CONCURRENT DELAY DISPUTES AND CLEAR CONTRACTUAL PROVISIONS

By Stephanie McDonald Tuesday, October 30, 2018
  • SHARE THIS ARTICLE

Concurrent delay has always been a hot topic in the construction world. It arises when completion is delayed due to a mix of factors which are attributable to both the contractor and the employer. Such delays cause uncertainty and concern for employers and contractors alike, the reason being the inherent difficulty of attributing legal liability in a complex matrix of facts where both parties may carry a degree of responsibility for delay.

Our recent experience of concurrent delay disputes in Kenya and South Africa has highlighted the importance of specifically legislating in the construction contract for what should happen if concurrency arises. All too often, parties do not address this or they attempt to do so but the risk allocation is unclear, leading to disputes. Falling back on the legal principles governing concurrent delay in a particular jurisdiction may not provide an easy answer because the law in this area is not always clear.

Impact of exclusion clauses

In deciding for themselves how to approach concurrency, the parties may agree that where it arises, the contractor will have no right to apply for an extension of time (on the basis that he or she would have been late anyway) or that the contractor’s extension of time entitlement will be reduced to the extent the delay is attributable to the employer.

Contractors often attempt to argue that such clauses are unenforceable on the basis that they offend the ‘prevention principle’, i.e. that the employer cannot benefit from his or her own faults. However, in the July 2018 judgment of the UK Court of Appeal in North Midland Building Ltd v Cyden Homes Ltd, the Court re-confirmed that concurrent delay exclusions are valid, enabling employers to rely on the effectiveness of such clauses without running the risk of setting time at large.

English law judgements in construction disputes often set the trend for similar approaches in other common law-based jurisdictions, which explains why the North Midland case has attracted attention outside the UK.

Successfully arguing the point in Kenya

Our recent experience of concurrent delay disputes in Kenya has shown the effectiveness of adopting a commonsense approach to assessing causation, based on UK case law.
 
In one such recent dispute involving the FIDIC Red Book (1999 edition), the contractor had initiated the dispute and was claiming an extension of time as a result of delays caused by events attributable to the employer, including certain political risks and variations instructed by the employer.

On behalf of our client, the employer, we successfully argued that the variations were not the dominant and substantive cause of the delays in completion. It was clear that English case law on causation, as adopted by the Kenyan courts and cited with approval in many decisions involving concurrent delay, remains valid today.

Concurrent delay under the new FIDIC

With the recent 're-write' of the FIDIC rainbow suite, some people have been surprised that the new concurrent delay clause did not go further in offering a standard position on concurrent delay. Essentially, the new FIDIC (Sub-Clause 8.5) leaves the parties to decide on the risk allocation by referring to the ’rules and procedures stated in the Special Provisions’. If there are no rules stated, the default position is that the contractor’s entitlement to an extension of time will be assessed ‘as appropriate taking due regard of all relevant circumstances’.

In effect, the legal principles on concurrent delay in each jurisdiction will then determine the approach. While FIDIC could have been bolder in attempting to standardise the position in Sub-Clause 8.5, employers and contractors will often prefer to write their own rules on concurrent delay, so the link to the Special Provisions acts as a useful prompt for parties to give due consideration to this important topic.