KCConstructionUpdate

Spring 2014

In this issue...
News... The Nuclear Option
Dr Robert Gaitskell QC

Justin Mort appointed as Queen’s Counsel Wind Farms: Legal and Technical Challenges
Vincent Moran QC, Paul Buckingham & Alice Sims
Declan Redmond joins Keating Chambers Running Heavy Litigation and Arbitration
as CEO and Director of Clerking Paul Darling QC

Knocking at the Door of Radical Breach

Véronique Buehrlen
 www.keatingchambers.com KCConstructionUpdate Spring 2014

Contents
Welcome to the Spring 2014 Edition of
KC Construction Update

1 Welcome to the Spring 2014 Edition

Anthony Lavers & Adam Constable QC
13 Seminars & Presentations
Selected recent and forthcoming presentations
I n the first KC Construction Update of 2014, there is an unmistakeable
flavour of the new. The year has started with the excellent news that
Justin Mort becomes the latest addition to Chambers’ cohort of Queen’s A s the first shoots of spring are seen in the flower beds of the
Temple’s gardens, we also seem to be seeing the shoots of
economic recovery take hold.
Counsel; his elevation takes place in April.
The growing number of cranes seen dotted around not just the capital
Welcome, too, has been the arrival of Declan Redmond as CEO and Director but also the UK’s other major cities, stands in contrast to their notable
of Clerking, and there will be much interest in his views about future strategy absence over the last few years.
and developing legal markets in the Brief Encounter feature.
This intuitive feel is matched by the economic data: the UK's

2 Running Heavy Litigation and Arbitration

A barrister’s view
Paul Darling QC
14 Selected Reported Cases
Selection of reported cases involving Keating Chambers
All are likely to be heartened by the evidence adduced by Adam Constable QC
on this page of the latest construction sector figures, which show levels of
growth not seen in years; it may be early days, but the view looking forward
appears much preferable to what has gone before.
construction sector grew last month at its fastest pace for almost six
and half years.
The Markit/CIPS purchasing manager’s index (PMI) for the sector rose
to 64.6 in January. This was up from 62.1 in December and well above
The way ahead is also evident in the energy theme of the principal articles in the 50 level that separates growth from contraction.
this Issue.
This is the strongest reading since August 2007, as well as one of the
Dr Robert Gaitskell QC, Chairman of the Dispute Board for the ITER highest figures since the survey began in 1997. Volumes of new work
nuclear fusion project in France, brings his engineering acumen to bear have increased for the ninth consecutive month and, whilst some of this

16
on the future of the global energy industry and how its disputes are to be has been driven by residential housebuilding (expanding at its fastest

8
Knocking at the Door of Radical Breach
Brief Encounter resolved. rate since 2003), a sizeable part of the growth is attributable to
Will a mutual indemnity hold harmless clause bite?
Declan Redmond increased commercial building work and civil engineering activity.
Véronique Buehrlen QC Vincent Moran QC, Paul Buckingham and Alice Sims highlight the growth of
wind farms as a source of renewable energy and the technical issues leading As those of us who deal with building disputes well know, the question
to disputes over their construction and operation. is not whether disputes arise during construction projects, but when
these disputes will arise and how they will be resolved.
Also addressing energy issues, Véronique Buehrlen QC considers the
effectiveness of ‘mutual indemnity hold harmless clauses’, used notably in risk All across Chambers, our experience is that clients are increasingly
allocation in upstream oil and gas projects. instructing Counsel to get involved in dispute avoidance at very early
stages of the project, often asking us to provide focussed advice on key
The last issue of 2013 contained a short report of the presentation by Head of

10 The Nuclear Option

A guide to avoiding nuclear meltdown
Dr Robert Gaitskell QC
18
Wind Farms
Legal and Technical Challenges
Vincent Moran QC, Paul Buckingham & Alice Sims
Chambers Paul Darling QC at the Middle Temple and, as promised, in this
Issue is an edited transcript of the paper ‘Running Heavy Litigation and
Arbitration – a barrister’s view’: while drawing on 30 years of experience, he
too is looking forward at how the advocate’s role in litigation is developing.
aspects of contractual interpretation, which can help shape a strategy
from the outset, and long before litigation is contemplated.
We welcome the opportunity to help, not just after things may have
irretrievably set themselves on a path to formal dispute resolution, but
whilst the project is live and where fast and effective advice can make
Anthony Lavers, Director of Research & all the difference.
Professional Development We have a contribution to make to ensure that things go well, as well
as being on hand to assist when problems arise. Let’s maintain the
positive direction.

21 Other Areas of Expertise

More than just a construction set
Adam Constable QC

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Running Heavy Litigation and Arbitration Running Heavy Litigation and Arbitration

A barrister’s view
Transformation: the TCC
The transformation began with Mr Justice
Paul Darling QC Dyson, as he then was, sitting half-time as
presiding judge like Mr Justice Forbes.
This is an edited version of the presentation given by Paul
The then Mr Justice Jackson argued successfully
that the Technology and Construction Court
The TCC has itself been very influential in
advancing procedural changes in other courts,
which are now taken for granted.
Lord Woolf’s reports acknowledged his debt to
the ORs generally and specifically in relation to
written witness statements.

Darling QC at the Middle Temple Hall to mark his 30 years needed a full-time High Court judge, and the

in practice at the Bar. He was joined on the platform by the

transformation has been completed, during my
time, from six circuit judges to a powerful
The rule of the advocate
Turning now to the trial process, I believe that
Rt. Hon. Sir Rupert Jackson and Gary Born, Chair of the combination of full-time and part-time High
Court judges.
we have to ask ourselves every day of our
International Arbitration Practice Group of Wilmer Hale. This has been a remarkable development.
professional careers: “What is the role of an
advocate orally or on paper?”.
Although adjudication has affected the volume
In my opinion, the answer is simple; it’s about
and nature of work, the Technology and
helping the court or other tribunal to make a
n considering where we are in litigation For the sake of his client, Counsel would ask one until 10.15am and summonses were taken first Construction Court has gone from strength to

I and international arbitration, I want to

start with litigation and the courts.
Donald Keating, to whom I and the other
members of Keating Chambers owe our
professional lives and raison d’ȇtre, writing
27 years ago in 1986, described construction
litigation in the early 1950s as follows.
Early days in the ORs
A typical Official Referee (ORs) case of 35
years ago would begin by young counsel
telling the court whether the case concerned
a schedule of defects under a lease or under
a building contract.
He would usually be interrupted to be asked
whether there were surveyors on each side.
Upon being told that there were, the OR
would say ‘Let’s hear the evidence’.
The surveyors would be sworn, and sat facing
one another in court. The OR would then ask
one about an item and turn to the other for
his comments, invite a reply from the first
...gradually the volume of cases expanded, and so did
their scale. The mega-case arrived, with multiple parties
and hearings of inordinate length.
surveyor, make a note in his schedule and
move on to the next item until the schedule
was finished.
Counsel’s function was to take a note and, at
the end of the schedule, when the surveyors
had answered the OR’s questions, he would
be asked whether he wished to ask any
further questions regarding the very full and
helpful evidence.
or two questions and then sit down – and
remain seated.
The OR would then go through the schedule,
giving his decision on each item in pounds,
shillings and pence. Everyone kept a running
total including set-offs, costs were dealt with on
the basis of the amount paid in.
Reference to law was severely discouraged and
only rarely and briefly argued. Many present
may reflect that what they have heard described
was an early version of ‘hot-tubbing’ – perhaps
‘Turkish bathing’. Cases were decided speedily,
cleanly and simply.
Growth of construction
litigation
Donald contrasted this with the late 1970s and
early 1980s, where the reality was entirely
different. Six ORs, assisted by Recorders, were
sitting in construction cases involving very large
sums. Leaders proliferated and points of law
arose often, frequently many in one case.
Reference could rarely be made to High Court
decisions, since there were so few, so the ORs
were on their own, deciding the law, often in
cases of great importance, which they did boldly
and in large quantities.
The late Judge John Newey, looking back to the
70s and 80s, also reflected on the same
transformation.
There had been a time, he noted, when the ORs
court was very leisurely; the court did not sit
and then trials. There were not many
construction cases for a time and ORs were
available to sit in the Queen’s Bench Division or
as Commissioners of Assize.
But gradually the volume of cases expanded, and
so did their scale. The mega-case arrived, with
multiple parties and hearings of inordinate length.
One case ended up being heard in the basement
of the National Liberal Club because of the
number of participants who had to be
accommodated, and there is a picture in the
‘Short History of Keating Chambers’ that includes
Patrick Garland, Anthony May, John Dyson,
Richard Fernyhough, John Marrin, Vivian Ramsey,
Rosemary Jackson – and Rupert Jackson.
The role of counsel had changed very significantly
by this time and the Construction Bar was
handling some of the heaviest cases, both in fact
and in law.
It is no accident that many of the biggest cases of
the 1980s and 1990s were in construction:
Peabody v Sir Lindsay Parkinson, D&F Estates v
Church of England, Murphy v Brentwood.
I was lucky enough to appear in Temloc v Errill,
where the Court of Appeal was persuaded that
the word ‘nil’ for liquidated damages meant that
there were no damages for delay. I was also
fortunate in appearing in Holbeck Hall v
Scarborough about the hotel that fell off the cliff
into the North Sea.
But although this was a wonderful period for the
Construction Bar, when all these big cases were
argued, not everything was entirely rosy in the
ORs’ court.
When I appeared as Richard Fernyhough’s
junior in Balfour Beatty v Chestermount
Properties in 1993, the case was taken to the
Commercial Court because it was perceived that
assessment of a concurrent delay and the
workings of the delay mechanisms in the JCT
contracts would benefit from the scrutiny of a
Commercial Court judge.
strength, especially in expanding its range, for
example, into EU procurement work.
The TCC is now located with its sibling courts,
including the Chancery Division and the
Commercial Courts, and there is much cross-
over of skills and of subject matter.
The position now is not just that we have a
world-class court, which is the best specialist
court of its kind, but we have, in the TCC, a
court that has no hard and fast boundaries.
It could no longer be said today, as Mr Justice
Colman said in Balfour Beatty v Chestermount
20 years ago, that it was appropriate for a
construction case to be tried in the Commercial
Court if it “raised matters of contract law which
are of general importance in the wider
commercial context”.
It has been very instructive to appear in cases
in other courts too. Starting from doing cases
around this country (Temloc v Errill, for example,
began in Nottingham), I have been able to learn
a good deal by going overseas.
This has included appearing in the ‘Pyrite’ case,
James Elliott Construction v Irish Asphalt in
Ireland’s High Court and Blair v AWG Residential
in Northern Ireland, as well as many further
afield.
Experience in the Irish High Court offered a new
perspective, for example, on witness statement
practice, of which more anon. But influence is a
two-way process.
...the transformation has been completed, during my time,
from a handful of part-time circuit judges to a powerful
combination of full-time and part-time High Court judges.
decision in your client’s favour.
What the advocate has to do is to make
comprehensible the incomprehensible.
The key skill is in simplifying cases rather than
complicating them.
Being an advocate involves working out how
best the case you have will play with the
tribunal, rather than working out how you
would like to do it yourself, as if you were
alone in the room.
It involves concentration, focussing and
distilling – not allowing the material to sort
itself out or reading papers without working
out the overall purpose and plan.
It also involves understanding the pressures on
the judge or tribunal.
Sir Anthony May, when newly appointed to the
bench, would point out that no matter how
able or even distinguished a tribunal might be,
it had a finite capacity to take on board,
analyse and process information.
We should remember that, however difficult
we think the advocate’s job, judges and
arbitrators have a difficult job too, quite
different though it may be.
If the advocate can think of ways of making the
tribunal’s job easier, even the job after the
closing submissions as well, the chances of
getting the right result are better.
Opening submissions
There is never a place where it is more
important to help the tribunal than in the
opening submissions.
The tribunal should know what your case is
before the evidence is called. In the past, the
plaintiff’s opening was often a somewhat
neutral event, setting out both positions fairly.
Sir Christopher Clarke said at a Malaysian
judicial seminar recently that it was then
sometimes almost impossible after the
opening submissions to identify any dispute
between the parties.
Openings today are much more partisan and
indicative of what the respective parties will
say. Some balance must be maintained,
obviously; if the case is put too high in
opening, the tribunal will focus on whether
the evidence can support the case so
assertively.
But it is crucial that the tribunal understand
from the start the case being put. It must read
the opening submissions and understand
them.
One of my preferred options is for a short oral
opening, with the rest of the day spent by the
tribunal reading/re-reading it and at least
some of the critical documents mentioned in
it and to be referred to.
So when the witnesses start to give evidence,
the tribunal has also been directed to the
really key documents.

