Lessons from the Landmark 2025 Russian Aviation Insurance Case

Article

Lessons from the Landmark 2025 Russian Aviation Insurance Case

12th June 2025

A significant decision has been handed down in what is widely regarded as one of the most consequential insurance cases in English legal history. The Commercial Court ruled in favour of aircraft lessors in the high-profile Russian aviation insurance dispute, determining that insurers must provide compensation under ‘war risk’ insurance for aircraft stranded in Russia following the 2022 invasion of Ukraine. The case involves multiple aircraft and engines, with insured values of over $4.5 billion, annexed by Russia in response to international sanctions.

Read the full judgment here.

Determining ‘War Risk’ Damages

This ruling has created significant waves through the aviation leasing and insurance industries emphasising the complex challenges and geopolitical risks when quantifying losses of valuable assets stranded under ‘war risk’ insurance policies in conflict zones.

Quantifying loss can be a complex exercise. In this instance, the court identified March 10, 2022, as the point of “loss,” when Russian legislation prohibited aircraft exports thus triggering coverage under war risk policies. This ruling limited recoveries to policy caps that were often lower than those for all-risk claims, resulting in potential payouts being reduced by billions. Ultimately AerCap secured a little under a third of its $3.5 billion all-risk claim.
Valuation poses another challenge. There was uncertainty over the market values of aircraft stranded in Russia, notably due to questions around continuing airworthiness and re-registration by local authorities. In this case, the court relied on insured values at the loss date. However, fluctuating market conditions and operational status complicate such assessments. The question of whether valuations should reflect pre-conflict lease terms or post-sanction realities will likely be debated in future disputes.
Settlements further cloud the quantum. Prior agreements with Russian entities or insurers, involving significant financial settlements, required careful deduction to prevent double recovery. In this dispute, compensation focused on the market valuation of the stranded aircraft. In other cases, depending on the policy exclusions, business interruption type claims may also allow for the recovery of lost profits or broader financial impacts such as lost lease revenue. If so, this may necessitate greater consideration of mitigation or contingencies where an operator may, for example, be able to reduce operating losses by making more efficient use of its operational fleet.

Rising Costs, Tightened Coverage, and Legal Turmoil are on the Horizon

Ultimately this ruling is poised to fundamentally alter aviation insurance. With insurers likely to absorb the implications of heightened risk exposure, it would seem inevitable that fare prices will see further increase.  

At the same time, coverage terms may tighten significantly, with insurers restricting, or withdrawing, policies for airlines operating in, or near, conflict zones regardless of how minor or speculative the threat.  

Additionally, this decision is expected to trigger a wave of policy revisions, exclusions, and legal disputes as insurers reevaluate their exposure to geopolitical risks and seek to redefine the parameters of coverage. 

This case sets a powerful precedent. We anticipate further disputes arising concerning: 

Sanctions-related losses
Cyber warfare and hybrid threats
Emerging conflict zones and grey areas in coverage

How HKA can help

Our Aviation & Space team offers deep expertise in navigating complex insurance, leasing, and geopolitical risk disputes. We have supported clients across the entire aviation ecosystem, providing expert witness services, claims and quantum analysis, dispute resolution and litigation support, forensic accounting and investigations, valuations and economics, and strategic risk advisory. Whether you’re contemplating the immediate impact of this recent legal ruling or preparing for future industry challenges, our team is equipped to help you chart a clear and confident course forward. 

Simon Dean McCarroll, Partner, Forensic Technical Services
Simon Dean McCarroll is an Aviation Expert and leader with over 25 years of worldwide aviation experience as both an airport client and a consultant, including in the Middle East, North America, and Antarctica. He serves as an Expert Witness and Expert Determiner for aviation cases, focusing on airport planning, design, operations, engineering, and dispute resolution. At HKA, Simon adds value by using his extensive experience and expertise to support and grow the aviation and space practice with a strong focus on collaboration across the firm. He contributes to the development of innovative solutions for complex aviation projects, ensuring that clients receive the highest level of service and expertise. He is recognised by Lexology as a Thought Leader in the transportation sector.

Anthony Charlton, Partner, Forensic Accounting & Commercial Damages
Anthony Charlton is a Chartered Accountant with over 30 years’ professional experience. He has been appointed as an expert in many matters involving forensic accounting and the assessment of economic loss and given oral evidence on around 40 occasions. His experience is global and covers a variety of industries including aviation, defence, technology media and telecoms, oil and gas, energy, resources, construction, real estate, mining, infrastructure, banking, and media. Anthony is a fellow of the Institute of Chartered Accountants in England and Wales and a member of its specialist valuation group. He is widely recognised by Lexology Index as a Global Elite Thought Leader and a thought leader in its quantum of damages, arbitration and investigations forensic experts’ research.

HKA launches services in Forensic Accounting and Commercial Damages in the Netherlands

News

HKA launches services in Forensic Accounting and Commercial Damages in the Netherlands

11th September 2024

HKA, a leading global consultancy in risk mitigation, dispute resolution, expert witness, and litigation support services, is expanding its presence in the Benelux region with a new service line and additional office in Amsterdam, the Netherlands.

The firm has had a footprint in the region for over 40 years, working for clients to deliver dispute resolution services, including construction claims consulting, expert advisory, and expert witness support. The launch of a Forensic Accounting and Commercial Damages (FACD) practice in a second office in the Netherlands is a significant development for the business and will mean HKA is providing Financial Dispute consulting-services to complement its existing Construction Claims and Expert (CCE) services which have been offered in the market since April 2024. These two compact teams will represent a unique multi-disciplinary approach not currently offered in the Benelux region, thereby offering a breadth of combined capabilities when resolving complex disputes.

Leading HKA’s expansion in the Netherlands is Partner Mark Castell, together with newly appointed Partner Tjeerd Krol. The Dispute Consulting-team will be supported by two additional new appointees, Director Tony Mauritz and Associate Tygo Fijn. Additionally, Kadir Firat Varol will enhance the CCE team in the Netherlands.

