Covid-19 and Force Majeure under the JCT Contract and NEC 4.

Covid-19 and Force Majeure under the JCT Contract and NEC 4.


Queries have been raised about how to deal with the impact on NEC contracts that may be caused by the prevention and containment measures being instigated to control the spread of the coronavirus. This note is aimed at explaining the ways in which the NEC4 contracts deal with this matter. The guidance is given in relation to the Engineering and Construction Contract (ECC), but similar actions apply under the other NEC contracts. This advice is given in relation to the standard wording in NEC4 contracts. If modifications have been made, the contract should be reviewed to check whether the guidance given here still applies.

The impact of the virus will vary between different countries, and affect contracts in different ways. The main problem is likely to be the unavailability of resources, primarily people but also Plant and Materials or Equipment. An early warning of the issue should have been given by either the Contractor or the Project Manager at the time, so that early discussion about the potential impacts could be held in advance, and mitigation measures identified. As the impact of the virus develops, and restrictions which affect the works, further early warning meetings should be held.

Governments in some countries have imposed specific restrictions on movement of people and goods. In this case, if the Site is located in that country and if Option X2 – changes in the law – has been incorporated into the contract, those restrictions would be a compensation event and the impact would be assessed in accordance with the contract.

In the most severe cases, where work has had to be stopped or suffers delay, because of the virus, clause 19 – prevention – may well apply. The situation could arise when people have been prevented from working on the contract or Plant and Materials or Equipment cannot be obtained due to restrictions on movement. These restrictions may have been applied in another country where essential Plant and Materials or Equipment were being sourced. It would be difficult to argue that, in such an extreme case, the Contractor could have anticipated the issue and have allowed for it. If the impact stops the whole of the works being completed by the date for planned Completion shown on the Accepted Programme, or being completed at all, then the provisions of this clause apply and the Project Manager should take control of dealing with the matter.

An event which passes this test will also be a compensation event under clause 60.1(19). Instructions issued by the Project Manager to deal with the matter are likely also to be compensation events, through a change to the Scope, stopping or not starting work or other events identified in clause 60.1.

It should be noted that the test in clause 19 is fairly strict. It is not sufficient that the works or a section of the works is delayed, the delay must impact the date of Completion of the whole of the works. A delay which does not impact the critical path of the programme or that can readily be overcome would not meet that test. It should also be recognised that clause 19 and the corresponding compensation event only applies in the case of delay, and do not apply where the only impact of the virus on the contract is an increase in cost.

Where the effect of the virus is having or is going to have a significant impact on the work in the contract, it would be sensible for the Project Manager to manage the effects of the virus on the works in the interests of the Client. That may mean the Project Manager instructing the Contractor to stop work or changing the Scope in some way to overcome the difficulties encountered. Clause 19 has been written specifically to make the Project Manager take control, but whether or not the effect of the virus meets the limitations in this clause, the Project Manager should consider whether or not it would be sensible to issue instructions dealing with the matter. This would allow the Project Manager to control the time and cost effect of the virus on the contract.

Under the NEC4 Term Service Contract, which does not contain clause 19 or the corresponding compensation event, the same approach for early warning and proactive management by the Service Manager should be followed. The Parties should work together in accordance with clause 10.2 to best address any impact on the delivery of the service due to the coronavirus.

Whilst the Short Contracts do not include clause 19, they do include the early warning procedure and (with the exception of the NEC4 Term Service Short Contract) provide for the event being a compensation event. This emphasises the point that the Client should be actively managing the effects of the virus to ensure that actions taken are in the best interest of the project.



  1. Force Majeure is a French civil law concept which is undefined within English Law but was

introduced due to the narrow application of the Contract Law doctrine of Frustration.


Case Law

  1. The principle of  Force  Majeure  has  been  defined  over  the  years  through several cases.

Matsoukis v  Priestman &  Coi Justice  Bailhache  found  that force majeure did apply  to the

disturbance of business caused by a national coal strike along with accidents to machinery

but also decided that this did not cover delay caused by bad weather, football matches or

funerals as “these are the usual incidents interrupting work and the defendants, in making

their contract, no doubt took them into account”.



  1. Lebeaupin v Crispin five years later expanded on this to include War and Epidemics “….

Thus  was,  inundations  and  epidemics  are  cases  of  force  majeure;  it  has  even  been

  decided  that  a  strike  of  workmen  constitutes  a  case  of  force  majeure”.  Justice  McCardie

went on to state that the force majeure clauses should be constructed with close attention

to the words and the effect which could be different when considering different documents.


  1. In relation to  Strikes  it  was  found  that  this  could extend  to  where  a  strike  is  anticipated

along with embargoes and refusals to grant licenses in Coloniale Import-Export v Loumidis



  1. The recent case of Seadrill Ghana Operations Ltd v Tullow Ghana Ltdiv noted that a party

who  looks  to  rely  on  a  force  majeure  clause  must  demonstrate that (on  the  balance  of


o A Force Majeure Event has occurred and that it had the effect specified in the contract

(e.g. it prevented / hindered performance).

o The Claimants failure to perform was due to circumstances outside its control.

o There  was  nothing the  Claimant could  reasonably  have  done  to  avoid  the  Force

Majeure Event or mitigate its effects.

The  force  majeure  claim  failed  in  this  case  as  it  was  found  that  the  claimant  would  have

been unable to act in any event due to their own negligence/default.


