Compensation Event (Banking & Finance) definition

View the related practice notes about Compensation Event (Banking & Finance)

Compensation events and relief events in PFI/PF2

This Practice Note examines the Compensation Event and Relief Event regimes under the Project Agreement in relation to a PFI or PF2 project. It looks at the features of each regime and the difference between them under PFI and PF2 (sometimes referred to as PFII).In the 2018 Budget (delivered on 29 October 2018), it was announced that the government will no longer use PF2 on new projects (see News Analysis: Budget 2018—what does it mean for infrastructure and housebuilding?). However, existing PFI and PF2 projects will continue to run, and given the typical lifespan of such projects this is likely to be for many years.ContextCompensation Events and Relief Events are two examples of 'supervening events'; events for which some relief is appropriate. The aim is to deal with the allocation of risks which may arise as a result of various unintended occurrences which adversely affect the Contractor's ability to deliver its obligations under the Project Agreement (or, by extension, the ability of its sub-contractors to deliver under their respective sub-contracts).Such...

NEC contracts—compensation event regime

This Practice Note considers compensation events in the NEC3 and NEC4 contracts, the occurrence of which may entitle the Contractor to additional time and/or money. It looks specifically at the NEC3/NEC4 Engineering and Construction Contract (ECC), but similar provisions are found across the suite.Key featuresThe compensation event regime in the NEC contracts is contained in section 6 of the core clauses. Key features include:•there is a single procedure dealing with the Contractor’s claims for additional time and money, with a single list of qualifying events. This can be contrasted with the position in the JCT contracts, in which events entitling the Contractor to additional time (‘Relevant Events’) and money (‘Relevant Matters’) are dealt with separately. For an analysis of the compensation events themselves, see Practice Note: NEC contracts—interpreting the list of compensation events (clause 60) and for a comparison with the JCT Relevant Events/Relevant Matters and time/money claims under the FIDIC contracts, see Practice Note: Comparison between JCT, NEC and FIDIC time and money events.•in NEC4, the list of compensation...