About the HKA Amsterdam team

Partner Tjeerd Krol is leading the Financial Dispute Consulting practice in the Amsterdam office. His practice is focused on (commercial) disputes, both in litigation and in arbitration, as well as forensic accounting, and financial reporting disputes.

Tjeerd has over 25 years of experience in various types of disputes, both in litigation and international arbitration, such as post-merger disputes, shareholder disputes, minority interest valuations, follow on claims, securities litigation, lost profits-calculations, as well as various types of accounting irregularities and reconstructions.

His experience includes consulting to clients facing accounting irregularities, financial statement restatements, and SEC or other regulatory inquiries / investigations. Prior to HKA, Tjeerd was Managing Director in the Expert Services practice at Kroll Expert Services, Managing Director at Alvarez & Marsal Disputes and Investigations, and an Audit Partner at Deloitte.

Director Tony Mauritz, also formerly of Kroll Expert Services, focuses on litigation support for various financial and accounting issues, including shareholder disputes, business interruption, minority interest valuations, accounting irregularities, as well as investigations supporting collective actions. Prior to joining Kroll, he served as manager at KPMG, managing audit teams during the audits of both large and small clients across a variety of industries.

Mark Castell has been a Partner at HKA since 2019, and he has 40 years of experience on construction projects and disputes. He has been appointed as expert witness in international arbitrations on more than 35 occasions, as mediator and expert determinator. The appointments have covered both delay and quantum matters on disputes of up to US$300 million. His experience ranges from infrastructure, energy, marine and offshore to buildings, process, and industrial sectors. Mark also has extensive knowledge of the Benelux market having previously been based in the Netherlands between 2003 and 2018.

“The new service line offering signifies the enhancement and diversification of HKA’s presence in the Dutch market, thereby uniquely positioning the firm to offer services from both our Forensic Accounting and Commercial Damages practice, as well as our Construction Claims Expert practice. I believe that this is a unique offering amongst our peers, and the value of this proposition is a very welcome development for our broad client base.”
Mark Castell, Partner

“Given the increasing demand for Forensic Accounting and Commercial Damages expertise in the Netherlands, coupled with the opportunity to collaborate effectively with experts from other service lines, I am eager to offer our clients comprehensive solutions. These will encompass services such as commercial damage assessments, economic analysis, and investigative support.”
Tjeerd Krol, Partner

Media Contact:

Name	Suzanne Rayson
Title	Marketing & Communications Director, Europe
Number	+44 7540 693 335
Email	SuzanneRayson@hka.com

An insightful segment on the Dubai Eye Radio show discussing the Tasreef Dh 30 billion project

Technical Interview

An insightful segment on the Dubai Eye Radio show discussing the Tasreef Dh 30 billion project

27th June 2024

An insightful segment on the Dubai Eye Radio show discussing the Tasreef Dh 30 billion project, announced by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, to improve water drainage in the Emirate.

Watch the short recording of the conversation with @Tom Urquhart as he interviews HKA Director Mustafa Hussain who shares his valuable expertise on complex and challenging projects such as this.

“The drainage project is a complex project in a built city like Dubai, acknowledging that Dubai is the ideal place with the leadership to accomplish such a difficult project. Nevertheless, to keep the project on track, contemporaneous resolution of disputes is an ideal way of avoiding major delays.”
Mustafa Hussain, HKA Director.

Read more about how HKA’s integrated research programme CRUX Insight which draws on HKA’s unprecedented bank of knowledge to provide valuable insights into the pattern of causation on engineering and construction projects CRUX Insight – HKA

Connect with Mustafa on LinkedIn

How market turmoil can affect large projects

Article

How market turmoil can affect large projects

16th May 2024

Werner Luüs

Director

wernerluus@hka.com

DOWNLOAD ARTICLE (PDF)

Turmoil in the global economy is exposing an increasing number of large projects to unprecedented productivity and financial pressures. Severe microeconomic issues can arise on projects that stem from unforeseen macroeconomic events. We discuss this evolving situation and potential mitigants below.

Introduction

Turmoil is defined as “a state of confusion, uncertainty, or disorder”^[1]https://dictionary.cambridge.org/dictionary/english/turmoil, or “a state of great worry in which everything is confused, and nothing is certain”^[2]https://www.oxfordlearnersdictionaries.com/definition/english/turmoil. Perhaps the standout word here in the context of project execution is “uncertainty” which, from a construction and engineering project stakeholder’s perspective, means a greater exposure to financial risks.

A combination of macroeconomic events has resulted in many contractors on lump sum contracts suffering the impacts of unforeseen and exceptional increase in costs of materials, equipment, instrumentation, labour, and personnel. Some other impacts to projects, not always immediately considered to be directly market-linked, include delays and disruption to progress of the works, and reduced cashflow due to either lower revenue, increased costs, or a combination of both.

Large scale high-value projects under lump sum contracts that are scheduled to be constructed over longer periods, and in many instances on lower percentage profit margins, are generally vulnerable to changes in macroeconomic conditions. This is primarily driven by the scale and complexity of some projects, especially those with high specialist material quantities and labour requirements, which could in some instances have construction schedules over multiple years and CAPEX of hundreds of millions. On these projects profit margins can easily be eroded by macroeconomic factors due to their global exposure.

Current causative trends

Those projects, especially of a scale that require significant engineering, construction, and logistical input from around the globe, and which were procured during and shortly after the start of the COVID-19 pandemic, are being affected by supervening events which may include:

Slow resumption of the activities of global markets after the initial COVID-19 lockdowns;
The war between Russia and Ukraine;
Global supply chain shortages, ports congestion, lack of containers and transportation costs; and,
Region-specific severe weather and other types of force majeure events that on their own would not have impacted projects on such a global scale but exacerbated the microeconomic impacts on projects already battered by global market turmoil.

The project-specific impacts we see from these, or a combination of the above events include severe delays and disruption to engineering and construction works, and significant unforeseen increases in costs driven by:

Overloaded vendors of materials, specialist equipment and instrumentation catching up on projects that were delayed and disrupted during the pandemic; and
Raw material pricing, scarcity and global inflation causing significant escalation of the prices of materials, construction works and people.

