Ruth Wilkinson and Louise Shiels forecast what 2014 has in store, from a legal perspective, for the construction industry.

All the signs are that 2014 should be a positive year for the construction industry with construction outputs scheduled to grow - that gets us to thinking about what this year may have in store from a legal perspective.

We can look forward to a whole host of changes in public procurement, introduction of new contract forms and seeing the impact of the reforms to the civil procedure rules on construction disputes. On a day to day basis will we see an increased focus on net contribution clauses by consultants and adjudications based on collateral warranties? We look forward to an interesting year ahead ...

Procurement

In the sphere of public procurement so many changes lie ahead in 2014. How are contractors and public sector bodies supposed to keep up? Not only do we have the EU directives (the revised public sector directive, revised utilities directive and new concessions directive) being updated but we have the different parts of the UK introducing their own changes including, for example, the Welsh and Scottish Blacklisting guidance and the Scottish Government introducing its own statutory rules for below threshold contracts.

New contract forms

A new JCT suite is planned for 2014/2015 including a practice note on BIM, revisions to PBA provisions and a new target cost contract to possibly rival NEC3. FIDIC is also due to revise their contracts in the spring and LOGIC is in the progress of updating their suite of contracts.

Court Reforms*

In April 2013 there were significant reforms introduced to the civil procedure rules. These reforms included the introduction of cost budgeting affecting claims under £2 million meaning, in practice, more paperwork and significant consequences for non-compliance. The full effect of these reforms has yet to be felt but indications from the courts so far are that the reforms are being applied vigorously. Mr Justice Ramsey in the Technology and Construction Court is currently carrying out a review of progress - results expected April 2014, so a clearer picture is likely to emerge as to the practical impact of these reforms. In the meantime, there is speculation that there may be a return to domestic arbitration to avoid the impact of these new reforms.

Collateral Warranties

Collateral warranties will remain in the spotlight - of that we have no doubt. What is interesting is the increasing reliance on warranties to found claims for latent defects many years down the line. Will the industry embrace the possibility of adjudication pursuant to collateral warranties following the decision in Parkwood Leisure v Laing O'Rourke? In certain circumstances this will be legally possible but may be inappropriate particularly where a dispute has arisen many years after the contract was completed; where the dispute does not need a quick interim answer; or the dispute involves allegations of professional negligence. Speaking of adjudication, we expect we will see more unusual arguments when resisting enforcement of an adjudicator's decision; perhaps in the same vein as the Scottish case of Blyth & Blyth v White & Mackay, where the consulting engineers successfully resisted enforcement on the basis of a breach of their human rights to enjoy peaceful enjoyment of their possessions.

Net Contribution Clauses

In 2013 there were a couple of interesting cases on net contribution clauses. This is a clause which seeks to limit the grantor's liability to that share of the claiming party's loss for which it is to blame. In 2014, we should see an increased focus on how these clauses can be drafted effectively. In West v Ian Finlay (TCC) the architect tried unsuccessfully to rely on a net contribution clause to limit its liability for damages as against the insolvent contractor. The court held that the clause was not effective because of the way it had been drafted. We anticipate that consultants will pay a lot more attention to the terms of the net contribution clauses in collateral warranties to avoid them bearing the risk of contractor insolvency.

There is no doubt that over the next 12 months, construction law will continue to change and keep us on our toes - ensuring that it is an interesting year for all involved in the industry.

* English Courts

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