Insight Service: Dispute resolution

Nancy Lamb Joins Conexus Law to Launch Collaborative Contracts Service

Nancy Lamb

Conexus Law continues its growth and recruitment drive with the hire of Nancy Lamb, a leading expert in data centre construction contracts.

Lamb, who is known for her straight-talking, no-nonsense approach, offers to understand, negotiate and implement construction contracts to maintain project momentum and avoid expensive disputes. Conexus Law’s managing partner, Ed Cooke, and Lamb will be launching a new and unique service using the latest techniques for collaborative contracting exclusively for the data centre industry.

Ed Cooke; “As a law firm specialising in data centres we need lawyers totally embedded in the sector. A construction lawyer with big law firm experience who has super-niched in data centres, Nancy is one of the best and we’re thrilled that she’s joining our growing team at a critical stage in our development. Demand is soaring for a lawyer with Nancy’s exceptional skills and background. I’ve seen her in action, she gets things done, she delivers results.”

Nancy Lamb trained at Pinsent Masons later joining the firm’s top-ranked Construction Team before moving to Hill Dickinson LLP, also in construction. Lamb moved on from private practice law firms to work in various executive roles for Tyco Fire Product, Sudlows and MiCiM.

Nancy Lamb; “Conexus Law is the right choice for me for many reasons and here are my top two. Ed can see the value I will bring to clients because of my unique insight having worked in both the legal world and on project delivery. Second, the potential is huge. Collaborative contracts are so important because they acknowledge and value relationships – rather than processes – and the start to moving away from the existing adversarial and confrontational nature of construction projects. We can do better than that! A collaborative approach is particularly important in the data centre sector because the pool of stakeholders is so small. I’m looking forward to working with Conexus Law clients and introducing my own connections.”

Conexus Law is recruiting technology and corporate partners while broadening its team of consultants. Since launching 2019, Conexus Law has built a consultancy team that includes Emma Cordiner, data centre real estate expert, and Gavin Johnson, who heads up the firm’s Buildtech team.

Ed Cooke; “We’ve set the bar high on our recruitment standards and it takes a special kind of lawyer to join our team. Big firm experience and a track record in our markets are important because clients expect leading edge advice and outlook. We also need ambitious people, with entrepreneurial flair, who are keen to play their part in growing our firm. There is an exciting future for the right candidates.”

Conexus Law is a unique, challenger brand, boutique law firm advising clients operating at the intersection of the built environment, technology and people.

For further advice on Collaborative Contracting please contact Nancy Lamb via her contact details below.

Nancy Lamb
Main: +44 (0)20 7390 0280
Mobile: +44 (0)7771 877234
[email protected]

What to Consider if Your Contractor Goes Bust

As a result of the pandemic, we have seen, and advised on, numerous instances where main contractors have downed tools or closed sites. In some cases, this has been a temporary hiatus to construction works as we and our client employers have persuaded or assisted main contractors to return to site. However, we have unfortunately seen occasions where the contractor has gone bust and never returned to site.

If faced with contractor insolvency, we set out below what you need to consider and those matters with which you may need to deal:

If you have a funding agreement, notify your funder of the contractor’s situation. Buy yourself some time with your funder to give you breathing space to work out how any outstanding works are to be completed. Remember that most funding agreements will contain obligations requiring you to provide information (such as news of insolvency) to the funder in a timely fashion.

Immediately secure the site and materials on it. Ascertain what you have paid for in full, what is part paid for and what are contractor or sub-contractor assets on site.

Prepare a detailed valuation of the works and, if you have one, request the contract administrator to undertake a formal valuation. Ascertain the works to be completed (including any defects not yet rectified), revise any works programme (including ascertaining what is on the critical path), calculate the costs to finalise the works, whether extra funding will be required to finalise them and any disputes about the works already existing.