What are the economic effects coming out of this?

Typical claims from contractors and employers include escalation in material prices, specialist vendor works, and subcontractor construction works cost increases, delays and disruption to engineering, procurement and construction affected by losses in productivity levels, and the costs of labour and site running costs.

Large scale projects are typically also affected by increased transportation and logistics costs, especially projects for which bulk materials are bought from various/multiple destinations outside of the regions or countries where the works are being undertaken.

As an illustrative example, many large-scale Oil and Gas projects have in recent years relied on the supply of steel and other metal products, and specialist equipment and instrumentation from Russian and Ukrainian supply chains. These supply chains are now disrupted by the logistical restrictions and closure of facilities in these two and their neighbouring countries. While not seeking to monetise or be insensitive to the humanitarian travesty which is this war, the mentioned supply chain issues combined with sanctions imposed on Russian entities have required the re-procurement of materials from other, lesser known markets with varying risk profiles.

These impacting factors could result in short term losses to productivity and delays, while prolonged exposure to or a combination of them, could result in compounding impacts that could also affect the cashflow of many contractors, incurring unplanned, unforeseen and greater levels of costs in the financing required for these projects.

In some instances, the levels and severity of economic impacts arising from this, could put at risk the completion and delivery of the assets that are being constructed, providing stakeholders with the real dilemma of non-completion or severely delayed completion of the developed assets.

The gathering of evidence to develop a compelling case

Only once the contractual legal framework has been scrutinised and the claim strategy has been decided, can the quantification of financial impact related to escalation in prices, delays, disruption, and other direct consequential effects be assessed.

Like most claims, causation in fact could be one of the most important pieces of the puzzle. To quote Mullen / Davison in ‘Evaluating Contract Claims’^[3]Mullen J, Davison P, 2020, Evaluating Contract Claims, Third Edition, Wiley Blackwell, page 23. “…the task of establishing the quantum of a claim is much simplified and stands a greater chance of success if the claim itself has been fully analysed and established from the root causes as anticipated by the chain of analysis.” In relation to the quantification of disruption claims as an example they state “Analysis that goes back part way through the chain of causation to better detail of the effects of disruption can facilitate a more detailed approach to quantification.”

For complex cases that require detailed global market investigations and supporting evidence into the specific vendors, materials and commodities, obtaining specialised professional assistance could provide an advantage in finding the trail of macroeconomic causative links to the microeconomic effects felt on the projects.

How could the effects caused by global economic turmoil be particularised?

From our experience of the levels and standards of detail in which evidence is tested during international arbitrations, establishing the factual causation on a detailed particularised basis is a key aspect in discharging burdens of proof for claims. This is especially important where there is mixed liability and a high level of the disentanglement required for the causes and the effects.

A further key requirement is to allocate the additional costs to the causes on a detailed, factual and particularized basis. Cost evidence and transparency with pricing details provide further weight, especially when proving that unrelated costs have been excluded from claims. This will help to demonstrate that costs only relating to matters the claimant is not responsible for under the Contract are included.

For disruption or losses in productivity type claims, I highly recommend reading “The Analysis And Valuation Of Disruption” by Derek Nelson. Known methodology, such as the measured mile, in some shape or form is preferred in many jurisdictions and also mentioned in the Society of Construction Law Delay and Disruption Protocol (“the SCLDDP”)^[4]See pages 11, 12 and 14. and other industry publications such as AACE International Recommended Practise No. 25R-03.

For this, productivity assessments based on actual detailed manpower or other resource records should be conducted, on a detailed discipline by discipline basis where possible, and could be supported by production efficiency calculations of manpower spent on works for example, manpower per ton of steelwork fabrication, or manpower per m2 of paintwork, which in some instances could provide additional supporting evidence.

Any delay-related claim assessments should be supported by contemporaneous records, based upon appropriate delay analyses, and the conclusions derived must be sound from a common-sense perspective.^[5]The application of ‘common sense’ is mentioned in several sections of the SCLDDP, and in my view, a few more mentions could not have done any harm

With regards to claims for price escalation, transparency of the contractor’s pricing details is key, proving that changes in quantities or scope change related costs have not been included in these claims, and that only cost increase related to cost rates are included. Detailed fact-based narratives of the chronology along with transparency of the procurement processes and bid prices can also sometimes help to make a case more compelling.

Conclusion

It seems clear that market-related cost volatility will be a major consideration in the risk registers of large projects over the next few years, especially on those projects with higher probability exposure to severe impacts from long construction schedules, large quantities of materials and reliance on specialist labour.

It is therefore important for stakeholders to give particular consideration to how those risks have been allocated under their contracts, and to the required mitigating control measures.

About the Author

Werner Luüs is a Director at HKA, and experienced Chartered Quantity Surveyor and Quantum Expert. During his early career Werner worked on the delivery of Buildings and Infrastructure projects, and in recent years he has built up a wealth of experience in the Resources, Offshore Energy and Shipbuilding sectors on live projects and disputes. Werner has been appointed as Quantum Expert in the proceedings of complex, high-value dispute matters in international arbitration and other forms of Alternative Dispute Resolution.

HKA Services

HKA is a leading global consultancy in risk mitigation, dispute resolution, expert witness and litigation support services.

We collaborate with various stakeholders including owners, operators, contractors, subcontractors, law firms and government agencies, tailoring our services to meet their individual requirements.

Contact us to enquire about our market-leading expert services.

