Construction end of year recap—2016

While 2016 has been an eventful year in many respects, we look back at some of the key developments that occurred in the world of construction law and practice.

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New legislation and protocols

This year, we finally saw the coming into force of the long-awaited Third Parties (Rights Against Insurers) Act 2010 in August, which makes it easier for a third party to issue proceedings directly against the insurer of an insolvent company, and modernises and simplifies previous legislation. See Practice Note: Construction insolvency—the Third Parties (Rights Against Insurers) Acts.

The Insurance Act 2015 also came into force in August, making radical changes to insurance law, for example by updating and replacing the existing duty to disclose every material circumstance known to the insurer with a new 'duty of fair presentation'. See News Analysis: Insurance Act 2015—what does it mean for the construction sector?

In public procurement, the Utilities Contracts Regulations 2016 and the Concession Contracts Regulations 2016 came into force in April.

The much-awaited second edition of the Pre-Action Protocol for Construction and Engineering Disputes was launched, and came into force, in November. Alexander Nissen QC, who led the drafting, explored the new protocol (see News Analysis: Exploring the new Pre-Action Protocol for Construction and Engineering Disputes) and also told us about the new referee procedure (see News Analysis: Introducing the new construction protocol referee).

Finally, the Society of Construction Law published the draft second edition of the its Delay and Disruption Protocol for comment. The consultation period lasted 8 weeks, and we now await publication of the second edition in final form.

New standard form contracts

The headline news in relation to standard forms was the publication of the majority of the 2016 editions of the Joint Contracts Tribunal (JCT) suite of contracts. The first family (Minor Works) appeared in June, and this was followed by further contracts throughout the year, including the Design and Build Contract and Standard Building Contract families. See our new JCT contracts 2016 sub-topic to find out more.

We also learnt more about the changes expected in the upcoming new FIDIC forms of contracts, when we attended the annual FIDIC London users’ conference a few weeks ago. See News Analysis: FIDIC—an update on the new contracts and other developments.

Government/Brexit

This year everyone was talking about the result of the UK's referendum on EU membership. Check out our Brexit sub-topic, which includes an analysis by Adrian Bell of CMS on what Brexit could mean for construction and engineering (News Analysis: The future of the construction industry post-Brexit). The latest Office for National Statistics figures show that construction output increased by 0.7% in October 2016 as compared to October 2015, with new housing providing the biggest upwards contribution.

Also in 2016, building information modelling (BIM) level 2 became mandatory on all government projects in April, and an official BIM level 2 website was launched. We also saw the launch of a new National Infrastructure Delivery Plan (see Practice Note: The National Infrastructure Delivery Plan 2016–2021) and a new Government Construction Strategy (see Practice Note: Government Construction Strategy 2016–2020).

And let's not forget that the National Infrastructure Commission (NIC) was busy throughout the year, publishing reports on smart energy, London transport, northern connectivity and 5G technology. For more information, see our new Practice Note: National Infrastructure Commission.

Key cases

In this section we look back at key decisions from the last 12 months. As always, for a complete list of cases relevant to construction lawyers, see our Construction case tracker. There is also a 2016 review specifically for adjudication: Adjudication cases—2016 in review.

Payment

There were several cases this years concerning interim and final payment under construction contracts:

Construction arbitration/ADR

In construction arbitration/alternative dispute resolution:

Exclusion clauses

There were a couple of important cases concerning exclusion clauses:

  • the court considered the correct construction of an exclusion of liability for 'consequential or special losses, damages or expenses' and concluded (on the specific facts of the case) that the exclusion had a broader meaning than indirect loss under the second limb of Hadley v Baxendale (see News Analysis: 'Consequential loss and special damages' in exclusion clauses (Star Polaris LLC v HHIC-Phil Inc))
  • the Court of Appeal confirmed that the starting point for interpretation of exclusion clauses between parties of equal bargaining power is the natural and ordinary meaning of the language chosen by the parties, and where the wording is clear it is not appropriate for the court to apply interpretive principles such as the 'contra proferentem' rule (see News Analysis: Clarifying consequential loss clauses in contracts)

Other cases

2016 also saw the court:

Up next—2017

Watch our for our separate piece in January on what 2017 holds in store, from a panel of industry experts. And remember, you can always check out our Construction future developments tracker throughout the year to see what's in the pipeline.

Filed Under: Construction

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