Interview with Roger Harwood

What effect has the COVID-19 pandemic had on the construction industry, particularly in relation contractual tensions and disputes? 

Inevitably, it has led to some tensions and disputes (or potential disputes) arising as a result of delays to work and schedule. That in turn has resulted in a broad range of legal and contractual issues to manage and related risks to mitigate, from the likes of force majeure, liquidated damages and health and safety (for example the implementation and management of quarantine procedures for our large offshore workforce). It has impacted the entire supply chain, from the client down to all tiers of sub-contractors. 

How important has better communication between construction project stakeholders been in light of the difficulties created by the pandemic? 

Good communication has always been critical.  Firstly in terms of developing a successful and effective relationship with your counterparty, whether it's the client or your sub-contractor. And secondly, in terms of managing legal risk, where accurate information and understanding is key. It is interesting that communication has in some ways been made easier as a result of the pandemic, just by virtue of the ease and frequency with which we now have virtual meetings irrespective of where in the world we happen to be. That of course doesn’t replace the benefit of having a meeting in person on occasion and it will be good to get back to having the ability to do that again, hopefully sooner rather than later. 

What kind of pressure has the COVID-19 crisis put on contract management and how have you responded to this in terms of seeking external/additional help, including legal advice? 

It has meant being extra alert to potential issues, being ahead of the game and anticipating what might be around the corner. And to that extent seeking expert advice in certain cases has been useful. What I’m looking for are initial thoughts on the merits of our position, what the level of risk is, and what potential mitigations can be put in place to manage those risks. It helps me as general counsel to strategise in terms of what a good outcome might look like. This allows me to clearly articulate the level of risk and a plan of action to my management and board. 

What additional value do you get from external legal advisers in these situations? 

The value comes from dealing with someone who is well experienced in your particular sector, who knows the business and knows the players. It's having access to someone that can advise on the legal position, but who also understands the environment in which we’re working and therefore can be commercial and work together with me in developing a realistic strategy and approach.

In dealing with contract tensions and potential disputes, how can the industry improve? 

There’s absolutely no question that keeping good records is fundamental. I think that penny has dropped across the industry in recent years. It can prevent disputes from arising in the first place or at least enable you to put your best foot forward when in a full-on dispute process. There’s really no excuse today for not having a robust contract management system in place given recent advancements in technology and the plethora of IT products on the market. We have ourselves recently invested in and implemented an AI contract management solution. 

What is your view on addressing points of contract tension or dispute during the course of a project, or dealing with them towards or at the end? How has this approach been affected by COVID-19 factors? 

Dealing with things at the end of the contract may have worked back in the day when things were done on a handshake. But volatility in oil prices over the years in particular have made things inevitably more litigious, right across the supply chain. I’d be surprised if there were many companies left that were willing to leave material legal or commercial issues to be resolved at the end of a project. It's a significant risk to take. 

What is your view on seeking legal advice during the course of a project to prevent conflict points that might lead to a large dispute or major disputes at the end of the contract? 

We use a range of external counsel on different matters based on their particular experience and depending on the type and governing law of the contract and where it is being performed. My approach is very much to instruct individuals based on their particular expertise. Throughout the course of a project, it can be very useful to have someone on the end of the phone with the right experience and commercial approach to act as a sounding board. 

What is your view on arbitration as a form of dispute resolution? To what extent is the arbitration process more appealing to you than it used to be? 

Arbitration continues to be a meaningful option depending on the nature of the contract and other variables. With some arbitration venues now offering expedited hearings or interim awards, it is arguably becoming even more of a preferred dispute resolution solution. 

What other forms of dispute resolution are attractive to you and do you see newer resolution methods emerging? 

There’s definitely a place for alternative dispute resolution, again depending on the nature of the dispute. I have for example used expert determination in the past to bring about an early resolution of a dispute. It can be particularly effective when parties are prepared to take a step back and look at things more commercially.