Case Law On NEC3

Since being endorsed by the Office of Government Commerce in 2013, NEC3 has fast become the standard form of choice for construction and maintenance works in the public sector, as well as being used occasionally in the private sector for major engineering projects. Despite this being so, historically at least, case law on NEC3 has been relatively scarce. Mr Justice Akenhead expressed his concern two and a half years ago about the lack of consideration by the courts of the NEC form.

But are things really that bad? The form has been before the Technology and Construction Court on several occasions over the past four years and was considered for the first time by the Court of Appeal in February 2014, so it is at long last starting to receive some judicial scrutiny. This 47th issue of Insight examines the more important of these decisions and considers the court's evolving approach to the NEC3 form.

Since being endorsed by the Office of Government Commerce in 2013, NEC3 has fast become the standard form of choice for construction and maintenance works in the public sector, as well as being used occasionally in the private sector for major engineering projects. Despite this being so, historically at least, case law on NEC3 has been relatively scarce. Mr Justice Akenhead expressed his concern two and a half years ago about the lack of consideration by the courts of the NEC form, noting that the NEC3 Conditions:

"are used throughout the construction and engineering industries and are highly regarded in the sense that they are perceived by many as providing material support to assist the parties in avoiding disputes and ultimately in resolving any which do arise. There are some sirens or other voices which criticise these Conditions for some loose language, which is mostly in the present tense, which can give rise to confusion as to whether and to what extent actual obligations and liabilities actually arise. Very few cases involving material disputes as to the interpretation of the NEC3 Conditions have made their way through to reported court decisions."1

This paints rather a dim picture of the NEC form, but are things really that bad? The form has been before the Technology and Construction Court on several occasions over the past four years and was considered for the first time by the Court of Appeal in February 2014, so it is at long last starting to receive some judicial scrutiny. This 47th issue of Insight examines the more important of these decisions and considers the court's evolving approach to the NEC3 form.

Atkins Ltd v Secretary of State for Transport [2013] EWHC 139 (TCC), 1 February 2013

This case was concerned with the validity of a compensation event under a Highways Agency Managing Agent Contractor contract which was a heavily amended form of NEC3 that was entered into between Atkins Ltd ("Atkins") and the Secretary of State for Transport ("SST") to maintain various trunk roads in East Anglia. Payment was broadly on a lump sum basis subject to Atkins' right to claim relief for any compensation events.

During the course of the works, Atkins encountered a greater number of potholes (which it was obliged to repair) than it had anticipated and sought to claim...