References[+]

References
↑1	https://dictionary.cambridge.org/dictionary/english/turmoil
↑2	https://www.oxfordlearnersdictionaries.com/definition/english/turmoil
↑3	Mullen J, Davison P, 2020, Evaluating Contract Claims, Third Edition, Wiley Blackwell, page 23.
↑4	See pages 11, 12 and 14.
↑5	The application of ‘common sense’ is mentioned in several sections of the SCLDDP, and in my view, a few more mentions could not have done any harm

CAP – An Evaluative Approach to Collaborative ADR

Article

CAP – An Evaluative Approach to Collaborative ADR

17th April 2024

Dr. Franco Mastrandrea

Partner

francomastrandrea@hka.com

T: +44 (0) 7884 436 537

Expert Profile

DOWNLOAD ARTICLE (PDF)

Introduction

There are a number of collaborative Alternative Dispute Resolution (“ADR”) approaches, in which (an) independent, third-party neutral(s) assist(s) the parties avoid an incipient, or resolve an actual, construction dispute. The Dispute Avoidance/Adjudication Board (“DAAB”), part of a multi-tiered dispute resolution procedure promoted by the FIDIC 2017 suite of contracts is an example.^[1]For a short article on this form of ADR, see Mastrandrea, F, “DAABs: Dos and Don’ts”…

Mediation

Mediation is perhaps the most commonly recognised form of collaborative ADR. The parties to an incipient or actual dispute agree on or are provided with a neutral to facilitate discussions between them, with the goal of reaching a settlement. The power to settle remains with the parties, but the process is led by the mediator. Mediation has a number of recognisable features. Thus:

It is voluntary.
It is confidential.
It is largely informal.
It is not beset by rules.
It allows the appointed mediator to set the procedure considered to be appropriate based on the matters in issue.
It typically involves some form of position paper/statements from the parties, and responses thereto.
It typically involves caucusing between the mediator and one or more (but not all) parties, or plenary meetings with all parties.
Whilst it typically involves reality testing by the mediator (usually during caucusing sessions), it does not usually involve examination of the parties or their witnesses (whether factual or expert), whether by way of concurrent evidence (or hot-tubbing), cross-examination by the parties, or inquisitorial questioning by the mediator.
The mediator acts as honest broker, seeking to bring the parties together through an understanding of their interests as well as the merits of their positions.

A few more words are appropriate on caucusing. This is one of the vaunted advantages of mediation. It allows the mediator to receive information from a party providing the mediator with better insight into a party’s interests, position, and motivation – all of which can assist the mediator in achieving settlement. These are often matters which the disclosing party may not (at least at that stage in the mediation) want to be shared with the other party(ies).

That introduces two major challenges for the mediator:

First, to make sure that that which has been disclosed remains undisclosed until (if and when) the disclosing party agrees to its disclosure.
Second, it can involve information going beyond the ordinary cut and thrust of dealings between commercial parties.^[2]Ranging from part truths, through deliberate understatements or exaggerations, to (at the extreme) perjury, fraud, and other illegality. No doubt mediators will have their own strategies for avoiding/dealing with these sorts of difficulties,^[3]Mediator codes of conduct may or may not assist but they can clearly compromise the honest broker role of the mediator, even make the mediator’s ability to continue untenable.^[4]Consider, for example, the CEDR Code of Conduct for Third Party Neutrals, 2023 Edition, providing at Clause 7.2:‘The Neutral may withdraw from the Process… if:…• any of the Parties is acting … Continue reading

The mediation process is very often facilitative, and not evaluative i.e., there is no appraisal by the mediator of the respective merits of the parties’ cases whether on the facts or on the law, other than to a limited extent that which may be hinted at by the mediator or discerned by the relevant party during reality testing. Thus, the mediator does not express views on matters:

legal (such as the interpretation of contractual terms or their application, termination, measure of damages),
technical (such as design, health and safety issues, defects, the state of completion),
managerial (such as tendering, planning, procuring, quality assuring or controlling, executing, administering, varying, progressing),
time (such as delays and causes thereof, extensions of time), or
quantum (such as the financial value of the parties’ claims, damages for delay, prolongation, disruption, acceleration).

Whilst this may mean in practice that a skillful mediator but one without the particular specialist skills needed for an evaluation on the merits set out immediately above can nevertheless manage to facilitate a settlement, many users see this as a significant drawback.

It is sometimes the case with a failed mediation that the mediator is asked to express a view on value at the end of the failed process. In practice this is often at a summary level without any (or any adequate) reasons, and particularly so with a mediator not specialised in matters of evaluation in the particular areas of difference or dispute between the parties.

A related question is whether a mediator can, after a failed mediation, act as an adjudicator or arbitrator of the unresolved differences or disputes. The challenge then is whether the mediator’s earlier involvement taints his/her ability to provide an enforceable (temporary or permanently binding) decision or award. Unsurprisingly, such law as there is on this topic suggests they can not. Thus, in Glencot Development & Design Ltd. v. Ben Barrett &Son (Contractors) Ltd.^[5]2001] EWHC Technology 15., His Honour Judge Humphrey Lloyd QC (as he then was) refused to enforce an adjudicator’s subsequent decision on grounds of apparent bias.

RICS Conflict Avoidance Process (CAP)

The RICS Conflict Avoidance Process (“CAP”)^[6]See RICS Conflict Avoidance Process (CAP) – Summary, January 2021, last modified 21/11/2023. is promoted as a cost saving mechanism to prevent lengthy and damaging disputes between parties. Its stated aim is to help parties address emerging issues early, avoiding costly and confrontational proceedings like adjudication, arbitration, or litigation.

CAP involves the appointment of a panel of one or three impartial professional(s) who is/are expert(s) in the relevant field. The panel is intended to collaborate with parties to provide pragmatic recommendations to resolve the issue(s) in dispute. CAP is a flexible process, meaning that the CAP facilitator can adapt the procedure to suit the needs of the parties.

Thus, speed, economy, expertise, and flexibility are its vaunted advantages.

CAP thus displays most of the nine characteristics set out above for mediation.

One particular feature, namely caucusing, should I suggest be treated with great care. Whilst caucusing is possible, my experience is that this feature should be used with a light touch and with caution. The ability to act as honest broker demands that the CAP facilitator be trusted. That something learned in caucus may, however subliminally, influence the CAP facilitator’s recommendation(s) cannot be dismissed. My preference therefore is that each party should, before the facilitator’s recommendations are finalised, know everything about the other party’s position as shared with the CAP facilitator. This removes also the potential blight exposed in Glencot.

The process also typically involves:

early on, an identification of the key issues,
some form of consultation typically a mixture of inquisitorial, caucus (subject to the caution already identified set) and plenary sessions.

