Navigating "Global Claims" in Construction.

Introduction

In the intricate world of construction, disputes and claims are almost inevitable, especially when complex projects encounter delays. Among the various types of claims, the global claim has gained recognition as a method by which contractors seek compensation for delays resulting from multiple concurrent causes. This comprehensive article delves into the concept of global claims in construction, exploring their definition, emergence, and how courts have historically approached them.

Further, this article will unravel the intricacies surrounding global claims, including the shifting perspective of courts, the challenges claimants and respondents face, and the crucial factors that determine the fate of these claims.

Understanding Global Claims.

A global claim, in essence, is a contractor's plea for a single lump sum of money to cover losses attributed to multiple underlying causes or events that led to project delays. It is a mechanism that comes into play when distinguishing the individual causes of these delays becomes a complex and daunting task. The roots of global claims are often found in delay claims, where various factors contribute to project timeline disruptions. This article will meticulously dissect the constituents of a global claim and shed light on the scenarios that necessitate its usage.

The SCL Protocol.

The SCL Protocol, as outlined in its second edition from February 2017, takes a firm stance against the practice of contractors making composite or global claims in construction disputes. This position remains steadfast, even in light of the evolving, more flexible approach that courts have adopted regarding global claims.

The Protocol emphasizes that if contractors maintain accurate and comprehensive records, they should be fully capable of establishing a clear causal link between an Employer Risk event and the resulting loss or expense they have incurred. In essence, this discourages the reliance on global claims as an alternative means of seeking compensation. Instead, the emphasis is placed on meticulous record-keeping and documenting events, which can help contractors substantiate their claims without the need for a global approach.

The Protocol also underscores that the absence of such records does not serve as a justification for resorting to global claims, reinforcing the importance of precise documentation and transparency in construction projects.

The Historical Perspective...

Historically, courts have scrutinized global claims with a degree of skepticism. Legal conventions have insisted on establishing a causal link between the sums claimed and specific events, whether these events arise from contract breaches or entitlements to loss and expenses. We will delve into the historical backdrop of global claims, examining why they faced skepticism and the challenges they posed for claimants.

The Evolution of Court Approaches...

Recent years have witnessed a shift in the way courts approach global claims. While the traditional stance demanded strict adherence to causal links, a more lenient approach is emerging. Courts now acknowledge scenarios where it may be impractical or impossible for a contractor to establish such causal links. This article will scrutinize the changing landscape of court attitudes towards global claims and the factors contributing to this shift.

Claimant's Considerations.

For contractors considering global claims, this article will serve as a guide for evaluating the feasibility and circumstances that warrant such claims. Global claims should be perceived as claims of last resort, only to be pursued when the traditional approach of linking specific costs to individual causal events is entirely impractical. We will discuss the scenarios in which contractors should contemplate making global claims, along with the risks involved when concurrent causes of delay contain elements for which no compensation is payable.

Respondent's Perspective..

From the respondent's viewpoint, which includes principals or head contractors, this article will shed light on the need to approach global claims objectively. While there are situations in which global claims can succeed, each case should be assessed on its merits. The article will emphasize the importance of treating global claims with careful consideration, taking into account the principles governing these claims, as set out in the construction context.

Objections to Global Claims.

The primary objection to global claims arises from their perceived departure from the conventional legal position concerning the burden of proof required for a contractor to succeed in their claim. Traditionally, a contractor is expected to establish a causal link between the sums claimed and each individual event, ensuring a clear and specific connection between their losses and the causes.

Global claims, in essence, challenge this accepted norm by aggregating losses under a single claim, thereby shifting the burden of detailed analysis onto the employer. Consequently, it becomes the employer's responsibility to scrutinize the events and quantify the loss while demonstrating why the global approach is not warranted.

Employers, on their part, possess an array of defenses to counter a contractor's global claim effectively. Among these defenses, demonstrating that they were not responsible for a significant cause of the loss, which served as the dominant factor in the delay or loss, emerges as one of the most potent strategies to refute such claims. This objection and the associated defenses reflect the intricate legal landscape surrounding global claims in the realm of construction disputes.

Principles which must be considered when dealing with the Global Claim.

When dealing with global claims in construction disputes, several key principles must be considered to ensure a fair and reasonable assessment of the claim:

• Burden of Proof: The claimant, typically the contractor, must demonstrate, based on the balance of probability, the facts surrounding the loss and expense incurred. This involves presenting a convincing case with sufficient evidence.
• Contractual Requirements: The contractor must meet any contractual prerequisites or condition precedents to qualify for the claim. Failing to adhere to these contractual obligations can lead to disqualification of the claim.
• Causation Challenges: While global claims are legally acceptable, they present difficulties in establishing causation, particularly in cases involving multiple concurrent causes of delay or loss.
• Practical Determination: Courts do not necessarily require an exact breakdown of costs attributable to each individual loss-causing event. Instead, they allow a global claim when practical and reasonable, providing an avenue for contractors to recover loss and expense without having to provide precise individual proofs.
• Impossibility of Separation: In situations where it is impractical to separate and establish links between individual events and losses, a global claim may still be considered. However, the burden of proof rests with the contractor to demonstrate this impossibility, as seen in cases like Walter Lilly & Company Limited.
• Accountability for Self-Inflicted Loss: Contractors are required to make proper allowances for losses and expenses incurred as a result of their own actions or omissions. This ensures that claims only cover losses that are genuinely attributable to external factors.
• Explicit Linking: Amounts directly linked to specific causes should be excluded from global claims and, instead, addressed through standard claim procedures. This helps maintain transparency and accuracy in the claim process.

By adhering to these principles, parties involved in construction projects can navigate global claims more effectively, ensuring that claims are fair, just, and properly substantiated.

Conclusion

Global claims in construction are a subject of ongoing debate, with shifting legal perspectives and evolving industry dynamics.

In a nutshell, while global claims in the construction industry have their complexities and challenges, they can serve as a practical approach to reasonably compensate contractors for their losses and expenses. The unique nature of construction projects often involves multiple concurrent causes of delay and loss, making it difficult to establish direct links between individual events and their impact.

Embracing the concept of global claims up to a certain extent can help achieve a win-win situation that benefits both contractors and project owners. This approach promotes the fair resolution of disputes, supports successful project completion, and maintains positive working relationships in the construction sector.

MORE READS ON CLAIMS

1. What is a Global Claim: Click here
2. Construction Claims: Click here
3. Acceleration Claims: Click here
4. Delays and Disruptions in Construction: Click here
5. Extension of Time and Prolongation Costs: Click here
6. A Guide to Claims Procedures in FIDIC 1999: Click here

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