The General Conditions of Contract for Construction Works is a standard form construction contract published by the South African Institution of Civil Engineering (SAICE). The General Conditions of Contract for Construction Works, 3rd Edition, 2015 (“GCC2015”) is probably the most commonly used version by Organs of State. However, a simplified and shortened version of the GCC was published in 2018. For purposes of this musing, there is no material distinction between GCC2015 and GCC2018.
To offer a brief and rather simplistic explanation, the GCC2015 entitles contractors to submit a claim for time and money where they are prevented from performing their obligations due to reasons or factors entirely beyond the contractor’s control. Importantly, the term “force majeure” is not recognised in South African law.
In an attempt to define the circumstances that render performance objectively impossible and regulate consequential risks, [2] the GCC2015 lists several events using terminology that have developed over the past centuries. However, despite the GCC2015 being somewhat of a South African contract, it borrows foreign or arguably archaic terminology in describing such events. To name two listed events which are relevant to this discussion:
“8.3.1.3 Mutiny, military uprising, military or usurped power, martial law or state of siege, or any other event or cause which determines the proclamation or maintenance of martial law or state of siege
“8.3.1.7 Epidemic famine or plague,”
No reference is made to a ‘State of Emergency’ or ‘State of Disaster’ despite these being the only two Constitutionally permitted states in South Africa that may be similar to these definitions. Currently, the nationwide lockdown issued under a declared State of Disaster due to the COVID-19 pandemic[3] could perhaps feature in clauses 8.3.1.3 and 8.3.1.7 respectively. A non-binding and without prejudice SAICE Guidance Notice issued on 1 April 2020[4] recommends the application of the latter. However, these provisions fail to provide the level of certainty required to deter any possible disputes regarding their application.
To illustrate this point concerning clause 8.3.1.3., the executive arm of government enjoys enhanced powers in this State of Disaster, yet other characteristics of martial law such as restrictions on the powers of parliament and the judiciary have not occurred and are probably more closely associated with a State of Emergency. Similarly, under a State of Disaster there are restrictions on movement which is typically only one element of a state of siege.
In the second instance, the SAICE Guidance Notice characterises COVID-19 as an epidemic and therefore an excepted risk in terms of clause 8.3.1.7. However, it is debatable as to whether this provision was read holistically to the extent that the successive terms “famine or plague” appear to be discarded entirely even though there are no commas to separate the terms. Irrespective of the archaic and somewhat narrow wording qualifying epidemics to famine or plague, it might be insensible and irresponsible to exclude COVID-19 from the ambit of this provision.
Final thought
In light of the above, it is evident that work on various projects almost certainly has ceased because of supervening impossibility of performance. However, it is perhaps arguable whether the ‘excepted risk’ clause in GCC2015 may be invoked. If anything, the actions taken by SAICE to release a guidance note on the issue is perhaps an indicator that the GCC contracts do not cover such instances with sufficient certainty to avoid any disputes. Nonetheless, the guidance notice might be enough to persuade contracting parties of what constitutes a sensible interpretation of the contract.
Ultimately, whilst the GCC tries to cover all possibilities using broad and imported terminology, it is regrettable that South African phraseology has not been carried over to the contract. This issue is compounded by the fact that there has been limited judicial consideration of either of these terms of contract or the limitations of state power in a State of Emergency or Disaster.
[1] Peters Flamman & Company v Kokstad Municipality 1919 AD page 427.
[2] “Clause 8.3.1 The excepted risks are risks of damage or physical loss or any other loss caused by or arising directly or indirectly as a result or consequence of:…”
[3] The President of the Republic of South Africa has declared a nationwide lockdown for 21 days to be enacted in terms of the Disaster Management Act 57 of 2002 (“Disaster Management Act”) as an emergency protocol and pre-emptive action plan in response to the national state of disaster declared by Government Notice No. R. 313 of 15 March 2020.
[4] SAICE, “Dealing with the effects of COVID-19 in the ambit of the SAICE Suite of GCC Contracts Version 2, 1 April 2020.
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Brooks Legal 