WF_Brexit

Projects & Construction – Top 5 Issues (23 Dec 2020)

Brexit will have a significant impact on the projects and construction sector. The key legal issues likely to arise are as follows:

  1. Changes in law and regulation - EU and Irish laws applying to projects and constructions in Ireland may change in a manner so that there is no longer equivalence under UK law. The implications for existing projects under the changes in law provisions in existing bespoke and standard industry form construction, public sector and PPP contracts need to be carefully reviewed. Contract drafting and negotiation in connection with future works and services agreements will need to carefully consider how risk allocation and the related consequences are managed for changes in law arising from Brexit.   
  2. New or increased tariffs, taxes or import duties and currency fluctuations impacting  construction materials, equipment and specialist design services - Ireland imports a significant quantity of construction materials, equipment and specialist design services through the UK. In that context, increased tariffs, fluctuations in currency, changes in taxes and friction related to trade of and increased costs in construction materials, equipment and/or specialist design services could have significant increased cost for construction projects. It is a key concern for those involved in construction projects in Ireland. This issue will need careful consideration in risk allocation and contract drafting as to who will bear such additional costs.
  3. Risk of Irish and UK construction industry standards diverging - Irish construction industry standards have been closely aligned with the UK in many respects. This is because both jurisdictions had implemented EU-wide standards or adopted similar standards to each other. An example of this is in area of construction products, where both countries have adopted the EU Construction Products Regulation (CPR) which laid down harmonised rules for marketing of construction products in the EU. The aim of the CPR is to ensure free movement of construction products across EU Member States. It also creates greater certainty in the quality and safety of construction product standards. Under the CPR, CE marking is mandatory for all construction products placed on the market in the EEA and covered by a harmonised European product standard. This has now become a requirement of the Irish building control regime. However, if the UK decides not to retain certain harmonised construction product standards or other industry standards, Irish businesses will no longer be able to rely on similar protections being in with UK suppliers. Separately, where design professionals rely on UK design standards such as BS standards in the design and specification of works and buildings, these will now need to switch to equivalent Irish/EU standards. Similarly any certification regimes and product guarantees with a UK basis will need to be moved to Irish/EU certification standards and agencies. Contracts will need to be appropriately updated.
  4. Project Programme Delay: Time and Cost Consequences - Increased red tape and import restrictions on construction materials and equipment could create supply chain difficulties, programme delays, leading to potential failure to hit key project milestones such as dates for completion, end user occupation and funding drawdown dates. This could result in significant increased costs for construction project delivery and could create potential breach or frustration issues under project agreements and any related real estate and funding contracts, leading ultimately to potential termination events. This issue will need to be carefully addressed in risk management planning, contract drafting, programme management and mitigation measures.
  5. Availability of Key Personnel and Labour - Restrictions in movement of people which is Brexit related could have implications for availability of key personnel and labour, particularly in the context of projects with workforces comprising personnel from both Ireland and the UK.  In particular, different movement and quarantine restrictions between the UK and Ireland arising in the context of necessary public health measures due to Covid-19 is already creating challenges for construction projects in Ireland.  Additional Brexit related restrictions on freedom of movement of construction workers could lead to availability issues for key personnel and labour. This is turn would impact resourcing and programme obligations required under contracts and at law, particularly under health and safety and building control regimes. 

Contact:

Cassandra_Byrne_Brexit
  

Jarleth_Heneghan_Brexit

Cassandra Byrne
Consultant

Email Cassandra
+353 639 5206

 

Jarleth Heneghan
Partner

Email Jarleth
+353 639 5252