Access is fundamental to the successful execution of a construction project. However, in the event of a construction dispute, insufficient thought is often given to the access required to successfully prosecute or defend a claim.
The "access" required in these circumstances is not access to the project site, but rather access to:
- project-related documentation (including, communications and digital records); and
- key project personnel.
Given the fluid nature of the modern workforce and the increased reliance on digital record keeping, it is this access that parties to construction projects often neglect to secure – to their disadvantage in the event of dispute.
In this article we explore the issues that you should be aware of and offer practical and legal solutions to help construction parties avoid this increasingly common pitfall.
Access to documentation
Good documentation and record-keeping is critical to success in any construction dispute. Without contemporaneous project records, there is limited evidence upon which to advance or defend a claim and, therefore, a reduced chance of a positive outcome. In addition, reconstituting poorly-organised project records is a time consuming and costly exercise.
When a construction dispute occurs, one of the first things that your legal advisor will ask is "where are the contemporaneous project records?" In our recent experience, this question is becoming harder for construction companies to answer.
Commonly-used standard form construction contracts anticipate an electronic transmission system which captures written project communications, including instructions and notices, produced during the life of the project (see for example Clause 1.3 in the FIDIC 1999 suite of contracts which anticipates if agreed, that all communications shall be transmitted by an agreed system of electronic transmission). In practice, given the volume of information being exchanged, these electronic systems are often difficult to administer and can become poorly organised.
Project documents and records
In addition, contractors are typically obliged to maintain certain project records and regularly issue progress reports during the execution of a project. However, in reality, the way that project records are created and maintained has changed significantly over the last 10 to 15 years. Increasingly, project records and information are being created, shared and stored in a digital format and on digital platforms (often cloud-based).
In the Middle East construction market, it is common for projects to be executed on the basis of standard form contracts (primarily the FIDIC 1987 and 1999 suites). These forms of contract do not include a detailed framework for managing and controlling digital project records. As a consequence, this information is not always captured in a centralised project database and often falls within the carriage and control of individual employees, saved on personal laptops or is exchanged and captured in personal email accounts.
Moreover, with the proliferation of camera equipped smartphones, digital note-taking devices and informal instant messaging (e.g. WhatsApp), a significant body of contemporaneous project documentation and evidence is being produced by (and stored on) employees' digital devices.
By way of further example, we have recently been engaged on matters where clients have been unable to locate full execution copies of contract documents. These examples demonstrate that the issue of access concerns even the most fundamental project records.
Access to personnel
These developments in technology are coupled with the fact that people are now far more fluid in their employment. This is particularly the case in the UAE where, on average, members of the expatriate workforce remain with the same employer for less than 4 years. Construction companies' workforces are often therefore in a state of flux, with key personnel regularly joining or leaving projects and the company itself.
Access to project personnel is critical to success in a construction dispute and, at the outset of any dispute, your legal advisor should be asking "who was involved in the project?" and "can I speak to those people?"
Project personnel provide the background to the events that are in dispute. They will be the factual witnesses. They often fill the gaps that the contemporaneous documents cannot and, typically, their 'story' (in the form of a witness statement) and their oral testimony provides the colour and detail behind the facts of the case. This is, of course, an extremely important part of persuading a court or tribunal as to the merits of your position.
In the Middle East, "final account" disputes are common, typically these concern projects completed three or more years previously. As a consequence, in many cases, the relevant project personnel are likely to have moved on to new roles or possibly left the region entirely. Companies will therefore often face the costly and time-consuming exercise of locating key project personnel and attempting to encourage them to provide the required level of assistance.
This can prove particularly difficult when the employee in question has moved on to a competing company or if a good relationship between the construction company and the former employee has not been maintained. In such circumstances, if access can be arranged (and this is never certain), the services of the individual in providing key evidence will often be subject to a hefty retention fee.
Practical measures to ensure access
Robust internal processes for record-keeping are critical – parties must implement these and ensure that they are followed throughout the duration of the relevant project. In particular, construction companies should focus on:
- Centralised digital database – maintain a centralised project database of digital information produced during the execution phase of the project. Ideally, this should be chronologically organised and word searchable.This database should be maintained until after all project accounts have been settled;
- Retention of hardcopy and digital information – ensure protocols and processes are put in place to retain project records as it is ongoing, and once a project is complete;
- Recovery of digital records held by employees – at the end of a project, or when an employee leaves the company, ensure information held on laptops / tablets / other mobile devices / hard drives is transferred and retained on a central project server; and
- Retention of employee records – retain a register of personnel engaged (with their specific roles) throughout the duration of a project. Maintain records and contact information for ex-employees as they leave your employment.
There are also legal steps construction companies could take to help increase their control over and access to project records, information and personnel. In particular, companies should incorporate well-drafted express terms in employees' contractual documentation including:
- Obligations to keep the company's information secret which apply during the employee's employment and after its termination;
- Express reporting obligations which require employees to inform the company if they become aware or have reason to believe that there has been an unauthorised disclosure of the company's information;
- Sufficiently clear garden leave provisions which will help companies to better control the activities of its employees during their notice periods;
- An obligation on employees to return all company property (including confidential information) which is in their possession or under their control to the company on the termination of their employment;
- Post-termination restrictions (e.g. non-compete clauses) which are permissible under UAE law provided that they are reasonable in terms of scope, territory and duration;
- An obligation not to destroy any documentation (whether in hard or soft copy) belonging to the company or relating to its business; and
- An obligation on ex-employees to provide assistance in respect of any legal proceedings relating to a project with which the employee was involved during their employment.
In our experience, including more rigorous terms in an employee's contractual documentation is more likely to encourage the employee to engage and assist their current or former employer in the event of a dispute.
Access to project documentation and personnel is critical in the event of a construction dispute. Increasingly, this has become a significant issue facing those engaged in disputes to resolve their final accounts. In the complex modern construction environment, access to documentation and personnel is not certain unless appropriate preparatory steps are taken.
Thankfully, there are a number of straightforward, practical and legal steps you can take to facilitate access. In our experience, taking these steps to secure access upfront will ultimately save significant costs and fundamentally enhance your ability to advance or defend claims in the event of a dispute.