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Running Heavy Litigation and Arbitration
Nowadays, of course, both sides get the chance
to open. Those who appeared before the ORs in
the 1980s will remember that the defendant’s
counsel was given a 15-minute opportunity to
summarise its client’s position. Having to get all
key points across in such a short time is an
excellent discipline and the best of these were
works of art.
Today, one of the requisite skills is attention to
procedural correctness, so that the opening is of
the right length and correctly paginated.
The Queen’s Bench guide, for example, requires a
concise summary of submissions on each side,
citation of the main authorities relied on, reading
list with time estimate, all set out within a
maximum of 20 double-spaced A4 pages in
numbered paragraphs.
The need to get the opening right, so that at the
end of it the tribunal knows where your case is
going, is even more acute in international
arbitration than in court, because with shorter,
time-limited hearings, and parties picking some
points and leaving others, the tribunal may not
understand what point a question of cross-
examination is addressing.
Document management and
In the future, management of documents
through e-bundles, hyperlinks and document
databases will be normal practice, as it is
already becoming, but the skill of the advocate
in this respect is the same – to be in control of
those documents and their purpose.
Witness statements
The opening and the documents being
completely controlled, the witness statement is
the next priority.
The starting point was the judge’s ‘inherent
jurisdiction’, and they become formally part of
There is no single right answer to this and as
yet no universal practice in the courts as to
prohibition or encouragement, or somewhere
between the two.
My experience of the Irish High Court was
that, although there were witness statements,
the evidence was given orally. The upside of
this is that the evidence heard is from the
witnesses themselves rather than what has
been thought up in the quiet of solicitors’
offices or counsel’s chambers.
However, the downside of oral evidence is
that some time can be wasted.
Running Heavy Litigation and Arbitration
The reality is that in England, and soon in Ireland if and
when adjudication takes off there, domestic arbitration
in the construction industry is becoming of much less
importance...
So far as experts themselves are concerned, they
are, of course, governed by a strong set of rules,
originally formulated by Sir Peter Cresswell in
The Ikarian Reefer.
Nevertheless, experts do not always behave as
the tribunal would wish. In Kingspan v Borealis,
Mr Justice Christopher Clark, as he then was,
observed about the expert evidence that:
“leaving aside the tank design expert and leaving
aside the legal experts and leaving aside the
finance experts, runs to 1137 pages. That is more
than my copy of the Old Testament, the New
Testament and the Apocrypha”, complaining that
his court had been “swamped with a vast
amount of material … The inordinate size of the
material and the scattergun approach adopted is
Arbitration
Finally, a few words about arbitration. The
reality is that in England, and soon in
Ireland if and when adjudication takes off
there, domestic arbitration in the
construction industry is becoming of much
less importance, which in one sense is a sad
thing, as the procedures and personnel had
been sorted out at the time that this started
to happen.
But international arbitration is a significant
proportion of the work for many of those
attending this event, and interesting
questions arise as to the interplay between
this and litigation work.
one response suggested that the CPR gave
power to do just that.
Another distinguished judge, however,
warned of the need to get agreement to
those sorts of procedures, because satellite
appeals about whether the procedure was or
was not permitted under the rules should be
discouraged.
The reality is that there is a tension about
pure innovation. That is not surprising, given
the way in which court rules have been
adapted and moulded and made so much
more flexible over the last 30 years, and
particularly the last ten years, which has been
an astonishing process.
In thinking about what could happen in
arbitration, I want to mention some drastic
proposals for saving time and cost, mentioned
by Prof. Dr. Joerg Risse, Baker & McKenzie
Dispute Resolution Partner in Frankfurt, some
surprising, some less so.
The first is to limit parties’ submissions to 100
pages in all circumstances. Somewhat more
revolutionary is the second idea of all
pleadings being done orally, and the tribunal
noting those that it thinks are important.

bundles
the Rules of the Supreme Court in 1986 and an enemy to understanding”. Obviously there are a number of similarities Following the terms of reference meeting, the

