Guidance on the Covid-19 (Temporary Measures) Act 2020 for the construction industry

21 April 2020

1. Commencement of Covid-19 (Temporary Measures) Act 2020

• By way of update, as of yesterday, 20 April 2020, the provisions in the Covid-19 (Temporary Measures) Act 2020 (“Act”) in relation to temporary relief from legal action for inability to perform certain contracts have commenced. Please click here for the press release on the Ministry of Law (“MinLaw”) website.
• This note is a follow-up to our previous client update on “Dealing with Covid-19 in the construction industry: Preliminary views on Covid-19 (Temporary Measures) Bill”, which can be accessed by clicking here, and is meant to serve as a brief guide on the steps that need to be taken for parties wishing to avail themselves of the protective measures under the Act, and information for parties at the receiving end of such measures.

2. Reliefs under the Covid-19 (Temporary Measures) Act 2020 

A party who wishes to avail itself of such temporary relief under Section 5 of the Act must serve a Notification for Relief (“Notification”) in the form of a specific Form 1, to the other parties to the contract and other specified parties in accordance with Section 9 of the Act and Regulation 9(2) of the Covid-19 (Temporary Measures) (Temporary Relief for Inability to Perform Contracts) Regulations 2020 (“Regulations”). This may be done using the electronic system established for this purpose, or in accordance with the modes of service stipulated in Regulation 5 of the Regulations. Please click here to access the Notification on MinLaw’s website. It bears noting that Form 1 requires a notifying party to set out how the inability to perform the contractual obligation (e.g. the inability to complete works by a certain completion date) was materially caused by a Covid-19 event. For example, a notifying party may state that it was unable to continue work on site for the duration of the circuit breaker, and would therefore be unable to complete the works on time and would need (x) number of days EOT upon resumption taking into account remobilisation time and issues. 

• While supporting documents may be submitted with the Notification to substantiate how the Covid-19 event has materially caused the inability to perform the obligation, it is not mandatory for the notifying party to adduce any documents. Form 1 also provides that a notifying party may propose an alternative solution for consideration. For example, a notifying party who cannot pay a full month’s rent may propose to pay rent at a reduced rate instead. If parties are unable to reach a compromise on their own (after a Notification has been served), either party to the contract may make an application for an Assessor’s determination (in accordance with Section 12 of the Act). Please click here for more information about the application for an assessor’s determination on MinLaw’s website.
• Where a party qualifies for relief, and has served a Notification, the other party may not commence or continue any court or arbitral proceedings against the notifying party in respect of the obligations covered under the Notification. In the event that there are pending court or arbitral proceedings against the notifying party at the same time of service of the Notification, or if such proceedings are commenced in breach of Section 5(2) of the Act after service of the Notification, a Memorandum of Notification for Relief may be submitted to the court or arbitral tribunal, to stay or dismiss the proceedings. Please click here for more information about the Memorandum of Notification for Relief on MinLaw’s website. 

We will continue to keep you updated. In the meantime, please do not hesitate to contact us should you require any clarification on the above, or, if you are considering triggering the mechanism for reliefs under the Act.

Further information

Allen & Gledhill has a Covid-19 Resource Centre on our website www.allenandgledhill.com that contains knowhow and materials on legal and regulatory aspects of the Covid-19 crisis.

In addition, we have a cross-disciplinary Covid-19 Legal Task Force consisting of Partners across various practice areas to provide rapid assistance. Should you have any queries, please do not hesitate to get in touch with us at covid19taskforce@allenandgledhill.com.

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