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Rob Hammond, Gatehouse Chambers

In Providence Building Services Ltd v Hexagon Housing Association Ltd1, the Supreme Court allowed an employer’s appeal as to the proper interpretation of the JCT Design and Build Contract 2016’s5 termination provisions. The immediate issue concerned a contractor’s right to terminate for repeated late payment:

“Can the contractor terminate its employment under clause 8.9.4 of the JCT […] where a right to give the further notice referred to in clause 8.9.3 has never previously accrued?”5 

The judgment is significant for construction lawyers, given JCT’s widespread use and the JCT 2024’s adoption of the same termination clause. Lord Burrows’ reasoning is also a pithy and authoritative restatement of various matters of wider commercial interest:

1. The approach to interpretating industry-wide, standard form contracts;

2. The limited role of previous versions of standard forms when doing so; and

3. The continued prevalence – following Arnold v Britton [2015] UKSC 36 – of contractual language over commercial common sense.

Clause 8.9 [5]: Clause 8.9 of the JCT Design and Build Contract 2016 set out the Contractor’s rights to terminate for default by the Employer. In summary: clause 8.9.1 allows the Contractor to give a notice of specified default (including late payment); clause 8.9.3 allows the Contractor to serve a further termination notice if the Employer’s notified default continues for 28 days post-notice; and clause 8.9.4 permits termination for the repetition of a specified default where “for any reason” the Contractor has not already given the further termination notice under clause 8.9.3.

Competing Interpretations [16–17]: The Employer argued that clause 8.9.4 could only be engaged if the Contractor had previously acquired (but not exercised) a right to terminate under clause 8.9.3 – meaning the earlier default must have gone uncured for at least 28 days [16]. The Contractor contended that no such accrued right was required: once a specified default had been notified, any later repetition entitled it to terminate immediately under clause 8.9.4 (which mirrored the Employer’s termination rights) [17].

Decisions Below: Adrian Williamson KC held for the Employer at first instance, concluding that clause 8.9.4 required a previously accrued right to terminate under clause 8.9.3. Arguments of harshness against the Contractor – based on cashflow concerns and business common sense – were of limited assistance [19–28]. Stuart-Smith LJ in the Court of Appeal disagreed: emphasising the background of the Employer’s own termination rights, the language of clause 8.9.4 did not require a previously accrued right to terminate under clause 8.9.3 [31–33]. Although commercial commonsense did not take the matter further generally, he found the availability of other remedies to contractor cashflow difficulty did not detract from the Contractor’s concerns [43]. The Supreme Court unanimously allowed the Employer’s appeal.

The Supreme Court reaffirmed that industry-wide standard forms, such as JCT contracts, are to be interpreted by reference to the orthodox objective approach. Lord Burrows rejected the suggestion that standard forms involve a fundamentally different interpretative exercise:

“The established approach, based on the objective intentions of the contracting parties in the relevant context, should still be applied to the interpretation of an industry-wide standard form contract” [31]

That said, he also accepted that the context against which objective intention is assessed differs in some important respects. First, explanatory notes are admissible guides to interpretation [24]. Second, past decisions of the Courts on the same or earlier terms are also admissible [26]. Third, where parties choose an industry-wide standard form, it is generally assumed that they intend their rights and obligations to be consistent with those of others using the same form [30]. As Lord Burrows put it:

“Where parties choose to use an industry-wide standard form, it can generally be taken that their objective intentions […] are that their respective rights and obligations should be consistent with those of other parties using the same form and should reflect the objective intentions of those who were concerned with the drawing up of that standard form agreement”. [31]

Courts are, accordingly, reluctant to adopt interpretations that would fragment the meaning of standard clauses depending on the idiosyncrasies of contracting parties.