The distinctive feature, unlike in classic mediation, is that CAP does not limit itself to a facilitative process but includes evaluative components, potentially at all stages by a facilitator with the relevant skills, culminating in a recommendation by the CAP facilitator to resolve the whole.

An anonymised case study

I set out in summary hereafter details of a CAP process which the author recently completed. This involved 3 separate contracts, between the same parties, each let on the same amended NEC form of contract. The main issues were variations and project delays:

at my instigation as the facilitator, the parties were able to agree on:
- the extent of delays on each contract, and when those delays occurred, and
- a list of variations on each contract
in response to my indications of what an arbitrator or the courts would regard as the appropriate approach to the valuation of each, given the contract terms, I encouraged the parties to work together on a valuation of each matter having regard to which (1) variations were stand-alone variations having no impact on the project duration, or (2) variations that lay on the project’s critical path
the parties were thereafter encouraged to, and did, agree that
- the preliminaries component of the prolongation claim was to be valued at actual cost,
- overheads were to be valued as a choice between a tendered or an actual overheads percentage,
- the resolved overheads percentage was to be added to the additional preliminaries component of the prolongation claim,
- the profit claim was to be considered on a loss of alternative opportunity time-sensitive basis (perhaps on a formula), and
- duplication was to be addressed in relation to variations by identifying the variations lying on the critical path for an agreed period. For that period no preliminaries, overheads or profit were to be allowed, as the variations were to be valued on a rates basis.

The final stage, bearing in mind the desire for speed and economy was something that I fashioned in the form of a pendulum procedure. This was based, should the parties fail to agree everything, on their producing a Scott Schedule which identified:

items agreed, with agreed values against each, and
items not agreed, with each party’s value issued by way of exchange (i.e. unsighted and uninfluenced by the other) for me thereafter to make a pendulum recommendation against each, given the principles set down and agreed earlier in the process.

It seemed to me very likely that this final stage

not only saved the significant time and cost that would likely have been involved for an independent and detailed review by me of significant amounts of factual, pricing, and cost, data, but also
acted as a temper to extremes of valuation by each, given the risk that the pendulum recommendation by me would not adopt excessively high or low valuations that either of the parties might proffer.

About the Author

Franco Mastrandrea is a Chartered Quantity Surveyor and Chartered Arbitrator with over 40 years of experience in the construction industry. He has acted as expert on more than 50 international project management, delay and quantum-related disputes.

Contact us to enquire about our market-leading expert services.

References[+]

References
↑1	For a short article on this form of ADR, see Mastrandrea, F, “DAABs: Dos and Don’ts”…
↑2	Ranging from part truths, through deliberate understatements or exaggerations, to (at the extreme) perjury, fraud, and other illegality.
↑3	Mediator codes of conduct may or may not assist
↑4	Consider, for example, the CEDR Code of Conduct for Third Party Neutrals, 2023 Edition, providing at Clause 7.2: ‘The Neutral may withdraw from the Process… if:… • any of the Parties is acting in an unconscionable or criminal manner… Cf. in Oregon by reference to the Oregon Statutes Revised – Chapter 36 Mediation and Arbitration, the Formal Opinion NO 2005-167 [Revised 2014] Lawyer as Mediator: Attempted Fraud by One Party, concluding that a Lawyer-Mediator cannot complete a mediation based in whole or in part on the fraud of a mediating party. At a minimum, Lawyer-Mediator must inform Party A that as a result of Party A’s nondisclosure, Lawyer-Mediator will be obligated to withdraw from the mediation. As for Party B, unless the disclosure falls within a statutory exception, the mediator is bound to keep the communication confidential. The exceptions include communications that the mediator or a party reasonably believes must be disclosed “to prevent a party from committing a crime that is likely to result in death or substantial bodily injury to a specific person.”
↑5	2001] EWHC Technology 15.
↑6	See RICS Conflict Avoidance Process (CAP) – Summary, January 2021, last modified 21/11/2023.

Darren Mullins joins HKA’s Forensic Accounting and Commercial Damages Practice in Dubai as Partner

News

Darren Mullins joins HKA’s Forensic Accounting and Commercial Damages Practice in Dubai as Partner

25th March 2024

HKA, a leading global consultancy in risk mitigation, dispute resolution, expert witness, and litigation support services, announces a key hire in its Forensic Accounting and Commercial Damages (FACD) practice as Darren Mullins joins the firm as Partner based in Dubai.

Darren has over 18 years of experience and is a distinguished expert in forensic and cyber investigations. Specialising in financial crime, digital evidence recovery, electronic discovery, and data analytics, he has worked across a large spectrum of industries. He has garnered recognition for his expertise, having assisted many major, prolific companies in various regions around the world.

“I am thrilled to welcome Darren to HKA and to our Partner team. As our FACD service offering continues to develop and expand, Darren will be an influential addition to our growth strategy, working alongside Clare Lavin, Partner Forensic Accounting & Commercial Damages out of Dubai, as well as the wider EMEA team.”
Stuart Ells, Partner, Chief Growth and Operations Officer, EMEA

With previous posts at Accuracy, KPMG, Deloitte and EY, Darren has led diverse teams in delivering forensic investigations services tackling fraud, financial crime, cyber breaches and intellectual property theft. Further to his experience, Darren acts as an expert witness and has provided invaluable insight on a range of complex litigation matters.

Darren said: “I am delighted to join HKA, a firm renowned for its commitment to excellence and innovation. As I embark on this new chapter, I look forward to leveraging my expertise in forensic investigations to further enhance HKA’s innovative approach to delivering exceptional solutions for our clients worldwide. Together with HKA’s talented team, I am confident that we will continue to push boundaries and set new standards of excellence in the industry.”

ABOUT HKA

Headquartered in the UK, HKA is a leading global consultancy in risk mitigation, dispute resolution, expert witness and litigation support services.

HKA brings a proud record of excellent service and high achievement to bear on today’s challenges. As trusted independent consultants, experts and advisers, we help clients manage disputes, risk and uncertainty on complex contracts and challenging projects. Our advice is impartial, incisive and authoritative.