Defined Force Majeure Clauses


  1. Some contracts (by way of amendments) may seek to define the term “Force Majeure” with

a  list  of  events  with  the  final  event  to  be  a  broader  range  of  terminology  such  as  “other

such events”. Great care needs to be taken in this regard as rather than applying a ‘catch

all’  principle  it  can  lead  to  the Ejusdem  Generis (of  the  same  kind  or  class)  principle

applying, in that within the preceding list there will be some common category developed

and  anything  which  falls  outside  of  this  category  will  not  be  included.v This  stance of the

courts remains as is highlighted in BOC Group plc v Centeon LLC and another & Burrows

Investments v Ward


  1. Whilst the inclusion of a definitive list may help a party to bring a Force Majeure claim, this

does not automatically guarantee that a party will be successful in claiming Force Majeure.

This is evident in the recent case of Classic Maritime Inc v Limbungan Makmur Sdn Bhdvii

which introduced a ‘but for’ test for causation and found that Limbungan would have been

unable to perform even if the Force Majeure event had not occurred.


Force Majeure in relation to COVID-19


  1. To enable a  successful  claim  under  the  Force  Majeure  clause  of  the  JCT, a  party  would

have  to  demonstrate  that  as  a  result  of  COVID-19  they  have  been  prevented  from

completing  their  works  or  that  to  continue  would  lead  to  the  party  breaking  other





  1. The fact that  performance  has  taken  longer  to  achieve  than originally  anticipated  or  was

more difficult/unprofitableix will not allow a party to be successful in a Force Majeure claim.


  1. So, if you want to rely on the Force Majeure provisions of the Contract you must be able to

establish that you could not progress your works whatsoever.


CDM Regulations 2015


  1. Under the CDM  Regulations  2015x the  client  has  overall  responsibility,  as  defined  within

section 4. This is clarified under the following sections below:

            4.(1) – 

            4.-(1)  A  client  must  make  suitable  arrangements  for  managing  a  project,

      including the 

              allocation of sufficient time and other resources.


            4.(2) (a) & (b) – 

            (2) Arrangements are suitable if they ensure that – 

    (a) the construction work can be carried out, so far as is reasonably practicable, without

        risks to the health or safety of any person affected by the project; and

        (b)  the  facilities  required  by  Schedule  2  are  provided  in  respect  of  any  person

        carrying out construction work.


        4.(3) – 

        (3)  A  client  must  ensure  that  these arrangements  are  maintained  and  reviewed

        throughout the project.


4.(6) (a) & (b) – 

  (6) A client must take reasonable steps to ensure that – 

        (a) the  principal  designer  complies  with  any  other  principal  designer  duties  in

        regulations 11 and 12; and

        (b)  the  principal  contractor  complies  with  any  other  principal  contractor  duties  in

        regulations 12 to 14.



  1. Due to the  requirements  to  maintain  social  distancing  as  far  as  practicable  and  increase

the cleaning regime on site as a result of the Site Operating Procedures, this overall

responsibility  for  this arguably rests  with  the  client.  The  Client must ensure  that  the

Principal Contractor complies with sections 12 – 14 of the Regulations, meaning that if the

Principal Contractor was to not implement any measure to comply with the Site Operating

Procedures then the Client would be ultimately responsible in this regard.


  1. Under paragraph 4.1  onwards  of the CDM  Regulations  2015, the client  is  ultimately

responsible for ensuring the works are carried out safely.


  1. The CDM regulations place obligations on both the Client and the Principal Contractor.


  1. There may be  an  argument  that  compliance  with  the  current  site  operating procedure

requires an instruction from the Client to the Principal Contractor.


  1. It may be  possible  by  following  the  respective  Parties  obligations  under  the  CDM

regulations  to  demonstrate  that  the  Client  ensures compliance  with the  site operating

procedures which may arguably be possible to be a relevant event and relevant matter.





  1. The approach to be taken may change depending on your position in the supply chain i.e.

Main  Contractor  or  Subcontractor  and  the  Terms  and  Conditions  of the Contract you  are

working under.


  1. For Subcontractors the  introduction  of  the  Site  Operating  Procedures  will  lead  to  the

imposition of restrictions which may be included under variation 5.1.2 of the Sub-Contract

which could (depending on amendments) lead to a claim for both an Extension of Time and

Loss and Expense. Alternatively, this may be an ‘Act or Impediment’ by the contractor and

give rise to an Extension of Time and Loss and Expense.


  1. For Main Contractors  taking  into  consideration  the  clients  obligations  under  the  CDM

Regulations  along  with  the  restrictions  placed  upon construction activities by the  Site

Operating Procedures Version 3 could fall under clause 5.1.2 of the Contract if established

would give rise to both an Extension of Time and Loss and Expense.


  1. In each instance the exact wording of the Contract will need to be reviewed along with the

relevant notices that are in place, and most importantly a careful review of the specific facts

of each situation.




[1915] 1 KB 681 at 685-7


[1920] 2 KB 714 at 719


[1978] 2 Lloyd’s Rep 560


[2018] EWHC 1640 (Comm)


Powell v. The Kempton Park Racecourse Co., [1899] A.C. 143


[1999] 1 All ER (Comm) 970, & [2015] EWHC 2287


[2019] EWCA Civ 1102


Reardon Smith Line v Ministry of Agriculture, Fisheries and Food [1961] 2 All ER 577


Tennants (Lancashire) Ltd v G.S. Wilson & Co. Ltd [1917]


The Construction (Design and Management) Regulations 2015