Lord Burrows also drew a careful distinction between legitimate contextual material and impermissible “archaeological digging” into earlier standard form editions. Citing Beaufort Developments v Gilbert-Ash6, he reiterated that:

“The evolution of standard forms is often the result of interaction between the draftsmen and the courts and the efforts of the draftsman cannot be properly understood without reference to the meaning which the judges have given to the language used by his predecessors” [24]

However, he cautioned against assuming that differences between successive editions of a standard form were consciously adopted by the parties to achieve a particular legal effect. Drawing on Moore-Bick LJ’s judgment in Seadrill Management Services Ltd v OAO Gazprom7, at [28], Lord Burrows discouraged “Archaeology of the forms”, save where “it is possible to identify with a degree of confidence the reason for a particular amendment to a standard form” [28]. Relying on former editions outside that category of case is an impermissible exercise “not wholly removed from that of referring to drafts produced during the course of negotiations” [28].

In Providence, the Supreme Court therefore concluded that neither previous editions of the JCT nor commentary on them assisted in resolving the issue [38], and that the contract had to be construed on its own terms, by reference to the language used [32–35].

The judgment strongly reaffirmed Arnold v Britton8, while also referencing the “iterative approach” proposed in Wood v Capita9. The parties’ chosen words are of primary importance and when performing its iterative analysis, courts must not to allow commercial common sense to displace clear language:

“The words used by the parties are of primary importance so that one must be careful to avoid placing too much weight on business common sense […] at the expense of the words used” [22].

The iterative approach underpinned the Court’s willingness to consider the rationality of the Employer’s contented interpretation [34–35], having already found it to be the text’s most natural reading [32–33]. Lord Burrows’s view was not displaced by the commercial impact of the Employer’s interpretation on contractor cashflow [20(iv), 38]. As Lord Burrows made clear, contractual words should not be distorted to promote one party’s commercial interests: perceived defects in industry wide-standard forms are matters for future drafting, not judicial correction [38].

Start With the Words: Even in industry-standard contracts, close attention to the language is critical. Courts strongly resist interpretations which render express words “redundant”, or which are “inept” to convey the proposed meaning [32–33].

Standard Form Means Consistency: Where parties adopt industry-wide standard forms like the JCT, courts will consider consistency across the industry, by reference to the drafters’ intentions and their explanatory notes [24–31].

Archaeologists Beware: Previous editions and case law may assist where a change clearly responds to a known issue, but generalised comparisons between editions will not [24–28].

Commercial Common is Limited: The orthodoxy of Arnold v Britton remains well-entrenched: arguments of commercial inconvenience will not prevail over the natural meaning of the text.

Matthias Cheung, Max Twivy, Atkin Chambers

Mathias Cheung acted for the Claimant and Max Twivy acted for the Defendant in Paragon Group Ltd v FK Facades Ltd2. The case concerned whether a construction contract and the Scheme for Construction Contracts permitted an assignee of the Employer’s rights to refer a dispute against the Contractor to adjudication. The Court held that the assignee, Paragon, did have the right to adjudicate. FK has been granted permission to appeal to the Court of Appeal.

The dispute arose out of an amended JCT Minor Works Contract 201610 (“Contract”) for remedial works to the roof installation at a commercial property in Greater Manchester.

The original Employer under the Contract was Office Depot International (UK) Ltd (“ODI”). In 2021, ODI assigned the benefit of the Contract to OT Group Ltd (“OTG”), and OTG in turn assigned the benefit of the Contract to Paragon in 2024.

Article 6 of the Contract provided that “[I]f any dispute or difference arises under this Contract either Party may refer it to adjudication in accordance with clause 7.2”. Clause 7.2 then provided that the Scheme for Construction Contracts (“Scheme”) shall apply to any such adjudication.

Clause 3.1 of the Contract, as amended, allowed the Employer to assign the benefit of the Contract at any time without the Contractor’s consent.

Paragon commenced an adjudication against FK to recover liquidated damages for delay and interest. The adjudicator gave a decision awarding liquidated damages to Paragon.

Paragon therefore commenced adjudication enforcement proceedings in the Manchester TCC, and FK sought to resist enforcement on the basis that Paragon had no right as an assignee to refer a dispute to adjudication under the Contract or the Scheme.

