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NEC ECC: BREXIT (X2)

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If and when Brexit happens on 29th March 2019, will this constitute a change in the law in accordance with X2 and therefore a compensation event?

And if so, how should you go about forecasting the effect of the compensation event upon Defined Cost?
asked Feb 7 in General by philjbrady (580 points)  

1 Answer

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Sorry I must have missed this - is something happening with Europe????



I have just sent Theresa an early warning to say that this could cause some issues and just waiting for her to confirm a day/time for the early warning meeting but she said she was a bit busy at moment.



I don't think that Brexit itself (if it happens as you say) itself will be a CE. However, individual changes in law/legislation that affect the project would and they will be assessed on their own merits as and when.

As an aside - i saw this week my first Z clause where a client had actually introduced an extra reason for a CE in 60.1 as being the potential departure from the EU as a compensation event.
answered Feb 7 by Glenn Hide (68,990 points)  
I've seen similar Z clauses being put into contracts recently to protect contractors from the effects of Brexit. They need to be very carefully drafted as a contractor is only entitled to recover Defined Cost (as defined in the Schedule of Cost Components) plus Fee, it's possible that some costs may fall outside the definition of Defined Cost and drop into Fee which will effectively reduce the contractor's margin. This is particularly relevant to contractors who are based outside the UK and those who import resources from the EU.