The Week That Was - 26 July 2024

Welcome to the week that was, a round-up of key events in the construction sector over the last seven days.

Bill to amend the English Arbitration Act 1996 re-introduced to Parliament after general election

On 18 July 2024, the Bill to amend the Arbitration Act 1996 was re-introduced into Parliament and had its first reading in the House of Lords.

The Arbitration Bill was previously introduced to Parliament in November 2023 and had almost completed its passage through the House of Lords when the general election was called in May 2024.

Prior to the election, two issues were raised with the Bill which may have affected its passage into law.  Firstly, whether Clause 1 of the Bill, which addresses the governing law of arbitration agreements, would apply to non-ICSID investment treaty cases and secondly, whether measures should be introduced to combat corruption and fraud in arbitration.

How these issues will be rectified remains to be seen, but the fact that the Bill has had its first reading so soon after the election suggests that the Government means to expedite its passage into law.

You can read more about the Arbitration bill here and keep up to date with its passage through Parliament here.

Supreme Court decision on limits of "reasonable endeavours" in force majeure clauses - RTI Ltd v MUR Shipping BV [2024] UKSC 18

In the case of RTI Ltd v MUR Shopping BV, the Supreme Court has considered the question of what a "reasonable endeavours" obligation might require a party to do in the context of a force majeure clause in RTI Ltd v MUR Shopping BV.

It has concluded that an obligation to exercise reasonable endeavours does not extend to requiring the party relying on the force majeure clause to accept non-contractual performance, even where it would have suffered no detriment in doing so.

In its decision, the Supreme Court reinforced the primacy of the parties' bargain as documented in the contract, emphasising the importance of contractual certainty and predictability.  The Court considered that to decide otherwise would import "considerable legal and factual uncertainty".

This decision has implications for those drafting commercial contracts.  They must decide whether to attempt to cater for unpredictable events in the allocation of risk in their contract or whether to rely on commercial pragmatism and deal with risks as and when they arise.

You can read the judgment here.

Call for clarity after product safety bill announced

Industry figures have called for clarity around product-marking regulations after the Government signalled it may allow alignment with European standards to continue.

Background papers published after the King's Speech state that the proposed Product Safety and Metrology Bill will ensure "that the law can be updated to recognise new or updated EU product regulations, including CE marking, where appropriate, to prevent additional costs for businesses and provide regulatory stability".  However, the papers also indicate that “the legislation will also ensure the UK can end recognition of EU product regulations, where it is in the best interests of UK businesses and consumers”.

With the new UK Conformity Assessed (UKCA) mark set to replace the CE mark for construction products after 30 June 2025, the construction industry awaits further details.

You can find out more here.

Insolvencies to remain high until the impact of the new Government's plan for infrastructure is felt, warn experts

Figures released by the Insolvency Service on 19 July reveal that construction remained the worst-hit sector for insolvencies in the year to May 2024, as in April 2024.

Mark Supperstone, Managing Partner at ReSolve, said that the King's Speech set out helpful policies including plans to deliver 1.5 million new homes, but that the timeline for the commencement of this project remains unclear.  As such, he notes that the sector will remain under pressure.

Others in the construction industry comment that insolvencies are likely to remain high in the second half of the year as interest rates remain high.  On a brighter note, one expert commented that the sector should take confidence from the nation's future direction, particularly when it comes to infrastructure investment.

You can read more here.

Ashe appointed for £12 million eco school extension in Bedford

Ashe Construction has been awarded a £12 million design and build contract for a 60-week construction project for an extension at Bedford Academy.  Pick Everard will be the project managers for the scheme, which is expected to be completed in time for the start of the 2025 school year.

The project will result in the construction of 16 classrooms, new changing facilities, a dining hall and a community café and the layouts of these areas have been influenced by student feedback.  The building will be designed with the intention of achieving Net Zero Carbon in Operation status and aims to use materials which will require low maintenance throughout the building's lifespan.

In collaboration with Pick Everard, Ashe will expose students to various careers in the construction industry, in an effort to help address the skills shortage in the sector.

You can read more here.

Authors for this week are:  Fiona Engledow, Ella Crawley-Till and Sky Arklay

Disclaimer: The information in this publication is for guidance purposes only and does not constitute legal advice.  We attempt to ensure that the content is current as at the date of publication, but we do not guarantee that it remains up to date.  You should seek legal or other professional advice before acting or relying on any of the content.