Check insurance coverage and insure the site, the works and check the insurance position in respect of any third party assets to remain on site. The contractor will likely have carried public liability, employers liability, professional indemnity insurance (if providing design) and contractor’s all risk insurance. These may come to an end with its insolvency or termination of the building contract (see below). Decide what insurances you will need in place for the future of the project. Also check any insurances you have in place in respect of the project and whether they require you to inform your insurer of the main contractor’s insolvency.

Check the contractual documentation:

  • Be it a JCT contract, NEC form of contract or bespoke agreements, they should set out provisions for termination on insolvency of the main contractor. Follow the provisions of your contracts to the letter to formally bring your contract with the main contractor to an end, especially where you want to engage a new contractor to finish any works or oversee their completion yourself.
  • Is there a parent company guarantee or performance bond you can claim under?
  • Have the trigger events in such agreement occurred?
  • Do you have any collateral warranties from subcontractors? These may assist you and give you step in rights to take over vital supply chain contracts.

Make immediate checks to ensure that documentation for which the contractor was responsible can be located and is up to date (eg health and safety records, drawings, test certificates, manufacturers’ warranties etc).

Unless commercially imperative, do not make any further payments to any party about the works until you know your full position.

Decide how any outstanding works are to be completed after formal termination of the main contractor’s contract. Generally, the options will be a new main contractor or the employer or a construction manager to manage the existing or new sub-contractors. Agree a new contract with a new main contractor (likely to be on a cost plus basis) or with a construction manager.

Take advice as to whether you have any claims against the main contractor and whether these are commercially worth pursuing.

The first days after a main contractor has entered into some form of insolvency procedure are critical and it will be an intensive time of information gathering and decision making. It is however hoped that you will have seen some of the warning signs that your main contractor may be in difficulty (eg less activity on site, slow or late deliveries, plant or equipment disappearing from site, requests for accelerated payments, programme issues, persistent rumours about the main contractor’s financial position including sub-contractors and suppliers not being paid, late filing or qualified accounts being filed at Companies House and a new evasiveness in communications) before they go bust and you have been able to undertake some pre-planning before their insolvency occurs.

HOW CAN CONEXUS LAW HELP?

If you would like advice on your options where you believe that your main contractor may be in financial difficulties or after it goes into insolvency, please contact Ian Timlin or Ed Cooke whose details are below.

Ian Timlin
Main: +44 (0)20 7390 0280
Mobile: +44 (0)77 6742 7332
[email protected]

Ed Cooke
Main: +44 (0)20 7390 0281
Mobile: +44 (0)7535 123000
[email protected]

Arbitration – Why have an Arbitration clause in your commercial contract?

Agreement

In recent months, we have written about using mediation and adjudication as dispute resolution tools. But let’s look at another option open to you, when you engage in your commercial contracts.

Below we consider Arbitration, and what benefits it might have for you in resolving conflicts arising from your commercial contracts instead of using Court proceedings.

First, unless a party has agreed to arbitrate you cannot force them to do so. It is a private binding form of dispute resolution conducted before an impartial Arbitration body.

So why have an Arbitration clause in your commercial contracts to resolve disputes?

Well, litigation in England is a public proceeding before a Judge or Tribunal. It is not just public if the dispute eventually goes to trial. For example, many publications/journalists keep a watching brief at the High Court in London in respect of any Court claim issued. They can obtain copies of the pleadings (the Particulars of Claim, Defence and Reply) and often their attachments filed in any Court proceedings on payment of a small fee. This is without obtaining the Court’s permission to do so and without notice being given to any of the parties.

Arbitration is however private and confidential (unless you need to enforce an Arbitration award but even then the minutiae of your dispute is likely to remain confidential). Using Arbitration, it is easier for the parties to avoid damaging publicity and to preserve sensitive commercial information from entering into the public domain.

It also gives the parties greater variety and flexibility in how they resolve any dispute. The parties are free to choose their own tribunal – usually one or three arbitrators from one of the leading Arbitration bodies such as the International Chamber of Commerce (ICC), London Court of International Arbitration (LCIA) or The International Centre for Dispute Resolution (ICDR). That provides focused expertise (factual and/or legal) and you get one panel dealing with all aspects of an Arbitration from the start to end of the process.

