Construction Law

Legal issues, news, and regulations concerning the construction industry

1
“If it isn’t broken…”: A practical guide to the effective use of standard forms of contract
2
Pay First, Ask Questions Later: Court of Appeal Ruling on “Smash and Grab” Adjudications in S&T (UK) Limited vs. Grove Developments Limited
3
Don’t Dump Stuff in the River
4
Congratulations to our Doha Construction Team – “Property & Construction Team of the Year”
5
Collateral Warranties: A Reminder of Their Importance
6
Presentation Available: Mega Project Management
7
New Planning Framework for the Western Sydney Aerotropolis
8
Court Places Assets in the Freezer
9
EPA to “Veto” Its Own Veto Authority under the Clean Water Act?
10
Nominated or not – basic rules of subcontracting in Poland

“If it isn’t broken…”: A practical guide to the effective use of standard forms of contract

By Kiran Giblin and Inga Hall

Standard form building contracts play an important role in many construction and engineering projects. There are various advantages to using standard form contracts (as further detailed below), with a wide array of standard forms available to suit the particular types of parties, works and procurement routes involved in virtually all construction and engineering projects.

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Pay First, Ask Questions Later: Court of Appeal Ruling on “Smash and Grab” Adjudications in S&T (UK) Limited vs. Grove Developments Limited

By Kevin Greene and Saya Lee

In an eagerly awaited judgment, the Court of Appeal upheld the TCC’s judgment in Grove Developments Limited v S&T (UK) Limited, confirming that the employer may adjudicate to establish the “true value of the sum due” in a second adjudication.

Background

In March 2015, Grove Developments Limited (“Grove”) engaged S&T (UK) Limited (“S&T”) to design and build a new hotel at Heathrow Airport under the JCT Design and Build Contract 2011 with amendments, for a contract value of £26.4m. Following a delay of over 5 months, practical completion was achieved in March 2017. The parties subsequently conducted an adjudication to decide if Grove’s pay less notice dated 18 April 2017 was invalid on the basis that it was served late.The adjudicator decided, in S&T’s favour, that the pay less notice was invalid. 

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Don’t Dump Stuff in the River

By David L. Rieser

So, you are managing a major construction site in downtown Chicago. It’s been raining and you have thousands of gallons of silty water which you need to get off site. You can: (a) store it in tanks and then truck it to a waste water treatment facility; (b) discharge it to the local sewer under proper sewer authority; or (c) pump it into the river in full view of thousands of commuters walking over the bridges from the local train stations.

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Congratulations to our Doha Construction Team – “Property & Construction Team of the Year”

K&L Gates is proud to annouce that our Doha-based Construction & Infrastructure team was recently named the “Property & Construction Team of the Year” by the Qatar Business Law Forum. Members of our Doha office are pictured below accepting the award, which was presented on 13 November 2018.

 

Collateral Warranties: A Reminder of Their Importance

By Kevin Greene and Daniel Cartmell

The judgment of O’Farrell J in Swansea Stadium Management Co. Ltd v Swansea City and County Council ([2018] EWHC 2192 (TCC)) provides guidance on collateral warranties and acts as a warning for any potential claimants to be mindful of any limitations of time in which to commence proceedings under them.

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New Planning Framework for the Western Sydney Aerotropolis

Clive Cachia, Kirstie Richards

What has happened?

The NSW Government has played its hand in setting out the priorities for the proposed development of the Western Sydney Aerotropolis by releasing the draft Stage 1 Land Use and Infrastructure Implementation Plan (Draft Stage 1 Plan).

Further to our earlier updates on the development of the Western Sydney Airport (see here and here), the Aerotropolis will serve as Western Sydney’s new economic hub to support the massive public and private investment needed to construct and operate this once in a lifetime infrastructure development.

The Draft Stage 1 Plan provides clarity on the proposed re-zonings and sequencing of development for the Aerotropolis. The NSW Department of Planning and Environment (DP&E) is seeking feedback on the Draft Stage 1 Plan until 2 November 2018. See link for details on how to make a submission on the Draft Stage 1 Plan.

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Court Places Assets in the Freezer

By Sandra Steele and Michael O’Callaghan, K&L Gates, Sydney

The Supreme Court of Western Australia has recently made a freezing order in the matter of Trans Global Projects Pty Ltd (In Liquidation) (TGP) v Duro Felguera Australia Pty Ltd (Duro) [2018] WASC 136.

This decision sheds light on:

  • the factors that the Court will consider in granting a freezing order (i.e. an order whereby the assets of a company are “frozen” so that the company cannot dispose of or deal with those assets)
  • the circumstances in which a Court will issue a freezing order to enforce an arbitral award.

In short, the Court ordered that AUD20 million of Duro’s assets be frozen as Justice Tottle was persuaded that there was a danger that a prospective judgment based on an arbitral award against Duro would be wholly or partly unsatisfied because there was danger that the assets of Duro would be removed from Australia (or disposed of, dealt with or diminished in value). The Court made this determination notwithstanding Duro’s cross claims against TGP.

Read the full alert on K&L Gates HUB.

 

EPA to “Veto” Its Own Veto Authority under the Clean Water Act?

