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Riots give clause for concern

LAW

In the event of delays caused by protests such as the G8 demonstrations last week, it is important to know where you stand contractually, writes Catriona Dodsworth

THE CIVIL unrest that attended the G8 Summit recently resulted in chaos in Scotland's capital city.

On July 4, the city centre was paralysed as over 1,000 demonstrators confronted police.

The clashes began around 1:00 pm and continued into the evening, blocking traffic from entering the city centre.

Such violent demonstrations do not happen very often but when they do they can be extremely disruptive ? remember the Poll Tax riots?

One of the consequences of this type of unrest is that construction projects become disrupted or grind to a halt.

During the Poll Tax riot in Trafalgar Squa re, site huts and parts of an unfinished building were destroyed by arson.

The possibility of serious disruption to a construction project gives rise to the question of whether a contractor whose works have either been delayed or stopped by such unrest can obtain an extension of time under his contract and thereby avoid any liquidated damages for delay.

The answer depends on the time of the relevant construction contract. Here are the provisions relating to the granting of extensions of time under three of the most common standard form contracts: JCT, ICE and GC/Works.

Extensions of time under the 'JCT Private With Quantities' contract are dealt with in Clause 25. The key question here is whether the activity falls within the definition of a 'Relevant Event' and whether practical completion will be delayed as a result. So was the G8 riot a 'relevant event'?

There are four sub-clauses to Clause 25.4 that point to an answer. The first is Clause 25.4.3: 'Loss or damage occasioned by any one or more of the Specified Perils'. Both riot and civil commotion are covered by a 'specif ied per il' and so this clause could be used to obtain an extension of time where loss or damage has occurred.

Clause 25.4.4 cites: 'Civil commotion, local combination of workmen, strike or lock-out affecting any of the trades employed upon the Works or any of the trades engaged in the preparation, manufacture or transportation of any goods or materials'.

This clause should be used where civil commotion has affected the execution of the works, for example where workmen or deliveries have been unable to get to site.

Clause 25.4.9 refers to 'the exercise after the Base Date by the United Kingdom Government of any statutory power which directly affects the execution of the Works by restricting the availability or use of labour which is essential to the proper carrying out of the Works or preventing the Contractor from, or delaying the Contractor in, securing such goods or materials or such fuel or energy as are essential to? the Works'.

This clause could be used where access to the site is restricted by police and the contractor is not allowed to enter the site.

The fourth sub-clause is Clause 25.4.16: 'The use or threat of terrorism and/or the activity of the relevant authorities in dealing with such use or threat'. This clause could be used where there is no civil commotion or rioting but the police are concerned about terrorism. Remember also that a contractor must use his 'best endeavours' to prevent delay in the process of the works.

The notice requirements of Clause 25.2 require the contractor to give notice 'forthwith' as the delay becomes reasonably apparent. This notice must identify the cause of the delay and demonstrate any 'relevant event'.

Remember also that one of the areas commonly targeted for amendment by employers is the list of relevant events and it may be that some of the above events are excluded or watered down by a project-specific schedule of amendments.

In the ICE Conditions, Clause 44(1) has a catch-all provision that provides for an extension of time where there are 'other special circumstances of any kind whatsoever which may occur'.

Similarly, clause 36(2) of GC/Works/1 provides for an extension of time where there are 'any other circumstances (other than weather conditions) which are outside the control of the Contractor or any of his subcontractors and which could not have been reasonably contemplated under the contract'.

This clause may have its limitations as it could be argued that the effect of the G8 Summit could have been 'reasonably contemplated'.

Clearly this may depend to some extent upon where any civil unrest takes place.

Whereas rioting in Auchterarder (near where the Summit was actually held) may be reasonably contemplated, rioting in Edinburgh and Glasgow might not be.

Again, remember that employers will often seek to water down the protection afforded by such catch-all provisions referred to above by a projectspecific schedule of amendments.

So what should you do if faced with a delay caused by unrest or potential unrest during such events?

First of all, for any new contracts, you must ensure that rioting is dealt with in the contract. For 'old' contracts you should dust them down and check the relevant provisions.

You must also use your 'best endeavours' to reduce the risk of delay and serve any notices of delay required under your contract.

Finally, you should also give consideration to the recoverability of costs such as loss and expense.

KEY POINTS

One of the consequences of th is type of un rest is that construction projects, particularly those in the city centre, become disrupted or grind to a halt.

Most contracts provide for 'special circumstances' that are outside the control of the contractor, but there are of ten limitations.

Check that riots and civil unrest are covered.

A contractor must use his 'best endeavours' to prevent delay in the process of the Works.

Law Report is a weekly column covering legal issues of all kinds ? including contractual, employment and industrial relations. To h e lp us provide a steady f low of quality, readable legal articles, we have created a panel of expert advisers. They are: ¦ Daniel Atkinson, executive director of Atkinson Law; ¦ James Bell, partner with London law firm Christian Khan; ¦ Guy Cottam, a conciliator, arbitrator and former chairman of the arbitration advisory panel of the Institution of Civil Engineers; ¦ Catriona Dodsworth, a partner with law firm Pinsent Masons; ¦ Rudi Klein, visiting professor of construction law at the University of Wolverhampton and chief executive of the Specialist Engineering Contractors' Group; ¦ Lindy Patterson, partner and head of construction group with Dundas & Wilson; and ¦ Jeremy Winter, a partner with law firm Baker & McKenzie.