Construction Forecast 2014

Scotland

All the signs are that 2014 should be a positive year for the construction industry with construction outputs scheduled to grow. What will 2014 have in store from a legal perspective?

1. Procurement Reform
In the sphere of public procurement so many changes lie ahead in 2014. Will contractors and public sector bodies be able 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 also have different parts of the UK introducing their own changes including, for example, the Scottish Blacklisting guidance and the Scottish Government introducing its own statutory rules for below threshold contracts.
2. 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 are also due to revise their contracts in the spring and LOGIC are in the progress of updating their suite of contracts.
3. Collateral Warranties in the Spotlight
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. Strategy will remain of paramount importance when resolving disputes successfully.
4. New Adjudication Arguments?
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 Whyte and Mackay v Blyth & Blyth Consulting Engineers Ltd, where the consulting engineers successfully resisted enforcement on the basis of a breach of their human rights to peaceful enjoyment of their possessions.
5. Focus on Net Contribution Clauses
In 2013 there were a couple of interesting cases on net contribution clauses. A net contribution clause 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. The drafting of such clauses also came under the spotlight in a Scottish case at the end of the year called RBS V Halcrow where, once again, the clause, as drafted, did not provide the required protection for the consultant. We anticipate that consultants will pay a lot more attention to the terms of net contribution clauses in 2014 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.