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In the first episode of our Global Projects and Construction podcast, host Chris Leadbetter focuses on the evolution of building safety law in the last ten years and the risks that these rapid changes bring for companies in the construction sector. Joining Chris are Eugene Tan, who leads Clyde & Co’s Asian Construction Practice, Chloe Blackwell, Senior Associate in the Sydney office and specialist in construction law, and Will Cadwaladr, Senior Associate in the UAE office.
The episode begins by looking at the impact of high-profile cladding fires on the risks and liabilities facing the construction industry. Guests compare and contrast the impact that these incidents have had around the world, primarily in driving claims for remediation, the recovery of the cost of these works, and how these issues have been resolved in different jurisdictions. The discussion moves on to how regulations have evolved to increase safety levels in the sector, as well as touching on the funding available for remediation work, and the impact on the professional indemnity insurance sector.
Leadbetter, Blackwell and Cadwaladr kick off by discussing how fires at the Lacrosse Tower in Melbourne, The Address hotel in Dubai, and the Grenfell Tower in London have created a hugely complex claims environment in the construction sector. As Leadbetter explains, the number of parties involved makes it: “extremely complex and difficult to ascertain exactly where the liability ought to sit”. Furthermore, as an increasing number of cladding materials have been classified as unsafe, thousands of buildings must now be rectified, leading to a wave of claims from construction companies to recover the costs of this work.
The conversation then outlines how these incidents have sparked broad changes in the underlying legal framework of the construction sector, to avoid a repeat of these disasters and clarify the law around liability and remediation. For example, in the UK, the limitation period for breach of duty has increased from 12 to 30 years, while under the Building Safety Act, claims can now be brought against materials manufacturers if they’ve misleadingly sold their product or sold a product that was inherently defective - a law which already exists in Australia.
We also hear about the importance of preventative measures. For example, Tan explains that in Singapore the government has mandated regular building inspections, to minimise structural risks, such as falling cladding. Furthermore, all plans must to be signed off by an ‘accredited checker’, under legislation introduced in the 1980s. Similar rules can now be found elsewhere, for example the UK demands checks by the Buildings Safety Regulator, while New South Wales in Australia now has a building commissioner, whose role it is to inspect buildings and take action to ensure they’re safe. Meanwhile, in the UAE, the Fire and Life Safety Code has been updated numerous times in recent years to reflect the evolving risk landscape.
From a funding perspective, Leadbetter and Blackwell touch on the initiatives that have been set up in the UK and Australia to provide funds for contractors to carry out necessary remediation works. For example, in Australia this takes the form of Project Remediate, which provides ten-year, interest-free loans to constructors. Insurance is an equally important part of the equation, and Grenfell and other incidents have led to an increase in the fire safety claim coverage required by construction firms, causing difficulties for smaller companies in the supply chain, who are frequently not able to access the necessary cover.
Guests talk about the numerous discrepancies and challenges that remain, for example whether legislative changes should be forward or backward facing, particularly in reference to remediation works. Cadwaladr says that in the UAE, the Fire and Life Safety Code is forward facing, and it is a similar situation in Australia, according to Blackwell. However, this is contradicted in the UK where Leadbetter says any remediation work must comply with the latest version of the rules, stating: “It's an area that gets very muddy very quickly and there's no real clarity.”
It is certainly a hugely dynamic area, with big changes afoot, including steps to pierce the corporate veil, as Leadbetter says: “undoing hundreds of years of commercial and corporate law.” This first podcast scratched the surface, but there are many more issues to discuss in future instalments.