HKA and Kennedys jointly hosted a webinar addressing the impacts of the COVID-19 pandemic on construction industry projects in the Middle East. Around 200 invitees expressed an interest in attending the webinar and the concluding feedback was extremely positive, complementing the high level of professionalism and competence of the presenters in addressing various issues created by the pandemic.
This free session was moderated by Celine Kanakri, a Partner at Kennedys, who was joined by David Stapleton, Partner at HKA and, Khalil Mechantaf, Senior Associate at Kennedys.
The presentation commenced with an overview of significant dates covering the outbreak of COVID-19 and the measures taken to combat it in the Middle East, in particular the UAE. Khalil Mechantaf then moved on to explain the Damages Pyramid, concluding that with regards to the UAE the likely available COVID-19 defences against a claim for damages were either Force Majeure (FM) or Unforeseen Circumstances.
Dealing initially with the issue of FM, Khalil Mechantaf advised on the UAE legal position with regards to events of FM, firstly as provided for by statute and secondly as considered with regards to UAE Jurisprudence. David Stapleton continued with the theme of FM, focusing on nature of the event, the fact that the effects have been far reaching and exceeded any possible expectations, reasonable or otherwise, and addressing, in particular, various considerations which would need to be taken into account when assessing how the event prevented a party from meeting its obligations and thereby impacting on milestone completion dates. David Stapleton concentrated in this respect on (1) the nature of the delay, (2) when the delay actually impacted on the progress of the works, thereby causing prevention, and (3) the particular impact of the delay on supply chain and offsite activities.
David Stapleton addressed concerns about delayed procurement.
“More of a problem is looking at what is happening in the future with delayed procurement and potential delivery problems. If you have your own suppliers or the employer is looking at their own free issue materials or other contractors that they’re employing, how are they going to affect the output in the future? We need to look at where the procurement is coming from and what could affect it, so for example, travel regulations, factory acceptance tests and subsequent site acceptance tests or issues such as sailaway.”
Having addressed the impact of FM on the Contract/Obligation, by reference to “absolute possibility” and “temporary impossibility”, Khalil Mechantaf then moved on to the alternative position of Unforeseen Circumstances, considering firstly defences available when the performance becomes onerous and not impossible and secondly addressing the Commentary of the UAE Ministry of Justice which distinguishes the two concepts in two main areas, namely (1) impact of the event and (2) available relief.
Maintaining the theme of FM related issues, the seminar then moved on to briefly consider the topics of suspension and pacing, maintenance of records and the benefits of stakeholder engagement. Khalil Mechantaf addressed suspension in terms of statutory entitlement and then moved onto “pacing” as a potential alternative. David Stapleton addressed various cost issues when considering pacing, in particular how pacing could produce a mutually acceptable outcome through extended delivery, postponement of works and/or implementing alternative procurement solutions, delivery options and labour/equipment utilisation.
David Stapleton concluded the webinar with firstly a reminder of the necessity for maintaining good records, identifying the extent to which records, as matters of fact, are critical to the process of identifying what happened in an event of FM, and secondly why stakeholder engagement is increasingly important to reaching an outcome which could be acceptable, if not beneficial, to all parties in such situations.
The webinar closed with a brief Q&A session where Celine Kanakri, David Stapleton and Khalil Mechantaf briefly addressed questions regarding mitigating the impact of COVID-19 and how contracts signed now, in the knowledge of COVID-19, should deal with such issues moving forward.
For more information about HKA events and related resources please visit hka.com. Please email us at dubai@hka.com for more information on how your firm can best prepare for the impacts of the COVID-19 pandemic.
