The Week That Was - 27 May 2022

Welcome to The Week That Was, a round-up of key events in the construction sector over the last seven days.

Commercial Court rules Arbitrator has no jurisdiction 

In National Investment Bank Ltd V Eland International (Thailand) Co. Ltd (2022) EWHC 1168 (COMM), the first Defendant had commenced proceedings in the Accra Court in Ghana relating to a collateral management agreement which contained a permissive arbitration agreement.  The Claimant served a third-party notice on the second defendant, making it a party to a counterclaim in the proceedings.  

The second Defendant successfully applied to stay those proceedings in favour of arbitration and the commercial court allowed the Defendants' application to appoint an arbitrator under s18 of the Arbitration Act 1996 (the Act).  The Claimant then applied for relief under s.72(1) of the Act for a declaration that the arbitrator had no jurisdiction to determine the Defendants' claim against the Claimant.

Judgment was handed down on 17 May 2022.  Foxton J upheld the Claimant's arguments regarding the interplay between s.18 and 72 of the Act and they were successful in their application for relief.  Foxton J held that the defendants had waived their right to arbitrate the disputes raised in the proceedings because they had acted in such a way as to lead the Claimant to believe they had completed their election. 

You can read the full judgment here.

New 'Installer Pilot' report

In 2020, the 'Setting the Bar' report outlined how there must be improvements in those procuring, designing, constructing, inspecting, assessing, managing, installing and maintaining higher risk residential buildings.  The new 'installer Pilot' report sets out the current state of competence arrangements for those installing products and systems in buildings.  It provides a baseline to identify the shortfalls outlined in the 'Setting the Bar' report and considers the changes that are needed to create competence frameworks going forward.  

The Construction Leadership Council (CLC) has welcomed the publication. 

For further information, please click here. The full pilot report can be accessed here.

Prices rise as a result of Ukraine war

Almost nine out of ten contractors have seen price increases as a result of the war in Ukraine, a report by Gleeds has found.  The report focuses on: 

• Increased energy costs impacting on materials and product production; 
• Oil price rises impacting on petrol costs, which affects deliveries and increases delivery costs; and 

The impact on material supplies, particularly steel, as a result of Ukraine and Russia being significant producers and exporters of steel and Belarus (another significant exporter of steel products) also being subject to UK sanctions.  

The resulting cost escalation is driven by the increased price of steel building products and is said to be adding severe pressure to project budgets.  67% of those surveyed by Gleeds said that the current challenges are impacting growth in the construction industry with schemes said to be stalling due to uncertainty.  That said, tendering activity appears to have remained strong, with just 8% of contractors saying that tender opportunities had decreased in the first quarter.

You can read the full report here.

Elizabeth Line

The Elizabeth Line (previously known as Crossrail), London's new east-west railway, finally opened on 24 May 2022 after almost four decades since it was initially proposed and 13 years of construction. 

The entire line stretches for more than 60 miles and includes a pair of new tunnels under London, each 13 miles long.  There are 41 stations, including 10 new stations, and the line will increase Central London's rail capacity by 10%.  Each train is 200m long, holding up to 1,500 passengers, and it is estimated that 170m passengers will use the line annually by 2026.  

The final cost of the new line is estimated at £19bn (originally budgeted at £14.8bn).  The line is being opened in stages, and it should be possible to travel from one end to the other, uninterrupted, by May 2023. 

You can find out more here.

National Highways announces preferred firms for Stonehenge Tunnel

The MORE joint venture, made up of FCC Construcción, WeBuild and BeMo Tunnelling, has been selected by National Highways to completed the £1.25bn Stonehenge tunnel project.  The proposed project is an upgrade to the existing A303, which will include a tunnel passing underneath the World Heritage Site, Stonehenge.

The announcement was made despite the planning application having not yet been granted, after the previous decision to grant a development consent order was quashed. 

However, National Highways seem to be pressing ahead with plans in order to keep to the project timetable.  Derek Parody (Project Director) has said: “The announcement of a preferred bidder in no way pre-empts any [planning] decision, and once that is finalised, and should the Development Consent Order be granted, having a contractor in place will put us in the strongest possible position to deliver this transformational scheme and deliver the benefits we know it can.”

You can read more here.

Update on the Fire Safety Act 2021 

Whist the Fire Safety Act received Royal Assent in 2021, it was not brought into force at that time.  On 18 May 2202, the Government published the Fire Safety (England) Regulations 2022, which bring into force sections 1 and 3 of the Fire Safety Act with effect from 16 May 2022.  These sections concern which parts of a high-rise residential property will fall within the remit of the Regulatory Reform (Fire Safety) Order and define the duties of the Responsible Person. We still await the publication of the risk assessment procedures that the Responsible Person must follow in order to discharge their duties.  

Thanks to Ellen Ryan, Oliver Bulleid and Ella Ennos-Dann for contributing to this week's edition.

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.