Arbitration rules are flexible and streamlined and parties are not bound by national Court rules. Flexibility extends to the choice of law, venue for and language of resolving the dispute. So if your counterparty is based abroad and not keen on English law or the English Courts dealing with any dispute, you could as a compromise suggest that your contract have an Arbitration clause stating, say, that any dispute between the parties, be governed by English law but heard in Geneva[or any other locality you and they agree on], will be resolved pursuant to the ICC Rules with three arbitrators and the language of the Arbitration will be English. That gets around a party not wanting to submit to the jurisdiction of the other party’s local/national court.

The parties are also given autonomy to shape the form and scale of the Arbitration. Arbitrators can be selected by the parties for their familiarity with commercial and trade matters and may not necessarily be lawyers (although at least one on a three member Arbitration panel is likely to be). That circumvents the problem in some jurisdictions of judges not having relevant experience of a particular area.

As a client, you can be represented by lawyers and/or technical experts at an Arbitration hearing and not just limited legal advocates having particular rights of audience in a particular jurisdiction.

An Arbitration award is normally final and binding. The grounds for challenging an award are limited. As such, an appeal of an Arbitration award is difficult and it potentially cuts down on years and years of litigation to different appellant courts.

In some countries, the national courts are over‐burdened and it can take up to 10 years for a matter to come to trial. Arbitrating a substantial dispute usually takes 14-18 months to get to a final hearing. So whilst roughly on a par with the current length of English High Court proceedings getting to trial, the speed of Arbitration can be an advantage when compared to litigating in some jurisdictions.

The New York Convention provides for the enforcement of Arbitration awards. As of March 2021, 168 countries are a party to it and agree to enforce Arbitration awards made in other countries in their country. So Arbitration awards are more widely and readily enforced than Court judgments.

In our experience, the major disadvantage of Arbitration is its cost. Each of the Arbitrators needs to be paid on a hourly rate basis plus the administrative expenses of the Arbitration body setting up the Arbitration and the hiring of a venue for hearings. This is usually opposed to a one off Court fee or relatively low Court fees paid during a Court action (up to and including a trial) and no Court venue charges.

It is also not particularly workable where you want to join third parties into disputes where your relationship with that third party is not governed by Arbitration or you have agreed to arbitrate with that third party using a different Arbitration body/clause to the one in which the primary claim against you is being made.

Arbitration will not be right for every commercial agreement and should be considered on a case by case basis. In respect of high value contracts with international elements (either in respect of one or both parties or the subject matter), it will be worth detailed consideration.

If you would like more advice on whether you should consider having an Arbitration clause in your contract, and the form of it, please contact Ian Timlin whose details are below.

HOW CAN CONEXUS LAW HELP?

For further advice on adjudication, please contact Ian Timlin via his contact details below. Ian has been a CEDR accredited mediator since 2000.

Ian Timlin
Main: +44 (0)20 7390 0280
Mobile: +44 (0)77 6742 7332
[email protected]

Adjudication – Be Ready

Organisations in the construction sector are being warned to expect a rise in the number of adjudications around contracts as government support comes to an end and cash becomes scarce for many businesses.

Ian Timlin, a dispute resolution specialist at Conexus Law, is urging companies that might have a claim in a construction contract or might be on the receiving end of one to consider whether adjudication might apply to it. If so, they need to be prepared and either understand how they intend to initiate their own claim or ensure that they are not ambushed by an adjudication claim against them. “Given the tight timescales, a referring party often takes a responding party by surprise,” he concludes.

Ian explains: “Adjudication is the very quick (often 28 day) private and cost-effective procedure of resolving disputes in construction contracts. You cannot contract out of it and it applies to a construction contract which is an agreement with a person for any of the following:

• The carrying out of “construction operations”.
• Arranging for construction operations to be carried out, whether under a sub-contract or otherwise.
• Providing labour (either his own labour or others’ labour) for the carrying out of construction operations.