When it comes to cross-examination, there is

much to be said in favour of core bundles, the
compilation of which helps in finding your way
around them.
One of the lessons to be learned from the Irish
procedure is the practice of preparing specific
bundles or ‘books’, as we call them in Dublin, for
cross-examination of particular witnesses,
containing the documents especially relevant to
that person. Core documents are the key to
running an efficient case.
Lord Justice Sedley has summarised amusingly for
us in his 11 Laws of Documents how things
routinely go wrong in paper management.
When sitting in the Technology and Construction
Court, my fellow panellist, Sir Rupert Jackson,
would keep the documents exhibited to witness
statements in the corner of the court as they
were likely to be better copies than those in the
trial bundle, so that when, under Sedley’s
Seventh Law, the latter were illegible, truncated
or cropped, he had a ready alternative source of
reference.
In the future, management of documents through
e-bundles, hyperlinks and document databases will be
normal practice, as they are already becoming, but the
skill of the advocate in this respect is the same – to be in
control of those documents and their purpose.
1995, by which they came to stand as evidence
in chief.
Lord Woolf recommended that witness
statements should as far as possible be in the
witnesses’ own words, should not discuss legal
propositions, should not comment on
documents, and concluded with a signed
statement by the witness that the evidence is a
true statement and in his own words.
This development has now been continued by
the Jackson Report and to CPR Rule 32.2, giving
the court power to identify and limit the issues
to which factual evidence might be directed, to
identify those witnesses to be called and those
whose evidence may be read, and limiting the
length or format of witness statements.
The Jackson Report focusses on the difficulty of
whether or not witness statements should
stand purely as evidence in chief or whether
matters should be dealt with orally, since the
oral evidence will be determinative, so that the
witness statement should not stand, or should
only partly stand, as evidence in chief.
Cross-examination
There may be no right answer to this question,
but a witness statement does provide
something for counsel to get hold of in cross-
examination.
Some may regard cross-examination as less
important nowadays than it was, but in my
view it remains a fundamentally important
part of the civil justice system. Cross-
examination can change cases, positively or
negatively. The first essential in cross-
examination is to know what you are trying to
achieve and that your system is planned, with
the techniques to be used.
In cross-examining, the key thing in my view
is to listen to the answer that you get. And it is
vital not to give up; witnesses have been
known to fall apart after initial failures when
good cross-examination perseveres.
Cross-examination, it has been said, does not
mean examining crossly. The witness has to be
taken to the documents, and inconsistent
statements probed.
It should be seen as a means of eliciting the
evidence that the tribunal needs.
Unfairness in cross-examination is a very bad
idea, because if the tribunal perceives that
you are not trying to persuade the tribunal of
the merits and correctness of your case, the
effect is likely to be to damage your case.
This dovetails in with the capacity of the tribunal
to absorb the material already referred to. It is
very important that the evidence be produced in
a way that the tribunal can understand, either by
‘tutorials’ as to the subject matter, if unknown or
complicated, or by a short presentation by the
expert. Expecting a tribunal, however skilled,
simply to look at the expert’s report on their own
and then to go straight into hearing cross-
examination is at best very difficult.
There are a large number of cases in which cross-
examination has been the defining factor and
many where the expert cross-examination has
been absolutely determinative.
Different techniques and tactics can be used to
expose the inadequacy, or indeed the brilliance,
of the expert evidence. One idea stands out from
Adrian Whitfield QC’s marvellous lecture on how
to cross-examine, when he reminds us that very
often the task is to avoid making a situation any
worse than it already is.
Single Joint Experts (SJE) and hot-tubbing are
very much in vogue. The Jackson Report says that
the SJE is not a ‘one-size-fits-all’ technique; hot-
tubbing is beginning to work very well. My
perception is that we are seeing cross-
examination retained in hot-tubbing cases, but
nevertheless the benefit of experts being
examined at the same time is becoming apparent.
Cross-examination, in my view, remains the most
important and most fun thing that advocates do.
and differences, and some of the similarities
are becoming more similar and some of the
tribunal would make recommendations.
differences more different. Third, which is thought by some as
revolutionary, is the use of Calderbank offers
One area where the differences are growing in arbitration; in fact, this is fairly standard.
is that of party autonomy and control. One
is seeing party autonomy being given its Fourth, there should be no written witness
head in arbitration and a much more statements; interrogation would be by the
managing approach from the courts. arbitrators and by nobody else.
Neither is a bad thing, but the difference is
Fifth, there should be absolutely no document
clearly increasing. production by either side in any
The appeal systems are becoming bizarrely circumstances, the theory being that witness
more similar. The prospect of appeal from a statements and disclosure cost too much.
Technology and Construction Court decision
is much less than it was; trying to persuade
the Court of Appeal that an extremely
experienced, competent judge has made an
error on fact is not something to undertake
lightly.
This is growing closer and closer to the
finality of arbitration.
What is also interesting is the large
number of new procedures being
developed in arbitration that are more
flexible and different from those in the
courts.
At the Malaysian seminar, one of the
questions to the panel was whether
some of the devices in arbitration,
such as more flexibility in annexing
documents to the statement of
case, were a good idea and at least

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KCConstructionUpdate Spring 2014
Running Heavy Litigation and Arbitration
The process of advocacy is not one of telling the tribunal
something, but of explaining it and trying to simplify it and,
as part of that, listening to what the decision-maker both
understands and doesn’t understand so well.
Sixth, the tribunal should decide the material
issues and then the parties should address
those in order to answer the questions posed.
Seventh, there should be comprehensive oral
opening statements and then a discussion
with the tribunal on the merits; most of the
time in a hearing should be spent on opening
submissions.
Eighth, which arbitrators will like, the parties
are to assist the tribunal in writing the final
award.
Ninth, cost sanctions should be applied for
inefficiency in the conduct of proceedings.
Tenth, which arbitrators will not like quite so
much, financial incentives or punishments for
arbitral tribunals tendering the award quickly
or slowly; some might say that that could also
be done with other forms of dispute
resolution.
This is a very interesting analysis, which seeks
to tear up the rules and start again. It
advocates the use of some very modern
techniques, but goes back to where this
presentation started, to a greater use of oral
advocacy.
Panel session
Invited to comment on the state of oral
advocacy, Sir Rupert Jackson suggested that
the balance with written presentation is vital
to save court time, reduce costs and assist the
tribunal.
He took as an example the misuse of skeleton
arguments in the Court of Appeal. Instead of
being used as a brief summary of the points
to be argued, they are often immensely long
and advocates ignore them, instead dictating
propositions of law that they want the court
to accept.
If asked by the court where they are in the
skeleton, they often have no idea. Counsel
should take the court to the first submission
on the first page, and then when they have
seen what it is, make supplementary points,
reducing dictation/note-taking by the judges
and facilitating an effective dialogue.
Gary Born restricted his comments to
arbitration, although he thought his remarks
might apply to litigation as well. In oral
advocacy, the most important time spent by
the advocate is in listening to what the tribunal
is saying.
The process of advocacy is not one of telling
the tribunal something, but of explaining it and
trying to simplify it and, as part of that,
listening to what the decision-maker both
understands and doesn’t understand so well.
Focussing on and addressing those issues is
critical.
This second comment was that advocacy is no
longer simply oral or not. Oral advocacy,
especially today, may mean oral accompanied
by hyperlinks and PowerPoint and other audio-
visual accompaniments, depending on the
complexity of the case.
Paul Darling QC
Call: 1983 | Silk: 1999 | Email: pdarling@keatingchambers.com
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www.keatingchambers.com www.keatingchambers.com KCConstructionUpdate Spring 2014
SCL Gulf Conference – 24th April
Just as it is essential to master the documents
in cross-examination, so it is essential to
present them, and whatever other evidence
Westin Hotel, Dubai
there is, in a digestible way.
Finally, of course, the real question, when you
are displaying all this technological prowess,
and taking all this time to attend to the
tribunal’s concerns, is how to make the client
pay for all that, so a real challenge is balancing
Building the Gulf – Legal Challenges and Solutions
all this with demands for efficiency.
The panel also addressed questions on the
Jackson reforms. Sir Rupert Jackson
commented that the time to judge them will
be “when they have been in place for ‘a couple
of years’ and people have got used to them”.
Gary Born remarked that arbitration,
notwithstanding promises of efficiency and
speed, was often oddly conservative and that
tribunals were under pressure to allow parties An outstanding line-up of speakers and
to be heard ad nauseam because of the fear of
having an award set aside or not recognised. panellists, with unrivalled expertise in
Instead of hot-tubbing replacing cross-
examination and saving time, the tendency is construction disputes in the region, will
to end up with both, which is still a good thing.
One of the few effective mechanisms for
containing cost and delay is by fixing dates and
be looking at common legal problems on
dividing the time equally.
construction projects in the Gulf, and
The evening concluded with further
questions and discussion amongst guests
over dinner.
proposing solutions.
For further information, please visit:
www.scl-gulf.org/conference-2014
KCConstructionUpdate Spring 2014 www.keatingchambers.com www.keatingchambers.com KCConstructionUpdate Spring 2014

Brief Encounter
Declan Redmond

Declan Redmond joined Keating Chambers as Declan is a former Chair of the Institute of Barristers’ Clerks and joins us from a
CEO/Director of Clerking in January 2014, bringing distinguished career at Wilberforce Chambers
with him over 30 years of experience.

What is your perception of Keating Chambers since your arrival in January?
I was always aware that the Keating “brand” is very strong both domestically and abroad. I knew that Keating are
one of the leading construction sets in the UK. However, like others, I was not aware of the diversity of the work
undertaken by Members of Chambers, across the areas of Construction, Energy, Engineering, International
Arbitration, Shipbuilding, Procurement, Utilities and IT disputes.
I have found that the barristers are very approachable, committed and of an incredibly high standard. The staff
know the industry inside out and are always willing to go the extra mile for the clients. It is a very forward-
thinking set of Chambers.
What are the key elements of your role?
My role is very varied. It covers the following main responsibilities:
I have overall responsibility for all the clerking, marketing and administration functions in Chambers. I am
responsible for developing with Members of Chambers the overarching Chambers strategy that will enhance
Chambers’ brand in the market and its collective identity, and also developing a strategy for business
development and marketing (with Amy, the Marketing & Business Development Manager).
I also have 31 years of Clerking experience (12 years as CEO/Senior Clerk), so I will continue to be a point of
contact for clients who would like to discuss the various aspects of the work undertaken by members of Keating
and make the necessary recommendations.
What impact are changes in the global legal market having on Chambers and your role?
Nobody foresaw over 31 years ago, that by becoming a Junior Barristers’ Clerk, one day I would be visiting and
developing Chambers business in many foreign jurisdictions.
There are now so many different jurisdictions that Chambers can market to: the Middle East, Far East, Africa, USA,
Australia, Japan, Korea, Europe and others.
It is important to investigate these markets but it is of even more importance not to spread ourselves too thinly.
Keating has a presence in Hong Kong and also in Singapore, so we are able to monitor the legal market at first
hand. Members of Chambers get involved in major disputes in most of the jurisdictions mentioned above and we
will continue to develop our international strategy.
Do you envisage a shift in Keating Chambers?
My view is that the members of Keating Chambers are exceptional at delivering expertise, in the core areas of
Chambers work, i.e. Construction, Energy, Engineering, International Arbitration, Procurement, Professional
Negligence, Shipbuilding, IT and Utilities.
Arising out of those core areas members undertake work in the commercial property sector, they deal with
regulatory matters, PFI/PPP contracts and so on. It is important to concentrate on what you do well and offering
the client a first rate level of advocacy, advice and client care.

What are your priorities for the next 12 months?