By Ankur K. Tohan, Cliff L. Rothenstein, Endre M. Szalay, and Tad J. Macfarlan

On June 26, 2018, in one of his final acts as Administrator of the U. S. Environmental Protection Agency (“EPA”), Scott Pruitt issued a memorandum [1] that has set in motion a process to amend the regulations that govern the agency’s exercise of its “veto” authority under Section 404(c) of the Clean Water Act. [2] The memo directs EPA staff to prepare a proposal, within six months, that would potentially curtail EPA’s authority to effectively bar development projects that require a Section 404 dredge-and-fill permit from the U.S. Army Corps of Engineers.

As background, Section 404 of the Clean Water Act authorizes the Corps (and state agencies with delegated permitting authority) to issue permits authorizing the discharge of dredged or fill material into regulated waters at “specified disposal sites.” [3] However, the statute provides EPA the authority to “prohibit” or “withdrawal” the specification of any area as a disposal site when it determines that a proposed discharge will have an unacceptable adverse effect on water supplies, fisheries, wildlife, or recreational areas. [4] This is commonly known as EPA’s “veto” authority because the EPA can effectively veto a project that would otherwise be authorized under Clean Water Act permits issued by the Corps by prohibiting construction in areas for which there is no reasonably available alternative disposal site. EPA currently administers its veto authority through regulations that were last amended nearly four decades ago, in 1979. [5] To date, EPA has used its final veto authority only 13 times. [6]

The new memo grows out of concerns surrounding EPA’s prior use of its veto authority before a Section 404 permit application had been filed—i.e., a “preemptive” veto—or after a permit had already been issued—i.e., a “retroactive” veto—rather than in the midst of the permitting process. [7] Recent examples include EPA’s proposed preemptive veto of a high-profile copper and gold mining project near Bristol Bay, Alaska in 2014 (which remains pending), [8] and its 2011 retroactive veto of a coal mining project in Logan County, West Virginia. [9] Both of these cases spawned substantial litigation [10] and caused many observers (including former Administrator Pruitt) to question whether in the future “the mere potential of the EPA’s use of its section 404(c) authority before or after the permitting process could influence investment decisions and chill economic growth by short-circuiting the permitting process.” [11]

In response to these concerns, former Administrator Pruitt’s Memo directs EPA staff to prepare and provide to the White House Office of Management and Budget a proposal within six months (before the end of 2018) that would consider and seek public comment on the following changes:

  • Eliminating EPA’s authority to veto a project before a permit application has been filed.
  • Eliminating EPA’s authority to veto a project after a Section 404 permit has been issued.
  • Requiring EPA regional administrators to obtain approval from EPA headquarters before initiating the Section 404(c) veto process.
  • Requiring the completion of environmental review under the National Environmental Policy Act before preparing and publishing a proposed veto determination.
  • Requiring EPA to publish and seek public comment on final veto determinations before those determinations take effect.

While former Administrator Pruitt is no longer in office following his July 5 resignation, all indications are that the new Acting Administrator, Andrew Wheeler, will forge ahead with the rulemaking process initiated by his predecessor. Administrator Wheeler has publicly expressed his commitment to the regulatory agenda pursued by Pruitt prior to his departure and he has strong ties to the mining industries which, of all industries, were most negatively impacted by EPA’s application of the agency’s veto power under the Obama administration.

The coming weeks should serve as a valuable window into whether Administrator Wheeler will indeed move forward with a new 404(c) rulemaking. In a letter dated July 19, Senator Tom Carper (D-Del.) and Representative Peter DeFazio (D-Ore.) urged Wheeler to “immediately and publicly revoke” Pruitt’s memorandum. [12] The letter requests that by August 15, 2018, Administrator Wheeler respond to several 404(c)-related questions, including his “view on the proper exercise of EPA’s section 404(c) authority, and how this view is consistent with the Congressional history and judicious use of this authority by your agency in the past.” [13]

Assuming Administrator Wheeler stays the course set by his predecessor, the upcoming rulemaking process will provide a critical opportunity for EPA leadership and the regulated community to shape the Clean Water Act regulatory landscape for years to come. Persons and industries with interests tied to high-profile, capital intensive development projects—such as oil and gas, mining, and large scale water supply/impoundment projects—should give particular consideration to participation in the rulemaking process, as it is these types of ventures that are most likely to be negatively impacted by a surprise veto under EPA’s current regulatory regime.

The anticipated rulemaking limiting EPA’s Clean Water Act veto authority is already generating considerable controversy, so interested stakeholders should consider weighing in with EPA even before any proposed rule is released. K&L Gates has a team of lawyers and policy professionals in Washington, D.C. and beyond that is positioned to assist with such efforts.

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Nominated or not – basic rules of subcontracting in Poland

By Dominika Jędrzejczyk

It is difficult to imagine a complex infrastructure project without the participation of subcontractors. In Poland, where large projects are often contracted to foreign companies, local subcontractors play an important role. This was also the case prior to the EURO 2012 football championships, when subcontractors were heavily engaged in the construction of roads and railways necessary to secure access to the newly built football stadiums. However, the EURO 2012 also resulted in a wave of bankruptcies and liquidations of Polish subcontractors, who suffered due to payment withholding, warranty deposits, contractors’ bankruptcies and lack of financial liquidity along the supply chain.

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