Concurrent delay – what is the right test?

By Edward Foyle, Partner & Shahed Ahmed, Associate,  Fenwick Elliott

Even relatively simple construction projects regularly suffer a whole host of delays to activities. For complex projects, the interface between delays to various sequences of works – and establishing which activity is the cause of critical delay (i.e. actually causes delay to project completion) – is extremely complex. Identifying which issues are critical requires sophisticated expert delay analysis and detailed input from factual witnesses. Invariably, this is an expensive – and time consuming – process.

In English law, it is generally accepted that, where a project suffers from a period of “concurrent delay”, the contractor is entitled to an extension of time (such that the employer is not entitled to claim liquidated damages). However, the contractor is not entitled to recover from the employer its prolongation costs. However, as demonstrated by the recent judgment in Thomas Barnes v Blackburn, the meaning of “concurrent delay” may be more open to debate.

In contrast, there is no guidance in UAE law specific to the resolution of concurrent delay claims which will be decided under general legal principles, including good faith and concepts of fairness.  

The meaning of “concurrent delay”: true concurrency 

A line of English lower court authorities established a very precise meaning for “concurrent delay”, see Royal Brompton Hospital NHS Trust v Hammond (No 7) (2001), Adyard Abu Dhabi v SD Marine Services [2011] and Saga Cruises Ltd v Fincantiera [2016]. Those cases make clear that true concurrent delay will only arise in the following circumstances:

• Two delay events (one a contractor risk, the other an employer risk) occur at the same time;
• The effect of those two events, in terms of overall delay to the project, are felt at the same time.

Unsurprisingly, the occurrence of true concurrent delay is rare. It should be distinguished from:

• A situation in which two events cause delay to a contractor’s activities at the same time, but only one of those activities is on the critical path, such that only one event causes critical, or actual, delay; and, also
• A situation in which two events cause delay to critical activities at the same time, but although the effect of the delay event is felt at the same time, one of the events occurred prior to the other.

In the second example above, there is no concurrent delay due to the first-in-time principle. The essence of the first-in-time principle is that, by the time that the second event occurred, it could not cause any actual delay to the contractor’s works, because the contractor was already in delay anyway as a result of the first event. The example provided in Royal Brompton, and cited with approval in later cases, is where a contractor knows that it will be unable to progress works in a particular week because it has no workforce. The occurrence of inclement weather the following week (often an employer risk) will not be a concurrent cause of delay because the contractor was already unable to progress the works in that week in any event. Another frequently cited example is the late instruction of a variation by an employer, which would have pushed the completion date for the project if the contractor were not already delayed by reasons for which it was responsible. 

The courts’ emphasis on seeking to identify a single event that actually caused delay is consistent with the prevention principle: the employer is only prohibited from levying liquidated damages where it has actually prevented the contractor from completing the works on time. If the contractor was already in delay, the prevention principle does not apply.

The first-in-time principle requires a relaxation of the “but for” test, the usual test for establishing factual causation of losses, as neither party can show that, but for the other party’s delay, the project would have been completed on time. In many cases, parties may consider this arbitrary and the results unfair. For example, if the contractor is found to already be in delay (such that there is no finding of concurrency), an employer’s late instruction to vary the works would not prevent the employer from claiming liquidated damages as a result of a failure to complete on time. This will be the case even if the contractor’s works after the contractual completion date include the additional instructed works. It may be unlikely that, at the time of contracting, this was the parties’ intention.

Thomas Barnes v Blackburn: the broader approach 

In Thomas Barnes v Blackburn, the judge took a broader and more practical approach to considering whether delays caused by the contractor and employer were concurrent. The judgment is interesting for its conclusions as to what constitutes concurrent delay and also the judge’s approach to identifying the cause of critical delays, which did not accept either party’s expert’s analysis and instead focussed on the witness evidence and contemporary documents.