FK’s case relied on the references to a “party to a construction contract” in paragraphs 1 (1) and other paragraphs of the Scheme: see [30] to [33]. FK’s case, as summarised at [40], was (inter alia) that: (a) under the Scheme, only a party to a construction contract can refer a dispute to adjudication; (b) an assignee does not become a party to the construction contract and thus does not fall within the Scheme; and (c) insofar as is relevant, commercial commence supports this conclusion, given the difficulties and complications which may arise from allowing an assignee to refer a dispute to adjudication.

In response, Paragon’s case, as summarised at [41], was (inter alia) that: a proper interpretation of the whole of the contract, and when read with an understanding of the general law in relation to assignments, showed that a party included any statutory assignee of the original employer or contractor who, thus, also had the right to refer disputes to adjudication; and the difficulties and complications raised by FK were insubstantial.

The Judge noted at [2] that there was surprisingly no direct authority on the question of whether an assignee of the benefit of a building contract is entitled to refer a dispute to adjudication, and that the issue was not entirely straightforward. He noted at [44] that the previous authorities (some of which contained obiter observations on the relationship between assignment and adjudication) were “at best, of marginal assistance”.

The Judge ultimately approached the issue as a question of interpretation of the wording of the Contract and the Scheme.

The Judge stated at [77] that “I must confess that I have found the point finely balance”, but ultimately decided that on an objective interpretation of the contract in question an assignee can adjudicate an assigned claim against the original other party. In doing so, the Judge decided (inter alia) that:

FK’s case had “the undoubted benefit of simplicity”, and “at first blush” the reference in the Scheme to “any party to the construction contract” is confined to the employer and contractor: see [56]. Further, “in strict legal analysis, an assignee does not become a “party” to the contract in the full sense”: see [63].

However, there was an “apparent indiscriminate approach to the use of the word “party” in the Scheme” (see [59]) and that “The contract and the Scheme can be read as if the words “or any legal assignee of such party, where applicable” are read into the definition of a party” (see [77]);

Article 6 of the Contract was the primary operative contractual provision on adjudication, and the reference therein to “Employer” and “Contractor” must be considered in the context of clause 3.1 as amended which allows the benefit of the contract to be assigned: see [60] to [63]. Further, that “a statutory assignment of the benefit of a thing in action under a contract passes the legal right to the thing and all legal rights and other remedies for the same, which are transferred to the assignee as if they had been theirs from the beginning, and which would thus […] include the right to adjudicate”: see [63].

The Judge accepted that “there are some practical complications which would arise if an assignee could adjudicate against an original party” (see [65]), for example the problem of whether findings in an adjudication between assignee and original party would be binding on the assignor and the corresponding risk of inconsistent findings (see [67] to [69]). However, the Judge said that some of these complications were “more apparent than real” (see [72]) and that “as against all of these difficulties or perceived difficulties, must be set the difficulties which would arise if the only way an assignee could adjudicate a claim was by forcing or persuading the assignor to lend their name to an adjudication against the other original party” (see [75]).

That FK’s alternative argument, that a claim by an assignee does not arise “under the contract”, did not have any freestanding merit: see [79].

The Judge granted FK permission to appeal to the Court of Appeal, on the basis that the arguments for and against were finely balanced such that an appeal would have a real prospect of success, and the lack of any previous direct authority on the point.

FK filed a notice of intention to appoint an administrator before the handing down of judgment, which gave rise to an interim statutory moratorium. Relying on Coulson J’s decision in South Coast Construction Ltd v Iverson Road Ltd11, the Judge exercised the Court’s discretion to permit the proceedings to continue under paragraph 43 (6)(b) of Schedule B1 to the Insolvency Act 198612 for the purposes of hand down and making a consequential order.

Charlie Thompson, Keating Chambers

The TCC refused to grant summary judgment in favour of an insurer in a claim under an insurance policy for defects linked to fire risk, finding there was a real prospect that the insured could show that the risk of fire-related damage was sufficiently serious and imminent to fall within the insurance policy.

This was an application by the Defendant insurer (“Allianz”) for summary judgment.

