In any economic downturn, there is usually an increase in the number of demands made throughout supply chains and in particular by owners / employers on project securities (e.g. for performance issues, upon termination or following insolvency) and the recent global economic slowdown caused by the coronavirus pandemic is no different.

While I am a supporter of the Minimum Financial Requirements (MFR) for contractor licensing, I have also previously pointed out their limitations.

Many things have changed during the Covid-19 lockdown. Additional time with family and time to catch up with things I wouldn’t otherwise have had time to do are two of the main benefits I have enjoyed. Being a rather boring lawyer, one guilty pleasure I have indulged in is watching transmissions of Supreme Court hearings.

A recently published decision from the Technology and Construction Court, which examined the widely debated issue of whether companies in liquidation can adjudicate, could have increasing significance over the coming months in light of the Covid-19 pandemic.

Can a company in liquidation adjudicate? Balfour Beatty Civil Engineering Limited & Anor v Astec Projects Limited, or what happens when an irresistible force meets an immoveable object?

“Art is born when the temporary touched the eternal; the shock of beauty is when the irresistible force hits the immoveable post” G K Chesterton

There have been debates for years about the pros and cons of owners withholding retainage (usually 5% or 10%, depending on each state’s retainage laws or local “industry standard”) from prime contractors. Typically, the primes will, in turn, withhold retainage from all subcontractors. However, in these crazy times, when the future of private and public projects is unknown and profit margins are in question, it might be a good time to revisit this issue.

We have previously reported on the developing area of adjudication by insolvent companies, now the subject of another key judgment. In Balfour Beatty Civil Engineering Limited and Astec Projects Limited (in liquidation) [2020] the Technology and Construction Court (TCC) has provided a further clear example of the type of strict conditions that will need to be satisfied to enable such adjudications to proceed.

It is perhaps an inevitable result of the current global pandemic that employers, main contractors and subcontractors alike will be dusting down the guarantees they have been given, or provided to others, in respect of their ongoing projects. For those who have been given them they need to establish what security those guarantees actually provide and, perhaps as importantly, how quickly they will pay out.

“Your Courage, Your Cheerfulness, Your Resolution; Will Bring Us Victory” – Ministry of Information, 1939

The phrase “unprecedented times” seems to crop up in almost every recent article and news report and there is no doubt that it is a true statement. It is therefore rather nice that some things are reassuringly the same. This is true of my recent experience of advising on a number of adjudications, in this period of lock-down.

However, for this to happen it will require the licensing regime to embrace new thinking.

For several years I have been advocating for unique thinking to apply in respect of how the licensing regime should address situations where contractors are experiencing financial distress or are insolvent.