The dispute related to delays to the construction of a bus terminal which had led the employer to terminate the contract. The contractor claimed that it had been unlawfully terminated and that it was entitled to a significant extension of time.

A large part of the contractor’s extension of time claim related to 133 days’ delay to concrete topping works caused by the need for remedial works to steel frames in the roof beams in the hub area of the terminal due to deflection issues for which the employer was responsible. The contractor claimed the delays to concrete topping caused day for day critical delay to completion, such that it was entitled to a 133-day extension of time and to recover its costs incurred in this period of delay.

The employer’s position was that the contractor was only entitled to an extension of time of 27 days in respect of the delays to concrete topping works on the basis that, (among other things) for a large part of the 133-day period, roof covering works were on the critical path and were delayed by the contractor by 57 days, and also that the contractor had delayed commencing the concrete topping works by 12 days once they had been approved by the employer.

The judge found that the contractor was entitled to an extension of time of 119 days, being the 133 days’ delay caused to concrete topping works less 12 days’ delay in commencing works once approved. However, the judge considered that the contractor was in concurrent delay for much of this period and so awarded the contractor only 27 days’ prolongation costs.

The judge did not seek to define “concurrent delay” beyond stating that there must be “an effective cause of delay” for which the employer was responsible. The judge did not consider the particular meaning given to “concurrent delay” in the line of authorities explained above (Royal Brompton, Adyard, and Saga), or whether “true concurrent delay” was required in order to establish an entitlement to an extension of time, nor did he provide detailed analysis of when a delay event becomes “an effective cause” of delay.

The judge found that both the roof coverings and the remedial works to the hub structural steel were on the critical path. The contemporary documents showed that the contractor’s works on the roof coverings were delayed by its failure to source scaffolding and subcontractors.  The judge's key consideration in concluding that both these issues were effective causes of delay appears to have been that, throughout the 133-day period in which the employer’s remedial works to the hub steelworks delayed the commencement of concrete toppings, the contractor could not have known how long those remedial works would take to complete. The contractor should, therefore, have carried out all works available to it, including the roof coverings, in order not to delay completion when the hub steel remedial works were resolved.

The judge reasoned that, since resolution of both issues was essential for progression of the works, neither party could dismiss the delays for which they were responsible as irrelevant.  The fact that, as it happened, the delays to the hub remedial works not only began before the delays to the roof coverings but also ended after the contractor’s issues with the roof coverings had been resolved did not, in the judge’s analysis, mean that the roof covering delays were not a concurrent cause of critical delay.

Considered against the background of Adyard and other authorities, the finding of concurrent delay is surprising. The logic used is, effectively, the “but for” test, which, as noted above, Adyard and other authorities made clear was to be relaxed in the context of concurrent delays. However, many consider the practical approach taken by the judge, and the conclusion that the employer not be required to pay the contractor’s prolongation costs when the contractor was itself in delay, fair.  Whilst there may be further factual issues that were not reported in the judgment, it would appear from the case report that a strict application of the first-in-time principle (as established in Adyard) would not have had the same regard to contemporary documents and would have produced the same result.

It is often stated that courts should take a common-sense approach to determining the real causes of delay, based on an analysis of the parties’ experts’ analysis and examination of the contemporary records. However, what constitutes common sense is ultimately a matter of subjective opinion. In practice, it is difficult to establish the point at which a judge or arbitrator’s common sense should override established principles such as the first-in-time principle. This tension will result in unpredictable outcomes and continue to cause uncertainty for parties facing or advancing delay claims. However, the following messages are clear from Thomas Barnes v Blackburn: 

• First, contemporary documents recording the delays throughout the project are a key part of any delay claim, over-reliance on after the event programming analysis is not sufficient. Ultimately, to succeed, parties require credible delay analysis which must be supported by the contemporary record.
• Second, given the large number of interface issues on construction projects, it can be difficult to predict, during the course of the works, which issues a court or arbitrator may later conclude were the causes of delay. Therefore, in the event that a contractor’s activities are delayed by the employer, it must nevertheless continue with its works – so as to avoid any later argument of concurrent delay (which may or may not find favour with a judge).
• Finally, delay claims are fact intensive, and rarely easy to resolve. 

