The Heat Is On: Global Climate Change And Adverse Weather Conditions In Construction Projects

THE AUTHORS: Erwan Robert, Senior associate at Reed Smith, Erwan Robert, Senior associate at Reed Smith , Adam Calloway, Jurist at Reed Smith, Vanessa Thieffry, International arbitration at Reed Smith

This summer has seen unprecedented adverse weather conditions worldwide. One need not look very far for stark evidence of this: Paris and London have been regularly baking in temperatures of over 40°C and unprecedented swathes of countryside have been lost to raging forest fires all across Europe. The impacts of global climate change are already plain to see and have been felt from every household to construction site across the globe. Things are likely to get worse, which begs the important question: what do these unprecedented weather conditions mean for construction projects, and how are they contractually poised to deal with them?

Weather is a protean thing at the best of times – from heavy rain or snow, floods or droughts and the wildfires that generally go with them, from strong winds to tropical storms or hurricanes, from extremely high to extremely low temperatures. Each of these weather conditions may significantly impact projects, resulting in delays and additional costs. To provide but a few examples of such impacts, they can affect

workers’ access to site,
the delivery of supplies and materials to site,
the materials themselves (for example, concrete will not dry under pouring rain),
health and safety conditions on site (for example, wind can make site conditions unsafe for workers and even impact construction if very strong),
productivity, and
may damage the works themselves.

There is no international harmonized definition of adverse weather conditions. This does not mean that there are no such definitions at a domestic level, however (See, for example, under French law, Article 5424-8 of the French Employment Code, further discussed below). That being said, they are generally understood to be uncontrollable climatic events which, when compared to normal site conditions, delay or render more costly the performance of the works. Contractors will generally be expected, when planning and pricing the project, to have taken into consideration the normal site conditions (including the usual weather conditions of the site), which do not give rise to any entitlement.

As adverse weather conditions become more and more commonplace due to the impacts of global climate change, tricky legal questions are bound to arise, from whether such conditions should be considered normal site conditions and factored in when pricing projects, to who should bear the risk of such conditions on construction projects.

This article looks at how construction contracts, including some of the most popular standard form contracts, deal with such issues, and whether they are well positioned to weather the impacts of global climate change.

Adverse Weather Conditions In Construction Contracts

Several standard forms of construction contracts do address adverse weather conditions, in one way or another. However, often there is no specific provision dedicated to weather conditions. They are, instead, addressed in a number of separate contractual provisions that must be read together. These provisions relate to a wide range of from site data, extensions of time, compensation events, relevant events, specified perils, to even force majeure and hardship.

French Construction Contracts

The 2021 French general conditions for public works (“CCAG Travaux Publics”) provide for three different remedies available for weather-related claims:

extensions of time (See, Article 18.2.3 of the CCAG Travaux Publics),
additional payments (See, Article 9.1.1 of the CCAG Travaux Publics), and
compensation for loss and damages (See, Article 17.3 of the CCAG Travaux Publics.).

That being said, a key distinction should be made between events granting entitlement to extensions of time only, and others that grant some form of financial entitlement. Events giving rise to an entitlement to an extension of time only are defined by reference to the definition of adverse weather given in the French Employment Code. Pursuant to this Code, the following are considered to be adverse weather conditions: atmospheric conditions and floods when they result in the performance of the works being dangerous or impossible with regards to either the workers’ health or safety, or the nature or technic of the work to be performed (See, Article 5424-8 of the French Employment Code). In contrast, the two other forms of remedies, additional payments and compensation, are only available to the contractor in the event of unforeseeable natural phenomena – which suggests an even higher test than that of adverse weather. In either case, arguably, the standard under French law is loosely defined and offers little help to decide on who bears the risk of adverse weather conditions.

As for construction contracts for private works, French contracts often refer to the standard Afnor NF P 03-001, which is heavily inspired by the CCAG Travaux Publics. Article 10 of this standard grants contractors an extension of time equal to the number of days the contractor has been impacted by adverse weather. This extension of time will have the consequential effect of exonerating the contractor from paying liquidated damages (“pénalités de retard”) for such delay.

FIDIC

In the FIDIC Rainbow Suite of contracts, the approach to adverse weather conditions depends on the form used and its purpose.