My priorities are to: drive a focussed approach to business development on behalf of Chambers, continue to Declan Redmond: CEO & Director of Clerking | Email: dredmond@keatingchambers.com
develop Chambers’ reputation in the UK, develop client communication and client care mechanisms; add my
knowledge and experience of running a set of Chambers to assist the staff and barristers in providing a top-class
service to our clients; continue to promote Chambers in foreign jurisdictions.

eclan began his career as clerk at Wilberforce Chambers in 1982. In 1998, Declan took on the role of senior clerk eclan’s role will see him oversee both the clerking and administration functions of Chambers. He will take on the

D and by 2002 he had successfully amalgamated the posts of senior clerk and chief executive following a
management re-structure.
Declan’s appointment as CEO/Director of Clerking at Keating Chambers was acknowledged by Head of Chambers, Paul
D task of ensuring the effective running of Chambers and that clients receive the necessary quality of service, along
with responsibility for the overall leadership and development of the staff and Barristers' practices.
His key responsibilities will include the development and implementation of Chambers' strategic business plan, business
Darling QC by saying, “I am delighted that Declan is joining Chambers, he has a formidable reputation and considerable development and managing client relationships.
experience in the clerking world”.

8 9
KCConstructionUpdate Spring 2014
The Nuclear Option
A guide to avoiding dispute meltdown
Dr Robert Gaitskell QC
As Chairman of the Dispute Board for the ITER
nuclear fusion project in France, Dr Robert Gaitskell
QC, brings his engineering acumen to bear on the
future of the global energy industry and how its
disputes are to be resolved.
SOURCES OF ENERGY
The energy industry is in a state of flux.
Politicians want to interfere with the utilities
market. Shale gas and oil are giving the US a
significant competitive advantage over other
areas.
Germany has lost confidence in nuclear
fission power plants, while the UK is intent on
launching a new fleet of such energy sources.
Oil supplies from Libya and other traditional
providers are uncertain.
Further, the eco-friendly renewable sources
are proving problematic. In the UK, a recent
The ecological credentials of fusion include the fact
that it emits no pollution or greenhouse gases. Its
primary by-product is helium, an inert, non-toxic gas.
spell of extremely high winds meant that so
much power was generated by the existing
wind turbines that the suppliers were paid
substantial sums to stop feeding their
electricity into the national grid, which could
not cope with such levels.
The extreme winds were also responsible for
at least one such turbine suffering severe
failure.
Solar panels have been widely installed in the
UK, with the high take-up encouraged by
significant government subsidies.
However, national austerity measures are
reducing such subsidies, and the growth of
electricity generation from such sources will
now taper off.
It is in this context that there is now a fresh
interest in an enhanced form of nuclear power
generation, that from ‘fusion’ rather than from
the conventional fission process.
Most exciting of all is the ground-breaking
thermonuclear experimental project now
underway in France, supported by a wide range
of nations.
This is the International Thermonuclear
Experimental Reactor Project (ITER). The
chosen dispute resolution procedure for that
vast project is the now well-established dispute
board (DB).
NUCLEAR FUSION
Nuclear fusion is quite unlike nuclear fission.
The fission process has, of course, far more
public recognition, since that technology lies
behind the atomic bomb and conventional
nuclear power stations.
In the fission process, the nucleus of an atom
splits into smaller parts, usually producing free
neutrons and releasing a very large amount of
energy.
In a conventional nuclear power station, a
nuclear reaction is produced deliberately. The
fuel rods are bombarded with neutrons and the
result is that further neutrons are emitted.
This sets up a self-sustaining chain reaction that
releases energy at a controlled rate in a nuclear
reactor (for a power plant), or at a very high,
uncontrolled rate (in an atomic bomb).
10
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The fission process is linked with nuclear
waste problems and with well-known
examples of escaping radioactivity (e.g.
Chernobyl).
The fusion process, by contrast, is
significantly different. At the moment, a
limited amount is known about the process.
Much of what is known is very encouraging.
Stars, including the sun, experience the fusion
process at their cores. The ITER Project aims
to establish, if it can, that the fusion process
may be used to generate electricity on a
commercial basis.
The process that is to be used involves two
fuels that are relatively easily obtained.
Deuterium may be extracted from seawater,
and lithium is in the earth’s crust.
Used together in the fusion process they
create tritium on a significant scale.
Ultimately, therefore, the supply of tritium is
potentially unlimited. Mass for mass, the
lithium/deuterium fusion process envisaged
for the ITER Project is expected to release
about three times as much energy as uranium
235 fission.
Of course, this will be millions of times more
units of energy than any chemical reaction
such as burning fossil fuels like oil, gas or coal.
The ecological credentials of fusion include
the fact that it emits no pollution or
greenhouse gases. Its primary by-product is
helium, an inert, non-toxic gas.
Unlike fission ‘melt-down’ chain reactions,
there is no possibility of a fusion ‘run-away’
reaction, since any alteration in the
conditions of a fusion reaction results in the
plasma cooling within seconds, so that the
reaction ceases.
There is a low waste output.
www.keatingchambers.com
The Nuclear Option
THE ITER PROJECT
ITER originally stood for the ‘International
Thermonuclear Experimental Reactor’. However,
nowadays it is generally taken to refer to the
Latin word for ‘the way’. If the prototype proves
effective, the overall budget is now expected to
approach €16 billion.
The member states for the project are the EU,
which contributes 45% of the cost, and six
individual nations, each contributing 9%: India,
Russia, China, South Korea, the United States
and Japan.
The project was first seriously mooted in 1985
at the Geneva Superpower Summit in
November of that year.
Broadly, the ITER Project involves about ten
years for the construction of all facilities at
Cadarache in southern France, followed by 20
years of operation.
If this essentially experimental project is
successful, then a demonstration fusion power
plant (named DEMO) will follow, introducing
“We say that we will put the sun into a box. The
fusion energy to the commercial market, by
converting the heat generated by the fusion
process into electricity, in fairly conventional
ways familiar to those with an understanding of
current power plants.
The broad objective of the ITER Project is to
establish that the reactor, using 50 megawatts
of input power, is able to produce ten times the
energy output, i.e. 500 megawatts.
Provided that can be achieved for a relatively
short period (a matter of minutes), then the
principle will have been established and the
ultimate success of the DEMO power plant is
assured.
Another of the key objectives of the ITER
Project is to verify that tritium, one of the
necessary ingredients for the process, can be
‘bred’ in the reactor, so that the supply of that brought close together using high temperatures
fuel becomes self-supporting.
The broad objective of the ITER Project is to establish
that the reactor, using 50 megawatts of input power, is
able to produce ten times the energy output...
KCConstructionUpdate Spring 2014
The technological and scientific challenges
involved in the ITER Project should not be
under-estimated.
Pierre-Gilles de Gennes, the French Nobel
physics laureate, once said about fusion:
idea is pretty. The problem is, we don’t know
how to make the box.”
Plasma
To be successful, the reactor must contain high
temperature particles, with their enormous
kinetic energy, in a sufficiently small volume,
and for a sufficiently long time, for fusion to
take place, creating the plasma.
Ordinarily, protons in each nucleus of the
isotope fuel will strongly repel each other, since
they each have the same positive charge.
However, when the nuclei are brought
sufficiently close, with sufficient energy, they
are able to fuse.
In the ITER Tokamak machine, the nuclei are
and magnetic fields.
11
The plasma in the ITER Tokamak is a hot,
electrically charged gas. It is created, at
extreme temperatures, by electrons separating
from nuclei.
About 80% of the energy produced in the
plasma is carried away from the plasma by the
neutrons which, having no electrical charge,
are unaffected by the constraining magnetic
fields.
These neutrons then hit the surrounding walls
of the Tokamak, and are absorbed by the
blankets on the walls and so transfer their
energy to the walls as heat.
In the ITER Project, this heat is simply
dispersed through cooling towers.
However, in the forthcoming DEMO fusion
plant prototype, the heat generated will be
used to produce steam and, through the
intermediaries of turbines and alternators,
generate electricity.
Magnetic Fields
The plasma needs to be heated to 150 million
degrees centigrade in the core of the machine.
Plasma at that temperature, and with its
constitution, cannot be allowed to touch the
walls of the reactor, since the plasma would
rapidly destroy any constraining vessel and
would also cool down, ending the process.
Therefore, the plasma is controlled by so-called
‘magnetic confinement’. The plasma is shaped
by magnetic fields into a ring, or ‘torus’, and
thus it is kept away from the relatively cold
vessel walls.
KCConstructionUpdate Spring 2014
These surrounding walls have ‘blanket modules’
containing lithium. They are termed ‘breeding
blankets’ because, as part of the fusion reaction,
tritium can be generated.
The magnetic fields are created using
superconducting coils which surround the
vessel, while an electrical current is also passed
through the plasma.
On site at Cadarache, the Poloidal Field Coils
Winding Facility house has already been
completed. It is here that the largest of the
magnets will be wound.
The Tokamak Complex
At the heart of the project is the ITER Tokamak
machine. This machine draws on the
experimental work that broadly stems from a
major breakthrough in 1968, when scientists in
the Soviet Union achieved temperature levels
and plasma confinement times significantly
beyond anything achieved hitherto.
The Soviet scientists termed their device, which
achieved doughnut-shaped magnetic
confinement, a ‘tokamak’.
Since then about 200 tokamaks of various kinds,
shapes and sizes have been created in research
facilities all over the world.
One of the most significant tokamaks is the
Joint European Torus (JET) at Culham in England,
which has been operational since 1983.
JET is a project of the European Atomic Energy
Community (EURATOM). The JET tokamak
achieved the world’s first controlled release of
fusion power in 1991.
The ITER tokamak will be twice the size of the
largest current machine. It will be housed in the
Tokamak Complex at Cadarache. That Complex
will include the tokamak machine itself, as well
as Diagnostic and Tritium Buildings.
Of particular significance in the construction of
that Complex will be the Seismic Isolation Pit, a
17m deep hollow, excavated to house the
concrete basemat and the Seismic pads that will
protect the buildings and equipment from
ground motion in the event of a seismic
incident.
Construction activity on site is about to peak,
with 3,000 workers present. If all goes according
to plan, fusion power should be feeding into the
world’s electricity grid systems by about 2040.
Dr Robert Gaitsell QC | Call: 1978 | Silk: 1994 | email: rgaitskell@keatingchambers.com
If all goes according to plan, fusion power should be feeding
into the world’s electricity grid systems by about 2040.
DISPUTE BOARDS
In common with the contracts for
infrastructure projects around the world, the
many ITER contracts contain Dispute Board
provisions as part of the dispute resolution
procedures.
Dispute Boards (DBs) involve a procedure
whereby a panel of three engineers/ lawyers
(sometimes just one) is appointed, often at the
outset of the project.
Ideally, the DB will visit site a few times a year
and deal with any incipient grievances. This
often avoids a complaint crystallising into a
dispute.
Where the project has an especially diverse
range of technologies and construction
processes, there may be a large panel of
appropriately qualified specialists, who can be
assembled in panels of three suitable for the
particular dispute.
DB Background
After successful US experience with DBs in the
1960s and 70s, in 1995 the World Bank made
the procedure mandatory for all International
Bank for Reconstruction and Development
(IBRD) financed projects in excess of US$50
million.
From 1997, the procedure was adopted by the
Asian Development Bank and the European
Bank for Reconstruction and Development.
