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Construction update: latest legislation

  • United Kingdom
  • Construction and engineering - Articles


Insurance Act 2015 – changes to an insured party’s duty of disclosure

Under the existing law - which remains effective until the provisions of the Insurance Act 2015 come into force in August 2016 - an insured party owes a duty of good faith and full disclosure.  A representation of fact to the insurer must be “substantially correct” and a representation of expectation/belief must be made in good faith. The Insurance Act 2015 seeks to provide a greater level of clarity regarding these duties.  The main changes are as follows:

1)    Methods of disclosure

  • The insured must disclose all relevant circumstances that would influence the judgement of a prudent insurer in determining whether to take the risk.  The Act provides some examples of what is “relevant” including a catch-all provision for ‘anything which those concerned with the class of insurance and field of activity would generally understand’ to be material.


  • The insured may give the insurer ‘sufficient information to put a prudent insurer on notice that they need to make further enquiries for the purpose of revealing those material circumstances’. By warning the insurer that they should be asking further questions about a particular matter, the insured can satisfy this condition and will have complied with their duty of disclosure (however the insurer cannot deliberately withhold, conceal or obscure known facts).

2)   The duty of disclosure extends to what “ought to be known”

  • The duty of disclosure applies to what is actually known by the insured’s senior management and those individuals who are responsible for its insurance.
  • The duty of disclosure also applies to what the insured ‘ought to know’, that is, anything that would be revealed by carrying out a reasonable search of available information including information held by a company, its employees or any person to whom the insurance cover will apply (NB: this could extend to information held by third parties).
  • The insured is not required to disclose that which the insurer already has knowledge or ought to have knowledge, but this tends to be limited to such information that is “held by” the insurer rather than information that the insurer could have obtained.   

3)   Information must be clear and accessible

  • The 2015 Act introduces a duty to provide ‘clear and accessible disclosure’.  “Information dumping” will not be acceptable.

Litigation bites back

The 2005 Hague Convention on the Choice of Court Agreements, which came into force on 1 October 2015, has the potential to seriously alter the dispute resolution landscape.  It currently binds Mexico and all EU member states (except Denmark).  The USA and Singapore have also signed up, but have not yet ratified it.

Where a contract states that disputes between parties shall be determined by the courts of a specific jurisdiction then the 2005 Hague Convention provides that such nominated courts must be used for pursuing litigation in relation to those disputes (except in very limited circumstances).  Any courts of other jurisdictions that are subject to the Convention must enforce the decision of the nominated court without a review of the merits of the case.   

The 2005 Hague Convention seeks to prevent the same proceedings being issued in multiple jurisdictions.  It also seeks to achieve a greater level of consistency in the enforcement of foreign judgements.  The cost uncertainty associated with multiple proceedings and the inconsistency of approach to enforcement have contributed to the popularity of arbitration and other forums for the resolution of international disputes.  However, if the Convention is successful in removing these issues it is likely that parties will be more attracted to the benefits of litigating in certain jurisdictions (for example the strict timetable and cost budgeting requirements under the civil procedure rules of the English courts).

As the international courts become more appealing by developing newer and more efficient ways to deal with complex multi-jurisdictional disputes there is a fear amongst many, including Singapore’s chief justice Sundaresh Menon, that other forms of dispute resolution that fail to adapt may be disregarded.  This is being compounded by an increase in the number of arbitration decisions that are being challenged in the courts.  Accordingly, Menon is calling for a review and reform of the international arbitration rules to ensure that it is not left on the side line as litigation becomes increasingly more popular.

Have you appointed your Principal Designer?

The six month transitional period granted under the Construction (Design and Management) Regulations 2015 came to an end on 6 October 2015. 

The transitional period was provided to Clients (i.e. persons “for whom a project is carried out”) that had appointed a CDM Co-ordinator prior to 6 April 2015.  Such Clients must have appointed an appropriate party to perform the role of Principal Designer from 6 October 2015.  Those Clients that have not appointed a Principal Designer will assume the responsibilities and obligations of the Principal Designer as set out under the 2015 CDM Regulations.

The role of the Principal Designer has replaced and performs different duties to the role of the CDM co-ordinator provided for under the old regulations.  For a more detailed review of the duties imposed by the 2015 CDM Regulations please read the August 2015 edition of our Foundations e-briefing.

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