The claimant (“Vivid”) is the freehold owner of a block of 82 flats at Collins Place, Hampshire and the Insured under a Housing Warranty Insurance Policy issued in respect of the development. The insurance policy was issued by Building LifePlans Ltd (“BLP”) acting as the cover-holder under a binding authority granted by the defendant, Allianz.

The operative clause of the policy (“Clause 3(a) Operative Clause”) indemnifies the Insured for the cost of repairing, replacing and/or strengthening the premises following and consequent upon a Defect which becomes manifest and is notified during the Period of Insurance, where the Defect causes (i) destruction, (ii) physical damage or (iii) the threat of imminent destruction or physical damage which requires immediate remedial measures for prevention within the Period of Insurance. The Period of Insurance was 12 years from the Date of Inception. A Policy Inception Endorsement dated 23 May 2008 confirmed that the Date of Inception was 22 May 2008.

Vivid alleged five categories of defects:

• Rockpanel cladding (“Defect 1”): Vivid alleged that combustible RP cladding panels had been installed on a building over 18 m high in an untested arrangement in conjunction with combustible foam insulation, absent carrier barriers or with defective barriers, and with combustible debris in the cavities, which provided a vehicle for the spread of fire and/or smoke around the entire external envelope of the building.

• Vertical cavity barriers (“Defect 2”): Vivid claimed that no vertical cavity barriers were installed at the required locations (e.g. between the outer cladding and inner cavity and between floors) which provided a route for fire and/or smoke to spread unseen and uninhibited around the development.

• Horizontal cavity barriers (“Defect 3”): Vivid alleged missing or defectively installed cavity barriers at party walls, slab edges and window openings as a result of which fire and smoke could spread unseen and uninhibited around the development.

• Rockclad bracketry (“Defect 4”): Vivid alleged that the RP cladding panels were inadequately fixed to the vertical cladding rail with bracketry which was, in some locations, inadequately supported and/or overstressed causing a risk of detachment of the cladding panels and/or physical damage.

• Building debris (“Defect 5”): Vivid alleged that debris was left within building cavities providing an ignition source for fire and/or permitting the spread of fire and, additionally, that the debris provided a bridge for water into the flats causing consequent or additional damage.

Allianz argued that none of the Defects fell within the scope of cover. It was Allianz’s position that Clause 3(a)(iii) indemnified the Insured only for Defects that posed a real and imminent threat of destruction or physical damage to the premises, requiring immediate remedial action to prevent such damage within the Period of Insurance. Leading Counsel for Allianz submitted that the threat had to be sufficiently likely to happen sufficiently soon in order to be described as imminent, and that the clause did not cover risks that would only materialise after events that did not require immediate intervention. Allianz argued that the matters raised a short point of construction which could be determined on a summary basis, relying on assumed facts.

Application for summary judgment in relation to Defects 1, 2, 3 and 5 refused. Application for summary judgment in relation to Defect 4 granted.

Defects 1, 2, 3 and 5: In the case of Defects 1, 2, 3 and 5, the only pleaded circumstances in which the Defects could actually cause destruction or damage would be in the event of fire. To determine whether there was a threat of imminent damage or destruction involved asking whether, in August 2019, when the claim under the Policy was made, the risk of fire was sufficiently serious and would occur sufficiently soon. The judge concluded that there was a realistic prospect of establishing that a reasonable observer in August 2019 would have formed the view that there was a serious risk of fire and the consequent threat of destruction or damage sufficiently soon. On that basis, the case on the construction of the policy clause and whether the policy responded had a real prospect of success in relation to these defects, and the application for summary judgment was refused.

Defect 4: Vivid argued that Defect 4 posed a threat of imminent damage due to the risk that the bracketry could fail, causing the cladding to detach. They argued that, unlike fire-related defects, nothing further needed to occur for the risk to be considered imminent. Jefford J rejected this argument, noting that there was no realistic prospect of success for Vivid on this Defect in so far as it related to evidence of the risk of imminent damage rather than any case that may be advanced as to actual damage having occurred by way of the overstressed cladding bracketry.

