NEC ECS: Company Insolvency / Liquidation

What happens if a Subcontractor, who was procured as a result of an instruction from the Client, becomes insolvent or goes into liquidation? Is the Contractor entitled to claim any costs that may incurred back from the Client?

Similarly, what happens if a Subcontractor goes bust who have been engaged through the Contractor’s own procurement process? Is this then a Contractor risk?

The contractor will always be at risk for his own supply chain whether that arises from contract work or a compensation event (see clause 26.1).

The NEC does not recognise the use of a “nominated subcontractor”. However, a requirement to use a specific person or company may become part of the Works Information (Scope) as a constraint of Providing the Work in which case a change in that requirement could give rise to a Compensation Event. A lot of “ifs” there I am afraid as it will depend on the circumstances if you want to avoid the clear wording of 26.1.