The commonly favoured model for Dispute
Boards in the US was and is the Dispute Review
Board (DRB), under which ‘Recommendations’
are issued in respect of the particular dispute
being dealt with. This is a relatively consensual
approach to dispute resolution.
Broadly, if neither party formally expresses
dissatisfaction with the Recommendation
within a stated period of time, the contract
provides that the parties are obliged to comply
with the Recommendation.
12
www.keatingchambers.com www.keatingchambers.com KCConstructionUpdate Spring 2014
Seminars
Selected recent and forthcoming presentations
Society of Construction Law SCL Gulf Conference
London, 4 March 2014
th Dubai – 24th April 2014
Relaunch of the ICC Conditions Building the Gulf – Legal Challenges and Solutions
If either or both parties do express
Richard Harding QC
dissatisfaction within the limited time period, Professor John Uff QC
then the dispute may go to arbitration or court
litigation. Although the parties may choose For further information please visit:
www.scl-gulf.org/events
Society of Construction Law Annual Conference
voluntarily to comply with a Recommendation
while awaiting the decision of the arbitrator or
court, there is no compulsion to do so.
Leeds, 7th March 2014
Design and build claims SCL Seminar – Scotland
FIDIC DB Clauses
The International Federation of Consulting Thomas Lazur Glasgow – 15th May
Engineers (FIDIC), with World Bank Causation on construction claims and Mediation/ADR
encouragement, introduced the Dispute Board
procedure into its engineering standard forms Vincent Moran QC and Elizabeth Repper
Keating Chambers Energy Masterclass – Legal
by way of the 1995 Orange Book form. For further information please contact:
This was followed by its 1996 introduction into Issues in Energy ahammick@keatingchambers.com
Clause 67 of the Fourth Edition of the FIDIC
Red Book for Building and Engineering Works London, 10th March 2014
designed by the Employer. “Knock for knock” clauses; Limitation of liability, capping and International Junior SCL Event
FIDIC adopted the Dispute Adjudication Board carve outs; and Termination for cause and convenience Paris – 16th May
(DAB) model, whereby effect must be given
David Thomas QC, Véronique Buehrlen QC & Lucy Garrett Expert evidence in international construction disputes:
forthwith to a Board decision.
If no ‘notice of dissatisfaction’ is issued within Common Law v Civil Law Perspectives
28 days of the Board’s decision, it becomes Dr Robert Gaitskell QC
final and binding. If a notice is issued, then the
matter may proceed to arbitration, although For further information please visit:
the parties are obliged to comply with the www.scl.org.uk/events
decision in the meantime.
ICC DB Procedure
In late 2004, the International Chamber of
Commerce (ICC), Paris, took the process a step
forward by launching its Dispute Board Rules,
which offered, as part of the menu of
procedures available, a hybrid of the two
models already referred to.
Thus, the ICC scheme offers the conventional
DRB and DAB processes, but adds the option of
a Combined Dispute Board (CDB), where
Recommendations are normally issued, but
Decisions may be requested.
For further information on papers and seminars please contact the Marketing Team: ahammick@keatingchambers.com
13
 KCConstructionUpdate Spring 2014
Selection of reported cases involving members of Keating Chambers
Devon County Council v Celtic
Bioenergy Ltd [2014] EWHC 309 (TCC)
This was the latest in a long-running series of
disputes concerning Celtic's claims for additional
time and money arising out of its contract with
Devon for the design and construction of an in-
vessel composting facility for Devon.
Celtic had commenced eight previous
adjudications (failing to pay sums found to be
due to Devon in one), an ongoing arbitration
and this, the ninth referral to adjudication.
This judgment dealt with the costs of Devon's
application for an interim injunction restraining
Celtic from proceeding with an adjudication and
its Part 8 claim for declarations that the
adjudicator lacked jurisdiction on the grounds
that there was no dispute and whether the
adjudicator could order Devon to make payment
of any sum found to be due to Celtic to Knowles
to whom Celtic had assigned the proceeds of
any claim.
Upon Celtic belatedly giving an undertaking to
pay Devon the sum outstanding from an earlier
adjudication upon receipt of an invoice, the
application for an injunction was adjourned and
costs reserved.
In a later ex tempore judgment, Stuart-Smith J
decided that Devon succeeded in obtaining a
declaration that the adjudicator could not direct
Devon to make payment to Knowles (but was
unsuccessful in relation to the 'no dispute' issue).
Liability for costs was decided and this judgment
dealt with the quantum of costs as a result of
the orders made in relation to liability for costs.
The case was notable for the fact, remarked
upon by the judge that Celtic, being insolvent,
was enabled to pursue the proceedings by virtue
of a “strange deed of assignment”, which gave a
firm of claims consultants the right to receive all
sums due under the contract, while representing
Celtic and charging for doing so and while
providing an expert witness.
Stuart-Smith J observed that he had not been
asked to rule “on the legitimacy of that
arrangement”.
The principal issue concerned the costs of the
injunction and declaration hearings and whether
further issues remained to be determined (other
issues having been pleaded but by reason of
time constraints not dealt with at the hearing).
Celtic had claimed £62,181 as costs in an
application by Devon for a declaration relating to
the adjudications, including £33,561 for the
claims consultants fees.
These were reduced by some two-thirds, with
further reductions of solicitors and counsels fees,
resulting in the sum of £62,181 claimed being
reduced to £31,430, producing a net liability
from Devon of £13,000.
The court rejected the submission by Celtic “that
it would be an abuse of the process for issues
that were not addressed or resolved by the
Court’s judgment on that occasion to be raised,
if appropriate, at a later date”. Devon’s draft
form of order was largely adopted by the court.
Jessica Stephens represented Devon County
Council.
14
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Mileform Ltd v Interserve Security Ltd
[2013] EWHC 3386 (QB)
For several years, Interserve, the defendant
company, had engaged the claimant company,
Mileform, (amongst others) to provide
warehousing, packaging, distribution and
storage services.
Mileform alleged that a subsequent written
contract between the parties lasting for a term
of two years had included an orally agreed
exclusivity clause, and that Interserve, in
breach of that clause, had removed business
from it before the expiry of the two-year term.
On the facts, it was established that Interserve
had not approved the alleged exclusivity clause
at the time of the agreement, nor had there
had been any subsequent approval of it.
As a result, no such term was incorporated into
the contract, and judgment was given for the
defendant. In any event, reliance on such a
term would have been precluded by the entire
agreement clause in the contract. Furthermore,
such a term would have been too uncertain to
be contractually binding.
Richard Coplin appeared for the defendant.
www.keatingchambers.com
Greenwich Millennium Village Ltd v
Essex Services Group plc and
Others [2013] EWHC 3059 (TCC)
The claimant building owner, Greenwich
Millennium Village (“GMVL”), brought actions
against parties responsible for the original
design and construction of a block of flats in
the Millennium Village development.
Two separate but related failures in the
building’s cold water riser mains had resulted
in water cascading over the building’s
balconies, and leading to £4.75 million worth
of damage.
On the evidence, it was established that a
principal cause of the leakage was defective
workmanship by Robson, a sub-sub-sub-
contractor, which meant that mechanical and
electrical contractor Essex Services had
breached its warranty to GMVL.
GMVL further succeeded in establishing
liability against the system designers, and HSE,
a third-party sub-contractor, succeeded in
establishing liability on the part of Robson in
its operation of the system.
The case is of interest, not just because of the
prestige of the project concerned, but for the
discussion and adjudication of the rules
relating to causation.
Having established that there were two
independent causes of the system failures, the
judge departed from the classic “but for”
approach to causation of loss and held that
both operated as effective causes of the
damage suffered. Essex Services’ allegations of
contributory negligence against GMVL were
rejected.
Piers Stansfield QC appeared for the claimant.
Simon Hargreaves QC appeared for HSE.
KCConstructionUpdate Spring 2014
Viridis UK Ltd v Mulalley and Co Ltd JG Walker Groundworks Ltd v Priory
[2014] EWHC 268 (TCC) Homes (East) Ltd [2013] EWHC 2916
Viridis, the claimant, was the specialist (TCC), [2013] EWHC 3723 (TCC)
window sub-contractor on a housing The claimant contractor succeeded in obtaining
refurbishment project in NE London, for summary judgment of an adjudicator’s decision
which Mulalley was the main contractor. in its favour.
Following termination by Mulalley, Viridis The adjudicator had jurisdiction to determine
referred a substantial final account claim to the issues he did. As the defendant’s challenge
adjudication. Mulalley challenged the had been without merit, it was required to
adjudicator’s jurisdiction on the ground that explain why it should not pay the costs of the
the dispute encompassed claims arising under application on an indemnity basis.
six separate contracts and resisted
Elizabeth Repper appeared for the claimant.
enforcement of his decision.
The court held that the orders from the main
contractor amounted to separate contracts
complete in themselves, containing in some
respects materially different terms, so that it
was simply not the case that they could be
viewed as sub-orders under an overarching
framework of one contract.
In this instance, there was no agreed single
contract that could give the adjudicator
jurisdiction to decide the multiple contracts
argument as a substantive issue, and even if
there had been, once the Court had found
that there were in fact separate contracts the
adjudicator’s decision would not have been
enforceable.
Gaynor Chambers appeared for the
defendant, Mulalley and Co. Ltd.
15
 KCConstructionUpdate Spring 2014
Knocking at the Door of Radical Breach
Will a mutual indemnity hold harmless clause bite?
Véronique Buehrlen QC
The issue of whether the Courts will enforce ‘knock for knock’
clauses that purport to absolve a party from performing the very
obligation he contracted to undertake is explored in this article.
utual indemnity hold harmless clauses,
M ‘knock for knock’ clauses for short, are
a mainstay of the tools used by
participants in upstream oil & gas projects and
ventures to re-distribute and allocate risk.
These types of clauses are also commonly
referred to as “mutual hold harmless” clauses,
“mutual indemnity and hold harmless”
agreements or clauses and “cross-indemnities”.
The primary aim of these particular
arrangements is to allocate responsibility
between the various parties in such a way that
each will be responsible for his own property,
personnel and consequential loss.
The clauses operate both where the losses are
caused by a party’s negligence as well as where
those losses are caused by his breach of
contract.
However, a distinction needs to be made.
Negligence is concerned with a party’s failure to
meet a certain standard of performance. A
breach of contract can go much further, to
include both non-performance and even
deliberate non-performance of the very
obligations a party has agreed to undertake.
Where a clause requires A to indemnify B, the
contract breaker, for the consequences of the
latter’s breach of contract, there is an
immediate tension between the contractual
obligations B has undertaken to perform and
the consequences of his non-performance.
If the consequences of non-performance are
not to be visited upon the contract breaker, the
Negligence is concerned with a party’s failure to meet a
certain standard of performance. A breach of contract can
go much further, to include both non-performance and even
deliberate non-performance of the very obligations a party
has agreed to undertake.
obligations he has agreed to perform are at risk
of becoming no more than mere declarations
of intent.
Will the Courts enforce an indemnity clause
that absolves a party from performing the very
obligation(s) he contracted to undertake?
The answer depends on what, on true
“I think the whole clause points to the exceptions
construction of the relevant provision, was
intended by the parties.
The argument begins with the constructive
total loss of a vessel in Robin Hood’s Bay in
North Yorkshire some 100 years ago: Owners of
the Cap Palos v Alder (1921) 8 Lloyds LR 309.
The defendant contracted to tow the plaintiff’s
schooner, the Cap Palos (C.P.), on a round
voyage.
As a result of the negligence of the defendant’s
tug masters, the vessels got into Robin Hood’s
