Construction Law

Legal issues, news, and regulations concerning the construction industry

1
Dispelling the Myths of Lean Construction and IPD
2
Time Waits for No-One When a Garnishee Order can be Obtained to Enforce an Adjudicator’s Determination
3
Third Party Funding for Arbitration in Hong Kong
4
Unfair Contract Terms with Small Businesses: Implications for the Construction Industry
5
New UAE Penal Law Allowing for the Imprisonment of Biased Arbitrators Leads to Widespread Concern and Uncertainty in International Arbitration Community
6
New FIDIC Yellow Book 2017: Major Changes
7
Drones in Construction: Legal Overview
8
California Construction Risk Management Update: In Khosh v. Staples Construction Co., Court Further Defines Rule that Contractor Not Responsible for Sub’s Worksite Injury
9
Code Orange Moving to Green: New Building Code for Construction Sector
10
QATAR COURT OF CASSATION CONFIRMS CONDITIONS FOR THE ENFORCEMENT OF ICC AWARDS IN QATAR

Dispelling the Myths of Lean Construction and IPD

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

The text of this article first appeared in the December 2016 issue of SubStance, a publication by the Illinois Mechanical & Specialty Contractors Association.

Over the last year we have witnessed a successful Congress in Chicago by the Lean Construction Institute, a growing number of projects adopting Lean Construction Processes (“LCP”), in Illinois, and the recognition of the completion of at least one significant project in Illinois, which utilized Integrated Project Delivery (“IPD”). Nevertheless, I have perceived that there is confusion in the industry relative to LCP and IPD based upon comments made at presentations given by practitioners in the construction industry, who have not been involved with, or studied Lean Construction. The following article provides a brief overview and a comparison of LCP and IPD to address the myths created by some of these comments.

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Time Waits for No-One When a Garnishee Order can be Obtained to Enforce an Adjudicator’s Determination

By Sandra Steele and Andrew Hales, K&L Gates, Sydney

The Supreme Court is often called upon by an aggrieved party to restrain enforcement of an adjudicator’s determination whilst that party seeks to have the determination set aside.

In an ex tempore decision in Atlas Construction Group Pty Limited v Fitz Jersey Pty Limited [2017] NSWSC 72, his Honour Justice McDougall held that Fitz Jersey Pty Limited was not entitled to an interim injunction requiring AUD11 million received by Atlas Construction Group Pty Ltd pursuant to a garnishee order to be paid into court whilst Fitz Jersey pursued its application to set aside an adjudicator’s determination.

To read the full alert on K&L Gates HUB, click here.

Third Party Funding for Arbitration in Hong Kong

By Sacha Cheong and Dominic Lau, K&L Gates, Hong Kong

Given the highly technical and complex nature of the activities in the construction industry, to provide familiarity and certainty, and to save time and (legal and administrative) costs, standard form contracts are widely in use. Arbitration agreements are contained in most standard form contracts for similar reasons.

Traditionally, parties to construction disputes rely on their own financial resources to pay for legal representation in arbitration. This may soon undergo substantial changes as third party funders become much more active in this area.

Many jurisdictions such as the United Kingdom, and more recently Singapore, already permit third party funding for arbitration.

The Hong Kong Government is in the process of introducing similar legislation in Hong Kong, along with various safeguards to ensure ethical standards are maintained and to prevent abuse. The law relating to maintenance and champerty, which is still punishable as a criminal offence, will no longer be applicable to Hong Kong arbitration.

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Unfair Contract Terms with Small Businesses: Implications for the Construction Industry

By Sandra Steele and Andrew Hales, K&L Gates, Sydney

The unfair contract term prohibitions in the Competition and Consumer Act 2010 (Cth) were recently extended to cover standard form contracts with small businesses.

The new law provides for unfair contract terms to be declared void and unenforceable. The relevant contract will then only continue to bind the parties insofar as it can operate without the unfair terms.

These changes may have significant impacts on the building and construction industry as terms typically found in construction contracts are likely to be subject to the prohibitions. We recommend that principals and contractors identify and review any standard form contracts they may have with small business counterparties that may be impacted by this new regime.

To read the full alert, click here.

New UAE Penal Law Allowing for the Imprisonment of Biased Arbitrators Leads to Widespread Concern and Uncertainty in International Arbitration Community

By Michael P. Cotton, K&L Gates, Pittsburgh

Through a recent amendment to Article 257 of the UAE Penal Code, any arbitrators, experts, or translators who issue biased decisions or opinions in UAE arbitration proceedings may now be subject to criminal liability. The new law has led to widespread concern and uncertainty in the international arbitration community.

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New FIDIC Yellow Book 2017: Major Changes

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

Introduction

FIDIC has long been renowned for its flexible suite of standard forms of contract for use on international construction and engineering projects. FIDIC is the “contract of choice” for international infrastructure and process plant projects, particularly in Eastern Europe, Africa, the Middle East, and Asia.

Two of the key strengths, or attractions, of the FIDIC suite of contracts are, firstly, that they are capable of use across a diverse range of legal systems and, secondly, that they have been pro-actively updated and added to over time to respond to the needs of the industry.

