Out-Law Analysis | 30 Mar 2020 | 10:29 am | 3 min. read
The Hong Kong government issued new measures on 27 March 2020 in anticipation of a second wave of the outbreak of coronavirus, officially Covid-19. The measures seek to implement social distancing while striving to maintain the operation of daily business in every sector.
Among other measures, public gatherings of more than four people have been banned. Game centres, gyms, cinemas and other places of amusement and public entertainment are also required to close for two weeks starting from 28 March. Plans to suspend alcohol licences have been scrapped, but restaurants will be made to enact social distancing measures. Workplaces, which by definition include construction sites and industrial undertakings, are expressly exempted.
While the construction industry is not the direct victim of the new measures, contractors and other players in the industry are digesting new guidance on a weekly basis and working hard to protect their staff and keep their businesses operational – and afloat. Considering the speed of developments over the past week and the pressure now building on the government to act 'ahead of the curve', it is possible that the Hong Kong government may be forced into the draconian move of suspending all non-critical construction projects or enforcing a complete lockdown of construction sites.
Contractors should also be prepared that Hong Kong may follow the steps of the UK in introducing a standardised approach on all sites to protect workers and minimise the spread of infection by implementing social distancing.
The Site Operating Procedures recently published by the Construction Leadership Council and Build UK outline measures on construction sites of all sizes in line with the government’s recommendations on social distancing. It states that "sites should remind the workforce at every opportunity of the Site Operating Procedures which are aimed at protecting them, their colleagues, their families and the UK population".
The legal status of the procedures is deliberately vague but there is a risk that a site may be asked to shut down if it is not consistently implementing recommended measures, including the following:
Construction has always been seen as a vital part of the Hong Kong economy, and so will be permitted to continue for as long as possible. In fact, many developers and contractors in Hong Kong have already introduced stringent distancing and hygiene measures to minimise contact, reduce risks and keep everyone safe. However, in the most unfortunate event where a shutdown of construction sites is ordered by the Hong Kong government, contractors should take prompt action to ensure that their commercial positions are protected under different forms of standard contracts.
Outbreak of illness does not fall within the meaning of "excepted risks" used in most of the standard forms that might otherwise have entitled contractors to time or money. However, a number of compensation events under the NEC3 ECC could be triggered by restrictions imposed as a result of the pandemic. Each of the FIDIC Books entitle the contractor to an extension of time and additional money as a result of a change in law covering emergency legislation which affects the contractor in the performance of its obligations under the contract.
Extraordinary times demand different approaches. Pandemics are not the fault of either party. Whether or not they are caught by the mechanics of a contract, parties should engage and cooperate with each other as the situation develops, particularly since health and financial risks have to be managed on a day-to-day basis.