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NEC3 ECC: Who is obliged to notify a compensation event for an X2 change in law?

+2 votes
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Under clause X2 'Change in Law', does the 8 week time limit apply to a contractor raising a Compensation Event? The text and guidance around the respective roles and actions of the Project Manager / Contractor is not clear.

I would like to know if the PM can enforce / reject a CE for a change in law, when the law (event) happened 14 weeks previous, or is this one that the Contractor is not time barred for (i.e. within 8 weeks of becoming aware).

X2.1 states that Project Manager may notify the compensation event and request a quote, but makes no mention of the Contractor. Clause 61.3 says that the Contractor notifies a compensation event if they believe it is one and the PM has not. It goes on to say they can not claim any time or cost if they have not notified within 8 weeks unless the "event arises from the Project Manager or the Supervisor giving an instruction, issuing a certificate, changing an earlier decision or correcting an assumption".

Given that none of the exceptions seem to be valid it would appear that Contractor would therefore be time barred if they have not notified that a compensation event within 8 weeks? If that is indeed the case, the next question would be does the 8 week time-bar commence from when the law was passed, or from when they became aware that the Law would actually have an affect (which could very conceivably be different times)??
asked Feb 28, 2015 in NEC3 Secondary X, W & Y options by CM  
   

1 Answer

+2 votes
CM - you are quite right that change in law does not fall into one of the exceptions to the time bar at 61.3. Therefore it remains the Contractor's obligation to notify (X2.1 only says the PM "may" notify) and if it doesn't then it loses the right. In principle I have no problem with this, the Contractor should carry the risk of legislation impacting his work.

The timing for notification is a bit more tricky. The 8 weeks starts from becoming aware of the event. I suggest that the date of knowledge, given that all changes in law publicly available, is the date the legislation is given an operative date, even if that operative date is still in the future. Knowing that there is going to be a change in legislation is not in itself enough (although I would suggest that an Early Warning would be appropriate and would help to keep a track of the legislation)

So, if on 1 January an Act of Parliament is passed coming into effect on 1 April the 8 weeks starts in January and will be finished before the legislation is actually in force. In the legislation is passed on 1 January but with no commencement date, to be issued perhaps under a Statutory Instrument, then the 8 weeks will not start until the commencement date is announced. I suggest that is correct because without the commencement date it would be a practical impossibility to say what the impact of the change in legislation will be.
answered Mar 2, 2015 by Rob Horne (9,570 points)