Netherlands

1. Is there construction-relevant COVID-19 regulation?

No, under Dutch law there is no construction specific legislation or regulation regarding COVID-19 in specific at his time. Whereas other sectors have been closed (“locked”) down and people are strongly being encouraged to work from home, it is acknowledged that this does not apply to- and work for the construction industry. Certain safety measures are being taken on site by all contractors, in order to prevent the spread of COVID-19 in line with the Dutch authorities’ recommendations.

2. Subsidies and other government support for employer, contractor and other involved parties? (generic, high level only).

The Dutch government is offering compensation for those industries and businesses affected by COVID-19. It may be possible – depending on the circumstances - for parties to make use of the Entrepreneur Financing Guarantee scheme, request an interest discount, request a relaxation for deferral of tax payments, whilst employers may be eligible for a temporary arrangement with regard to wage compensation. However, unlike other industry sectors the construction sector has not been closed yet, and it will probably be more difficult for the contractors to call on this financial aid.

It is not yet certain whether the outbreak of COVID-19 justifies invoking force majeure or unforeseen circumstances, as it not readily granted under Dutch law as a general principle. It will very much depend on the specific circumstances and the agreed commercial terms and conditions. In the event the branches specific terms such as the UAC 2012 (UAV 2012) or the UAC-IC 2005 (UAV-GC 2005) apply, the contractor may be entitled to claim an extension of the term and/or compensation for the cost-increasing circumstance following the outbreak of COVID-19. If for instance foreign (sub)contractors leaf a Dutch site to return to their home country in fear of not being able to return home at all, that is – understandable as it may be - by choice and may not justify invoking force majeure and the (sub)contractor may be in breach of contract. If, however foreign (sub)contractors are not allowed to enter the Netherlands, then that may very well justify invoking force majeure.  

4. Does the Epidemic give rise to termination rights to either party?

Assuming the Epidemic qualifies as Force Majeure, yes, but this remains to be seen. The Employer may choose to limit, simplify or terminate the work by the outbreak of COVID-19, for example instead of reimbursing cost-increasing circumstances to the contractor. Under Dutch Law the Employer may always – subject to contract amendments - terminate a construction agreement in an unfinished state.

5. Do the measures currently being taken in relation to the Epidemic amount to change in law? What are the price and time consequences?

In the Netherlands, no overall lock-down is in force. The measures that currently apply do not (yet) directly address the construction industry. It cannot be ruled out that further and stricter measures will be taken by the Dutch government, but the current situation does not lead to a change in (construction) law.

6. Are there any other issues relevant to COVID-19 the construction industry should be aware of?

The consequences of COVID-19 depend in particular on what the parties have agreed upon and whether the parties have contractually envisaged such a situation. Furthermore, the consequences depend on whether, for example, the UAV 2012, the UAV-GC 2005 or FIDIC 2017 have been declared applicable to the agreement.

Jeroen-Berlage-CMS-NL
Jeroen Berlage
Partner
Amsterdam