Bay, where the tugs abandoned the C.P.
The C.P. could not get out and eventually
drifted onto rocks. Meanwhile, the tug owner
(being under a contractual obligation to send
assistance) cancelled an order for another tug
to go to help the C.P. thinking (erroneously)
that the Salvage Association had sent tugs to
assist.
When sued for breach of contract and
negligence, the tug owner relied on a clause in
the towage contract that absolved him of
responsibility for damage caused by (among
other matters) “default of the steam tug
owner”, i.e. default in failing to send assistance.
16
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The then Master of the Rolls held that, having
given up the towage, the tug owner could not
avail himself of the words “default of the steam
tug owner”, which on true construction of the
clause only extended to cover defaults during
actual performance of the tug owner’s
contractual obligations:
being confined to a time when the tug owner is
doing something or omitting to do something in
the actual performance of the contract, and do
not apply during a period when, as in this case,
he has ceased even for a time to do anything at
all and has left the performance of his duties to
some one else. In other words, I think the
exception extends to cover a default during the
actual performance of the duties of the contract,
and not to an unjustified handing over of those
obligations to someone else for performance.”
That same theme found support in the much
more recent case of A Turtle Offshore v Superior
Trading Inc [2008] EWHC (Admiralty) 3034.
Here, Teare J recognised, albeit obiter, that
whilst an indemnity clause might well apply to
a breach of contract, it would be difficult to
construe the provision as applying to a breach
that amounted to non-performance.
The facts, echoing those of the Cap Palos case,
were these:
The claimant rig owners hired the defendant
tug owners to tow a rig from South America to
Singapore via Cape Town.
As a result of their negligence, the tug owners
ran out of bunkers in the South Atlantic. The
towage connection was released and the rig
drifted off. Another tug refuelled the original
tug and both tried to find the rig without
success.
When finally located, the rig was found to be a
total loss. The indemnity clause provided that
any loss, howsoever caused, to the rig would be
for the sole account of the rig owner, whether
www.keatingchambers.com
Knocking at the Door of Radical Breach
or not caused by a breach of contract,
negligence or any fault of the tug owner.
The clause was held to apply to the tug owner’s
breach of contract in failing to ensure that the
tug was seaworthy on departure – a breach as
to the standard of performance of the tug
owner’s obligations.
However, Teare J considered the situation where
the tug owner committed a “radical breach” of
contract.
Would the indemnity apply where the tug
owner deliberately released the towage
connection in order to perform a more
profitable contract?
Could an indemnity operate to deprive a party’s
obligations of all contractual force? Teare J
thought not. Like Lord Sterndale in The Cap
Palos before him, Teare J saw a way round the
problem by construing the indemnity as
applying only so long as the tug owners were
performing their contractual obligations albeit
not to the required standard.
The clause would not operate to protect the tug
owner where he was not performing his
obligations:
“Had it been intended that the tug owners were
not responsible for loss …occurring after the tug
owner had chosen not to perform the towage
contract by, for example, releasing the towage
connection in order to perform a more profitable
contract, then very clear words would be
required because that would be a very radical
breach indeed.
Whilst the wide words of cl 18 are literally
capable of applying to such a radical breach I do
not consider that cl 18, if it is to be construed in
the context of the TOWCON, is fairly susceptible
of only one meaning, namely that it applies
however radical the breach.
The words, when read in the context of the
TOWCON as a whole, are also susceptible of
applying so long as the tug owners are actually
performing their obligations under the TOWCON,
albeit not to the required standard. That ensures
that the obligations of the tug owners are more
than a mere declaration of intent.”
A year later, in Internet Broadcasting
Corporation Ltd (trading as Net TV) v Mar LLC
(trading as MarHedge) [2009] EWHC 844 (Ch),
Gabriel Moss QC (sitting as a deputy High Court
Judge) took the matter much further, setting out
rules for true construction of exclusion clauses
in the context of a deliberate or repudiatory
breach of contract.
Véronique Buehrlen | Call: 1991 | Silk: 2010 | Email: vbuehrlen@keatingchambers.com
KCConstructionUpdate Spring 2014
Parties still have a long way to go if they want their
agreed contractual risk allocation provisions to
provide a comprehensive code for the allocation of
risk between them.
The case was concerned with an exclusion clause Like many of the limitation, exclusion and
in a joint venture contract for internet allocation of liability clauses relied upon to
broadcasting. protect a contract breaker from the
consequences of his breach, mutual
The Deputy Judge concluded that the clause at
indemnity hold harmless clauses have the
issue did not extend to a deliberate repudiation
potential for draconian consequences.
of the contract by the defendant.
They are not limited to the exclusion of
He made clear his view that there was a
certain types of liability or loss, but operate
presumption against an exemption clause being
construed to cover a deliberate or repudiatory
breach of contract, that very clear language
to render the innocent party responsible for
the damage (often all the damage) inflicted
on him by the contract breaker’s breach or
would be needed to do so and that such clauses
other default.
ought not to be construed as exempting a party
from the consequences of a repudiatory breach if This sort of departure from the usual
that would defeat the main object of the contract. allocation of loss rules developed by the
Courts over centuries continues to ensure
MarHedge therefore suggested clear limits to
that such provisions are construed strictly.
clauses restricting or exempting a party from
liability for breach of contract. Parties still have a long way to go if they
want their agreed contractual risk allocation
That approach went too far. Two years later, in
provisions to provide a comprehensive code
Astrazeneca v Albemarle [2011] EWHC 1574
for the allocation of risk between them, as
(Comm), Flaux J was having none of it. He
was recently illustrated by the Court of
(rightly) rejected the approach in MarHedge as
Appeal’s endorsement of Flaux J’s judgment
“heterodox and regressive” and not reflecting the
in Seadrill Management Services v OAO
current state of the law.
Gazprom [2010] EWCA Civ 691.
There is no presumption that an exemption
Given the sums at stake in the upstream oil &
clause will not apply to a repudiatory breach.
gas industry, coupled with the fact that the
Whether or not Albemarle’s liability fell to be
scope of knock for knock clauses remains a
limited by the relevant clause (here a cap on
matter of construction by reference to the
damages for non-delivery of goods) was no more
individual contract and circumstances of
than a question of construction, albeit strict, as to
each case, it is inevitable that arguments as
the scope of the provision.
to whether or not a particular clause will bite
Similarly, there is no rule preventing an in the event of a “radical” or deliberate
exemption clause from excluding or restricting breach of contract will continue to play out.
liability in the case of a deliberate breach, as was
made clear by the House of Lords in Suisse
Atlantique [1967] 1 AC 361.
True construction of the relevant contractual
provision is, of course, precisely the approach
Lord Sterndale took in The Cap Palos and Teare J
in A Turtle Offshore.
However, contract interpretation is an art and not
a science. It is an exercise to be undertaken by
reference to the contract as a whole and its
“factual matrix”; an exercise that is likely to
produce different answers from different judges.
17
KCConstructionUpdate Spring 2014
Wind Farms: Legal and Technical Challenges
Vincent Moran QC, Paul Buckingham & Alice Sims
Despite significant controversy in the popular press, the UK’s wind energy industry has
continued to grow rapidly. This article considers some of the main issues that have arisen in
offshore wind farm disputes in recent years.
he first offshore wind farm in the UK
T was completed in North Hoyle in 2002.
Since that time, and despite significant
controversy in the popular press, the UK’s
wind energy industry has continued to grow
rapidly. 2.7 gigawatts of new wind power was
brought online during 2013 and the offshore
wind industry continued to be the driving
force behind this growth, with London Array,
the world’s largest offshore wind farm with
175 turbines generating 630 megawatts of
electricity, becoming operational.
By the beginning of January 2014, wind power
generation in the UK consisted of 5,276 wind
turbines and over 10 gigawatts of offshore
capacity. As a result of this recent surge in
growth, the UK is now ranked as the world’s
sixth largest producer of wind power and, by
2020, RenewableUK estimates that the UK is
expected to have more than 28,000 gigawatts
of wind capacity.
The expansion of the wind energy sector, and
particularly the growth of offshore wind farms,
has led to many disputes associated with the
complex and novel technical challenges posed
by the installation of wind turbines and their
support structures and unrelenting
environmental conditions in which they are
installed.
For example, the dispute between the owners of
the Greater Gabbard site (GGOWL) and Fluor,
who constructed the wind farm, has been the
subject of widespread reporting in the press and
the specialist wind farm media in particular.
Disputes about wind farms, most of which have
been dealt with in confidential arbitrations, have
centred on defects and delays to completion. This
article considers some of the main issues
that have arisen in offshore wind farm disputes in
recent years.
Offshore Wind Farm Contracts
Offshore wind farms are usually owned and
developed by a joint venture or project company.
Various contracts need to be put in place to
develop the wind farm, including a construction
contract, an operation and maintenance contract
and financing and security arrangements.
Engineering, procurement and construction (EPC)
contracts are the most commonly used form of
construction agreement in this sector. Under an
EPC contract, the contractor usually accepts the
full risk for design, the procurement of the
turbines and their associated parts, and their
installation offshore. In terms of defects, this
single point of contact is of considerable
advantage to the owner.
However, there are currently no standard form
EPC contracts for the offshore wind industry and
so many companies have used bespoke or heavily
amended EPC forms developed in other sectors.
18
www.keatingchambers.com
This can give rise to a lack of clarity about the
extent and exact nature of the contractor’s
responsibilities.
One area of difficulty has been the extent to
which contracts include a ‘fitness for purpose’
warranty, particularly in relation to the
operational life of the wind farm. Plainly, such an
obligation is onerous for the contractor but
justified by the owner’s reliance on the
contractor’s expertise and experience.
This was a key issue in the TCC case of MT
Højgaard v E.ON Climate & Renewables before
Mr Justice Edwards-Stuart (in which John Marrin
QC and Paul Buckingham appeared for E.ON).
The decision is expected in Spring 2014 and will
be relevant to the industry, since similar terms
have been incorporated into many such
contracts.
Scour
Disputes concerning surveying data and, in
particular, seabed conditions have repeatedly
featured in disputes, as the impact of scour has
often been underestimated. Scour is the lateral
erosion of the seabed caused by the ebb and
flow of the tide and sea currents.
It is often difficult to predict and can have a
significant impact on the monopile design length
and cost. It can also affect the suitability and use
of jack-up vessels for the installation works. This
has led to disagreements about the
foreseeability of scour and responsibility for the
cost of “rock dumping” on the seabed to guard
against scour.
www.keatingchambers.com
Wind Farms: Legal and Technical Challenges
Vessel Suitability
The offshore wind market is currently facing
large bottlenecks in terms of suitable
installation vessels. This is mainly because of a
lack of specialised vessels.
Considerable problems have arisen because
vessels mainly used in the oil and gas industry
have not been suitable for the installation of
monopiles, despite extensive adaptations.
This was an issue that arose in the case of MT
Højgaard A/S v E.ON Climate & Renewables UK
Robin Rigg East Limited & Ors [2013] EWHC 967
(TCC) (in which Adrian Williamson QC and Paul
Buckingham appeared for E.ON).
In this case, Mr Justice Stuart-Smith had to deal
with the problem of valuing omitted works after
