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27/11/19

Global Claims: An Introduction

Global Claims:  An Introduction

Global Construction Claims:  An Introduction

Adrian Dobbie-Holman, Associate Director Driver Trett Dubai looks at global claims, how they are viewed by the courts and how they might be avoided.

In the past three years, I have reviewed four claims for companies who had all spent a vast amount more on labour than they planned to, ostensibly due to multiple and prolonged delay and disruption events. 

Each of the claims that were produced were a type of total cost global claim, and whilst a considerable amount of thought, effort and supporting documentation went into their production, the success of such claims is by no means guaranteed and there are many pitfalls to be aware of.

There is no single agreed definition of global claims, but the term 'global' essentially means that the explanation of the link between cause and effect is inadequate or absent. Global claims are usually founded on several separate matters or events. A total cost claim is a type of global claim where entitlement is quantified by simply deducting the planned cost from the actual cost incurred.

In the last 40 years or so, the following six main guidelines have arisen from UK (common law) court cases dealing with global claims:

Six main guidelines

  1. The claim must be sufficiently detailed to enable the recipient to know what case it has to meet;
  2. Generally, all contractual conditions (such as notices and interim particulars) must have been complied with;
  3. The claim must exclude any significant matters for which the defendant is not responsible;
  4. The claimant must demonstrate that it is impossible or impractical to separate out the consequences of each of the events being grouped together, if applicable;
  5. Any part of the claim capable of separation should not form part of the claim;
  6. The claimant must provide sufficient evidence to support the losses claimed.

Attitudes towards global or total cost claims have changed over the years and there are many examples of these claims generating emotive language from those involved, more so than one might expect from the more usual claims for prolongation, or valuation disputes.

Evolution of approach

From being accepted only in "extraordinary circumstances",1 a degree of acceptance of global claims arose in 1967 in Crosby,2 where it was accepted that cumulative delay and disruption caused by separate events made it impractical or impossible to separate cause and effect. 

However, in 1991 in Wharf,3 a Hong Kong case in which a very strict approach was taken, a claim was struck out as it failed to explain the link between the breaches and the amounts claimed.  In this case, the global nature of the claim was said to be “embarrassing” and “prejudicial”. A year later another key UK case noted that global claims were reputed to be exaggerated.4

In 2003, Pickavance, in his capacity as an arbitrator, opined that global claims were made when “the contractor simply does not have a case”5 however shortly thereafter a more pragmatic approach to global claims was taken in John Doyle, in which it was stated that if a claim fails in whole, the loss can be apportioned according to the events for which the defendant was found to be liable for.6

Within the last decade, in Walter Lilly,7 it was stated that causation must be proved on a balance of probabilities, not absolutely.

So, it appears that the strict approach to global claims has become slightly more relaxed and global claims are now less likely to be struck out, in favour of requesting amendments or further particulars. In addition to the desire for the expeditious and efficient determination of disputes that is sought,8 one factor in this approach might be that dismissing global claims might be inequitable in that respondents who cause or are liable for multiple events could end up in a better position than respondents who cause or are liable for one or very few such events.

Pros and Cons

The advantage of global claims is that they are relatively inexpensive and quick to formulate. However, I state “the advantage” deliberately as it is difficult to see any other advantage, despite the apparent benefit of the pragmatic view that might be taken in a common law dispute resolution process.

Conversely, there are numerous disadvantages. Often overlooked contractual preconditions must be met. With the weight of the poor reputation of global claims behind them, defendants will seek to highlight the global nature of such a claim and emphasise this point strongly even if considerable effort has been put into the separation of cause and effect where possible. They may also claim that the contemporaneous records are poor and insufficient and that further particulars are required. Another consideration is that in some circumstances a global claim might be seen to convert a priced contract into a cost-reimbursable one.

Labour and the Measured Mile

Global claims are commonly used to claim additional labour costs where labour productivity has been adversely impacted by numerous delay and disruption events. One recognised method of demonstrating the impact is called the “Measured Mile” method whereby productivity on an undisrupted portion of the work is measured and used to show that (1) without disruption, a certain level of productivity could be achieved and (2) what the total labour cost would have been if that productivity had been achieved.

At a RICS seminar that I attended a few years ago the senior commercial manager of a large contractor from Saudi Arabia asked “if you are not recording labour productivity, then what are you doing?”. A fair question, and one that should be considered carefully as in most cases that I have been involved in, productivity was not recorded, and when it was, the efforts to do so were inconsistent and in response to disruption, as opposed to a pro-active measure that one would expect to be a standard part of commercial monitoring, and one that could give an early warning of disruption.

How to avoid global claims

So, what can be done to avoid having to present global claims, or at the very least be in a position to satisfy all the requirements to maximise the chances of success?

Firstly, the easiest of all, administer the contract properly and issue all required claim notices, particulars and any other stipulations. Keep complete, accurate and consistent daily reports of plant and labour resources and production, but do not assume that daily reports can easily be turned into productivity analysis. On a road bridge project that I worked on, what appeared to be good quality daily reports proved to be useless in an attempted productivity analysis as there were numerous instances of missing labour data and locational information. Determining productivity rates along particular bridge sections was impossible. If there is an undisrupted portion of the work, productivity on that portion could become the “measured mile” baseline and poor productivity here will dent any later disruption claim, particularly if the contract includes planned productivity rates that were never achieved.

If a claim is appropriate, the guidelines mentioned above must be considered with respect to contractual entitlement or culpability for each event, demonstrating the impossibility or impracticality of separation; separation where possible and the respondent’s entitlement to know what case it must answer. Finally, carry out a “sanity check”. This may be as simple as a rule of thumb calculation showing that the figures used in your claim are within reason.

In my experience, global claims are generally made when a multitude of delay and disruption events have occurred and where additional costs have genuinely been incurred as a result. Considerable time and effort is spent to produce detailed and sometimes voluminous claims, however the complexity of the interaction of the multiple causes and effects, inadequacies in the contemporary records and the absence of productivity records all combine to make succeeding with a global claim a significant challenge.


1  R. Clay and N. Dennys, Hudson's Building and Engineering Contracts (13th edn, Sweet & Maxwell, 2018) 6-076

2 J. Crosby & Sons Ltd. v Portland UDC [1967] 5 BLR 121

3 Wharf Properties v Eric Cumine Associates (1991) 52 B.L.R. 8

4 McAlpine Humberoak Ltd v McDermott International Inc (1992) 58 B.L.R. 1 CA

5 Keith Pickavance, Extensions of Time – An Arbitrator's Perspective (ICLR, 2003)

6 John Doyle v Laing Management (Scotland) Ltd [2004] B.L.R. 295

7 Walter Lilly v Mackay (2012) EWHC 1773 (TCC); [2012] B.L.R. 503

8 GAB Robins v Specialist Computer Centres Ltd [1998] EWCA Civ 924

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