Construction Law – May 2021

Editor’s comment
Derailment inquiry exposes risk management shortfalls
Investigations continue into last year’s Carmont railway derailment but Editor Nick Barrett says there are already clear signs from an interim report that a head in the sand approach to risk management and maintenance regimes were at least part of the problem.

Our regular news roundup this month includes a warning that efforts to decarbonise construction are being held back by outdated procurement practices. Meanwhile difficulty obtaining PI insurance post-Grenfell is threatening firms’ ability to take on work, and a simplified new pre-qualification system promises to save the sector £1Bn a year.

Legal terms explained
Alice Pickthall and Michael Sharp of Herbert Smith Freehills LLP explain what is meant by Bonds and Guarantees.

Guest editor
The future of international construction arbitration
Guest Editor Ben Mellors of HFW asks if it is time to explore whether users of international construction arbitration might benefit from specific rules or guidance to supplement the more general arbitration landscape? A brand new set of international construction arbitration rules would be one solution, but a new set of protocols might suffice, he suggests.

Legislation state of play table
Dentons UK and Middle East provide our regular update on the progress of regulations and legislation affecting construction. Tracey Summerell provides a commentary on mounting pressures to cut carbon emissions.

Reports from the courts
Andrew Croft and Ben Spannuth of Beale & Company Solicitors LLP review the latest court cases of most interest to construction, including one highlighting that where appropriate, the courts will enforce adjudication decisions notwithstanding an exclusive jurisdiction clause; and a Scottish court decision which while not binding in England provides a reminder that the courts will give effect to the widely-used NEC3 dispute resolution provisions.

Insurance claims disputes likely to rise
Bruce Hepburn, Chief Executive Officer of insurance specialists Mactavish, explains recent turmoil in the increasingly complex insurance market. Getting proper advice when insurers themselves are sometimes not quite sure what their policies cover is essential, he warns.

CL guides
NEC4 (Part 2)
This second part of her article on the NEC4 Engineering and Construction Contract (“ECC”), by Joanne Bennett of DLA Piper, focusses on key aspects of core clauses 6 to 9, together with the dispute resolution options, secondary option clauses and Contract Data.

The adverse effect of normalisation of deviance in construction organisations
Dr Sara Hajikazemi, senior lecturer in project management at London South Bank Business School discusses how early warning systems can contribute to preventing normalisation of deviance in construction organisations, which can gradually bring them to a point where failure is inevitable.

Arbitration, but not as we know it!
Vijay Bange of Duane Morris looks at a recent court ruling on arbitration that shows that in order to make a binding agreement to submit to arbitration under the Arbitration Act, there must be a process that ends up with a binding decision. If not, the Arbitration Act will not apply.

Risk management
Building Back Better – A Digital Response
Smart Risk Registers can support high quality project delivery in line with the government’s Build Back Better plan, argue project team consultant Kelachi Amadi-Echendu, management consultant Graham Robinson, supply chain barrister Professor Rudi Klein, construction risk management consultant Stephen Woodward and South African-based organisational behaviour specialist Anton Krause.

Construction disputes – can technology make record keeping better?
Amy Roberts and Jane Fender-Allison of CMS Cameron McKenna Nabarro Olswang LLP explain how adopting the latest technology can help avoid and resolve disputes. Recent court cases illustrate the point.

Insurers feel the heat
Insurance expert John D Wright of JD Risk Associates explains the measures insurance companies are taking in policies to control their exposure to fire damage claims arising on ‘hot work’ projects. The use of conditions precedent to liability is growing since the Insurance Act 2015.

Alternative dispute resolution
Is the industry using adjudication as Parliament intended?
In our latest alternative dispute resolution series article Sarah Alexander of Dentons UK and Middle East questions whether adjudication is being used as Parliament intended.