NEC101 – Key Case Law

Michael Comba and Shyann Sheehy examine key case law relating to the NEC suite of contracts, building on the topics explored by their colleagues in this series previously.

How much case law is there?

We are often asked why there is relatively limited case law on the NEC suite. Compared to the reams of case law generated for the JCT, you’ll get limited hits when searching for NEC cases. Its fans will claim that as evidence that its emphasis on dispute avoidance (such as the early warning mechanism) works.

There is probably some truth in that, but the reality is a bit more complicated. Firstly, the NEC is quite young, first being introduced in 1993. By comparison, the JCT, and its predecessors, has been going since the 1890s. There has just been less time for NEC case law to develop.

Its first edition was also closely followed by the introduction of statutory adjudication in 1996 under the Construction Act. The vast majority of construction disputes are resolved through adjudication and the very few decisions (which are not published) are not challenged.

There are however still some cases of use, either on the NEC specifically or on some of its concepts more broadly. Being aware of these cases can help shore up your position when faced with claims and in helping resolve disputes.

What are the key features and challenges of the NEC suite?

In our first installment of this series we explored the key features and challenges of the NEC suite, including the principle of mutual spirit of trust and co-operation, sometimes referred to as the over-arching obligation. Van Oord UK Ltd v Dragados UK Ltd [2021], determined that this is an enforceable obligation for parties to act in good faith. This case demonstrated that parties must take into consideration the overarching obligation in any decision-making role and how that might fetter their discretion to act in their best interests.

Employers may want to consider making amendments to the standard form to exclude the over-arching obligation from certain provisions where it might cut across areas in which they need absolute discretion.

What are the key roles in NEC?

As discussed previously by Peter Jansen, the Project Manager has a key role in NEC contracts and their independence is crucial. The case of Imperial Chemical Industries Ltd v Merit Merrell Technology Ltd [2017] underlined the importance of the Project Manager’s independence and demonstrated that the Employer could not seek to put itself instead in this position if a Project Manager resigns. Here the independent Project Manager resigned after the Employer began requiring sign-off on any revisions of assessments under the contract. The Employer’s approach fundamentally changed the nature of the contract so the independent Project Manager’s resignation was deemed the correct course of action in the circumstances due to the removal of their essential powers.

There are also useful pointers from non-NEC specific cases like Scheldebouw BV v St James Homes (Grosvenor Dock) Limited [2006]. Here the TCC held that a contract administrator (or a similar role) could not be replaced by the client themselves in the administration of trade contracts as this is inconsistent with the obligation of fairness, impartiality and honesty.

How has case law enforced the importance of timing in NEC?

Parties will often be most concerned with how to deal with compensation events and the associated effects on time and money. The provisions of NEC differ from the JCT, particularly in its use of a time bar.

Though not NEC specific, Obrascon Huarte Lain SA v Her Majesty’s Attorney General for Gibraltar [2014] remains a good starting point for those considering time bars. Here it was determined that the contractor was required to notify the Engineer of delays as soon as possible (and no later than twenty-eight days) after becoming aware of the circumstances that gave rise to the delay or they would face the Employer being relieved from liability. Time bars can be enforceable.

Northern Northern Ireland Housing Executive v Healthy Buildings (Ireland) Ltd [2017] gave some guidance in the timing of assessments for compensation events, outlining that assessments should be made prospectively and on a forecast basis as far as possible.

The court has also confirmed that assessments, once implemented, can only be reopened through adjudication (or the tribunal). If referred to dispute resolution, the court (or adjudicator) will be able to open assessments up, but the original assessment will be a key starting point, including on particular items and rates referred to in other compensation events as established in Imperial Chemical Industries Ltd v Merit Merrell Technology Ltd [2018].

These cases underline that only those with proper experience (including matters of quantum) should be appointed as the Project Manager and Employers should secure their obligations with a robust appointment between themselves and the Project Manager.

How does case law help understand the correct procedure for resolving disputes under NEC?

One for the lawyers – but there is a body of case law on the correct operation of the NEC’s dispute resolution procedure. There are several cases on the interplay between arbitration (which is used more frequently in NEC contracts than other forms) and adjudication. For example, Sefton MBC v Allenbuild Ltd [2022] enforced an adjudicator’s decision and rejected an application for stay of enforcement until  the parties completed arbitration.

Greater Glasgow Health Board v Multiplex Construction Europe Ltd and others [2021] also confirmed that the NEC had a tiered format to dispute resolution. Parties must adjudicate first before seeking arbitration or litigation.

Any other advice?

Parties should be reminded that for all of the dispute avoidance intentions of NEC, they can quite easily find themselves in the cut and thrust of adjudication as per other standard forms. Being aware of some of the case law on key provisions will help arm you in any disputes. For more information on the common reasons for disputes, and how to avoid them see our previous article in this series.

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This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any issue raised in this article, please contact us by telephone or email This email address is being protected from spambots. You need JavaScript enabled to view it.