It also includes contracts with construction professionals.

“Traditionally used by contractors, adjudication is also a quick and cost-effective solution for an employer or building owner to obtain payments to resolve defects with a building that the contractor cannot or does not want to rectify or to resolve payments due to a contractor. We generally see adjudication used to resolve disputes in respect of the final account, interim payments, defects, delays and disruptions, as well as with works and extensions of time for the completion of works. All of these have been made more likely as a result of the impact of Covid-19, as many companies have struggled to deliver.”

Finally, Ian comments that a party to a construction contract can refer a dispute to adjudication at any time before or after construction works or operations have been completed, so used mid contract, it may offer resolution to a dispute with limited disruption to an on-going project or relations.

HOW CAN CONEXUS LAW HELP?

For further advice on adjudication, please contact Ian Timlin via his contact details below. Ian has been a CEDR accredited mediator since 2000.

Ian Timlin
Main: +44 (0)20 7390 0280
Mobile: +44 (0)77 6742 7332
[email protected]

Data Centre Alliance talks to Ian Timlin

We have completed a series of three briefings with the DCA

In the second in our webinar series, Ian Timlin focuses on dispute resolution and the valuable role that mediation plays

 

 

Boilerplate Clauses – The Devil is in the Detail

Tick box

Conexus Law, the specialist advisory firm that provides legal and commercial advice to clients who work in sectors where the built environment, technology, engineering and people converge, is warning companies to check the boilerplate clauses on all existing and future contracts in the light of the impact of Covid-19. The firm is warning that failure to do so could be costly and disruptive.

Ian Timlin, at Conexus Law, explains:

Boilerplate clauses, also known as standard, miscellaneous or general clauses, are generally found towards the end of most contracts or commercial agreements. They are normally standard commercial terms that do not vary much from one transaction to another. Boilerplate clauses are often not typically heavily negotiated, but they are important. They often regulate the operation of the contract (i.e. its duration, interpretation, transferability, and enforceability) and many contract disputes depend on the drafting of boilerplate clauses such as termination, force majeure, and entire agreement clauses.

Understandably when people are using an existing contract, for example a supplier agreement, they concentrate on the operative terms and conditions of the agreement and pay less attention to these standard provisions at the end of an agreement. However, many contract disputes depend on the drafting of boilerplate clauses such as termination, force majeure, and entire agreement clauses. This is particularly important during Covid-19 for organisations who are struggling to deliver a contractual service as a force majeure clause might allow for the suspension of performance as a result, for example, of quarantine or other employee restrictions.

(Of course if you now entering into new contracts it is worth considering adding a clause that specifies a pandemic, epidemic, outbreaks of infectious disease or any other public health crisis restrictions as an event of force majeure.)
In addition, most boilerplate clauses clarify the relationship between the contracting parties. Generally, subject to statutory restrictions and illegality, the parties to an English law contract are free to define their contractual relationship between each other which can provide certainty if terms in the contract are ever disputed.
This is especially important given the strain that Covid-19 has put on relationships throughout the supply chain, with many businesses now looking at their financial and logistical obligations to third parties to prepare and protect their operations and staff.

As a result, it is also worth noting that boilerplate clauses are also changing. In a limited supply marketplace, it is always worth considering having a standard clause that forces your counterparties to a contract to mediate before court proceedings can be instigated by one party against another which can save time and money. It can also help salvage a business relationship before parties become entrenched in their positions as a result of court proceedings.
However, just re-hashing clauses and omitting properly thought out boilerplate clauses may create uncertainty and expose certain elements of the relationship or agreement between parties open to interpretation in a court of law, which is often an expensive and unpredictable exercise.

Finally, it is worth checking these clauses for another reason. They may assist you in your commercial aspirations – you may be pleasantly surprised by what is hidden there!

