Late disputes and the NEC3 Engineering and Construction Contract

Abstract

Surveys show growing use of the third edition of the New Engineering Contract (NEC3) family of contracts. One of the reasons for project owners’ choice of the NEC3 Engineering and Construction Contract is the avoidance of the risk of claims and disputes long after project completion. In several cases not involving NEC3 contracts, UK courts have been presented with difficult questions concerning adjudication after project completion and delayed reference of adjudicated disputes to the applicable final tribunal. This paper critically examines these questions, the courts’ answers to them and their implications for the NEC3 family of contracts. It concludes that the drafters of future editions of the NEC3 Engineering and Construction Contract should consider provisions targeted at: ensuring that the test of awareness for the purposes of the clause 61.3 time-bar is on an objective basis; conclusive evidence clauses that impose a disincentive against seriously delayed challenges to assessment of compensation events and payment; and providing that the decision of an adjudicator becomes finally binding if the dispute decided is not referred to the tribunal within a stated period.