Construction Law

Legal issues, news, and regulations concerning the construction industry

1
Building from the Sky Down: New FAA Rules Affect Use of Drones in Construction Industry
2
Interim Payments – No Automatic Entitlement to Interim Payments Beyond the Last Date in the Agreed Payment Schedule
3
Picerne Constr. Corp. v. Castellino Villas
4
New Jersey Supreme Court Gives Supreme Win to Policyholders
5
Modern Slavery and Human Trafficking in the Construction Industry
6
Welcome to the 32nd Edition of K&L Gates’ Arbitration World
7
BREXIT: Is Your Business Prepared? Construction & Engineering
8
THE CURIOUS CREATURE THAT IS A MECHANIC’S LIEN IN BANKRUPTCY
9
Timely Response to U.S. Army Corps of Engineers Notice Critical for Stakeholders Interested in Securing Congressional Authorization for Future Water Resources Development Projects
10
New Bill Planned for the Development and Funding of Offshore Wind Energy in Germany

Building from the Sky Down: New FAA Rules Affect Use of Drones in Construction Industry

By Gregory R.  Andre, K&L Gates, Chicago and Thomas R. DeCesar, K&L Gates, Harrisburg

On August 29, 2016, the Federal Aviation Administration’s (FAA) long-awaited final rules regarding the commercial operation of small unmanned aircraft (a.k.a. drones) become effective.[1] The FAA’s new rules, which will primarily be codified under Part 107 of the Federal Aviation Regulations, are a major step for the eventual integration of unmanned aircraft into business operations nationwide. Part 107 represents the FAA’s first comprehensive regulation of unmanned aircraft operations.

Before Part 107, companies had to obtain preapproval through the lengthy Section 333 exemption process (named for Section 333 of the FAA Modernization and Reform Act of 2012) before conducting commercial unmanned aircraft operations. The Section 333 exemption process imposed significant restrictions on unmanned aircraft operations and required operators of unmanned aircraft to have a pilot’s certificate. The new rules, however, generally permit companies to use unmanned aircraft in commercial operations without obtaining preapproval from the FAA and with fewer restrictions than were required under Section 333 exemptions.  In addition, the rules create a new class of pilot’s certificate specific to unmanned aircraft that is easier to obtain than a typical pilot’s certificate.

The construction industry will stand to benefit from Part 107, as unmanned aircraft can be employed in a variety of operations helpful to construction companies, including: topographical surveys, access to hard-to-reach locations, job progress tracking, videography/marketing, building and structure inspections, site security, safety, and general construction site troubleshooting. In fact, in an early survey of companies seeking FAA authority to use unmanned aircraft, nearly half of applicants identified the construction industry as a field where they would use their device.[2] This post summarizes the new FAA rules and highlights a few issues of particular importance in the construction industry.

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Interim Payments – No Automatic Entitlement to Interim Payments Beyond the Last Date in the Agreed Payment Schedule

By Nita Mistry, K&L Gates, London

In Grove Developments Limited v Balfour Beatty Regional Construction Limited [2016] EWHC 168 (TCC), the contract (JCT Design and Build Contract, 2011 edition with bespoke amendments) contained an agreed schedule of 23 interim valuation and payment dates. The last date in the schedule coincided with the date of practical completion. The works completed after the contractual date for completion of the works. The contractor issued an interim application number 24. This interim application was outside of the agreed payment schedule. The contract did not contain a provision regarding payment beyond the 23 scheduled payments. The employer argued that the contractor was not entitled to issue further applications beyond interim application 23, and the judge, Mr Justice Stuart-Smith, agreed. The contractor was not entitled to further interim payments.

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Picerne Constr. Corp. v. Castellino Villas

By Hector H. Espinosa and Benjamin Kussman, K&L Gates, Los Angeles

Under California’s mechanic’s lien laws, a general contractor has 90 days from “completion” of its work to record a claim of mechanic’s lien. Ca. Civ. Code §8412.  Previously, it remained unsettled as to when this 90-day period began to run because some California courts held that the 90-day clock was triggered upon substantial completion of contractor’s work.  In Picerne Constr. Corp., the California Court of Appeal rejected this interpretation of Ca. Civ. Code §3115[1], ruling that completion (for purposes of the 90-day window) only occurs upon “actual completion” of the work of improvement as defined by statute.

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New Jersey Supreme Court Gives Supreme Win to Policyholders

By Frederic J. Giordano, Robert F. Pawlowski, Denise N. Yasinow, K&L Gates, Newark

On August 4, 2016, the Supreme Court of New Jersey unanimously affirmed the Appellate Division’s holding that consequential damages caused by a subcontractor’s faulty workmanship constitute “property damage” and an “occurrence” under the 1986 Insurance Services Office, Inc. (“ISO”) form commercial general liability (“CGL”) insurance policy.  This holding is welcome news to real estate developers, general contractors, and commercial policyholders who may seek coverage for damage caused by the faulty work of their subcontractors.

To read the full alert, click here.

Modern Slavery and Human Trafficking in the Construction Industry

By Camilla A. de Moraes, K&L Gates, London

Background

With an estimated 35.8 million people enslaved today,[1] it is undeniable that modern slavery and human trafficking is a significant global problem.  The construction industry in particular, with its high demand for migrant labour and complex procurement processes, has the potential for exploitation, and there have been high-profile cases such as in relation to the construction work for the 2022 football World Cup in Qatar.  However, in recent years, steps have been taken, both domestically and internationally, to tackle such human rights abuses.

In the United Kingdom, the Modern Slavery Act 2015 (the “Act”) is now in force and an Independent Anti-Slavery Commissioner has been appointed as a result.  There have also been amendments to the UK Companies Act 2013, which requires companies quoted on the London Stock Exchange to report on their human rights performance, and a new Immigration Act, which proposes changes to the way the current Gangmasters Licensing Authority operates.  On the European stage, the EU Non-Financial Reporting Directive requiring disclosure of human rights policies is in force, with member states required to bring into force laws to comply with it by 6 December 2016, and globally, a target to end modern slavery and human trafficking has been included as Target 8.7 of the Sustainable Development Goals, which will help shape development policy worldwide.

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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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