Construction Projects and Disputes: A Look Beyond the COVID-19 Lockdown, Part II

It is becoming increasingly clear that the impact of the pandemic will continue to be felt once lockdown measures are relaxed and goods and services are remobilized and deals are rekindled. In addition, many governments are easing restrictions gradually rather than directing a full and complete end to lockdown status, eliminating any hope of an immediate return to the way things were. Further, how owners and contractors respond to the easing of restrictions may themselves be the source of claims.

This second part of a three-part White Paper provides an overview of the impact of COVID-19 on a select number of key sectors within the construction industry: real estate development, oil and gas, renewable energy, social infrastructure, transportation infrastructure, and telecoms. The analysis is from both a transactional and disputes perspective and addresses issues of global relevance, including several questions that Jones Day has encountered in the few months since the start of the pandemic, from owners, contractors, and design professionals. It also reviews the typical insurance policies that cover construction projects and how they may or may not apply to a project that suffers financial consequences as a result of COVID-19.

Part I, published on May 1, 2020, set out an overview of some of the recurring issues facing construction industry participants. It sought to convey a global perspective on these issues, as major companies, particularly those with global operations, must have an understanding of the legal challenges presented by the virus to proactively address the challenges it presents across jurisdictions.

The final part, which will be issued shortly after this Part II, looks beyond the lockdown to examine what effects the pandemic may have for new or suspended projects as well as issues that may require formal dispute resolution. It also discusses some prudent strategies that companies may wish to follow in navigating the long-term fallout from the pandemic.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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