slavery Act 2015 (the “Act”) is now in force and an Independent Anti-Slavery Commissioner has been appointed as a result. There have also been amendments to the UK Companies Act 2013, which requires companies quoted on the London Stock Exchange to report on their human rights performance, and a new Immigration Act, which proposes changes to the way the current Gangmasters Licensing Authority operates. On the European stage, the EU Non-Financial Reporting Directive requiring disclosure of human rights policies is in force, with member states required to bring into force laws to comply with it by 6 December 2016, and globally, a target to end modern slavery and human trafficking has been included as Target 8.7 of the Sustainable Development Goals, which will help shape development policy worldwide.

BREXIT: Is Your Business Prepared? Construction & Engineering

Jun 30 2016

By Matthew E. Smith and Inga K. Hall, K&L Gates, London

It seems unlikely that the UK’s exit from the EU will result in significant legal or regulatory changes for clients investing or working on construction or infrastructure projects in the UK in the short term.

The uncertainty over where Brexit will take both our UK and international construction clients in the medium to longer term is however likely to be reflected in an uptake in disputes, particularly in adjudication, and some UK projects and/or foreign investment decisions put on hold (or remaining on hold) until the picture becomes clearer.

Click here to read the full article on K&L Gates HUB.

THE CURIOUS CREATURE THAT IS A MECHANIC’S LIEN IN BANKRUPTCY

Jun 27 2016

By Joseph B.C. Kluttz, K&L Gates, Charlotte

“God looks out for drunks, fools and construction lawyers.”

— with apologies to Otto von Bismarck

Many contractors and non-bankruptcy practitioners are generally aware that upon the filing of a bankruptcy petition a variety of collection impediments spring into existence, including indignities like the “automatic stay,” lien-trumping provisions and “preferences.”

Many involved in the construction industry may be unaware, however, that because of special provisions and exemptions applicable to mechanics’ liens in bankruptcy, a contractor (or subcontractor) may be able to improve its position dramatically on the eve of — or even after — the filing of a bankruptcy petition by a counterparty. That could become increasingly important as clouds of economic and political uncertainty continue to gather on the horizon.

Timely Response to U.S. Army Corps of Engineers Notice Critical for Stakeholders Interested in Securing Congressional Authorization for Future Water Resources Development Projects

Jun 22 2016

By Stephen A. Martinko, James A. Sartucci, Michael G. H. Pfeifer, K&L Gates, Washington, D.C.

Stakeholders with an interest in securing potential Congressional authorization for water resources development projects in future Water Resources Development Act (“WRDA”) legislation should pay close attention to a notice recently published by the U.S. Army Corps of Engineers (“USACE”) in the Federal Register seeking proposals for its report to Congress on future water resources development.

Entities interested in pursuing potential Congressional authorization for future water resources development activities should act now to submit proposals to the USACE. Congress uses the information provided by the USACE to determine authorization priorities in future WRDA legislation, and only those proposals that are submitted by the USACE to Congress are eligible for authorization.

The USACE will review proposed submissions from stakeholders, and the Secretary of the Army is required to submit to Congress an annual report of those activities that meet the criteria established by Congress.

To read the full Legal Insight, click here.

New Bill Planned for the Development and Funding of Offshore Wind Energy in Germany

Jun 06 2016

By Christoph Mank, K&L Gates, Berlin

An introduction of bidding processes for determining the amount of funding for the generation of electricity from onshore wind turbines, offshore wind turbines and large photovoltaic systems is planned with an amendment of the German Renewable Energy Act (Erneuerbare-Energien-Gesetz).

The German government sees the transition to bidding processes as being a central instrument for attaining the goals laid down by policy makers regarding the development of the share of renewable energies in the production of electricity. The political goal is to increase the share of renewables in the amount of electricity generated to between 40% and 45% by 2025, between 55% and 60% by 2035 and at least 80% by 2050. In real terms the increase in the contribution of renewable energy to the electricity production in Germany has gone from 25.3% in 2013 to 28% in 2014 and 32.6% in 2015. It is the political will of the current government not to fall below or exceed this established scope for expansion. For this purpose the aim is to fix the tendered quantities at a level that is as accurate as possible on the one hand; on the other hand, a high realisation rate needs to be achieved with regard to the projects awarded in the context of the bidding process.

A further goal of the general introduction of bidding processes for establishing the amount of funding is to limit the funding to a level that is economically essential. In order to ensure that this amount is determined correctly by means of the planned bidding processes, a high level of competition must be achieved for these.

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.

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