Suspending construction: When progress comes to a halt
A tale of legal implications and practical tips.
Ever since Senator David Umuahi assumed the role of Minister for Works in Nigeria, he has been on a mission, inspecting federal government construction projects with a keen eye. Today, we plunge into the captivating tale of one such visit - a story of swift and decisive action, where progress came to a sudden halt, setting off an intricate suspension saga that reverberated through the East-West Road Section 11 construction project.
This pivotal moment unfolded on 20 September 2023, during an inspection of a 54km road in Bayelsa, Nigeria, known as East-West Road, Section 11. The Minister of Works made a critical decision, ordering an immediate stop to the work leading to the need for a comprehensive review due to a perceived dip in project quality. In this article, I explore the minister's directive, its legal context, and the practical consequences for both Employers and Contractors involved in construction projects.
Work Suspension: The Emergency Stop
The minister's directive signifies a suspension of work, a powerful tool often used by employers or their engineers. It is like an emergency brake applied when a contractor breaches the contract, endangering the project’s quality. Breaches, especially those affecting work quality, can trigger this suspension.
The Written Word's Power: Making Orders Official
Now, here is where it gets interesting. Does the minister’s spoken word hold water within the contract? Well, it depends. Standard forms of construction contracts used in Nigeria, like the Federal Ministry of Works Standard Conditions of Contract (Roadworks) 1999 edition (FMOWC), demand that the engineer issues a suspension notice in writing to the contractor to formally suspend work. Clause 40(1) of the FMOWC states that “the Contractor shall, on the written instructions of the Engineer, suspend the progress of the works...” If this clause is in the contract, the minister's verbal order might need a written confirmation to become legally binding.
Navigating the Suspension Effectively
When work is rightfully suspended due to the Section 11 contractor’s defaults, there are consequences. The contractor might lose the right to claim payment for extra costs or ask for more time to fix the issues listed in the suspension notice. This rule is provided in contracts like FIDIC and FMOWC. In such cases, the Section 11 contractor must foot the bill and get things back on track within the original project timeline. Failing to act promptly could lead to delays, possible liquidated damages, financial claims or even a contract termination by the federal government.
To sail through this storm, the Section 11 contractor must quickly address the issues mentioned in the suspension notice and inform the project engineer. But what if the contractor has resolved the issues in the suspension notice, and yet the federal government drags its feet on lifting the suspension? In such a scenario, the Section 11 contractor will be entitled to additional payment and extension of time for the engineer's delay. The case of Sarasota County Florida v. Southern Underground Industries, Inc. (County v. SUI) serves as a real-life example to illustrate this principle.
Sarasota's Construction Tale (County v. SUI)
A contractor called Southern Underground Industries, Inc. (SUI), was tasked with installing a force main pipe and water transmission line beneath the intracoastal waterway. All was well until a homeowner nearby raised concerns about vibrations from the work damaging his home. On that very day, the county issued a stop work order under the contract to address a safety issue, a seemingly reasonable move.
But the plot thickens. SUI got an engineer's report stating that the damage was purely cosmetic, and the vibrations were within acceptable limits. The homeowner declined the SUI’s offer to make amends. Yet, the county kept the suspension in place, despite compelling evidence. The county however restarted the works after 93 days had passed from the date the homeowner first contacted the county, and 71 days had passed since the issuance of the engineer's report declaring the damage cosmetic.
SUI, feeling the financial pinch of this prolonged suspension, sought compensation for extra costs and time extensions. The trial court ruled in their favour, awarding them a substantial sum of $638,794. Why? Because the xounty had wrongly extended the stop work order. This real-life case underscores the urgency of addressing suspension issues promptly and the potential consequences of unnecessary delays.
Here is some practical advice for employers and contractors that find themselves in similar situations:
1. Clear Contracts: Ensure your suspension matches the contract, especially if it mandates written instructions. Send these instructions to the right person, just as the contract specifies.
2. Transparent Communication: Clearly state why you are suspending work and when it happened. Consider setting a deadline for resolving the issues stated in the suspension notice.
3. Legal Guidance: Before you hit the contract termination button due to the contractor's negligence, seek legal counsel and follow the contract's rules.
4. Prompt Review: Quickly assess the rectified issues. If you are satisfied, give the green light to the contractor to continue working to avoid incurring extra costs due to delays.
1. Swift Action: Address the issues outlined in the suspension notice promptly and inform the project engineer without delay.
2. Know Your Rights: Understand your entitlement to additional time and payment if you have fixed the issues, but the employer is dragging their feet on resuming the work.
3. Seek Legal Counsel: If you are unsure about your rights under the contract or the next steps after receiving a suspension notice from the employer, reach out to a lawyer for proper guidance.
Photo: East-West Road Section 11 (Source: Nigeria Ministry of Works)
Osinachi Nwandem is a lawyer and arbitrator with vast experience and expertise in construction law and arbitration. He also had prior exposure to litigation and arbitration in a range of commercial disputes ranging from contracts, labour and employment, debt recovery, telecommunications, maritime and taxation.
He practices at the law firm of Aluko & Oyebode, which is based in Nigeria and has been rated as one of Africa's leading law firms.
Osinachi received his law degree from the Rivers State University of Science and Technology, Port Harcourt Nigeria. He obtained his LL.M. degree from the University of Ibadan, Nigeria.
He has a particular interest in assisting clients to resolve their construction disputes and is passionate about developing the practice of construction law in Nigeria. He is a member of the Institute of Construction Industry Arbitrators (ICIArb), the International Bar Association and the Nigeria Bar Association – Section on Business Law.
Osinachi is a regular contributor to several peer-review journals, texts and publication platforms including the Gravitas Law Review, AELEX Article Series and Mondaq, where he proffers viewpoints on recent developments in construction disputes and contracts.