Construction Foundation Newsletter August 2017

• United Kingdom

• Construction and engineering - Foundations

09-08-2017

Foundations will update you with details of what we think are the top court decisions of the previous month and provide a summary of important legislation changes or proposals and a paper providing insight and guidance on a particular area of construction law and practice in the UK and internationally.

We hope you find our e-briefing useful and informative.

International insight 

Shortcut your arbitration – the new ICC expedited procedure 

In March, the International Chamber of Commerce (ICC) launched its Expedited Arbitration Procedure. Here we look at what the procedure is and how useful it might be in construction and engineering disputes.

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UK insight 

Cautionary tale of the unintended consequences of a lender taking an assignment ‘by way of security’ of the benefit of development documents

Mailbox (Birmingham) Limited v Galliford Try Construction Limited [2017] EWHC 67 (TCC)

The Technology and Construction Court (TCC), earlier this year, considered the effect of an assignment of the benefit of development documents to a lender. The key question was whether, the borrower, Mailbox, had the benefit of the building contract at the time it commenced an adjudication against Galliford Try, the contractor. Galliford Try sought to resist enforcement of the adjudicator’s award on the basis that Mailbox did not have the benefit of the rights in the building contract because it had assigned these to the lender.

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New guide sets out the recommended pre-action process for parties to follow in a procurement dispute

On 17 July 2017 a new Appendix H to the Technology and Construction Court Guide was published which provides guidance on the management of public procurement claims (the “Guide”).

Although this detailed procedural guidance is likely to prove useful in ensuring the efficient progress of public procurement cases, both bidders and contracting authorities / utilities are most likely to be interested in the guidance on pre-action conduct and the steps parties should take to facilitate the resolution of disputes at an early stage contained within the Guide.

This article outlines the content of the guide, the recommended pre action processes and general commentary. It also contains a useful link to the approved electronic version of the Guide which will be published in the next supplement to the White Book but which is already applicable.

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Top 3 cases 

UK: Supreme Court decides on MT Højgaard v E.ON case related to design risk in offshore wind farms

The UK Supreme Court handed down its decision in the case of MT Højgaard v E.ON last week. The decision relates to design responsibility – fitness for purpose v reasonable skill and care - and has been eagerly awaited by all parties involved in the construction of complex projects, particularly in the energy sector, and particularly where the contracts are subject to English law. It is those on the Employer side of such projects who will be most happy with what they read. 

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(1) Governors & Co of the Bank of Ireland (2) Bank of Ireland (UK) plc v Watts Group plc [2017] 

Lenders in development finance projects seek layers of protection to manage the risk of potential losses caused by the insolvency of a borrower. This case decided a lender cannot claim its quantity surveyor was negligent in preparing a report where other factors including the lender’s experience and knowledge were relevant.

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125 OBS (Nominees1) & Anor v Lend Lease Construction (Europe) Ltd & Anor [2017] EWHC 25 (TCC)

The court considered the contractual responsibility of a contractor concerning spontaneous failures of glass panels at a prestigious building in London. The court held that in absence of an order of priority clause, certain clauses which the defendant claimed to be inconsistent were separate and discreet obligations on the contractor.

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