Nicholas Gould, Partner, Fenwick Elliott

In early December, I had the pleasure of serving as a session moderator at the Annual FIDIC International Contract Users’ Conference in London. The session, “Impact of tariffs and suspension on development projects”, featured a panel of construction and international arbitration experts. 1 In our discussion, we explored the multi-faceted effects of tariff regimes and project suspensions, particularly those arising from the cuts to the United States Agency for International Development (“USAID”) and the Millennium Challenge Corporation (“MCC”).

These developments have substantial implications for international contractors and employers involved in US-funded infrastructure programmes, including projects which were under the FIDIC form of contract.

Soon after being sworn into office in January 2025 President Trump signed Executive Order 14169, pausing US foreign aid funding for 90 days. This move signalled a significant shift in the American approach to global aid and infrastructure.

In the months that followed, the Trump administration took further steps to reduce and effectively close USAID and MCC2 through funding freezes and proposed rescissions of previously appropriated funds.3 These measures meant that independent foreign-assistance entities, including USAID and MCC, faced severe reductions in budget authority and operational capacity.

In April 2025, the Department of Government Efficiency formally ordered the MCC to suspend all ongoing programmes.4 USAID experienced a comparable operational shutdown, having lost the majority of its foreign-assistance programmes, with staff either laid off or reassigned and core functions transferred to the State Department.

The funding freezes and rescissions, which functionally sought to “switch off” the ongoing aid and infrastructure programmes, were further compounded in April when President Trump announced the “Liberation Day tariffs” via Executive Order. While the legal status of these tariffs is currently being debated in the US courts (and therefore makes it unclear what the tariffs’ long-term impact will be), they have profoundly affected domestic and global supply chains in the short term.

But the impact of the tariffs extends beyond trade issues — tariffs have significantly impacted the feasibility of US-funded infrastructure and the delivery of projects, with real consequences for employers and contractors up and down the supply chain involved in these infrastructure projects. Increased material costs, delays in equipment deliveries, and uncertainty over contractual obligations have affected the feasibility of US-funded infrastructure projects, creating real consequences for employers and contractors.

This, alongside the effective suspension of US grant programmes, has left numerous international infrastructure projects facing terminated contracts and uncertainty regarding their continuation and completion.

For international contractors and employers operating under the FIDIC form of contract, these disruptions create a series of practical and legal challenges. Projects that were well underway suddenly had their remaining funding cancelled, with no clear path to completion.

Funding freezes and tariffs immediately had serious contractual implications — turning what appeared to be a policy issue into a crisis under FIDIC Clauses 8, 13, 14 and 16.

A fundamental assumption behind the contracts which govern these projects is that there is a functioning and paying employer — and should the employer cease to function or be able to pay, that there will be sufficient time to follow proper procedure. Where funds were summarily withdrawn and programmes shuttered, this core assumption failed. Many projects were never formally suspended via Clause 8.9. Instead, work stopped because the funding was rescinded, rather than because instructions to suspend were issued. This has led to disputes over suspension, standby costs and repudiatory breach.

Where a change in law arises after the base date which would impact the contractor’s performance of the works, Clause 13.6 can give rise to an extension of time and potentially to cost. Tariffs qualify as a change in law, giving entitlement to time and cost in principle — but this fell apart because costs rose at the same time that funding became frozen and was rescinded.

While FIDIC sets out a structured escalation pathway for non-payment under Clauses 14 and 16, the scale of the funding rescissions meant that many employers were effectively unable to remedy the default. Rather than allowing the contractual mechanisms to operate as intended, a number of agencies characterised the resulting project closures as “terminations for convenience”. This sits uneasily with FIDIC’s default-based allocation of risk and remedy. By recasting a non-payment event as an administrative termination, contractors’ entitlements to breach-based recovery were significantly restricted and pushed many parties towards treaty, political-risk or extra-contractual claims to address losses that the convenience termination model does not capture.

Clause 20 is a cornerstone of the FIDIC contractual framework, setting out precise notice and claims procedures that are strictly enforced. In the context of the USAID and MCC funding collapse, Clause 20 posed a challenge: contractors were often unable to issue notices in real time. Where entitlement to relief under Clauses 8, 13, 14 or 16 might exist, procedural non-compliance under Clause 20 has limited or thwarted many claims.

