Three strikes and you’re out

Scott McKinnell, a partner in the Construction, Engineering and Projects Group at law firm Pannone, looks at whether contractors or subcontractors might be entitled to extra time and money to complete their works as a result of strike action.

THE construction industry like other parts of British society has been hit by the recent public sector strikes, whether relating to increased time for equipment, materials and labour to arrive
on site due to diffi culties with transport or, in some cases, due to staff being unable to deal with their normal duties due to short notice childcare arrangements.

The present generation of construction professionals have not in many cases had to deal with this before and, faced with the prospect of further industrial action over coming weeks and months, are now having to consider what may be a signifi cant impact on the progress of works on site and
the implications that this may have for the extra time and cost that it takes to complete works.

The degree to which parties can rely on the impact of strikes will vary according to what the choice of contract form has been and the provisions may, unlike the picket lines, not be quite as clearly drawn as the parties may have expected. The position also varies according to which standard form contract is being used.

The two most commonly used forms of contract in the industry are currently JCT and NEC.

The JCT Standard Building Contract, Design and Build Contract and Standard Building Subcontract all list a strike as a relevant event entitling a contractor to an extension of time. The contractor has an obligation to notify the employer of the strike and this obligation arises when it becomes reasonably apparent that the works are likely to be delay.

The contractor must also use his best endeavours to prevent any delay or further delay as a result of the strike action. Whether these requirements have been satisfi ed will depend on the
individual circumstances and may be open to interpretation.

However, a strike is not a relevant matter for the purposes of a loss and expense claim. Therefore, while the contractor may be entitled to additional time, he is not entitled to additional money.

Under NEC 3 contracts the contractor is potentially entitled to both additional time and the potential for additional money as a result of delays to the works caused by strike action.

Under NEC 3, so long as the strike is not confined to the contractor’s employees, it will be an employer’s risk under the contract and therefore a compensation event entitling the contractor to additional time and money. The additional costs, however, only relate to loss or damage to the works, plant and materials - the employer’s property. The contractor carries the risk of loss or damage to his own property. This may not go as far as entitling the contractor to additional money, particularly if there is no loss or damage to the works, plant and materials.

The contractor may also seek to rely on Clause 60.1(19), by saying that an event has occurred which stops the contractor completing the works or completing the works by the date shown in
the Accepted Programme and which neither party could prevent, which an experienced contractor would have judged at the date of the contract as having had so small a chance of occurring that it would not have been reasonable to have allowed for it, and which is not one of the other compensation events in the contract.

It seems, therefore, that while the strikes themselves might have defined positions, the provisions dealing with their effects within the standard contracts leave room for manoeuvre on the part of both the employer and the contractor. So in standard form contracts, the picket lines are not so clearly drawn and it is worth carefully scrutinising the position before making a claim for extra time or money, particularly as the standard forms are often also subject to bespoke amendments on a project-specific basis.

www.pannone.co.uk

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