Construction Law

Legal issues, news, and regulations concerning the construction industry

1
Welcome to the 32nd Edition of K&L Gates’ Arbitration World
2
BREXIT: Is Your Business Prepared? Construction & Engineering
3
THE CURIOUS CREATURE THAT IS A MECHANIC’S LIEN IN BANKRUPTCY
4
Timely Response to U.S. Army Corps of Engineers Notice Critical for Stakeholders Interested in Securing Congressional Authorization for Future Water Resources Development Projects
5
New Bill Planned for the Development and Funding of Offshore Wind Energy in Germany
6
FIDIC Update: The Employer’s Claim to Liquidated Damages and Performance Security under the Yellow Book
7
Design life warranties and fitness for purpose in Construction Contracts: the position in Australia and England
8
Sydney Partner Sandra Steele Named Lawyers Weekly Construction and Infrastructure Partner of the Year
9
Preparing for a New Era in the Design and Construction Industry
10
How Are Your Construction Activities Regulated under OSHA’s Final Silica Rule?

Welcome to the 32nd Edition of K&L Gates’ Arbitration World

Welcome to this 32nd edition of Arbitration World.

To view Arbitration World, click here.

To download a printable PDF of the publication, open the link above and click on the fourth icon from the right in the magazine toolbar at the top of the page.

We are very pleased to include in this edition, as part of our series of guest contributions from expert witnesses, an article by Howard Rosen and Noel Matthews of FTI Consulting, regarding how “country risk” can affect the value of investments and the approach towards this issue in damages calculations in international arbitration.

We review recent developments in arbitration in Qatar, including court decisions regarding the validity of arbitration agreements and the enforcement of arbitration awards. As part of a series of articles related to so-called “Bermuda Form” liability insurance policies, we look at the process of formation of the arbitral tribunal in Bermuda Form policies and whether such insurance policies may conflict with certain U.S. state laws regulating insurance.

We report on a recent decision of the English Commercial Court regarding enforcement of a tribunal’s order for a provisional payment, as well as a recent UK Privy Council decision on the meaning and effect of permissive arbitration clauses. We review the new mediation rules of the Vienna International Arbitration Centre (VIAC) and report on the work of an International Bar Association (IBA) Subcommittee in assessing how states have defined the public policy exception under the New York Convention.

We review some recent decisions of the Federal Supreme Court of Switzerland on arbitration award set-aside applications in the past year. We are also very pleased to include a guest contribution from Ben Beaumont, a barrister from Thomas More Chambers and Chairman of the Arbitration Club, regarding a recent decision of the Federal Supreme Court of Switzerland on the role of a Dispute Adjudication Board (DAB) under the FIDIC Red Book regime.

We also provide our usual update on developments from around the globe in international arbitration and investment treaty arbitration.

We hope you find this edition of Arbitration World of interest, and we welcome any feedback (email ian.meredith@klgates.com or peter.morton@klgates.com).

BREXIT: Is Your Business Prepared? Construction & Engineering

By Matthew E. Smith and Inga K. Hall, K&L Gates, London

It seems unlikely that the UK’s exit from the EU will result in significant legal or regulatory changes for clients investing or working on construction or infrastructure projects in the UK in the short term.

The uncertainty over where Brexit will take both our UK and international construction clients in the medium to longer term is however likely to be reflected in an uptake in disputes, particularly in adjudication, and some UK projects and/or foreign investment decisions put on hold (or remaining on hold) until the picture becomes clearer.

Click here to read the full article on K&L Gates HUB.

THE CURIOUS CREATURE THAT IS A MECHANIC’S LIEN IN BANKRUPTCY

By Joseph B.C. Kluttz, K&L Gates, Charlotte

“God looks out for drunks, fools and construction lawyers.”

— with apologies to Otto von Bismarck

Many contractors and non-bankruptcy practitioners are generally aware that upon the filing of a bankruptcy petition a variety of collection impediments spring into existence, including indignities like the “automatic stay,” lien-trumping provisions and “preferences.”

Many involved in the construction industry may be unaware, however, that because of special provisions and exemptions applicable to mechanics’ liens in bankruptcy, a contractor (or subcontractor) may be able to improve its position dramatically on the eve of — or even after — the filing of a bankruptcy petition by a counterparty.  That could become increasingly important as clouds of economic and political uncertainty continue to gather on the horizon.

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Timely Response to U.S. Army Corps of Engineers Notice Critical for Stakeholders Interested in Securing Congressional Authorization for Future Water Resources Development Projects

By Stephen A. Martinko, James A. Sartucci, Michael G. H. Pfeifer, K&L Gates, Washington, D.C.

New Bill Planned for the Development and Funding of Offshore Wind Energy in Germany

By Christoph Mank, K&L Gates, Berlin

An introduction of bidding processes for determining the amount of funding for the generation of electricity from onshore wind turbines, offshore wind turbines and large photovoltaic systems is planned with an amendment of the German Renewable Energy Act (Erneuerbare-Energien-Gesetz).

The German government sees the transition to bidding processes as being a central instrument for attaining the goals laid down by policy makers regarding the development of the share of renewable energies in the production of electricity. The political goal is to increase the share of renewables in the amount of electricity generated to between 40% and 45% by 2025, between 55% and 60% by 2035 and at least 80% by 2050. In real terms the increase in the contribution of renewable energy to the electricity production in Germany has gone from 25.3% in 2013 to 28% in 2014 and 32.6% in 2015. It is the political will of the current government not to fall below or exceed this established scope for expansion. For this purpose the aim is to fix the tendered quantities at a level that is as accurate as possible on the one hand; on the other hand, a high realisation rate needs to be achieved with regard to the projects awarded in the context of the bidding process.

