English courts have historically upheld time-bar clauses if they are not strictly followed. These clauses aim to provide certainty and finality, allowing claims to be investigated while events are still recent, giving the employer a chance to mitigate delays or reconsider instructions that led to a claim.
Ordinarily, English courts do not require specific language for a time-bar clause to be effective. In fact, courts have consistently ruled that the wording of time-bar provisions should be interpreted in their “ordinary and natural meaning” (Waterfront Shipping Company Ltd v Trafigura AG). For example, in Steria v Sigma Wireless Communications, a clause requiring a timely notice for an extension of time in an amended MF/1 subcontract was held to be a condition precedent. The contractor’s failure to give notice on time, despite the absence of explicit language, barred the claim under that clause.
Under English law, good faith has limited relevance in enforcing time-bar clauses. Waiver and estoppel can sometimes prevent a party from enforcing a time-bar if they have represented, or it was assumed, that it wouldn’t be applied. Beyond this, and except for specific legislation governing unfair contract terms, English courts typically do not assess the fairness or potential oppression of a time-bar.
Even an express good faith clause is unlikely to affect the enforcement of time-bars. In Costain Ltd v Tarmac Holdings Ltd, a construction contract required strict adherence to time limits for dispute resolution. The claimant failed to meet these deadlines and attempted to rely on a general obligation to act with “mutual trust and co-operation.” However, the English court rejected the argument that this clause implied a requirement to act fairly, stating that good faith obligations did not override the time-bar clause unless the defendant had actively misled the claimant into believing the time-bar would not be enforced.
This interpretation of good faith does not extend beyond the doctrines of waiver and estoppel and does not address unfairness stemming from the strict application of a time-bar clause.
Time-bars in Civil Law Jurisdictions
In contrast, civil law jurisdictions often challenge time-bars based on principles of good faith and rules against the abuse of rights. These norms are considered fundamental and non-negotiable in the civil and commercial codes of many countries. Additionally, civil law courts typically interpret contract provisions more broadly than English courts, considering the overall purpose of the contract and the parties’ intentions.
For example, in an international arbitration case, JV of American and EU Dredging Companies v Red Sea Public Authority, the tribunal found a time-bar clause in a FIDIC 1st Edition contract to be clear and enforceable, as the contractor failed to submit a claim within the required 28 days. However, the tribunal moderated the strictness of the time-bar by considering the parties’ intentions and the principle of good faith, concluding that the clause should be relaxed if the employer or engineer was already aware of the contractor’s intention to claim additional payments.
A recent decision in the Dubai International Financial Centre (DIFC) illustrates the difference between civil and common law approaches. The DIFC operates under its own commercial laws, influenced by English common law and the UNIDROIT Principles. Under DIFC Contract Law, there is an implied duty of good faith and fair dealing (Article 57), as well as a provision allowing courts to reduce liquidated damages that are excessive (Article 122).
In Panther Real Estate Development LLC v Modern Executive Systems Contracting LLC, the DIFC Court found that the contractor’s claims were time-barred due to its failure to issue timely notices under clause 20.1 of a FIDIC Red Book contract. The contractor attempted to rely on the good faith obligation (Article 57) and the provision to reduce liquidated damages (Article 122) but was unsuccessful. The court held that the obligation of good faith did not override the express terms of the contract, and the reduction of liquidated damages was not applicable since the damages were tied to the failure to complete the project on time, not the contractor’s failure to issue notices.
This case demonstrates the DIFC’s strict interpretation of time-bars, aligning closely with English law rather than the more flexible civil law approach.
Conclusion
The enforcement of time-bar provisions still leave a significant divergence between common law and civil law jurisdictions.
The case of The Panther Real Estate is a case that clearly highlights this divide, with the DIFC’s common law background prevailing over the civil law-inspired contract provisions. It should be noted that contractors and employers that are working on international projects should always carefully consider how the governing law approach time-bar provisions, especially as the civil law jurisdictions may allow more flexibility in their interpretation than the strict enforcement typical of common law systems. Adjusting the time-bar clauses or governing law in contracts may help align legal expectations with project realities.
Please note. The information provided on this website is NOT LEGAL ADVICE and is for information purposes only. No action or inaction should be taken due to this information, or any reliance placed upon this information. Please note where legal advice is required this should be obtained by an appropriate qualified legal practice and no information provided within this website should form the basis of any legal, contract, or commercial decision. K J Taylor Consulting Ltd. is a commercial quantity surveyor and not a construction legal advisor.