We work with government agencies, local authorities, contractors, legal firms, and other professional service providers, as well as owners and operators, financial institutions and insurers. HKA’s global portfolio includes some of the world’s largest and most prestigious commissions across a wide range of industries, including aerospace and defence, buildings, energy and natural resources, environment and climate change, financial services, healthcare and life sciences, industrial and manufacturing, marine and shipping, mining and metals, oil and gas, power and utilities, real estate and tourism, sports and entertainment, technology, media and telecoms and transportation infrastructure.

HKA has in excess of 1,000 experts, consultants and advisors across 45+ offices in 17 countries with the skills and experience that are essential to get to the heart of even the most complex issues. Our people have vast first-hand experience spanning all major industries and the world’s most complex megaprojects, as well as an international track record of achieving successful outcomes.

For more information about HKA, visit hka.com and connect with us on LinkedIn, X (formally Twitter, @HKAGlobal) and Facebook.

Media contact:

Name	Jude Wilson-Brown
Title	Marketing & Communications Director, Middle East and Africa
Number	+971 4 337 2145
Email	JudeWilsonBrown@hka.com

Acceleration of construction projects

Article

Acceleration of construction projects

7th February 2024

Dr. Franco Mastrandrea

Partner

francomastrandrea@hka.com

T: +44 (0) 7884 436 537

Expert Profile

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Acceleration of construction projects^[1]For a more comprehensive review of this topic see Mastrandrea, F, “The Appraisal of Contractors’ Acceleration Claims”, [2024] ICLR 27.

Acceleration is increasingly on the agenda for construction projects. Its use for decades in the U.S in the form of constructive acceleration appears to continue unabated, and there is some evidence that the concept may be sought to be applied more broadly in other jurisdictions.

Acceleration can be achieved in a variety of ways: by changing the design or specification of permanent and/or temporary works, altering methods of working, re-sequencing work, introducing additional (or more expensive) resources whether material plant or labour, working overtime, extending working hours, introducing shift working, etc.

The SCL ‘Delay and Disruption Protocol’, Second Edition, 2017, defines acceleration by reference exclusively to contractor-driven strategies.

Although acceleration has traditionally been discussed in the context of project, or critical path, delays, that seems too narrow a focus. The underlying justification for acceleration claims can, it is suggested, be put more broadly: the contractor’s wish through acceleration to contain its costs or losses, or increase its profit. Thus, a contractor hindered by defaults of the employer which lead to non-critical delays would typically be entitled, as a remedy for breach of contract, or according to the contract’s loss/expense provisions, to localised time-sensitive and/or disruption costs.^[2]For a more comprehensive review of this topic see Mastrandrea, F, “Localised Delays: The Poor Relation in Construction Claims Appraisals?”, [2023] ICLR 112. The contractor sees advantage in those circumstances in taking exceptional accelerative measures as a potential means of reducing overall costs it incurs, and claims additional expenditure in pursuing that acceleration, and proves that expenditure (which can in all cases of acceleration be a challenging task, being an exercise in incremental costing). If that is right, acceleration is not confined to seeking to reduce the duration of critical path activities.

Acceleration directed at some failure on the part of the employer, is to be distinguished from acceleration motivated by some other consideration. A contractor making poor progress (for whatever reason) will often find itself under significant pressure from an employer to improve upon that progress. The additional cost of accelerative measures taken in response to legitimate demands by an employer for the contractor to pick up the pace of works will typically be unrecoverable.

By contrast, additional costs incurred by a contractor instructed or directed to accelerate where the contractor is not itself falling behind will typically be recoverable.

It seems unlikely that, in the absence of an express provision to that effect, an obligation on the part of the contractor to accelerate arises simply by reason of the application of common-sense principles, as presumably the contractor will ordinarily be entitled to say that if it is late in completion the employer will have its remedy in delay damages.

Constructive acceleration, widely recognised in the U.S., is intended to denote deemed, as opposed to instructed, acceleration. Notwithstanding some recent suggestions otherwise in response to unfolding case law,^[3]A recent example popularly used for illustration is V601 v. Probuild [2021] VSC 849. it has not found fertile ground in other common law jurisdictions^[4]There appear to be few examples of the concept being pursued in civil law jurisdictions: for an exception, see the ‘accélération par induction’ in Dawcolectric inc. c. Hydro-Québec, 2014 QCCA … Continue reading where, beyond instructed acceleration, compensation is typically limited to accelerative measures taken by way of a justifiable response, such as mitigation, to a breach of contract. The challenge then becomes one of identifying the triggering breach. This is typically a failure on the part of the employer or its agents properly to discharge its contractual obligations (e.g. to grant possession of the site, to provide timely design information, by the contract administrator to carry out the employer’s functions, or illegitimate collusion with the employer such as by failing to award extensions of time properly due).

As with other claims a contractor’s claim for acceleration may be barred because of its failure to submit its claim in accordance with the express contractual requirements, many of which may be exacting, although exceptions, such as waiver and the employer’s own knowledge, may apply in particular jurisdictions.

A disincentive to acceleration may in future be the increasing availability – by way of developing standard forms of contract and/or statutory reforms – of adjudication or other expedited forms of dispute resolution to decide delay claims speedily.

About the Author

References[+]

References
↑1	For a more comprehensive review of this topic see Mastrandrea, F, “The Appraisal of Contractors’ Acceleration Claims”, [2024] ICLR 27.
↑2	For a more comprehensive review of this topic see Mastrandrea, F, “Localised Delays: The Poor Relation in Construction Claims Appraisals?”, [2023] ICLR 112.
↑3	A recent example popularly used for illustration is V601 v. Probuild [2021] VSC 849.
↑4	There appear to be few examples of the concept being pursued in civil law jurisdictions: for an exception, see the ‘accélération par induction’ in Dawcolectric inc. c. Hydro-Québec, 2014 QCCA 948.

Can uncontroverted expert evidence be rejected?

Article

Can uncontroverted expert evidence be rejected?