For example, in the Conditions of Contract for Construction (the “Red” Book) and those for Plant and Design-Build (the “Yellow” Book), a contractor may be entitled to an extension of time (but no additional costs) if the adverse weather is exceptional. To qualify as exceptional, adverse weather conditions will need to be compared to:

the site data, notably consisting of the climatic and environmental conditions at site, provided by the employer as per Sub-Clause 2.5 [Site Data and Items of Reference], and
the “climatic data published in the Country for the geographical location of the Site” (Sub-Clause 8.5(c)). Hence, an employer’s obligation to inform a contractor of the conditions of the site create an important obligation of the contractor to perform its due diligence on such conditions.

Conversely, however, the Conditions of Contract for Engineering, Procurement and Construction (“EPC”)/Turnkey Projects (the “Silver” Book) do not contain any provisions regarding adverse weather conditions. Under an EPC contract, the Contractor is in charge of the engineering, procurement and construction of the works (EPC). It therefore bears all the risks – including those related to adverse weather conditions – unless modified by the parties.

In between, is the Short Form of Contract (the “Green” Book), pursuant to which unforeseeable adverse climatic conditions on site are identified as an Employer’s risk (See, Sub-Clause 11.1 [Employer’s risks and Contractor’s entitlements]). Under the Green Book, a contractor is only entitled to claim an extension of time – being clarified that the term “unforeseeable” is defined as “not reasonably foreseeable by an experienced contractor at the base date”(Sub-Clause 1.1.44.).

New Engineering Contract (“NEC”) Suite Of Contracts

The NEC suite of contracts grants contractors the opportunity to claim for both an extension of time and money, provided an event can be qualified as a “compensation event”, of which NEC provides a limited list. Only one listed compensation event relates to adverse weather conditions, entitled “weather measurement” (See, for example, clause 60.1 (13) of NEC3 Engineering and Construction Contract) and provides a detailed description of what strict weather conditions are required in order for a contractor to be able to claim time and money.

First, weather measurements that a contractor believes constitute a compensation must be recorded:

within a calendar month of occurring;
before the Completion Date for the whole of the works; and
at the place stated in the Contract Data agreed upon between the parties.

The NEC sets out in its contract data that weather measurements for each month are to be made based on:

cumulative rainfall;
the number of days with rainfall of more than 5mm;
the number of days with a minimum air temperature of less than 0 degrees Celsius; and
the number of days with snow lying on the ground at a set time.

The Parties are free to add to what NEC provides and provide for other weather events.

Once this weather is recorded, the value must be compared with the weather data, this being historic records of weather in the local area. If the weather measurement is subsequently found to occur on average, less than once in ten years, then a compensation event will be found to have taken place and an opportunity to claim time and money established.

Whilst the NEC suite of contracts clearly set out what constitutes adverse weather conditions, the fact remains that the threshold for achieving the requirements are considerably higher than under a FIDIC contract. Contractors therefore need to be alert to the possibility that, despite potentially intense and disruptive weather, they may not be awarded the additional time and costs that they seek.

Joint Contract Tribunal (“JCT”) Contract Families

In contrast to the NEC contracts, the JCT family of contracts simply state that “exceptionally adverse weather conditions” are relevant events under the contract that entitle a contractor to an adjustment of the date for completion (and consequently, relieve the contractor from the payment of liquidated damages for this event).

No further information is provided as to what exactly constitutes “exceptionally adverse weather conditions”, making it a challenge for parties to determine if the requirements of the relevant event have been fulfilled, with limited guidance from the English courts on the subject. Yet, The JCT suite is one of the most commonly used standard form contract in the UK construction industry.

To assist both employers and contractors alike, JCT has, since 2018, collaborated with the Met Office to provide two forms of weather report for use in construction project planning and management:

a “Weather Planning Report”, designed for use in the project planning stage, which includes both 1-in-10-year and long-term averages for a number of weather elements; and
a “Downtime Report”, which includes both 1-in-10-year and long-term averages for numerous weather elements for each month of the year.

The location-specific 1-in-10-year and long-term average data included in these reports (and in particular the Downtime Report) can be particularly helpful to assess the occurrence of “exceptionally adverse weather conditions” in the context of an extension of time claim.

Adverse Weather Conditions In The Absence Of Applicable Contractual Provisions

In the absence of a specific clause relating to adverse weather conditions, two legal avenues may be open to contractors:

force majeure, and
hardship or imprévision.

Force Majeure

Under French law, force majeure is governed by Article 1218 of the French Civil Code. There are three conditions for an event to be characterized as an event of force majeure. The event must be:

beyond the control of the party performing the obligation;
unforeseeable, in the sense that it could not have been reasonably foreseen when the parties entered into the contract; and
unavoidable – that is that the party performing the obligation could not have avoided the effects of the event by taking appropriate measures.