Contractors are increasingly seeking protections such as automatic tariff adjustments, political-suspension compensation and expedited remedies for non-payment. There is pressure to revisit and potentially re-draft key FIDIC clauses, such as those mentioned above, to address the new landscape of geopolitical and financial disruption caused by the US tariff regime and withdrawal from foreign aid programmes.

Practitioners are now confronted with a critical question: is the FIDIC form of contract robust enough to deal with these unprecedented risks, or has the traditional approach to risk allocation become outdated?

While FIDIC provides a structured framework for addressing suspension, change in law and non-payment, recent events demonstrate that the current forms were not designed for simultaneous political, financial and trade/supply chain disruption on this scale. Moving forward, one might expect to see future versions of FIDIC contracts deal explicitly with political funding rescissions and tariff volatility as standalone cause for compensation.

In the interim, practitioners can adopt practical strategies to navigate this fast-changing environment:

• Communication and triage: Maintain clear, continuous dialogue with employers, financiers and other stakeholders to identify emerging risks and prioritise responses. Rather than hoping everything will work out, be proactive in auditing the contract to assess the project’s ongoing economic viability and scope.

• Strict adherence to notice requirements: FIDIC has very specific requirements as to what qualifies as a notice. Ensure that all claims, suspensions and variations are formally documented in compliance with Clause 20.

• Real-world risk assessment: Carefully evaluate the political, economic and supply-chain environment before committing to new contracts. Consider contractual protections or mitigations where possible.

The combination of funding freezes and tariff volatility initiated earlier this year has underscored both the resilience and limitations of the FIDIC form of contract. While FIDIC provides structured mechanisms for addressing the issues above, these events reveal the challenges that emerge when simultaneous disruptions occur outside the control of either party to a FIDIC contract.

For contractors and employers, the practical implications are clear. Proactive communication with stakeholders, disciplined contract administration, and effective risk management are more critical now than ever. Ultimately, the lessons from the USAID and MCC cases highlight the evolving interface between global policy, project finance and contractual risk.

Nicholas Higgs, 39 Essex Chambers

In Uniform Building Contractors Ltd v Water and Sewerage Authority of Trinidad and Tobago4, the Judicial Committee of the Privy Council has delivered a judgment of real significance for users of FIDIC-based construction contracts and other internationally deployed standard forms. The appeal concerned the proper characterisation of alleged variations, the limits of an engineer’s authority, and the operation of clause 20.1 as a condition precedent to entitlement.

The leading judgment was given by Sir Peter Coulson, with whom the rest of the Board agreed. The decision reiterates the importance of the contract to which the parties had agreed and provides authoritative guidance of particular importance to both international arbitration and common law courts.

The dispute arose out of a lump-sum design-and-build pipeline contract dated 23 May 2007, governed by the FIDIC Yellow Book (1999 Edition)13. Uniform Building Contractors Ltd (“UBC”) undertook to design, supply and install 28.43 km of transmission pipeline from Rio Claro to Mayaro in Trinidad and Tobago, split into two packages valued at TT$15.9 m and TT$12.6 m respectively (approximately USD $4.3 m total).

Disputes emerged during the works and both packages were terminated by the Water and Sewerage Authority of Trinidad and Tobago (“WASA”) in May–June 2009. UBC commenced proceedings in May 2013, close to the expiry of the applicable four-year limitation period.

At first instance, the High Court dismissed both UBC’s claim and WASA’s counterclaim. The Trinidad and Tobago Court of Appeal reversed that decision, awarding UBC TT$13.9 m (approximately USD $2 m) plus interest and costs, principally on the basis that four categories of work constituted variations and that it would be unfair for WASA to rely on strict contractual analysis given the manner in which the project had been administered on site.

WASA appealed to the Privy Council. The Board unanimously allowed the appeal and restored the High Court’s dismissal of UBC’s claim in full.