31st January 2024

Mark Dixon

Partner

markdixon@hka.com

T: +44 (0) 7979 850 684

Expert Profile

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On 29 November 2023 the Supreme Court handed down its judgment in TUI UK Ltd v Griffiths^[1][2023] UKSC 48. The appeal to the Supreme Court raised an important question of the fairness in the original trial, namely whether the trial judge was entitled to find that the claimant had not proved his case when his expert witness had given uncontroverted evidence on causation that was not illogical, incoherent or inconsistent, or based on any misunderstanding of the facts or unrealistic assumptions.

The unanimous decision of the judges in the Supreme Court set out in the speech of Lord Hodge is the culmination of a long-running saga concerning a relatively modest dispute arising out of a package holiday in 2014.

Although this is a travel industry case, the judgment confirms some important principles that are of general application to expert witness evidence in civil cases.

The Facts

Mr. Griffiths entered into a contract with TUI for a 15-night all-inclusive package holiday for his family and himself in Turkey between 2 and 16 August 2014. Mr. Griffiths fell ill while on holiday and ended up in hospital with acute gastroenteritis.

In August 2017 Mr. Griffiths commenced an action in the County Court claiming damages from TUI. TUI denied the claim and put Mr. Griffiths to proof as to the cause of his illness.

Mr. Griffiths relied inter alia upon an expert report from a microbiologist dealing with matters of causation. After service of the report, TUI put written questions to the expert pursuant to CPR Part 35.6, which he answered. TUI did not rely on any expert evidence of its own.

TUI did not seek to have Mr. Griffiths’ expert witness attend the trial for cross-examination, with the result being that his evidence was accepted on paper. His expert evidence was, therefore, uncontroverted in the sense that it was not subject to challenge by cross-examination and, moreover, was not in conflict with any other evidence led at the trial.

Notwithstanding this, counsel for TUI made specific criticisms of the expert’s evidence in opening and closing submissions.

In judgment, the trial judge accepted the factual evidence of Mr. and Mrs. Griffiths, who she described as patently honest and straightforward witnesses. The only expert evidence on causation before the trial judge was the uncontroverted expert report of the microbiologist and his answers to the CPR Pt 35.6 questions. The judge nonetheless accepted TUI’s challenges to the expert’s report and was separately critical of some of his conclusions and answers to the CPR Pt 35.6 questions. The judge concluded that Mr. Griffiths had not proved his case and dismissed the claim.

Mr. Griffiths appealed to the High Court. In a judgment dated 20 August 2020^[2][2020] EWHC 2268 (QB) Spencer J allowed the appeal on the grounds that the trial judge was not entitled to reject the uncontroverted evidence of the expert, which he was satisfied complied with the minimum requirements of CPR Practice Direction 35.

TUI appealed. In a judgment dated 7 October 2021^[3][2021] EWCA Civ 1442 the majority of the Court of Appeal (Asplin LJ and Nugee LJ) allowed the appeal, with Bean LJ dissenting. Asplin LJ delivered the leading speech, concluding that Spencer J had erred in law in holding that, where an expert’s report is uncontroverted, the court is not entitled to evaluate the report but need only to ask itself whether the report meets the minimum standards prescribed by CPR PD 35. Bean LJ dissented in strong terms, describing it as trite law that a party is required to challenge the evidence of any witness of the opposing party in cross-examination if it wishes to submit to the Court that the evidence should not be accepted.

The Law

Following a detailed review of the legal authorities, the Supreme Court identified the following relevant propositions:

The general rule in civil cases is that a party is required to challenge by cross-examination the evidence of any fact or expert witness of the opposing party on a material point which it wishes to submit should not be accepted.
The purpose of the rule is to make sure that the trial is fair.
The rationale of the rule, i.e., preserving the fairness of the trial, includes fairness to the party who has adduced the evidence of the impugned witness.
Maintaining the fairness of the trial includes fairness to the witness whose evidence is being impugned, whether on the basis of dishonesty, inaccuracy or other inadequacy. An expert witness, in particular, may have a strong professional interest in maintaining his or her reputation from a challenge of inaccuracy or inadequacy as well as from a challenge to the expert’s honesty.
Maintaining such fairness also includes enabling the judge to make a proper assessment of all the evidence so as to achieve justice in the cause. The rule is directed to the integrity of the court process itself.
Cross-examination gives a witness the opportunity to explain or clarify his or her evidence.
It is not, however, an inflexible rule. Its application depends upon the circumstances of the case, as the criterion is the overall fairness of the trial. Thus, where it would be disproportionate to cross-examine at length or where, for example, the trial judge has set a limit on the time for cross-examination, those circumstances would be relevant considerations in the court’s decision on the application of the rule.
Examples of further circumstances in which the rule may not apply include:

(a) the matter to which the challenge is directed is collateral or insignificant and fairness to the witness does not require there to be an opportunity to answer or explain.
(b) the evidence of fact may be manifestly incredible, and an opportunity to explain on cross-examination would make no difference.
(c) there may be a bold assertion of opinion in an expert’s report without any reasoning to support it, i.e., a bare ipse dixit (an argument based solely upon the authority of the witness), although reasoning which appears inadequate and is open to criticism for that reason is not the same as a bare ipse dixit.
(d) there may be an obvious mistake on the face of an expert report.
(e) the witnesses’ evidence of the facts may be contrary to the basis on which the expert expressed his or her view in the expert report.
(f) an expert has been given a sufficient opportunity to respond to criticism of, or otherwise clarify, his or her report. For example, if an expert faces focused questions in the written CPR Pt 35.6 questions of the opposing party and fails to answer them satisfactorily, a court may conclude that the expert has been given a sufficient opportunity to explain the report negating the need for further challenge on cross-examination.
(g) a failure to comply with the requirements of CPR PD 35 may be a further exception, but a party seeking to rely on such a failure would be wise to seek the directions of the trial judge before doing so, as much will depend upon the seriousness of the failure.
(h) there will also be circumstances where in the course of a cross-examination counsel omits to put a relevant matter to a witness and that does not prevent him or her from leading evidence on that matter from a later witness.

