NEC contracts are widely used internationally and have become more common in Ireland in recent years in the utilities and infrastructure sectors.
They are used on some semi-state and large infrastructure projects in Ireland. For example, Metrolink on their website has indicated that the design-build contracts for the civil infrastructure contracts for the tunnels, shafts, portals, station structures (underground, retained cut, and at-grade), viaducts, and related civil infrastructure will be based upon the NEC4 Engineering and Construction Contract (ECC) Option C Target Contract with Activity Schedule.
The NEC4 contract suite was launched in 2017 and further updated with amendments in 2023. NEC recently published new conflict avoidance clauses and a practice note with guidance for using its conflict avoidance process on NEC4 contracts and sub-contracts.
Key Features:
- Clauses – The clauses provide a procedure for resolving disagreements at an early stage using a conflict avoidance panel in an NEC4 contract. Versions are provided for any NEC4 main contract or sub-contract using dispute resolution Option W1 or W2. These would be incorporated as a "Z clause". As an alternative to these clauses, parties using dispute resolution Option W3 already have an equivalent procedure via a dispute avoidance board (DAB). The DAB carries out the functions of the conflict avoidance panel.
- Conflict Avoidance Panel – This panel is selected by the parties or nominated by the conflict avoidance nominating body specified in the contract to provide a recommendation to resolve a disagreement between the parties. An initial scoping meeting is held with the parties within one week of appointment to define the disagreement and scope of the proposed recommendation, timings and particulars of the referral process and common understanding of the referral procedure. Once the reasoned recommendation for resolving the issue is issued, it is implemented if the parties are satisfied with the recommendation. Once implemented, it is legally binding upon the parties. If dissatisfied, the parties may refer a dispute over the recommendation to the senior representatives.
- Conflict Avoidance – The client and contract cooperate in the early identification, notification, or resolution of any disagreement that may lead to a dispute. A dispute is triggered by notice to the other party and if not resolved within the noted timelines, is referred to the Conflict Avoidance Panel. As part of the process, an exchange of submissions and documents is envisaged within particular timelines.
- Costs – Each party bears equally the costs of the Conflict Avoidance Panel and any fees of the conflict avoidance nominating body.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
