Construction law quarterly

Welcome to the second edition of Construction Law Quarterly for 2026. In this edition we cover a number of different topics from recent relevant case law to the impacts of tariffs and suspension on projects under the FIDIC contract. We cover termination clauses and the recent decision of the Privy Council that relates to the approach to variations in construction contracts insofar as variations are determined not by site practice but by the contract.Our first paper covers recent case law that relates to the interpretation of termination clauses. In Providence Building Services Ltd v Hexagon Housing Association Ltd1, the Supreme Court confirmed that termination for repeated late payment under JCT clause 8.9.4 requires a previously accrued (but unexercised) right to terminate under clause 8.9.3. The decision reinforces orthodox interpretation of standard form contracts: the words used are paramount, consistency across the industry is assumed, historical drafting archaeology is discouraged, and commercial common sense cannot override clear contractual language.In our second paper, In Paragon Group Ltd v FK Facades Ltd2, the Court held that an assignee of an employer’s rights under a construction contract may refer a dispute to adjudication. Construing the JCT Minor Works Contract and the Scheme together, the judge concluded that the right to adjudicate passes with an assigned contractual claim. The issue was finely balanced, practical difficulties were acknowledged, and permission to appeal has been granted, reflecting its wider industry significance.Third up is Vivid Housing Ltd v Allianz Global Corporate that engineers lack authority to vary contracts or waive rights; and that FIDIC clause 20.1 operates as a strict condition precedent to entitlement. Fairness and flexibility cannot override clear contractual risk allocation.As ever, should you have a short article or legal update that you would be interested in submitting for inclusion in a future issue please contact the journal editor at journals@icepublishing.com.The content and the opinions expressed have been provided for information purposes only. It should not be relied on as a substitute for specific legal advice on any particular topic.Rob Hammond, Gatehouse ChambersIn 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?”5The 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: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” 31That 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”. 31Courts 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” 24However, 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 ChambersMathias 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 an assignee of the Employer’s rights to refer a dispute against the Contractor to adjudication. The Court held that the did have the right to FK has been granted permission to appeal to the Court of dispute out of an JCT Minor Works Contract for remedial to the at a commercial in Employer under the Contract was Ltd In assigned the of the Contract to Group Ltd and in assigned the of the Contract to Paragon in of the Contract provided that any dispute or under this Contract may refer it to in with clause Clause provided that the Scheme for Construction Contracts to any such of the as allowed the Employer to the of the Contract at any without the Contractor’s an against FK to for and The a decision to therefore in the and FK to resist on the that Paragon had no right as an assignee to refer a dispute to under the Contract or the case relied on the to a to a construction contract” in and other of the to as at was under the only a to a construction contract can refer a dispute to an assignee not a to the construction contract and not the and insofar as is commercial this given the difficulties and which may from an assignee to refer a dispute to as at was a proper interpretation of the of the contract, and when with an of the law in to that a any assignee of the or contractor also had the right to refer to and the difficulties and by FK were at that there was no authority on the of whether an assignee of the of a contract is entitled to refer a dispute to and that the issue was not at that the previous of which on the between and were of the issue as a of interpretation of the of the Contract and the at that must that have found the finely but that on an objective interpretation of the contract in an assignee can adjudicate an assigned against the other In the case had of and first the reference in the Scheme to to the construction contract” is to the and strict legal analysis, an assignee not a to the contract in the there was an approach to the use of the in the and that contract and the Scheme can be as if the words any legal assignee of such where are into the of a of the Contract was the primary contractual on and the reference to and must be in the context of clause as which allows the of the contract to be to that of the of a in under a contract passes the legal right to the and legal rights and other remedies for the which are to the assignee as if they had been from the and which would … the right to accepted that are some practical which would if an assignee could adjudicate against an for the of whether in an between assignee and would be on the and the risk of to the that some of were and that against of difficulties or perceived must be set the difficulties which would if the only an assignee could adjudicate a was by or the to their to an against the other that a by an assignee not the did not have any granted FK permission to appeal to the Court of on the that the arguments for and against were finely such that an appeal would have a prospect of and the lack of any previous authority on the a notice of intention to an the of which to an Relying on decision in Construction Ltd v the the Court’s to the to under of to the for the purposes of and a refused to grant summary judgment in of an insurer in a under an policy for defects to there was a prospect that the could that the risk of fire-related damage was sufficiently serious and imminent to the was an by the Defendant insurer for summary is the of a of at and the under a Housing in respect of the The policy was by Building Ltd as the under a authority granted by the clause of the policy the for the of the and a which and is notified during the of where the physical damage or the threat of imminent destruction or physical damage which requires immediate remedial for the of The of was from the of confirmed that the of was alleged of argued that of the the of cover. It was that Clause the only for that posed a and imminent threat of destruction or physical damage to the requiring immediate remedial to such damage the of for Allianz that the threat had to be sufficiently to sufficiently in to be as and that the clause did not cover that would only events that did not require immediate Allianz argued that the matters a short of construction which could be determined on a summary on assumed for summary judgment