Thomas Barnes v Blackburn may provide encouragement to parties seeking to argue concurrent delay (and thus either relief from LDs or no liability to pay prolongation costs).  It should not do so.  Each judgment turns on its facts and the principles in the Adyard line of authorities are well established.

Concurrent delay in the UAE

As noted above, there is no guidance in UAE law specific to the resolution of concurrent delay claims. Concurrent delay claims will be decided under general legal principles, including good faith and concepts of fairness.

Accordingly, where there is a finding of concurrent delay, rather than follow the English law approach (of allowing a contractor an extension of time but not to recover its prolongation costs), a UAE court (or arbitrator) is likely to apportion liability for concurrent delay under the UAE Federal Law No. (5) of 1985 (the “Civil Code”). In addition to good faith (in Article 245), relevant provisions of the Civil Code include Article 291, which provides for the apportionment of liability where two or more parties are responsible for damage, and Article 290 which provides the court with flexibility to reduce a damages award if the claimant is also responsible for the loss suffered.

If a period of concurrent delay is apportioned 50/50, it would be reasonable to anticipate that the contractor will get only half the extension of time requested, but will also be able to recover its prolongation costs in the period of extension of time allowed. In turn, it would be reasonable to expect that, for the period in which no extension of time has been allowed, the contractor will be liable to pay liquidated damages. The two claims (prolongation and LDs) will then be set off.

There is also no definition of “concurrent delay” under UAE law, but because UAE law is less prescriptive and allows more discretion, it is arguable that a UAE court would not apply the “first-in-time principle” (per Adyard and other English authorities) and would instead focus on achieving a “fair” result. The provisions above, and others such as abuse of rights (Article 106) and unjust enrichment (Article 318), allow the UAE courts to assess the relative impact of the causes of delays and, thereafter, apportion liability for concurrent delay as it deems fair. If the court considers the two causes of delay to be of equal causative impact, the court would be likely to share liability between the parties equally. In considering how effective an issue is in causing delay, the court is unlikely to be influenced by strict principles. It is unlikely that a court would allow an employer to charge liquidated damages where it is responsible for an issue that would prevent the contractor from completing the works were the contractor not already in delay.

Further, the court may find an alternative basis to allocate liability, if it considers it fair and reasonable to do so given the facts and the impact that it considers the various events had on the contractor’s works. It is not constrained to apportion liability on a 50/50 basis.

Practical considerations

Delays are one of the biggest, if not the biggest, risks for construction projects. Parties must, therefore, be aware of how liability for delays is treated under their contracts’ governing law. For example, for the reasons given above, parties to construction contracts governed by UAE law (and likely other civil law systems) should be aware that UAE law’s approach to both assessing whether there is concurrent delay and determining the liability that flows from concurrent delay is markedly different from English law (and likely many other common law systems). Where construction projects subject to UAE law are delayed, each party should ensure that it is not responsible for any delays to its own activities so as to avoid any risk that some liability for the project’s delay will be apportioned to it, as the risk of both concurrent delay being found and liability for that delay being shared between the parties is greater under UAE law.

Finally, given the frequency with which concurrency issues arise in delay claims, parties may wish to consider agreeing in their contracts (whatever their governing law) whether the first-in-time principle must be satisfied for concurrency of delay to arise, or whether the “but for” test should apply (which parties may consider fairer). Specifying the relevant test in contracts should provide parties with greater certainty. This is particularly so in the context of disputes under laws other than English law, or where the dispute is likely to be resolved by contractual or statutory adjudication, as these are forums in which there may be a greater tendency for concurrent delay to be found than in the courts.

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