Effect of strike or lock-out under JCT and NEC3 ECC

On 28 July Unite reported that thousands of its electrician and labourer members have rejected a five per cent two-year pay deal.  Wearing my construction lawyer hat my next thoughts turned to what any possible industrial action might have on an ongoing project and how any delay or loss as a result might be dealt with.

The JCT building contracts that I most commonly advise on deal with strike and lock-out as a an Employer’s risk event for the purpose of extending the Completion Date:

strike, lock-out or local combination or workmen affecting any other trades employed upon the Works…” clause 2.26.11 (DB 2011), clause 2.29.12 (SBC 2011) or clause 2.20.11 (IC 2011).

Loss and expense arising out of any such delay however would be a contractor’s risk event unless the strike or lock-out was by Employer’s Persons:

any impediment, prevention or default, whether by act or omission, by the Employer…or any of the Employer’s Persons…” clause 4.21.5 (DB 2011), clause 4.24.5 (SBC 2011) or clause 4.18.4 (IC 2011)

The NEC 3 Engineering and Construction Contract differs in its approach:

Loss of or damage to the works, Plant and Materials due to…strikes, riots and civil commotion not confined to the Contractor’s employees…” is an Employer’s risk under core clause 80.1.  Core clause 60.1(14) makes this a compensation event for which the Contractor may submit a quotation containing revised Prices and changes to the Completion Date as a result, for acceptance by the Project Manager.

If however industrial action caused pure delay, as opposed to physical loss or damage, it would be a contractor’s risk event, unless it falls under the compensation event in core clause 60.1(19):

An event which stops the Contractor completing the works or stops the Contractor completing the works by the date shown on the Accepted Programme and which neither Party could prevent, an experienced contractor would have judged at the Contract Date to have such a small chance of occurring that it would have been unreasonable for him to have allowed for it and is not one of the other compensation events stated in this contract.

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