in to and for summary judgment in to and In the case of and the only in which the could destruction or damage would be in the of whether there was a threat of imminent damage or destruction in 2019, when the under the was the risk of was sufficiently serious and would sufficiently The judge concluded that there was a realistic prospect of that a in would have the view that there was a serious risk of and the threat of destruction or damage sufficiently that the case on the construction of the policy clause and whether the policy responded had a prospect of in to defects, and the for summary judgment was Vivid argued that posed a threat of imminent damage to the risk that the could the cladding to argued that, fire-related defects, further to for the risk to be Jefford J rejected this that there was no realistic prospect of for Vivid on this in so as it to of the risk of imminent damage any case that may be as to damage having by of the cladding had the of as a at the FIDIC Contract in The of tariffs and suspension on development a of construction and In our we the of tariff and those from the to the for and the have for and in US-funded programmes, projects which were under the FIDIC form of into in for a significant in the approach to and the that the administration further to and close USAID and and proposed of previously that USAID and in authority and the of the MCC to USAID a having the of its programmes, with or and to the and which to the and programmes, were further in when the “Liberation the legal of tariffs is in the courts therefore it the impact will they have and in the short the impact of the tariffs tariffs have the of US-funded and the of with for and up and the in material in and over contractual obligations have the of US-funded for and the suspension of grant programmes, has projects contracts and their and and under the FIDIC form of contract, a of practical and legal that were had their with no clear to and tariffs immediately had serious contractual to be a policy issue into a under FIDIC and the contracts which projects is that there is a and and should the to or be to that there will be to proper Where were and this projects were never Clause the was to were has to over suspension, and a change in law the which would impact the contractor’s of the Clause can give to an of and to as a change in law, to and in but this at the same that and was FIDIC out a structured for non-payment under and the of the that were to the the contractual to as a number of the as for with FIDIC’s allocation of risk and a non-payment as an to were and parties or to address that the termination not is a of the FIDIC contractual out notice and that are In the context of the USAID and MCC Clause posed a were often to issue in Where to under or under Clause has limited or are such as tariff and remedies for is to and FIDIC such as those to address the of geopolitical and financial disruption caused by the tariff and from are with a is the FIDIC form of contract to with unprecedented or has the approach to risk allocation FIDIC a structured for suspension, change in law and recent events that the forms were not for financial and disruption on this one to future of FIDIC contracts with political and tariff volatility as for the can adopt practical to this of and tariff volatility earlier this has the and of the FIDIC form of contract. FIDIC structured for the events the that when outside the of to a FIDIC and the practical are with contract and risk are the from the USAID and MCC the between and contractual ChambersIn Uniform Building Contractors Ltd v Water and Sewerage Authority of Trinidad and Tobago4, the of the Privy Council has a judgment of for of FIDIC-based construction contracts and other standard forms. The appeal concerned the proper of alleged the limits of an engineer’s and the of clause 20.1 as a condition precedent to judgment was given by with the of the Board The decision the importance of the contract to which the parties had and authoritative of particular importance to and common law dispute out of a contract by the FIDIC Uniform Building Contractors Ltd to and of from to in Trinidad and into at and during the and were by the Water and Sewerage Authority of Trinidad and in in close to the of the first instance, the Court and The Trinidad and Court of Appeal that and on the that of variations and that it would be for to on strict contractual analysis given the in which the had been on to the Privy The Board unanimously allowed the appeal and the Court’s of in of the Court of reasoning was its that the contract had been on such that could not later a strict contractual of its the Court of Appeal that, the FIDIC terms had been the of the contract and that a the to the language of the contract would to an It concluded that it would be for to from the engineer’s treatment of the as approach was rejected in clear terms by the Privy are determined by the contract, not by or Privy Council held that the Court of approach from a of a is a matter of contractual It not how the were in nor the of the that or not an of is a is a of the contract and that the of contractual analysis in the Court of reasoning was a a of the FIDIC the Employer’s and the of the Board concluded that of the outside the of that the Board relied on the in v where it was held that an of in a contract is the which the authority was applied to the orthodox that contractual risk allocation in contracts is not to be by or there may be some for the had been the he only had the authority that the contract and he was by its Privy Council also to the Court of that the engineer’s on site could waive contractual or vary the parties’ of the FIDIC that the has no authority to the contract or to of any obligations or under that the Board held that the Court of Appeal was to that notice and had been that if the to with with clause 20.1 or the under clause he would in be the contract, which he was not to The engineer’s is and not of the parties’ contractual of the judgment will be of particular to given the with which arguments are that site practice or has contractual risk The analysis the engineer’s the limits of the authority by the most significant of the decision concerns clause 20.1 of the FIDIC The Privy Council held that the clause is in condition precedent terms – and that to the to payment Board the analysis in v for where clause 20.1 was as a condition precedent to confirmed that the language of clause 20.1 the between and Board also rejected the Court of that termination of the contract clause 20.1 operates and cannot which were already to judgment a clear and authoritative restatement of contractual orthodoxy at the by it reinforces of importance in construction contractual is determined by the contract engineers cannot vary contracts or waive rights express and condition precedent FIDIC clause will be as in courts and Uniform Building Contractors is a that not at the of construction contracts, and that arguments cannot be used to the contractual the parties have