The effects of the event of force majeure depend on its impact on the performance of contractual obligations. If the contractor is simply temporarily prevented from performing the works, then its obligations under the contract are suspended. If the prevention is permanent, then the contract may be terminated, under certain conditions. However, even if performance is prevented just temporarily, the parties may agree to terminate their contract, provided that the circumstances justify such an action. In any event, parties are free to define contractually events of force majeure, including to what extent they extend to adverse weather conditions. Cases of force majeure resulting from adverse weather conditions have been recognized by French courts in construction disputes in relation to extreme snowfalls (See, French Cour de cassation¸ 3rd Civil Chamber, 7 March 1979, n° 77-15.153), floods caused by extreme rainfalls (See, French Cour de cassation¸ 1st Civil Chamber, 26 January 1999, n° 97-10.028), violent storms (See, French Cour de cassation, 3rd Civil Chamber, 11 May 1994, n° 92-16.201), drought (See, Versailles Court of Appeal, 4th Chamber, 26 January 2004, Jurisdata n°2004-234815), or increase of water level (See, Paris Court of Appeal, 30 October 1986, JurisData n°1986-027215).

Turning to English common law, the term “force majeure”, derived from French law, has no recognized legal meaning. That being said, many contracts subject to English law contain a force majeure clause, which often defines force majeure as an act, event or circumstance beyond the reasonable control of the parties. The express inclusion or exclusion of certain events is highly recommended when drafting and negotiating such a clause, as in the absence of a contractual definition of what may constitute a force majeure event(s), it is unlikely to be effective. To illustrate this, the English courts have considered that the sole reference to force majeure is “void for uncertainty” (See, British Electrical and Associated Industries (Cardiff) Ltd v Patley Pressings Ltd [1953] 1 WLR. 280). Furthermore, in addition to paying mind to the scope of a force majeure clause, parties should also draw their mind to setting out clearly defined notice provisions, and any obligations for contractors to mitigate the effects of a force majeure event.

Hardship / Imprévision

Under French law, since 2016, when adverse weather conditions do not fulfil all the requirements of force majeure, a contractor may still rely on unforeseeable conditions to request a renegotiation of the date for completion and/or contract price. If the employer refuses to negotiate or if negotiations are unfruitful, the contractor may request judicial revision of the contract. To be able to rely on the unforeseeable nature of weather conditions, the contractor must prove that:

the adverse weather conditions represent unforeseeable change in conditions compared to when the parties entered the contract;
such change has made the performance of the contract too onerous for the contractor (but not impossible); and
the contract does not explicitly prevent the parties from asking for the revision of the contract. In any event, the contractor must continue to perform its obligations under the contract, whether during the renegotiation or pending the judge’s decision.

Again, as for force majeure, there is no similar concept of imprévision under English common law. Reference to the doctrine of frustration (See, Davis Contractors Ltd v. Fareham UDC [1956] AC 696) is unlikely to prove successful, given the English courts’ repeated narrow interpretation given the scope of the doctrine, which renders the threshold of success much higher than that of force majeure. This is why parties often include hardship clauses in their contracts, giving the parties the opportunity to renegotiate a contract in case of “hardship” caused by unforeseen changes arising from exterior circumstances. Hardship is a contractual concept regularly approved by English courts, although the precise meaning of “hardship” will depend on the terms of each particular contract. Some will define hardship by reference to precise events, others will provide for a more general trigger referring merely to “hardship” or to an “excessive burden” on one of the parties. The more objective the criteria, the greater the prospect that the clause will be enforceable.

Extension Of Time Claims Arising Out Of Adverse Weather Conditions

As seen above, extensions of time are the most frequent remedy available to contractors faced with adverse weather conditions.

The conditions for the success of such claims will turn on the specific wording of the contract. The contractor will generally need to prove:

The occurrence of an excusable event (usually exceptionally adverse weather);
Impact on the delay for completion; and
Causation between the weather event and the delay incurred in the performance of the works.

Occurrence Of An Excusable Delay Event

Proof of adverse weather conditions, and particularly their unforeseeability can be challenging, especially in times of changing climate.

It requires clear documentation of what constitutes “normal” weather conditions, and comparing this to any exceptional, unforeseeable conditions if they arise.

Documentation of “normal” weather conditions

When tendering, the contractor should generally have taken into account the available weather data. In order to claim the consequences of adverse weather, it will have to demonstrate that the weather conditions were not foreseeable, i.e., that they were exceptional.

As seen above, foreseeability tests usually set out in the contract can vary in precision. That being said, predictability as to conditions can avoid disputes. As a result, parties may be well advised to agree upon what they consider as “normal” weather conditions.

