Law and regulation of concurrent delay in Germany

Under German law concurrent delay is a question of causality. Thus, the general principles of legal causality, including the concept of concurrent causality (konkurrierende Kausalität), apply. The concept of concurrent causality and the rules applicable to it have been developed by extensive case law and literature. However, there is no jurisprudence on the specific application of these rules to construction related delay scenarios, i.e. to concurrent delay. Further, the German standard construction form contract, the VOB/B, does not include provisions dealing with concurrent delay and it is also not common to include such provisions into construction contracts.

Thus, while the case law on causality provides certain guidance, the specific assessment of the prerequisites and consequences of concurrent delay has been left to legal scholars, which have developed a number of possible solutions. However, in absence of statutory law and jurisprudence, there is not the one correct answer

Based on the definition of concurrent causality generally accepted under German law, concurrent delay is most commonly defined as parallel but independent contributions to causation, i.e. concurrent delay occurs were there are two causes, one arising from the sphere of the employer and one from the sphere of the contractor, each of which lead to the delay independent of the other.

Under this definition, it is not relevant whether the two causes took effect at the same time or whether one of them took effect before the other. Similarly, the causes' duration is irrelevant. Rather, the relevant time period of concurrent causality/delay is the period during which both causes were effective.

As stated above, it is generally accepted that concurrent delay is a question of causality and that it must therefore be resolved in accordance with the principles developed for the resolutions of concurrent causality. In addition, the resolution of situations of concurrent delay is aided by the general statutory rules on performance, default and liability contained in the German Civil Code (Bürgerliches Gesetzbuch).

In German legal literature, three possible solutions for a contractor's entitlement to extension of time in concurrent delay scenarios are discussed:

• Under the first solution, the contractor is entitled to an extension of time for the full duration of the concurrent delay. This solution is based on the notion that pursuant to § 286 (4) German Civil Code the contractor is not legally in default as long as the employer sets an additional cause for the delay which would anyhow prevent the contractor from performing the works.
• Pursuant to the second solution, the contractor is entitled to a reduced extension of time apportioned pursuant to the parties' respective contribution to the concurrent delay. This solution is based on an application of the principle of apportioning legal liability according to causation as stipulated in § 254 German Civil Code.
• Under the third solution, the contractor is not entitled to any extension of time for the period of the concurrent delay. This is based on a strict application of the conditio sine qua non formula, which defines that a party is responsible for a result if it has set a cause without which the result would not have occurred.

While there is no case law providing a definitive answer which of these three solutions is to be followed, the first solution is preferred by the majority in legal literature. In contrast to the other two solutions, it is fully in line with the German statutory provisions and case law on causality and provides clear-cut results.

There are no statutory rules or jurisprudence regarding specific causes of concurrent delay.

With regard to the contractor's entitlement to additional payments for periods of concurrent delay, two possible solutions are discussed in German legal literature:

• Under the first solution, the contractor is not entitled to prolongation costs or damages as a result of the concurrent delay. This result is either based on § 297 German Civil Code, pursuant to which the employer is not legally in default of its duties to accept performance and cooperate with the contractor as long the contractor is itself not ready to perform the works. Alternatively, this is based on a strict application of the conditio sine qua non formula.
• The second solution provides the contractor with a reduced claim for prolongation costs or damages which is apportioned pursuant to the parties' respective contribution to the concurrent delay. This solution is based on an application of the principle of apportioning legal liability according to causation as stipulated in § 254 German Civil Code. 

While there is no case law providing a definitive answer which of these two solutions is to be followed, the first solution is preferred by the majority in legal literature. If based on the rules on default pursuant to § 297 German Civil Code, it is fully in line with the German statutory provisions and case law on causality and provides clear-cut results.

German courts will generally appoint experts to assess and give evidence on the causes and periods of delay. These experts will receive their instructions from the court and most often the court will draw up their instructions, including the questions to be answered by the experts. While not commonly done, courts may also consult with the parties before phrasing their questions to the experts.

In addition or rebuttal to the court appointed experts, parties may provide opinions of party appointed experts. While these opinions constitute formal evidence, courts generally perceive them as less neutral and award them less weight compared to the opinions of the court appointed experts.

