FIDIC webinar on force majeure draws 800+ attendees

09 Apr 2020

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The second of FIDIC’s Covid-19 webinars took place on Thursday 9 April with an event focusing on force majeure. The webinar, which was attended by more than 850 attendees, explored how Covid-19 could impact various aspects of projects, including supply and labour, health and safety requirements, activities on site and performance. Contractual issues including force majeure clauses as well as other relevant clauses in FIDIC forms of contract were discussed at length during the 90-minute event.

Chaired by FIDIC CEO Nelson Ogunshakin, webinar speakers included FIDIC board member Aisha Nadar, Vincent Leloup, chair of the FIDIC Contracts Committee,  Clare Marshall, legal director at Arup Group, Angus Rankin, partner at Hogan Lovells, Charles Kim, chief legal counsel of ACEC in the USA and Daduna Kokhreidze, head of legal and compliance at FIDIC. The speakers shared their experiences from across the world and offered help and guidance to member associations and firms facing the challenge of dealing with the current crisis.

The first speaker, FIDIC contracts committee chair Vincent Leloup said that the issue of force majeure was one of the first things that people think of during the current pandemic, given the prospect of projects being delayed or halted. He highlighted that there were no specific expressed rights to monetary relief under force majeure clauses in the FIDIC contracts and it was more likely that extra time would be granted to contracts. Leloup mentioned the difference between local, regional and national government regulations in relation to who can work and when and the effect that these could have on contracts and force majeure. He said that guidance would be published in the next couple of days on force majeure by the FIDIC contracts committee.

Clare Marshall, legal director at Arup Group, highlighted that Arup staff were now working remotely. There were obviously challenges in that, she said, but also opportunities. The health, safety and wellbeing of staff were central to everything that Arup is doing, said Marshall, but clients and projects are also very important and the need to keep projects afloat was central at a time like this. “Our staff are doing important work supporting sites and fulfilling obligations on projects,” said Marshall.

She also highlighted that the role of technology was well and truly to the fore in the current crisis. Technology has been critical in keeping Arup connected with its staff, clients and stakeholders, she said. The firm was still working on projects and still winning work, said Marshall, who also stressed that it was important to be collaborative in the current climate. “None of us have ever been in a situation like this and we need to work together and engage with all participants,” she said. “At times of crisis, to avoid chaos you need rules. The importance of a contract is crucial. Knowing your contract and sticking to the workings of it is vital. Take steps to minimise the impact of issues. It’s a complex situation currently, but collaborating and communication is key,” she said.

Angus Rankin, partner at Hogan Lovells, talked about the unprecedented challenges facing the industry in the current climate. “No contract on earth could have contemplated the headwinds we are seeing now,” he said. FIDIC offers scope and a framework for dealing with the current circumstances but a purely contractual adversarial approach may not lead to the best outcome, Rankin said. “This is a case where different streams of communication will need to exist in parallel, including ‘without prejudice’ discussions. Without such a candid approach it is difficult to work out what the best solution might look like,” he said.

Rankin said that if parties collaborate now, they might be able to exploit windows of opportunity that might otherwise not be there. “By all means give early notice of claims but we are entering a phase where parties need to think about causation and keeping records is crucial,” he said. “We as an industry are well placed as we are already used to analysing time and cost impacts. So, take contemporaneous records and build any case from the ground up but think about those parallel channels,” said Rankin. “It does no one any good to take a purely contractual route,” he said.

Charles Kim, chief legal counsel of ACEC shared his thoughts from the USA on force majeure in a Covid-19 context. Consulting with legal counsel was obviously vital, he said. He took a wider look at the projections for the pandemic that will impact on the construction industry and said that it will be difficult for stable business plans to emerge from a situation where the intensity of the pandemic rises and falls in an uneven way. Like other speakers, Kim stressed that it was necessary to preserve “a good faith collaboration between contract parties” and be mindful that “a successful outcome will rest on an understanding that we are all in this together”.

“Addressing this challenge will involve every skillset that the engineering community possesses,” said Kim. “We have had to educate ourselves – in epidemiology and world demographics – and every day ACEC is circulating information to members to keep them informed.

Angus Rankin from Hogan Lovells made some interesting observations on what might happen when projects are finally finished and delivered but at a time of economic turmoil. “Will completed projects still open? Might they be mothballed? It’s a complicated situation,” he said.

Clare Marshall said that force majeure should not be seen as a ‘get out of jail free card’. “It’s important to look at all the issues and keep the channels of communications open,” she said. In common with all the speakers, she said that collaboration and discussion was key to navigating a path through the current crisis.

The webinar series and the information outputs being circulated on the crisis is clearly positioning FIDIC as a thought leader at the present time. Going forward it will be important to bring together lessons learned to highlight what factors worked in parties resolving difficulties and what factors did not so that the industry can learn lessons and examine the benefits of collaboration.

There were hundreds of questions from webinar participants which led to further interesting discussions at the event. It was impossible to answer them all but no doubt there will be more opportunities to quiz a new set of speakers at the next FIDIC webinar which is on the subject of COVID 19 and its impact on joint venture transactions. The webinar takes place on Tuesday 14 April at 12 noon CET.

Click here to book your place on the event on joint venture transactions.

Please click below to view a recording of the webinar.

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