Manual of Construction Agreements Set

Issue 33 November 2020

In this issue we have made update amendments to reflect the latest thinking on good faith in commercial contracts in Bates v Post Office (No 3) [2019] EWHC 606 (QB) where Fraser J held that there was an implied duty of good faith in contracts between the Post Office and sub-postmasters and codified the characteristics of a ‘relational contract’. We also look at Samsung C&T Corp v Soon Li Heng Engineering Pte Ltd [2020] SGCA 79where the Supreme Court of Singapore held that it is unconscionable for a party to make a demand on a performance bond in circumstances where the effect of so doing will be to negate an adjudication determination (AD) prior to any final determination of the dispute between the parties. This is an interesting development and one can expect similar arguments to stop a ‘call’ on a bond in England.

In terms of litigation procedure we have looked into what happens when so-called ‘pre-arbitration’/‘pre-litigation’ steps are not followed. Peterborough City Council v Enterprise Managed Services Ltd [2014] EWHC 3193 (TCC) concerned an application by the defendant for an order to stay litigation on the ground that the contract required all disputes to be referred to adjudication by a DAB as an express precondition to litigation (based on Sub-Clause 20.8 of the FIDIC General Conditions of Contract for EPC/Turnkey Projects).

In terms of arbitration we have looked at Federal Republic of Nigeria v Process & Industrial Develpments Ltd (No 1) [2020] EWHC 2379 (Comm), where the claimant was granted an extension of time to challenge an arbitration award on grounds that a gas processing contract, the arbitration clause contained in it and arbitration awards based on it had been procured by fraud perpetrated by the respondent company; A v B [2020] EWHC 952 (Comm) where the court delivered a warning to claimants considering the enforcement of an arbitration award that fails to establish a clear ‘right to payment’; and PT Ventures SGPS SA v Vidatel Ltd where the BVI Commercial Court ruled that an ICC arbitral award of over US$646 million was enforceable in the BVI given the defendant’s failure to establish, on a balance of probabilities, its defences related to the composition of the arbitral tribunal and an alleged lack of impartiality of two of the five arbitrators. The BVI is party to the New York Convention and has therefore adopted a general pro-enforcement approach to Convention awards. Section 86 of the BVI Arbitration Act 2013 provides that the enforcement of a Convention award may not be refused except in the specific circumstances outlined in s 86(2). Section 86 is largely identical in terms to s 103 of the English Arbitration Act 1996.

We have also picked up the Corporate Insolvency and Governance Act 2020, which received Royal Assent on 25 June 2020. The Act has introduced new procedures and measures to seek to rescue companies in financial distress as a result of the COVID-19 pandemic and the resulting economic crisis and represents the most extensive changes in the insol- vency landscape since the Enterprise Act came into force in 2003.

In Part B, the forms of consultant appointment (Forms B1 to B22) and the collateral warranties in Forms B64 to B68 have been generally updated. A minor change has been made to the parent company guarantee (Form B90).

The Schedule of Amendments to the JCT Minor Works Contract 2016 (MW/MWD) (Form B50) has been updated to follow the recent updating of the Schedules of Amendments to the other JCT Forms.

Two new forms have been added to Section 10 (Miscellaneous). Form 108 contains drafting to include the new insolvency events created by the Corporate Insolvency and Governance Act 2020 into a JCT building contract (DB16). It can be amended as needed to suit the terminology of any other contract form. Note that at this stage, while market practice is developing, the Forms in Part B have not been generally amended to include provisions extending the insolvency events that give rise to a right to terminate to include the new moratorium and restructuring plan introduced by the Act, as this appears contrary to the policy intention of providing viable businesses with breathing space and additional tools in order to enable them to be rescued, which underpins the Act.

New Form 109 contains an additional clause providing for a 12-year period for the bringing of claims under the contract in which it is included, which (in response to the increase in remote execution) is intended to mitigate the risk of a failure by a party to comply with execution formalities required for a deed leading to the reduction of the limitation period applicable to the document to six years. The clause is drafted for inclusion in a building contract, but can be amended to suit the contract in which it is to be included. This clause (amended as appropriate) is included in the updated consultant appointments, collateral warranties and the Schedules of Amendments to the main JCT Forms.

Part A Law and Practice

• The Nature of Construction Contracts
• The JCT Contracts
• Non-JCT Construction Contracts
• Standard Form Consultants' Appointments
• Collateral Warranties and Third Party Rights
• Guarantee Bonds and Parent Company Guarantees
• Insurance
• Assignment
• Novation
• Letters of Intent
• The CDM Regulations
• Relevant Legislation
• Dispute Resolution: Litigation and Arbitration
• Dispute Resolution: Adjudication, Expert Determination and ADR
• The Form and Content of Deeds and Documents
• The Execution of Deeds and Other Documents

Part B Forms

• Consultants' Appointments
• Amendments to JCT Contracts
• Amendments to ICE Contracts
• Amendments to NEC/ECC Contract
• Management Contracting
• Collateral Warranties
• Novations
• Letters of Intent
• Surety Documents
• Miscellaneous