Entering extra time

In “Old Chestnuts Under Fire”, I promised to let you know the arbitrator’s decision on how an architect, or an arbitrator exercising review powers, should grant extensions of time under clause 25 of JCT98, and what sort of matters should be considered in doing so.

You may recall that, during the hearing, the contractor had argued that, for these purposes, the impact of a particular “relevant event” could and should be looked at in isolation. Against that, the employer was arguing that it must take account of all relevant matters including concurrent delay.

Before breaking the news, let me explain the context in which the arbitrator was examining this question. The contractor had opted to refer to arbitration two out of a whole host of relevant events that it had previously cited as entitling it to extensions of time under clause 25. It argued that, as claimant, it could decide what matters to refer to arbitration. The logic was that, if it succeeded on the two particular relevant events, it would actually achieve its overall objective of securing repayment of liquidated damages.

The “old chestnut” came up because, in its defence, the employer alleged that it was other matters, for which the contractor was responsible, that had actually delayed the project. The employer also tried to force the contractor to put all its cards on the table by counterclaiming for a declaration that it had already received its full entitlement to extensions of time. The contractor objected to the employer’s approach on the grounds that it involved raising matters that were outside the arbitrator’s jurisdiction. This, claimed the contractor, was limited to the two relevant events cited in the arbitration notice.

Conversely, the employer argued that the matters it had raised were within the arbitrator’s jurisdiction. To hold otherwise would amount to depriving the employer of the right to defend itself by demonstrating that the matters upon which the contractor relied were not the true causes of delay.

A great deal turned upon the arbitrator’s decision on the preliminary issue. If the employer was right, the scope of the arbitration would be very much wider than the contractor wished. On the other hand, if the contractor’s approach was correct, large parts of the employer’s case would effectively be struck out as irrelevant.

A party cannot choose which criteria to exclude when considering the terms for extensions of time

An architect should assess all causal factors that led to a delay

So what did the arbitrator decide?

First, he considered that the real question before him was whether alleged causes of delay could be looked at in isolation. In answering that, the arbitrator’s starting point was that clause 25 of JCT98 requires an architect – and, it follows, an arbitrator exercising his or her review powers – to grant a fair and reasonable extension. In his opinion, the language of clause 25 was very much that of causation. It therefore followed that, in arriving at a fair and reasonable extension, the architect or arbitrator was bound to look at the project as a whole and determine whether the matters relied on did in fact cause delay.

Simply looking at the impact of a particular event in isolation, as the contractor had urged, would, in his view, be artificial. Matters such as concurrent delay and the relevance of the contractor’s original programme would clearly have to be considered in arriving at a fair and reasonable extension.

In upholding the employer’s case, the arbitrator also expressed considerable doubt about the validity of the contractor’s approach in the arbitration, which amounted to cherry picking extension of time issues. He also suggested that, in a situation such as this, the contractor’s confidence that it would be able to rely on other relevant events in a subsequent arbitration might be misplaced.