HOW CAN CONEXUS LAW HELP?

Businesses and individuals will need legal advice to help them understand the risks they may face and the options that may be open to them.

We are available to assist in reviewing the laws in many jurisdictions across the world, and to review specific contracts. We are also available to provide practical, business-orientated advice on how to best protect yourself from the ongoing commercial effects of Covid-19.

Contact

For further advice on renegotiating your contractual obligations or pursing your contractual rights, please contact Ian Timlin.

T: +44 (0)20 7390 0280
M: : +44 (0)7767 427 332
E: [email protected]

Lawyer warns construction companies of the challenges of ‘virtual mediation’ as a result of Covid-19

Organisations that are looking to use mediation as a way to resolve a dispute without the need for costly litigation need to be aware of the impact that the Covid-19 pandemic will have on the process in the coming months, and the potential pitfalls and challenges.

This is according to Ian Timlin, a specialist dispute resolution and commercial litigation lawyer at Conexus Law, who cautions that the new process may not be as effective and is also less secure unless certain measures are put in place.

Ian explains: “From a practical point of view it has been relatively straightforward to bring mediation online with Zoom for example being used as the facility for secure separate breakout rooms for separate parties and for bringing the parties together in a plenary session. The mediator can then speak to each party separately or with the parties together, virtually switching online from room to room.

“However, this does mean that things are not necessarily as secure as in a physical situation. As a result, we are advising that there is an online mediation protocol in the mediation agreement to be signed by the parties which governs the terms of how the virtual mediation progresses and the rules that are to be adhered to. It should cover areas such as not recording the sessions or sharing of the mediation meeting ID other than to participants involved to ensure no one ‘sits in’ unannounced.

“Also each party should agree that if for any technical reason, including error on the mediator’s part in moving parties correctly to the breakout rooms, they can see and/ or hear a private conversation between the mediator and/ or any other party, they must terminate the session at once and call or text the mediator.”

However, Ian goes on to say that the biggest challenge remains the fact that it is much more difficult to establish a genuine rapport across a screen with the mediator and other parties and this is key in mediation to gain a parties’ trust and confidence.

“Before people are willing to settle, they must feel that their interests are truly understood, and only then can a mediator reframe problems and float creative solutions. Eye contact with the other side can be difficult if they are sitting well back from their screens and not in the same room and therefore it is vital that participants show their faces and do not hide behind their name on a black screen or stock photo of themselves. That way each party and the mediator can see how they are reacting to the points being made,” he explains.

Ian also points out that whilst online mediation is new to many organisations, Ebay is a big user and it is estimated that an incredible 50+ million disagreements amongst traders on eBay are resolved every year using online dispute resolution.

“There is no doubt that virtual mediation is here to stay and is certainly appropriate for low value disputes. However, where considerable sums are in dispute or complex issues arise, serious consideration should be given to the traditional form of mediation even in the current circumstances,” concludes Ian.

For more information, Ian has created a guidance sheet, Mediations in the time of Covid, alongside another fact sheet, Renegotiation – An art not a science.

Fact Sheet: Mediations in the time of Covid-19

In our factsheet Renegotiation – An art not a science, we touched upon resolving disputes using the process of mediation.

Mediation is:

  • Voluntary, private and non-binding negotiation until the parties distil any negotiation/ settlement to a new written settlement agreement.
  • It is most often the appointment of a qualified professional third party mediator (from a professional mediation body such as CEDR or Independent Mediators in the UK) who shuttles between the parties, undertaking confidential discussions with the parties, with a view to brokering a negotiation/ settlement between them.

In the past, mediation has usually been undertaken across, at least, three rooms at a neutral venue with the mediator shuttling between the opposing parties’ rooms having confidential decisions with each party to try to narrow the dispute and gap between them, and ultimately try to get them to reach a settlement.

At the start of such a mediation, there was usually a plenary session where the mediator sits at one end of the table and the parties and their lawyers speak to each other across it.

