In some cases, a jurisdiction clause may be drafted so that one party is subject to non-exclusive jurisdiction, whereas the other party is subject to exclusive jurisdiction. Article 5 states that disputes will be referred to arbitration. There are three exceptions: NEC4 ECS also contains an arbitration agreement, but again it is not automatic. If the employer is an organisation that has many projects, it may wish to call upon the subcontractor to provide such advice under the framework agreement from time to time as its projects begin. The commercial value of a judgment in favour of the main contractor or subcontractor can depend on how easily it can be enforced. A jurisdiction clause is, in effect, a dispute resolution clause: it identifies the tribunal or court a dispute must be referred to. For example, if the agreed period for the subcontract works is 52 weeks and, due to events for which the subcontractor is responsible, the works are only 50% complete after 78 weeks with little prospect of the subcontractor completing them soon, the main contractor might wish to exercise a right to terminate the subcontractor's employment. Where the subcontract states that liquidated damages - a fixed/pre-agreed sum per day or week of delay - apply, there are three key issues: The difficulty of accurately calculating liquidated damages in advance is one of the reasons why many subcontracts do not contain liquidated damages provisions: In all cases, carefully consider whether it is appropriate for the subcontract to contain a liquidated damages provision. However, the situation in the supply chain could be more complex. In effect, this results in the original subcontract coming to an end, and the employer and the subcontractor entering into a contract on the same terms as the subcontract. If the entry is left blank, the courts will have jurisdiction. JCT DBSub 2016 states in Article 6 that the English courts have jurisdiction over disputes that arise out of, or in connection with, the subcontract. Is arbitration always incorporated into the subcontract? However, even if the main contract conferred this right, the employer may face two difficulties because a direct payment by the employer to the subcontractor: The employer can mitigate these risks by: The inclusion of these risk mitigation measures would be a matter of negotiation between the employer, the main contractor and, to an extent, the subcontractors. It does not state how disputes will be resolved (e.g. The second option depends on the laws of the territory in which the overseas company is incorporated, but the main contractor may not be familiar with them. This would be best achieved through an express term included in the subcontract. There may be benefits in the main contractor being able to use the permanent lifts during the construction phase; this is often known as 'beneficial use'. The employer and main contractor could agree that the law of Scotland applies. Article 5 states that the arbitration will be conducted in accordance with the JCT 2016 edition of the Construction Industry Model Arbitration Rules (CIMAR). However, clause 20 of the FIDIC Subcontract (2011) envisages disputes being referred to a 'dispute adjudication board' made up of one or three persons, which is equivalent to a DRB. Should the main contract and subcontract be subject to the same dispute resolution procedure? There are many practical considerations that can arise regarding subcontracting, particularly when advising on specific issues. The perceived benefits of e-tendering are: The employer or main contractor may want to secure the subcontractor (its services, materials or plant) in advance of the main contract works commencing or the subcontract being entered into. For example, a statement from the overseas subcontractor may be insufficient because the subcontractor is not an expert in the law of the territory in which it is registered and so its statement may not be correct, or the overseas company's delegated authority paperwork might be in a language other than English, which means it will need to be translated and the translation verified. the extent to which the main contractor is entitled to complete the subcontract works by other means, the extent to which the subcontractor is entitled to payment. The parties must agree to refer a dispute to arbitration for resolution instead of through legal proceedings. Where an overseas company is asked to submit a tender for works in the UK, it is usual for the ITT to specify that the currency of the subcontractor's tender, and the currency applicable to the subcontract, is pounds sterling (pounds). This section explores examples of these rights, but they should not be exercised without sufficient grounds. An outline is provided here. It is tempting to think that the answer is yes, on the basis that if the same adjudicator is named in the main contract and subcontract (and perhaps all the subcontracts in relation to the main contract works), that person may become familiar with the project and be in a better position to decide disputes that arise.