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Construction COVID-19 Bulletin – April 2020

3 June 2015

A COVID-19 Legal Toolkit for the Construction Industry. In the first of several bulletins, HFW advises how the construction industry can safely navigate the unprecedented challenges of the COVID-19 pandemic.

The COVID-19 pandemic is one of the most significant events of our time. Amidst the constant flood of new developments and the uncertainty these bring, businesses can easily feel overwhelmed and threatened. The construction industry is no different. The good news is that there are clear actions available to manage – and minimise – the impact of COVID-19 on your business.

Despite the challenges posed by COVID-19, HFW is fully mobilised and ready to advise on all contractual issues arising from the pandemic to minimise its impact. Whether you need advice for ongoing projects or on the terms of future contracts – HFW has the expertise and resources to help your business safely navigate the unprecedented challenges of the COVID-19 pandemic.

The current landscape and Bulletins to come

As the situation develops over the coming months, we will be providing regular bulletins on these key issues and the impact of COVID-19 on the Construction Industry in general.

At a glance: COVID-19 and the Construction Industry (the UK)

In the UK there is currently significant confusion about whether construction sites are exempt from the three week lockdown announced by the Prime Minister on 23 March 2020. The UK Government’s guidance does not specifically list construction workers and the industry in general as an ‘essential service’ that is exempt from the lockdown.

However, a statement from the British Prime Minister’s spokesperson confirmed that – as of 24 March 2020 – the Government’s policy was to allow building sites to remain open and to urge workers to practice social distancing measures on site. It is difficult to see how live projects will be able to accommodate measures such as keeping two meters distance between individuals and minimising physical contact.

Despite the UK Government’s policy that sites can stay open, the Mayor of London and First Minister for Scotland have separately advised that building sites should close to minimise the risk of further infections. In the absence of direct instructions from the UK Government to close sites, companies that choose to voluntarily suspend work (as many have already done) face a complicated environment in which to pursue claims for extensions of time and the additional costs caused by COVID-19.

Future bulletins

Whether or not building sites remain open for the foreseeable future, COVID-19 will substantially impact the construction industry. To help clients overcome these challenges, HFW will provide regular bulletins with advice on:

  • Delay & Disruption: COVID-19 will inevitably cause extensive delay and disruption to ongoing projects. We will advise on the key issues, such as: (1) COVID-19 as a Force Majeure event and the key issue of foreseeability (2)whether the COVID-19 response amounts to a change in laws under particular contracts; (3) the evidence required to link delays and disruption to the pandemic; (4) recovering additional material and labour costs (5) termination and frustration of contracts.
  • Future Contracts: COVID-19 fundamentally challenges the way current standard-form contracts allocate risk between the contractor and employer. We will advise on how these contracts can be amended to include ‘Corona Clauses’ to deal with disrupted supply chains, labour and material shortages, insurances and site closures.
  • Live disputes and claims: Formal disputes arising from construction projects can run for months or even years. COVID-19 is already extending the timetables of ongoing adjudications, arbitrations and court proceedings. Our bulletins will provide practical updates concerning the running of disputes in the new environment. In particular, extended timetables, online submissions and hearings, and good practice for remote consulting with experts and witnesses.
  • Contract management health checks: Good contract management and record keeping is vital in the best of times but crucial if contractors are to run viable claims arising from COVID-19. We will give some basic and easy-to-follow tips for keeping e-records, submitting electronic notices and an overview on when COVID-19 related notices should be given with reference to standard form FIDIC, NEC and JCT construction contracts.

Pandemic notwithstanding, it’s very much ‘business as usual’ at HFW and we are working with clients across our international network to help them minimise the impact of COVID-19 on their businesses – and to prepare for what’s next. We pride ourselves on actively maintaining contact with our clients and providing advice tailored to their needs. For any advice in relation to COVID-19, or construction advice in general, our team is ready to assist.

For further information or assistance, please do not hesitate to contact any of the contributors to this bulletin or your usual contact at HFW.

Max Wieliczko
Partner, London
T +44 (0)20 7264 8036

Michael Sergeant
Partner, London
T +44 (0)20 7264 8034

Ben Mellors
Partner, London
T +44 (0)20 7264 8060

Richard Booth
Partner, London
+44 (0)20 7264 8385