Global Claims in Construction Contracts.  

A Global Claim usually arises where a party struggles to demonstrate that specific breaches by the employer caused specific loss to the contractor. A Global Claim will identify a number of causes of delay and disruption and claim for loss and expense on that basis. The party therefore seeks compensation for a group of Risk Events but cannot demonstrate a direct link between the loss incurred and the individual Risk Events.

The Court in Walter Lilly and Co Ltd v Mackay[1]  took the opportunity to clarify the law on global claims which has been has been the subject of much debate over the last few years. Setting out the principles that a contractor must satisfy to bring a successful global claim.

The principal issue with global claims is that, for a contractor to be successful with a claim for loss and expense, typically they are required to demonstrate a causal link between the monies claimed and each specific event that has created this loss. In a global claim the contractor does not, evidence a direct link between a loss incurred and a specific event.

Global claims must however be evidenced as a matter of fact. Therefore, the contractor has to prove, on the balance of probabilities that events arose which permit them to claim loss and expense. Those events created disruption or delay and this caused the contractor to incur loss or expense.

In issuing a global claim, there is no obligation to go further and demonstrate that it is impossible to link a specific breach with a specific loss in the usual way. However, if a contract comprises a restriction on global claims then the conditions of the contract must be fulfilled, otherwise such claims will be denied.

In the case Walter Lilly, it was established that a global cost claim is acceptable in principle. A contractor is not prevented from pursuing a global claim where specific costs can be linked to specific loss events but the court is likely to be more sceptical about a global claim in such circumstances. Such claims present increased evidential difficulties. A party will have to prove that the loss suffered was not inevitable, tenders were suitably priced and there were no other factors which caused the loss. Whilst the employer will probably counter by proposing and evidencing that the contractors tender was priced so low that the loss was inevitable.

Global claims are not total claims. Where any loss events cannot be claimed these events can simply be removed from the global claim, with just loss from events for which the contractor is permitted to claim remaining. Also, where the contractor has generated the “impossibility of disentanglement” themselves a global award is also still obtainable

In overview the case of Walter Lilly and Co Ltd v Mackay[2] clarified 3 main developments in relation to global claims.

1. It is not necessary for a contractor to demonstrate that a specific event cannot be linked with a specific time or money consequence.

2. Global claims are not deemed to be unsuccessful simply because they encompass an event which is not attributable to the employer, any matters for which the employer is not accountable should simply be removed from the global claim.

3. The contractor must evidence that loss would not have been suffered in any event

Global claims remain a potentially perilous strategy however as they will invariably be subject to attack by the employer. A contractor is still required to evidence and prove his claim as a matter of fact, a problematic undertaking when there is an absence of direct causal links. 

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