the anticipated installation vessel proved to be
inadequate.
In summary, the contract specified that MTH
(the design and build contractor) was to provide
a jack-up barge called the LISA, use of which
was to be integral to the installation of the
monopiles and transition pieces.
However, both parties agreed that initial
operations had shown that the LISA was
inadequate because she could not install the
foundations at an acceptable rate.
As a result, the Engineer issued three variation
orders for the substitution of a different vessel,
and E.ON engaged the Resolution, enabling
MTH to install the remaining 62 foundations.
Scour, the lateral erosion of the seabed, is often difficult to
predict and can have a significant impact on the monopile
design length and cost. It can also affect the suitability and
use of jack-up vessels for the installation works.
The parties agreed that there should be an
adjustment to the contract price to reflect the
facts that the LISA had been omitted from the
contract and that additions had to be made for
the new work content attributable to MTH
working with the Resolution.
MTH argued that what should be omitted was
the component of the original contract price,
which included the provision of the LISA.
E.ON argued that the rates in a separate
variation pricing schedule should apply, using
the period of time that it was predicted that the
LISA would have taken to carry out the works.
KCConstructionUpdate Spring 2014
E.ON maintained that, as the LISA had proved
inadequate, MTH would have taken a very long
time to install the foundations and therefore the
value of the variation should be referable to the
actual change in cost. The difference between
the parties’ valuation methods led to a very
significant difference in the value of the
variations.
The Judge rejected E.ON’s approach. He
considered that it ignored the fact that the sums
that MTH would be entitled to be paid for
executing part of the works would be the same,
however long it took to execute them. That was
so whether MTH had overpriced or underpriced
the works.
Furthermore, the contractual mechanism for
dealing with delay was the application of
liquidated damages. If the LISA had completed
the works and the variation orders had not been
issued, E.ON could have argued that MTH had a
contractual responsibility for that delay, entitling
E.ON to liquidated damages.
However, there would have been no adjustment
to the contract price. As a result, the Judge
found that there was no reason why the issuing
of the variation order should have the result that
the additional delay, which would have been
incurred had work with the LISA continued,
should be reflected in an adjustment to the
contract price when the delay had, in fact, been
avoided.
This case is currently being appealed to the
Court of Appeal and will no doubt be of great
interest to those working in the wind energy
sector.
19
Until clarification of the issue is provided by the
Court of Appeal, those negotiating wind farm
agreements would be well advised to pay
particular attention to the contractual
provisions concerning the valuation of
omissions and, if omissions are to be priced in
the same way as additions, the contract should
clearly and expressly make provision for this
(rather than simply setting out a pricing
structure for “adjustments to the contract” as
did the MTH/E.ON contract).
Grouted Connections
Grouted connections have been used in the
offshore oil and gas industry for many years.
The first offshore wind farm using grouted
connections was built in 2000 in Utgrunden in
Sweden.
Basically, the monopile is driven into the
seabed (thereby transferring operational and
environmental loads into the ground).
Grout is then used to fill the void in the
connection between the monopile and the
tower (or the monopile and the transition
piece). A grouted connection has the advantage
over other types of connections in that any
verticality issues with the monopile can be
corrected relatively easily.
Even though grouted connections were well-
known in the oil and gas industry, the load
characteristics for grouted connections in
offshore wind farms were challenging because
of the combination of the wind and wave loads,
coupled with the height and slenderness of
wind turbine support structures which,
together, caused large bending moments.
In 2004, Det Norske Veritas (“DNV”) published
its “Offshore Standard – Design of Offshore
Wind Turbine Structures”. These rules
contained design equations and
recommendations for grouted connections on
wind farms and were the widely relied upon
design standard “J101”. Between 2004 and
2009, the majority of offshore wind farms
relied on grouted connections based on the
design principles in J101.
KCConstructionUpdate Spring 2014
Wind Farms: Legal and Technical Challenges
The exact time frame for offshore wind farm decommissioning
is difficult to predict with any accuracy as the achievable
operating life of offshore wind farms is still unknown…
However, in September 2009, it was observed
that the grouted connections at the Egmond aan
Zee wind farm (in the Dutch North Sea), which
had utilised the guidance from J101, were
“slipping” as the grout inside the connections was
disintegrating.
In September of that year, DNV issued a warning
letter to the industry because the standard had
overestimated the axial load bearing capacity of
grouted connections in monopile substructures.
A joint industry project was initiated and revised
rules and design equations for grouted
connections were issued in 2011 and,
subsequently, 2013.
It is believed that there are approximately 14
offshore wind farms built in UK waters utilising
the principles in J101.
Liability for the cost of remedying those grouted
connections will depend upon the precise
contractual arrangements between the employer
and the design/build contractor and, in particular,
may turn on whether there is a “fitness for
purpose” obligation in the contract
Nevertheless, there is also a question as to
whether reliance on the J101 code, with its
inherent design limitations, was reasonable at
the time, without the need for further testing.
This is a key issue for the industry, and one that
will be answered in the eagerly awaited
judgment of Mr. Justice Edwards-Stuart in the
MT Højgaard v E.ON dispute.
Vincent Moran QC | Call: 1991 | Silk: 2011 | Email: vmoran@keatingchambers.com
Paul Buckingham | Call: 1995 | Email: pbuckingham@keatingchambers.com
Alice Sims | Call: 2004 | Email: asims@keatingchambers.com
Decommissioning
There is an estimated £10.4bn to be spent
taking both oil and gas and wind farm assets out
of UK waters between now and 2022. Most of
this figure is to be spent on removing oil and gas
installations but the decommissioning of wind
farms is likely to gather pace between 2022 and
2040, with an estimated £30bn being spent
removing such assets in this period.
The exact time frame for offshore wind farm
decommissioning is difficult to predict with any
accuracy, as the achievable operating life of
offshore wind farms is still unknown, but it is
generally believed that Denmark will lead the
way in this process, as its first wind farms, built
from 1992 onwards, are now thought to be
nearing the ends of their service lives, which is
typically 20 years.
The challenges facing offshore wind farm
decommissioning should not be underestimated.
It is an enormously complex and novel
technological undertaking involving, for instance,
the installation of extensive temporary works
followed by high risk dismantling and a
subsequent environmentally difficult disposal
process.
Given these difficulties, the Government has
now made the preparation of a
decommissioning programme a condition of
planning consent and has also introduced
legislation so that operators now have to
provide surety for future decommissioning costs
(given that cost modelling by the Crown Estate
has predicted that decommissioning costs will
be around 60% of original installation costs).
20
www.keatingchambers.com
However, such preparation and financial
security was absent from early wind farm
developments in the UK and so this may give
rise to future disputes about liability for
decommissioning costs between licensees,
operators, installation owners, partners to
joint operating agreements and parent
companies.
Aside from disputes about liability for costs, it
is readily predictable that other disputes will
arise in relation to the design of
decommissioning technology, the suitability
and capability of vessels, and the
management of such programmes. It is also
likely that there will be an increasing number
of disputes concerning responsibility for
meeting the extensive environmental
legalisation that governs the removal of
offshore wind farms such as the Convention
on the Protection of the Marine Environment
of the North East Atlantic (the OSPAR
Convention).
Conclusions
The offshore wind energy industry is relatively
young and has expanded rapidly. This has led
to many technical challenges, the products of
which are only now being fully understood
and experienced. There are certainly further
challenges ahead, particularly when the full
impact of decommissioning becomes known.
Members of Keating Chambers have
played a leading role in many of these
matters with more than 20 members,
across all levels of seniority, being
involved in some fifteen offshore wind
farm cases and a number of onshore
disputes.
www.keatingchambers.com KCConstructionUpdate Spring 2014
More than just a Construction Set
Keating Chambers also provides dispute resolution services to the engineering, energy, shipbuilding,
procurement and technology sectors worldwide.
Engineering
Members of Keating Chambers have that experience and expertise. Chambers boasts no fewer than six
barristers with engineering qualifications, covering the civil engineering, electrical engineering and
chemical engineering disciplines. Their experience ranges from consultancy as an electrical engineer on
North Sea oil rigs to civil work in Hong Kong to electronics work with the BBC’s Planning and Installation
Department and to oil and gas process work with BHP. With an ICE Gold Medallist, a former IEE Vice-
President and a member of the Hong Kong Institution of Engineers, no other chambers can match Keating
Chambers’ engineering pedigree.
Energy
The exploration, development, recovery and distribution of energy, whether carbon-based, nuclear or alternative,
is central to the modern world. At Keating Chambers, you will find specialists with a genuine understanding of the
demanding technical issues which disputes within each of the major energy sectors involve.
Procurement
While members of Keating Chambers regularly act in high-profile proceedings concerning procurement law,
their involvement with procurement is not limited to representation of litigants in the courts. Its members
routinely advise at early stages of projects when it is often possible to identify crucial mistakes in the
tender process. Members of Keating Chambers' advice is especially sought by project sponsors, lenders
and contracting authorities and their consultants, all of whom wish to ensure compliance with the
regulatory regime.
Technology
Keating Chambers has specialists with substantial track records in dealing with IT contracts and disputes.
With several of our members possessing science or engineering backgrounds, Chambers is able to handle an
impressively wide variety of IT matters.
Shipbuilding and Marine Engineering
Members’ experience extends not only to vessels destined for the oil and gas industries, such as FPSOs
and jack-ups, but also to ferries, and to cable laying, naval and general cargo vessels. They have
experience of disputes not only in the Commercial Court and TCC, but also under the major arbitral
regimes such as LMAA and LCIA.
Barristers
Paul Darling QC | Professor John Uff CBE QC | Richard Fernyhough QC | Dr Christopher Thomas QC | John Marrin QC | Stephen Furst QC
Tim Elliott QC | Dr Robert Gaitskell QC | Philip Boulding QC | Marcus Taverner QC | Finola O’Farrell QC | Adrian Williamson QC
David Thomas QC | Rosemary Jackson QC | Alexander Nissen QC | Nerys Jefford QC | Sarah Hannaford QC | Simon Hargreaves QC
Richard Harding QC | Veronique Buehrlen QC | Vincent Moran QC | Adam Constable QC | Simon Hughes QC | Marc Rowlands QC
Piers Stansfield QC | Fionnuala McCredie QC | Justin Mort QC | Alan Steynor | Louise Randall | Robert Evans | Jane Lemon | Jonathan Lee
Abdul Jinadu | Paul Buckingham | Krista Lee | Richard Coplin | Gaynor Chambers | Samuel Townend | Gideon Scott Holland | Jonathan Selby
Jessica Stephens | Lucy Garrett | Elizabeth Repper | Calum Lamont | Alice Sims | William Webb | James Thompson | Thomas Lazur
Peter Brogden | Ben Sareen | Sarah Williams | Paul Bury | David Sheard | David Gollancz | Tom Owen | Simon Taylor | Matthew Finn
Door Tenants/Practising Associate Members
Ian Pennicott QC | His Honour Peter Bowsher QC | Professor Michael Furmston | Michael Stimpson | Chin Leng Lim
21
 Strength in depth
Keating Chambers has 57 barristers, 27 Queen’s Counsel, 31 Juniors and five door tenants/
practising associate members.
This means that assistance is available for construction disputes of every type and size, from
a domestic party wall case to a multi-million-pound claim in an oil and gas industry project.