With Covid-19, mediation has now moved online and they are taking place by various platforms using live screen video. In particular, Zoom is being used as the facility for secure separate breakout rooms for separate parties and for bringing the parties together in a plenary session.

So how is it operating virtually? The mediator places each party and its lawyers into its own virtual room, even if representatives from party are at different locations. The mediator can then speak to each party separately or with the parties together. Instead of actual shuttle diplomacy between actual rooms, the mediator does the same virtually by switching online from room to room.

But what are the matters and potential pitfalls that need to considered for a virtual mediation:

Check that there is an online mediation protocol in the mediation agreement to be signed by the parties which governs the terms of how the virtual mediation progresses and the rules to be adhered to. It should contain at least the following:

  • The parties should agree that no recording of the mediation takes place (it’s a confidential process), no photo images are taken and that there is no sharing of the mediation meeting ID other than to participants at it.
  • If for any technical reason, including error on the mediator’s part in moving parties correctly to the breakout rooms, a participant finds itself able to see and/or hear a private conversation between the mediator and/or any other party, the participant should terminate the online mediation session at once and call or text the mediator on the number provided by it.
  • Steps to be taken if technology fails to operate properly or the mediation session does not start on time or is interrupted.

In the case of the cross border mediations, pre-mediation checks should be undertaken to ensure that no national firewalls prevent parties in one jurisdiction from using Zoom or the technology platform to be used for the mediation.

A pre-mediation call from the mediator to all participants from a party and the testing of the technology platform to be used by all representatives of party for the mediation is paramount. A good and secure internet connection and both the parties and the mediator understanding the technology/platform are very important to a successful mediation.

As to the virtual mediation itself, the following points should be borne in mind:

  • A headset with microphone or earphones with microphone is very helpful.
  • Mute microphones and don’t talk over people.
  • A professional background and decent lighting will assist the process. Representatives of a party should show their faces and not hid behind their name on a black screen or stock photo of themselves so that each party and the mediator can see how they are reacting to points being made.
  • An interruption free day is very important for participants. That is more easily achieved in an in-person mediation rather than representatives from a party being in different locations and often at their homes. The use of phones and checking emails on the computer that a party is using to participate in the virtual mediation should try to be avoided.
  • Across a screen, it is going to be more difficult to establish rapport. To gain a parties’ trust and confidence, rapport must be genuine. Before people are willing to settle, they must feel that their interests are truly understood. Only then can a mediator reframe problems and float creative solutions. Relationship building is more difficult online. Eye contact with the other side can be difficult if they are sitting well back from their screens and not in the same room.

Virtual mediation is still relatively new for all clients, litigators and mediators. In our experience of having undertaken virtual or live screen mediations, it’s the best bet in circumstances where parties genuinely cannot all be present at the same premises (even on a socially distanced basis), but it is simply not as effective as a live mediation with all the parties at the same venue, cooped up in their respect rooms for most of a day and with the mediator being able to shuttle between them in the flesh.

Perhaps one of the most well recognised users of online dispute resolution is Ebay. It is estimated that an incredible +50 million disagreements amongst traders on eBay, are resolved every year using online dispute resolution.

Virtual mediation is here to stay and is no doubt appropriate for low value disputes but where considerable sums are in dispute, serious consideration should be given to the traditional form of mediation even in the current circumstances.

For further advice on mediating, please contact Ian Timlin via his contact details below. Ian has been a CEDR accredited mediator since 2000.

Ian Timlin
Main: +44 (0)20 7390 0280
Mobile: +44 (0)77 6742 7332
[email protected]

This factsheet is for general information purposes only and does not constitute legal advice. The law is open to, and may have changed since this was written, and it cannot be relied upon as advice in respect of your particular situation. 05/08/2020

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Chances are, that as a result of COVID-19, you are either going to have to seek to renegotiate your agreements with another party or deal with parties wishing to do so with you.

In respect of renegotiation, here are some points to consider…