There is no general defined standard for the calculation of critical delay and resulting costs. However, the common method applied by experts and accepted by courts is a three step analysis (Soll'-Methode):

1. Determination of the contractual time schedule (as-planned schedule).
2. Determination, documentation and analysis of the delay events.
3. Incorporation of the delay events in the contractual time schedule and determination of their effect.

This three step analysis shows how the as-planned schedule changed due to the different delay events. The result obtained is a theoretical as-built schedule providing a new theoretical total construction time, which provides an estimate of the delay events' overall effect. For it to constitute sufficient evidence before courts, the schedule has to directly allocated costs and delays to certain causes. As such, the expert analysis is required to have a high level of detail, which poses a considerable threshold for successful claims.

Pursuant to § 287 German Code of Civil Procedure (Zivilprozessordnung) courts are allowed to estimate, inter alia, the effects of delay events. Such an estimation is possible if the responsibility for a delay event is clearly allocated, the effect is probable and there are sound indications on which the estimate can be based. However, as these prerequisites are interpreted narrowly by the courts, this provision is seldom applied in practice.

Parties to a construction contract are generally free to agree the terms to govern their contractual relationship. The limits are provided by mandatory laws, including the law on standard terms. While there are no mandatory laws preventing the parties of a construction contract from assigning the risk of concurrent delays to either the contractor or employer, such a provision may be problematic if included in standard terms.

The statutory provisions on standard terms are included in §§ 305 et seq. German Civil Code. In international comparison, these provisions, and particularly the related case law, are very strict. 

The law defines standard terms as contractual terms that have been drafted for a multitude of contracts and which one party presents to the other party. The courts' interpretation of this definition is very broad. For example, a sole clause which has been specifically drafted and negotiated for a previous contract and is then copied into a second contract by one party will regularly be considered a standard term.

Generally, standard terms are held invalid if they lead to an unreasonable disadvantage of the other party. This is assumed by the courts in two constellations:

• if a term is not compatible with the basic principles of the statutory provisions from which it deviates, or 
• if a term restricts the essential rights and duties resulting from the nature of the contract in such manner that the purpose of the contract is jeopardised.    

There is no relevant case law on the validity of standard terms dealing with the risk of concurrent delay. Nevertheless, the general jurisprudence on standard terms suggests that a clause that puts the full risk of a concurrent delay on either of the parties and releases the other party from all liability may well be invalid.

Accordingly, a party wishing to incorporate a term on the risk of concurrent delays into its construction contracts should take care that the term is either not a standard term or, were it is, that the clause does not unreasonably disadvantage the other party in the meaning of the laws on standard terms.

An event that is at the Contractor’s risk under the contract (a “Contractor Risk Event”) will result in five weeks delay to completion, delaying the contract completion date from 21 January to 25 February. Independently and a few weeks later, a variation is instructed on behalf of the Employer which, in the absence of the preceding Contractor Risk Event, would result in delay to completion from 1 February to 14 February.

7.1 Is the Contractor entitled to an extension of time in respect of the variation? If so, for how long?

If applying the preferred solution for concurrent delay under German law set out above, the described scenario would be solved as follows.
The relevant time of concurrent delay is the time during which both causes of delay, i.e. the Contractor Risk Event and the Employer's Variation, are effective. This are the 14 days from 1 to 14 February. 

Since the Employer was not ready to receive the Contractor's performance during this time, the Contractor is not in default of its performance. Pursuant to § 286 (4) German Civil Code this consequence is independent of whether the Contractor could or, as presently, could not perform itself. Thus, the Contractor is in default of performance from 21 January to 1 February and from 14 to 25 February, but not for the time in between. As a result, the Contractor is entitled to an extension of time of 14 days for the time from 1 to 14 February as it is not legally at fault regarding this delay.

7.2 Assuming the Contractor is contractually entitled in principle to recover delay-related costs relating to the variation, for what period (if any) could it recover those delay-related costs?

However, since the Contractor was itself not ready to perform its duties under the contract during these 14 days, pursuant to § 297 German Civil Code the Employer is also not in default of its duties to accept performance and cooperate with the Contractor. Hence, the Employer is not required to reimburse delay-related costs to the Contractor for the time from 1 to 14 February as the Employer is not legally at fault regarding this delay either.