Standing
“Keating Chambers continues to enjoy a strong reputation in the construction industry for
providing all manner of construction law advice and handling a vast array of disputes.
Clients appreciate that its barristers are ‘down to earth, well organised, approachable and
knowledgeable’. Sources also note the set's impressive strength in depth.”
Chambers & Partners 2014 Construction

“A construction set with a terrific track record on energy sector disputes. It is often instructed
on large international projects demanding consummate expertise and the assurance of the
work ethic and commercial perspective Keating Chambers is known for. Its name is
frequently seen in energy matters before the TCC.”
Chambers & Partners 2014 Energy & Natural Resources

“A set with first-rate capabilities on the international stage when it comes to construction
arbitrations. It offers a profoundly broad spectrum of services to clients and its members are
regularly instructed on difficult and significant cases.”
Chambers & Partners 2014 International Arbitration: Construction/Engineering

“A construction heavyweight that houses barristers who regularly handle the most complex
and high-value claims. Keating stands out in this area, with sources noting that ‘on the
construction side, it is the go-to set for TCC work’.”
Chambers & Partners 2014 Professional Negligence: Technology & Construction

“This set continues to enjoy a sterling reputation for its work in procurement, and handles
contentious matters and provides strategic advice to contracting authorities and bidders.
The number of members specialising in procurement matters has grown in the last few years,
and the set is increasing its presence in the area.”
Chambers & Partners 2014 Public Procurement

In September 2009, Keating Chambers won the title Construction Set of the Year at the
annual Bar Awards for the fourth consecutive year, by “excelling in both international and
domestic construction markets”, in the words of the judges’ citation.
In 2011, 2012 and again in 2013 Keating Chambers was again named ‘Construction Set
of the Year’ at the Chambers and Partners Awards.

www.keatingchambers.com

Keating Chambers Tel: +44 20 7544 2600 Providing dispute resolution services to the
15 Essex Street Fax: +44 20 7544 2700
London WC2R 3AA
construction, engineering, shipbuilding, energy,
Email: clerks@keatingchambers.com
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procurement and technology sectors worldwide