Civil unrest – where do contractors stand?

In recent weeks, communities across the UK have been hit by rioting and looting as a result of the civil unrest with in excess of 500 people arrested for their part in the disorder. Construction sites have been secured against the effects of rioting and workers sent home.

Partially constructed works with relatively valuable materials and tools can make construction sites particularly vulnerable to such incidents.

In the wake of the disorder, some contractors now find themselves not only dealing with the damage but also looking into where they stand contractually.

Physical loss or damage to construction works from rioting is likely to be recoverable under a Contractor’s All Risks policy and theft of tools and materials and loss of vehicles are also likely to be recoverable under other insurance policies. In some circumstances, the employer may also be able to recover the effects of physical loss or damage under the Riot Compensation Act 2016.

More problematic however is the cost of extra security, disruption of working time on site and the effects of rescheduling deliveries, which are unlikely to be recoverable under such insurances.

JCT

Under the JCT form of contract, the contractor is entitled to an extension of time for civil commotion to complete the works. Further, physical loss or damage to the works is likely to be recoverable as a specified peril under the Contractor’s All Risks policy. However, the cost effects of preventative measures such as additional security, and the disruption costs of having to send workers home or reschedule of deliveries due to personal safety concerns are not dealt with by a corresponding clause for loss and expense. Consequently, unless a formal change to the works is agreed with the employer, these are likely to be at the contractor’s risk.

NEC    

While the NEC is slightly more flexible and potentially allows these costs to be claimed as a compensation event under clause 60.1(19), this may also be problematic, as in practice, this clause is often removed or amended so that there is only a time entitlement.   Accordingly and similar to the JCT contract, there may only be an entitlement to uninsured costs recovery where there is an instruction changing the works information agreed with the client.

Comment

Unless they have been able to proactively and pragmatically agree changes to their works with clients,  contractors are therefore likely to find themselves counting the cost of recent incidences of violent disorder.

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