COVID-19 as a force majeure event

COVID-19

The coronavirus pandemic effects every sector globally and the construction industry is not immune to this. Construction projects are increasingly experiencing the impact resulting from the pandemic and related measures imposed by governments and authorities across the globe. Delays are evident in international procurement and construction resources.

Who should be held liable for these delays and costs associated with the disruption caused by the spread of the virus?

 

Force Majeure

Force majeure is an event that is not foreseeable and cannot be controlled by the party that is prevented from performing its contractual obligations. Some examples include, but is not limited to, acts of war, invasion, insurrection, rebellion, terrorism, riots, strikes, natural catastrophes, etc. In an event of force majeure, contractors are usually afforded an extension of time claim only and rarely any additional payments – In the same way the contractor cannot be held liable for such an event, the employer also cannot be held liable financially as per clause 23.1 of the JBCC PBA, Edition 6.2.

 

JBCC Principal Building Agreement, Edition 6.2 – May 2018

Despite the JBCC’s list of possible events which could qualify as force majeure, it has no specific provision for a pandemic such as the coronavirus. However, the list in the JBCC is not limited to its’ provisions and COVID-19 may be treated as a force majeure event as it satisfies the definition thereof in that it could not have been reasonably foreseen, it is beyond the control of the parties, and it could not reasonably have been avoided or overcome. Therefore, the provisions allowed for in the JBCC under force majeure is by no means an exhaustive list and a pandemic like Covid-19 can be added.

The recent events in South Africa is due to the Covid-19 pandemic. However, the lockdown is a result of an exercise of the South African Government that directly affects the execution of the works as per clause 23.1.5 of the JBCC PBA, Edition 6.2. Construction in South Africa was not directly delayed by the Covid-19 pandemic, but as a result of the national lockdown. Therefore, in awarding an extension of time claim, it should be awarded based on an ‘Exercise of statutory power by a body of state’.

According to the 2018 Edition 6.2 of the JBCC PBA, an ‘Exercise of statutory power by a body of state’ can be adjudicated as follows:

Clause 23.1 “The contractor is entitled to a revision of the date for practical completion by the principal agent without an adjustment of the contract value for a delay to practical completion caused by one or more of the following events” and  clause 23.1.5 “Exercise of statutory power by a body of state or public or local authority that directly affects the execution of the works”.

The contractor may only qualify for such an extension of time claim provided the procedures described in clause 23.4.1-2 are followed:

  • The contractor takes reasonable steps to avoid or reduce such a delay and provides notice to the principal agent of the intention to submit such a claim for a revision to the date for practical completion within twenty working days of becoming aware, or ought reasonably to have become aware of such delay, failing which the contractor shall forfeit such claim as per clause 23.4.1 and clause 23.4.2.
  • The contractor must submit a notice of intent to claim. Thereafter, the contractor must submit an extension of time claim to the principal agent within forty working days, or within an extended period allowed for by the principal agent, from when the contractor is able to quantify the delay in terms of the programme as per clause 23.5

The extension of time claim submitted by the contractor shall in each circumstance separately state: the relevant clause [23.1-3] on which the contractor relies, the cause and effect of the delay on the current date for practical completion, where appropriate, illustrated by a change to the critical path on the current programme, and the extension period claimed in working days and the calculation thereof – as per clause 23.6

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