The JV Committee had been requested to suspend payments, but had been unable to reach agreement. Accordingly, the position remained as per clause 8.6 quoted above. The court considered that the first sentence of that clause required the full amount of the payment from NWL to be distributed to the parties without adjustment or suspension for anticipated pain-share. Conclusion and implications This is an interesting decision in relation to target cost contracting in a joint venture context. The court’s finding that the standard NEC target cost provisions do not permit pain/gain share adjustments for interim payments underscores the desirability for employers of negotiating such contracts to build in the ability to make pain-share adjustments at an interim stage where the target cost has already been exceeded. This avoids the need to recover overpayments upon completion of the works, although brings added complexity to the interim payment process and raises other issues such as whether the target cost figure should be updated on a rolling basis. Such cashflow considerations can also, as here, be seen at the joint venture level; which may lead to the inclusion of provisions preventing the release of funds to JV parties where pain-share adjustments are at risk, although that will force the issue to be dealt with at an earlier stage by the JV parties during the course of the works. The judgment also highlights the governance issues which can arise in JV structures where decisions are often required to be taken on a unanimous basis. Parties negotiating JVAs should consider carefully what options are available for the breaking of any deadlock which arises if JV relations are tested. The JVA in the present case permitted deadlock over the suspension or reduction of interim payments to be referred to dispute resolution, but did not indicate any specific criteria to be applied in resolving the deadlock.
Doosan Enpure Ltd v Interserve Construction Ltd [2019] EWHC 2497.
About the authors Victoria Peckett partner, london Phillip ashley partner london Mark Breslin senior associate Kate Jones associate Infrastructure construction and energy CMS law tax