English Construction Law in the International Market

English Construction Law in the International Market Presented by: Professor Nazzini Date: November 2022 Roadmap - The use of English law internationally - Choice of English law in the international construction market - Influence of English law in the international construction market The Use Of English Law Internationally - 43% of the 606 respondents to the 2019 study on governing law & jurisdictional choices in cross-border transactions by Singapore Academy of Law selected English law as the most frequently used governing law - 54.9% of the 224 respondents to the 2015 BIICL survey have agreed upon or recommended a choice of law clause in favor of English law between 2010 and 2015 - 76% of arbitrations heard by LCIA in 2021 included a choice of law clause in favor of the English law - Giles Cuniberti, 'The International Market for Contracts: The Most Attractive Contract Laws' (2014) 34 (3) Northwestern Journal of International Law & Business 455, 472 • (...) for international contracts involving international parties, English and Swiss laws are on average three times more attractive than US State laws and French law, and almost five more times more attractive than German law - Luise Merrett and Antonia Sommerfeld, 'Incentives for Choice of Law and Forum in Commercial Contracts: Predicting the Impact of Brexit' (2020) 3 European Review of Private Law 627, 635 • (...) English substantive law is the prevailing choice of businesses in international commercial contracts. Choice Of English Law In Construction Contracts - Law governing the main construction contract is often the law of the country where the project is carried out. However, the law governing other, related contracts such as subcontracts, supply contracts, JVs and consortia is often English law - Even when the law governing the contract - e.g. in the case of the main construction contract - is not English law, the drafting of the contract is often heavily influenced by English law • Role of the Engineer • Detailed provisions on notices • "Reasonable skill and care", "workmanlike manner" and "fitness for purpose" obligations • Limitation of liability clauses using English law concepts such as foreseeability, indirect damages, consequential damages, loss of profit, fraud, gross negligence • Overall approach to contract drafting heavily influenced by English law Why Do Parties Choose English Construction Law? - English construction law has become a global market standard - Legal certainty - Right balance between flexibility and inflexibility - Innovativeness - role of the TCC - Oxera, 'Economic value of English Law', 11 • English law has the flexibility to adapt to and solve complex market problems relatively quickly. By providing solutions early in various markets, English law often enjoys the first-mover advantage' by becoming a global market standard in these areas. This can occur through the establishment and building of precedent, providing further predictability to users of English law. Impact of Brexit? - Probably no impact on non-EU parties/projects in non-EU jurisdictions - How about EU parties and projects? • English construction law is to a large extent independent of EU law • Rome I Regulation has been incorporated into English law • Potential benefits of Brexit  Perception of the UK as an independent jurisdiction/neutrality  No impact of EU law on English law - increased predictability  Availability of a broader range of remedies including anti-suit injunctions (Enka v Chubb [2020] UKSC 38) Influence Of English Construction Law Internationally - Use of English contract forms • - JCT forms of contract are widely used in Nigeria and Singapore Influence of English contract forms • The 1957 FIDIC Red Book was based on the 1956 ACE Form which, in turn, was based on the 1945 ICE Form • Although since 1957 FIDIC forms of contract has gone through multiple revisions they are still based on common law concepts e.g.:  Role of engineer and determinations – FIDIC 2017 Conditions of Contract for Construction (Red Book), cl 3  Obligation to carry out works in a workmanlike manner - FIDIC 2017 Conditions of Contract for Construction (Red Book), sub-cl 7 Role Of The Engineer And Determinations In FIDIC - Dual role of the engineer - acting as an employer's representative combined with a duty to make fair determinations - The duality of the engineer's role has been recognized in traditional English construction contracts and the case law - This dual role has also been recognized in other common law jurisdictions e.g. • Canterbury Pipe Lines Ltd v Christchurch Draining Board (1981) 16 BLR 76, NZCA (at 98)  Duty to act fairly and impartially • Kane Constructions Pty Ltd v Sopov [2005] VSC 237 [617] Obligation To Carry Out Works In A "Workmanlike Manner" In FIDIC - The 2017 Red Book, sub-cl 7.1 • The Contractor shall carry out the manufacture, supply, installation, testing and commissioning and/or repair of Plant, the production, manufacture, supply and testing of Materials, and all other operations and activities during the execution of the Works:  (a) in the manner (if any) specified in the Contract;  (b) in a proper workmanlike and careful manner, in accordance with recognized good practice; and... - Such obligations can be found: • in English case law as early as 1862  (...) it must be taken that a workman undertakes to do his work in a workmanlike manner.... [Pearce v Tucker (1862) 176 ER 61] • English statutes  Obligations to use a proper and workmanlike manner are equivalent to exercise reasonable skill and care  In a [relevant contract for the supply of a service] where the supplier is acting in the course of a business, there is an implied term that the supplier will carry out the service with reasonable care and skill [Supply of Goods and Services Act (1982), s 13] • English standard forms of construction contract  The Contractor shall carry out and complete the Works in a proper and workmanlike manner and in compliance with the Contract Documents, the Construction Phase Plan and Statutory Requirements and shall give all notices required by the Statutory Requirements. [JCT SBC/Q 2016 Standard Building Contract With Quantities 2016, cl 2.1] Construction Acts Around The World - Main themes of the Part II of the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996): - • Right to interim payments • Right to adjudicate disputes • Mandatory provisions - it is impossible to contract out of the above rights Examples of foreign legislation based on the HGCRA 1996 • Building and Construction Industry Security of Payment Act 1999 (New South Wales) (BCISPA 1999) (NSW) • Building and Construction Industry Security of Payment Act (Cap 30B, 2006 rev ed) (Singapore) (BCISPA 2006) (Sing) • Construction Act 1990 (Ontario) - the 2017 amendments introduced among others prompt payment provisions and mandatory adjudication • Federal Prompt Payment for Construction Work Act 2019 (Canada) Impact Of English Contract Law: Prevention Principle - Recognized in construction context as early as 1838 - Described as one of the 'particular construction law concepts which have derived from the English common law' (Sir Vivian Ramsey, 'Construction Law: The English Route to Modern Construction Law' (2022) 75 Ark L Rev 251, 252) - Recognized in Australia - Australian jurisprudence helped shape the current position in English law • Turner Corporation Ltd (Receiver and Manager Appointed) v Astutely Pty Ltd (1997) 13 BCL 378 • Turner Corporation Ltd (In Provisional Liquidation) v Co-Ordinated Industries Pty Ltd & Others (1995) 11 BCL 202 - Recognized in Singapore • Lim Chin San Contractors Pte Ltd v LW Infrastructure Pte Ltd (No.1) [2011] SGHC 162 [28] • Chua Tian Chu v Chin Bay Ching [2011] SGHC 126 [62] • CEVIF • CON