Suspension is the penultimate self-help remedy under a construction contract. The ultimate is termination. The two are closely related but both are to be used sparingly and with extreme caution.
A “suspending party” often seeks to suspend works for a reason that would also give rise to a right to terminate. Suspending the works is the less dramatic option, more like suggesting a trial separation rather than admitting that the (contractual) relationship has completely broken down and risk upsetting the other party. Alternatively, suspension is used as the wake up call: a last chance for the other party to realise the error of its ways and change its behaviour.
However, there is no general right in law to suspend performance of a contract because the other party is failing to perform its obligations.
For the client suspending its obligations is usually suspending payment to the contractor. For the contractor, suspending its obligations usually means stopping carrying out the works.
In reality the client rarely needs to suspend. If the contractor has not carried out the works or part of the works, typically by the simple operation of the contract, the contractor is not then entitled to payment for those works it has not carried out.
For a contractor, it is not so easy. Suspending the carrying out of the works might seem the only way to get the client’s attention to resolve an issue but there is no clear statutory right underpinning this action. Therefore, the potential risks associated with suspending works need to be weighed up very carefully.
The danger in suspending performance of a contract is that, should a dispute arise as to the entitlement to suspend, a court or tribunal decides that the suspending party was not entitled to do so. This could leave the suspending party picking up the other party’s costs so incurred by the suspension. Eg damages for delay, and costs associated with making safe the site, costs associated with de or re mobilisation, amongst others.
A similar risk is that a contractor opting to suspend the works actually gives rise to an entitlement for the client to terminate the employment of the engineer/contractor, for example, for failing to carry out the works expeditiously or with due diligence. This could leave the client with a claim against the contractor for the costs associated with the termination including the costs of de and re mobilisation, delay, degradation of the site or materials and potentially loss of income.
Many standard form construction contracts include a contractual right to suspend upon the happening of a certain event, making it a much safer action for a party to take (providing the specified event has occurred). Suspension clauses need to be drafted carefully to ensure they deal with the practicalities of suspension. How long can the works be suspended before termination occurs? What if the event giving rise to the right to suspend is removed or rectified? Which party bares the associated costs and what should they include?
A well-drafted express contractual right to suspend can be a powerful tool. However, all too often in construction contracts in Qatar, the contractual right is removed.