SCCSI - Knowledge Check
NH International (Caribbean) Ltd v National Insurance Property Development Company Ltd [2015] UKPC 37 (Trinidad and Tobago)
This is a module from the Society of Construction Claims Specialists International's programmes.
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The NH International Caribbean case represents a landmark Privy Council decision that provides definitive guidance on critical FIDIC contract provisions. The judgment was delivered by the Privy Council following an arbitration and challenges through the Trinidad and Tobago courts. The contractor succeeded on both main issues, with the Board upholding the termination and establishing authoritative guidance on employer claims procedures, widely followed in Commonwealth jurisdictions. The decision provides essential guidance on payment assurance obligations under Sub-Clause 2.4 and employer claims requirements under Sub-Clause 2.5.
Case Background: The dispute arose from construction of the Scarborough Hospital in Tobago under the FIDIC 1999 Red Book. Following the employer's failure to provide reasonable evidence of financial arrangements, the contractor suspended and later terminated the contract. The employer challenged the termination while asserting rights of set-off against the contractor's claims. The Privy Council upheld the contractor's termination and established that Sub-Clause 2.5 operates as a condition precedent barring employer claims not properly notified.
Key Legal Points: This judgment clarifies the evidential threshold for reasonable evidence under Sub-Clause 2.4, explains that the contractor's suspension right (Sub-Clause 16.1) and termination right (Sub-Clause 16.2) are distinct: they may be used sequentially, but a prior suspension is **not** a prerequisite to termination. Termination under 16.2 is available if, 42 days after a Sub-Clause 2.4 request, reasonable evidence has not been provided and the contractor then gives the required 14-day termination notice, and establishes that Sub-Clause 2.5 applies to any employer claim (including set-off and cross-claims), save for genuine abatement arguments where the work valued is, on its face, worth less. The Board's analysis of condition precedent requirements for employer claims is binding in Trinidad and Tobago and in other jurisdictions where the Privy Council remains the final court, and is widely followed as persuasive authority elsewhere in the Commonwealth.
Case Background: The dispute arose from construction of the Scarborough Hospital in Tobago under the FIDIC 1999 Red Book. Following the employer's failure to provide reasonable evidence of financial arrangements, the contractor suspended and later terminated the contract. The employer challenged the termination while asserting rights of set-off against the contractor's claims. The Privy Council upheld the contractor's termination and established that Sub-Clause 2.5 operates as a condition precedent barring employer claims not properly notified.
Key Legal Points: This judgment clarifies the evidential threshold for reasonable evidence under Sub-Clause 2.4, explains that the contractor's suspension right (Sub-Clause 16.1) and termination right (Sub-Clause 16.2) are distinct: they may be used sequentially, but a prior suspension is **not** a prerequisite to termination. Termination under 16.2 is available if, 42 days after a Sub-Clause 2.4 request, reasonable evidence has not been provided and the contractor then gives the required 14-day termination notice, and establishes that Sub-Clause 2.5 applies to any employer claim (including set-off and cross-claims), save for genuine abatement arguments where the work valued is, on its face, worth less. The Board's analysis of condition precedent requirements for employer claims is binding in Trinidad and Tobago and in other jurisdictions where the Privy Council remains the final court, and is widely followed as persuasive authority elsewhere in the Commonwealth.
This knowledge check covers:
- FIDIC 1999 Red Book payment assurance provisions
- Sub-Clause 2.4 reasonable evidence requirements
- Suspension and termination procedures under Sub-Clauses 16.1 and 16.2
- Sub-Clause 2.5 condition precedent for employer claims
- Privy Council standards of review for arbitral decisions
- Set-off rights and cross-claim procedures
- Evidence standards for financial arrangements
- Employer claims notification and procedural requirements
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