A further goal of the general introduction of bidding processes for establishing the amount of funding is to limit the funding to a level that is economically essential. In order to ensure that this amount is determined correctly by means of the planned bidding processes, a high level of competition must be achieved for these.

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FIDIC Update: The Employer’s Claim to Liquidated Damages and Performance Security under the Yellow Book

By Camilla de Moraes, K&L Gates, London

The English courts have recently considered a number of cases involving the FIDIC suite of contracts (see here, here, and here for our previous blog posts).  The most recent case of J Murphy & Sons Ltd v Beckton Energy Ltd [2016] EWHC 607 (TCC)arises out of a contract based on FIDIC Conditions of Contract for Plant and Design Build for Electrical and Mechanical Plant and for Building and Engineering Works designed by the Contractor First Edition 1999 (FIDIC Yellow Book) with amendments.

The court was required to consider the relationship between two clauses in the Contract, namely Sub-Clause 2.5 (Employer’s Claims) and Sub-Clause 8.7 (Delay Damages and Bonus) with reference also to Sub-Clause 3.5 (Determinations) and 4.2 (Performance Security).  The issue in dispute was whether determination by the Engineer of the contractor’s liability for liquidated damages was a pre-requisite to recovery of liquidated damages by the Employer.  The court held that the clause entitling the Employer to liquidated damages operated outside of the regime in Sub-Clause 2.5 and therefore the Engineer’s determination was not a pre-requisite to the Employer’s entitlement.  This case also confirms the traditionally held view that obtaining injunctive relief preventing a beneficiary from calling on a performance bond will rarely be possible.

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Design life warranties and fitness for purpose in Construction Contracts: the position in Australia and England

By Sandra SteeleBelinda Montgomery, and Julia Kingston

Although Australian construction contracts quite commonly provide for design life warranties in respect of plant, equipment, building or structures, the concept of a ‘design life warranty’ has not been the subject of extensive commentary by the Australian legal profession or interpretation by the courts in Australia.

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Sydney Partner Sandra Steele Named Lawyers Weekly Construction and Infrastructure Partner of the Year

steele_sandraSydney Partner Sandra Steele was recently named as Construction and Infrastructure Partner of the Year at the inaugural 2016 Lawyers Weekly Partner of the Year Awards. Sandra has more than 20 years’ experience advising on contentious and non-contentious construction law matters. She has extensive experience in contract drafting and negotiation as well as litigation and alternative dispute resolution in the project management, construction, engineering and infrastructure project sectors. Sandra’s civic activities include serving as the National President for the National Association of Women in Construction, a member of the Australian Legislation Reform Committee for the Society of Construction Law, the Law Society of New South Wales, and the Resolution Institute and is on the editorial panel of the Australian Construction Bulletin.

Please join us in congratulating Sandra on this well-deserved accolade!

The Lawyers Weekly Partner of the Year Awards recognize outstanding performance by partners in law firms across 21 practice area-based categories. The finalists represent the leading partners in their field and were selected by Lawyers Weekly from an overwhelming number of nominations. Twenty-two high-profile judges took on the task of choosing the winners.

Preparing for a New Era in the Design and Construction Industry

By Justin L. Weisberg, K&L Gates, Chicago

The construction industry is currently on the precipice of substantial changes impacting all participants involved in the design and construction of modern projects.  Economic volatility has resulted in significant pressure on all participants to increase efficiency and deliver projects at reduced costs.  New technology, including BIM, is impacting the very responsibilities and interactions of project participants.  Over the past decade, environmental and sustainable design considerations have gone from nonexistent to a driving factor in the design and construction of numerous projects.

While Design Bid Build (“DBB”) was historically the leading method of project delivery, progressive methods have made substantial gains over the last decade.  Progressive project delivery methods include Design Build (“DB”), Construction Manager at Risk (“CMAR”), and Integrated Project Delivery (“IPD”).  These progressive methods take advantage of construction expertise during the design phase of the construction project.

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How Are Your Construction Activities Regulated under OSHA’s Final Silica Rule?

By Barry M. Hartman, K&L Gates, Washington, D.C. and Stephen J. Matzura, K&L Gates, Harrisburg

On March 24, 2016, OSHA issued the prepublication version of the final rule regarding occupational exposure to respirable crystalline silica, including one standard for the general industry and maritime, and another standard for construction work (“Final Rule”). The rule applicable to construction work will be codified at 29 C.F.R. § 1926.1153. It becomes effective June 23, with compliance obligations beginning at least a year later (June 23, 2017). The more stringent permissible exposure limit (“PEL”) of 50 μg/m3 and the “action level” of 25 μg/m3 are the same as in the proposed rule that OSHA issued in 2013.

The Final Rule essentially creates three categories of construction activities that are regulated differently depending on levels of exposure to respirable silica: (1) activities excluded from regulation; (2) activities listed in Table 1 that are afforded a “safe harbor” from the requirement to conduct an exposure assessment; and (3) activities that require an exposure assessment. Any employers that perform “construction work” – which may also include employers outside of the construction industry – must consider where their activities fall within the construction standard for silica.

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