A central feature of the Court of Appeal’s reasoning was its conclusion that the contract had been operated flexibly on site, such that WASA could not later insist upon a strict contractual analysis. At paragraphs 47–50 of its judgment, the Court of Appeal emphasised that, although the FIDIC terms had been incorporated, the day-to-day management of the contract demonstrated flexibility, and that a return “after the fact” to the literal language of the contract would lead to an unfair outcome. It concluded that it would be “fundamentally unfair” for WASA to resile from the engineer’s treatment of the disputed works as variations.

That fairness-based approach was rejected in clear terms by the Privy Council.

Variations are determined by the contract, not by conduct or opinion.

The Privy Council held that the Court of Appeal’s approach suffered from a fundamental error of principle. Whether work constitutes a variation is a matter of contractual construction. It does not depend upon how the works were administered in practice, nor upon the opinion of the engineer.

Sir Peter Coulson stated (at [15]) that “whether or not an item of work is a variation is primarily a function of the contract terms”, and that the absence of contractual analysis in the Court of Appeal’s reasoning was a “fundamental flaw”.

Having undertaken a detailed examination of the FIDIC conditions, the Employer’s Requirements and the Bill of Quantities, the Board concluded that none of the four disputed items fell outside the scope of UBC’s lump-sum obligations.

In reaching that conclusion, the Board relied expressly on the long-established principle in Sharpe v San Paulo Railway Co14, where it was held that an underestimate of work in a lump-sum contract is “precisely the thing which [the contractor] took the chance of”. That authority was applied to reinforce the orthodox position that contractual risk allocation in lump-sum design- and-build contracts is not to be diluted by hindsight or operational pragmatism. While there may be some sympathy for the Engineer, whose priority had been “getting the project done”, he only had the authority that the contract provided, and he was bound by its terms.

The Privy Council also declined to follow the Court of Appeal’s conclusion that the engineer’s conduct on site could waive contractual requirements or vary the parties’ obligations.

Clause 3.1 of the FIDIC Yellow Book expressly provides that the engineer has no authority to amend the contract or to relieve either party of any duties, obligations or responsibilities under it. Against that background, the Board held that the Court of Appeal was wrong to conclude that procedural requirements, including notice and claims provisions, had been waived.

Sir Peter Coulson explained that if the engineer purported to dispense with compliance with clause 20.1 or the determination procedure under clause 3.5, he would in effect be amending the contract, which he was not permitted to do. The engineer’s role is administrative and certifying, not constitutive of the parties’ contractual rights.

This aspect of the judgment will be of particular interest to international practitioners, given the frequency with which arguments are advanced that informal site practice or cooperative conduct has modified contractual risk allocation. The Board’s analysis firmly re-anchors the engineer’s role within the limits of the authority conferred by the contract.

The most practically significant aspect of the decision concerns clause 20.1 of the FIDIC Yellow Book. The Privy Council held that the clause is drafted in classic condition precedent terms (“if X, then Y” – see [64]) and that failure to comply within the 28-day period bars entitlement to additional payment entirely.

The Board expressly approved the analysis in Obrascon Huarte Lain SA v Attorney General for Gibraltar15, where clause 20.1 was treated as a condition precedent to recovery. Sir Peter Coulson confirmed that the language of clause 20.1 demonstrates the necessary dependency between compliance and entitlement.

The Board also rejected the Court of Appeal’s conclusion that termination of the contract rendered clause 20.1 inapplicable. Termination operates prospectively and cannot revive claims which were already time-barred prior to termination.

This judgment represents a clear and authoritative restatement of contractual orthodoxy at the highest level. Delivered by Sir Peter Coulson, it reinforces three principles of importance in international construction law: contractual scope is determined by the contract itself; engineers cannot vary contracts or waive rights absent express authority; and condition precedent clauses, including FIDIC clause 20.1, will be enforced as written, certainly in English law.

For international courts and tribunals, Uniform Building Contractors is a reminder that certainty, not flexibility, lies at the heart of sophisticated construction contracts, and that fairness arguments cannot readily be used to circumvent the contractual machinery the parties have chosen.