By way of background to this last point, FIDIC produced a core ‘Rainbow Suite’ of 4 contracts in 1999: the Red Book (for Building and Engineering Works), the Yellow Book (Plant and Design-Build), the Silver Book (EPC/Turnkey Projects) and the Green Book (short form contract). Additional forms have subsequently been added to the Rainbow Suite, including the White Book consultant’s appointment in 2006 and the Design-Build-Operate Gold Book form in 2008. In early 2016, FIDIC formed a working group to focus on updating its existing suite of contracts and to add entirely new forms of contract (including sector-specific tunnelling and renewables forms); with intentions to release such new and updated contracts over the course of the next two years.

Following the FIDIC International Contract User’s Conference in December 2016, at which K&L Gates partners, Matthew Smith, Kirk Durrant and Rafal Morek, spoke on trends in amending FIDIC contracts, attendees were able to obtain a copy of the much anticipated “special pre-release version” of the 2nd Edition of the Yellow Book (2017) and the 5th Edition of the White Book (2017).

This Alert provides a high-level overview of the changes which will be made to the Yellow Book, its first update in over 15 years. The 2017 Yellow Book 2nd edition changes are likely to have wide-reaching impact as the Yellow Book remains the most commonly used contract in the Rainbow Suite. Some of these provisions reflect innovations introduced in the Gold Book 2008 which are now being integrated into the new versions of the ‘1999 suite’ (Red, Yellow and Silver) but many other changes are completely new.

One thing that is clear is that the changes are very extensive indeed, both in terms of length and effect, and whether you are an Employer or Contractor or an Engineer or another consultant, it is essential that you are fully aware of these changes when the final versions of the new contracts are issued this year.

In due course we will be releasing more detailed commentaries on the ‘new’ Yellow Book and the other forms which are due for release this year as well as conducting workshops on the use of the new forms. If you are not already on our mailing list and wish to be informed of these, please contact Matthew Smith (matthew.smith@klgates.com) or Rich Paciaroni (richard.paciaroni@klgates.com).

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California Construction Risk Management Update: In Khosh v. Staples Construction Co., Court Further Defines Rule that Contractor Not Responsible for Sub’s Worksite Injury

By Timothy L. Pierce, Hector H. Espinosa, and Eric M. Khodadian, K&L Gates, Los Angeles

The Court’s decision in Khosh v. Staples Const. Co., Inc., Case No. 56-2014-00447304-CU-PO-VTA (Oct. 26, 2016) helps to further define the boundaries for whether a general contractor may be found responsible for worksite injuries suffered by an independent subcontractor’s employee.

In Khosh, the California Court of Appeal upheld the trial court’s decision that general contractor Staples Construction Company, Inc. (“Staples”) was not responsible for injuries sustained by an electrical subcontractor’s employee, who was severely electrocuted on the jobsite.

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Code Orange Moving to Green: New Building Code for Construction Sector

By Duncan Fletcher and Miriam Power, K&L Gates Perth

Background
The passing of the Registered Organisations Bill on by the Senate on Tuesday 22 November 2016 and the passage of the Building and Construction Industry (Improving Productivity) Bill (ABCC Bill) on 30 November 2016 following protracted negotiations between the government and the crossbench brings the two Bills the government used to trigger the double dissolution election earlier this year full circle.

Apart from re-establishing the construction regulator (the Australian Building and Construction Commissioner), the ABCC Bill, once enacted, will implement the Building and Construction Industry (Fair and Lawful Building Sites) Code (Code). The Code establishes an enforcement framework under which building industry participants may be excluded from tendering for or being awarded Commonwealth-funded building work if they are non-compliant.

To read the full alert on K&L Gates HUB, click here.

QATAR COURT OF CASSATION CONFIRMS CONDITIONS FOR THE ENFORCEMENT OF ICC AWARDS IN QATAR

By Matthew Walker and Leanie van de Merwe, K&L Gates, Doha

In Appeal No. 173/2016, the Qatar Court of Cassation considered an appeal against the Court of Appeal’s decision  dismissing an application for the enforcement of an International Chamber of Commerce (ICC) award.

SPEEDREAD

The Qatari Court of Cassation has clarified the position on enforcement of foreign arbitral awards in Qatar, by confirming that none of the domestic requirements relating to certification and authentication of foreign official documents apply to international awards, thanks to the New York Convention.

This judgment is a significant step in the right direction for arbitration in Qatar, especially where it concerns the hotly debated topic of  enforcement of foreign awards. Qatar, which has a mixed legal system (Civil Law based on overriding principles of the Shari’a), does not recognise the principle of legal precedent in the same way as a common law jurisdiction does. Judges are generally not strictly bound by the decisions made in previous cases or by superior courts. However, whilst this judgment may not be strictly binding on the lower courts in Qatar, it may be considered as highly persuasive, and is therefore not a case that the lower courts should overlook lightly.

It remains to be seen whether the French courts will uphold or dismiss the appeal in the parallel proceedings to annul the award. Until then, the Court of Cassation’s judgment stands and provides considerable clarity on the requirements for enforcement of an ICC award in Qatar. (Appeal No. 173/2016).

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