Importance of Accurate or Agreed Weather Data

Proving weather conditions requires daily data that is accurate, both in terms of measurements and of the location of such measurements. Usually, the data is provided by a local weather station close to the site.

However, such data is not always readily available. In such situations, it may be advisable for the parties to agree in the contract that the weather data from a determined station will be considered as applicable in order to circumvent any future challenge to the actual weather data. This is the solution proposed by the NEC contracts, which require the parties to agree in the Contract Data on:

the place where weather is to be recorded,
the weather measurements to be recorded for each calendar month,
which party is responsible for collecting the weather data, and
by whom the records of the past weather data is to be measured and where it is available.

Alternatively, the parties could agree for instruments to be placed at site, and a daily log put in place, the data of which would be agreed upon by the contractor and the employer’s representative.

Impact on The Time for Completion

Once the test of the exceptional character of the conditions has been satisfied, demonstrating the actual impact on the progress is imperative.

First, adverse weather conditions do not automatically cause delay or disruption to the works. Construction projects entail a number of activities (studies, indoor activities, etc.) that can be performed irrespective of the weather, or remotely.

Second, the impact of the weather conditions must be assessed by reference to their impact on the work actually being carried out when the event occurs, and not its hypothetical impact on the work originally programmed to take place at that time (See, Walter Lawrence & Son Ltd v Commercial Union Properties (UK) Ltd, 4 ConLR 37).

Causation Between the Weather Event and the Delay

Finally, as in all delay claims, causation is central.

For example, the contractor may be deprived of its entitlement to an extension of time in case the adverse weather delay event arises during a period of time where another delay imputable to the contractor produces its effects on the time for completion of the works. In such cases, the delay caused by the adverse weather delay event is absorbed by the other delay.

As always, in order to make a claim for an extension of time and additional costs for adverse weather conditions, contemporaneous documents will be key.

Conclusions

As seen above, avenues exist to address adverse weather conditions. However, the chances of success of a contractor’s claim are disparate and will ultimately be higher in the presence of contractual provisions addressing such conditions.

Such claims are arguably already notoriously difficult to make. That being said, one may question the impact of climate change on the chances of their success. With the proliferation of adverse weather events worldwide, there is a risk that the test of the exceptional character of adverse weather conditions become more and more difficult to pass. This begs the question: will “exceptional” adverse weather conditions become “normal” under the effects of climate change?

ABOUT THE AUTHORS

Peter Rosher is the Global Chair of Reed Smith’s international arbitration practice. A dual-qualified (English solicitor/French avocat) lawyer and advocate with nearly 30 years’ experience in international arbitration, Peter advises clients on contentious issues as well as providing extensive advisory services in relation to “live” major projects. He has handled arbitration cases both on an ad hoc basis (including UNCITRAL) and under the rules of international arbitration institutions (ICC, LCIA, SCC, SIAC, ICSID) across the world. Peter is an experienced advocate and also frequently sits as an arbitrator. A founding member of Paris Arbitration Week and Vice Chair of Paris Arbitration Week’s Organizing Committee, Peter is a member of the Dispute Resolution Board Foundation, sits on the board of the Association Française d’Arbitrage, and is Vice President of the association Paris, Home of International Arbitration.

Vanessa Thieffry focuses on international arbitration at Reed Smith, with a particular emphasis on the resolution of technical disputes, notably in the infrastructure and construction sectors, and/or involving an environmental or ESG component.  She has also been acknowledged in the 2022 “Ones to Watch” category of the Best Lawyers ranking, and has been elected to the board of the Paris Arbitration Week in July 2022.  Vanessa has acted as counsel, arbitrator, and secretary to arbitrators in over 30 arbitration procedures, under various procedural and substantive laws. In addition, she has assisted clients prior to the dispute, in contract and claim management, and post dispute resolution, in complex award enforcement procedures in France and abroad.

Erwan Robert is a senior associate in the Energy and Natural Resources at Reed Smith in Paris who specializes in construction arbitration in the energy and infrastructure sector with an emphasis on technical issues. Erwan also assists clients with contract drafting and provides advisory services in relation to “live” construction projects. He lectures on international construction contracts at Paris-Panthéon-Assas University. Erwan has also been appointed in July 2022 as a member of the “Young Professionals of Construction Paris (YPCP)”. 

Adam Calloway Adam is a jurist in the Energy and Natural Resources department of Reed Smith’s Paris office. Adam specializes in arbitration, especially in commercial arbitration. He also has experience in construction, energy and infrastructure.