Application of the Law to the Facts

In assessing the fairness of the trial, the Supreme Court considered it important to have regard to TUI’s conduct in not (i) calling fact or expert evidence of its own, (ii) asking questions under CPR Part 35.6 that were focussed on the criticisms relied upon at trial, (iii) putting the expert on notice of such criticisms and (iv) requesting that he attend trial for cross-examination.

The Court was also critical of Mr. Griffiths’ expert’s report, which was said to be terse, could and should have included more expansive reasoning, and left many relevant questions unanswered. However, it noted the factual evidence that was available to, and considered by, the expert—which evidence was accepted by the trial judge—and concluded that the report was far from a bare ipse dixit. Furthermore, the Court accepted that the expert may have thought that his full reasoning was implicit in the context of what was a claim of relatively low value. The Court also noted that an important part of the expert’s reasoning was explained in his answers to the CPR Part 35.6 questions.

Although the Court concluded that the expert’s assessment of causation was high level, it was found not to be irrational and may have been proportionate. The Court also decided that none of the exceptions identified under proposition eight (above) applied, and there was no basis for any assumption that the expert’s reasoning would not have been explained more clearly if challenged in cross-examination.

The Supreme Court concluded that both the trial judge and the Court of Appeal failed properly to address the application of the rules to the facts of the case and therefore erred in law in a significant way. Accordingly, the Court decided that Mr. Griffiths did not receive a fair trial and allowed the appeal.

Can Uncontroverted Expert Evidence Be Rejected? The Takeaways

There are lessons from this judgment for the parties and their legal advisors, experts and tribunals.

Parties and their legal advisers should think carefully before deciding not to require a potentially important witness to attend a trial or hearing for cross-examination and should ensure that all material points are put to a relevant witness.

Experts should take care to ensure that the reasons for their opinions are adequately explained in their reports.

Tribunals should be slow to reject uncontroverted witness evidence unless one or more exceptions of the kind identified by the Supreme Court are relevant, or the circumstances of the case are such that it would otherwise be fair to do so.

About the Author

Mark Dixon is a dual-qualified Chartered Surveyor and Chartered Arbitrator with 40 years of experience in the construction and engineering industries. He is a respected international quantum expert witness and dispute resolver.

References[+]

References
↑1	[2023] UKSC 48
↑2	[2020] EWHC 2268 (QB
↑3	[2021] EWCA Civ 1442

Huseyin Karanci joins HKA’s Delay Team as Principal based in London

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Huseyin Karanci joins HKA’s Delay Team as Principal based in London

10th January 2024

HKA, a leading global consultancy in risk mitigation, dispute resolution, expert witness and litigation support services, announces that Huseyin Karanci has joined the firm as Principal and Delay Expert based in London.

Huseyin is a civil engineer and delay and programming Expert with over 16 years of experience in the planning, design, procurement, construction management and analysis of complex construction projects internationally. He specialises in providing consulting services in the areas of programming, delay and construction management.

“We are thrilled to have Huseyin on board. As a highly experienced delay and programming Expert, with significant international experience, he will be a great asset to our delay team as we look to strengthen our capabilities in order to better serve our clients across the EMEA region.”
Michelle Metz, Partner

Having worked within leading international contractors and multi-national consultancy firms operating in EMEA, Huseyin has extensive on-site experience on large infrastructure projects, including airports, roads, rail and bridges, as well as high-rise buildings and shopping malls. His general experience also extends to the oil and gas and civil engineering sectors.

Huseyin said: “I am delighted to join HKA’s London office as a Principal and to be part of a world-class team of experts and specialists in risk mitigation and dispute resolution. I have always admired HKA’s reputation for delivering excellence and value to its clients across the capital projects and infrastructure sector. I look forward to applying my skills and experience to help HKA grow and develop in the UK, Europe and the wider EMEA region.”

View Huseyin’s full expert profile

ABOUT HKA

Headquartered in the UK, HKA is a leading global consultancy in risk mitigation, dispute resolution, expert witness and litigation support services.

For more information about HKA, visit hka.com and connect with us on LinkedIn, X (formally Twitter, @HKAGlobal) and Facebook.

Media contact:

Name	Suzanne Rayson
Title	Marketing & Communications Director, Europe
Number	+44 1928 756 500
Email	SuzanneRayson@hka.com

Igor Popovic joins HKA as Economics Director in London

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Igor Popovic joins HKA as Economics Director in London

9th January 2024

HKA, a leading global consultancy in risk mitigation, dispute resolution, expert witness and litigation support services, announces that Igor Popovic has joined the firm as Economics Director based in London. Igor will join the firm’s newly formed Economics Consulting Practice, headed up by Partner Chris Williams. The practice sits within HKA’s wider Forensic Accounting and Commercial Damages service offering.

“Igor brings a wealth of experience across the regulatory and financial economics field that will be invaluable to the development of our new, but rapidly expanding, economics practice. I have worked with Igor, both as a client and a colleague, for a number of years and know our clients will continue to value his combination of practical knowledge and ever-questioning mind.”
Chris Williams – Partner, Economics

Igor is an economist with over 20 years’ experience as an adviser to corporate and government clients, as well as an economic regulator. He has particular expertise across healthcare, telecommunications, energy, water, transport and financial services sectors. Igor has extensive experience working for Australian and UK Government regulators. He worked for the Australian Competition and Consumer Commission and was a Director at NHS Improvement where he built and led the Pricing Delivery team and was responsible for the annual development of the National Tariff Payment System. Igor also provided Government advisory services to clients during his time with Ernst & Young Australia.

More recently, Igor was a Director at Alvarez & Marsal Economics, and an Associate Director at Grant Thornton where he provided advice in disputes, supported clients in commercial transactions, both on buy and sell side, and advised private and Government clients across multiple sectors.

Igor said: “I am thrilled to be joining HKA at this exciting time, as the firm grows its offering across its economics, forensic accounting and dispute practices. There are significant synergies in supporting our clients with a combined offering, leveraging our respective toolsets, to provide a comprehensive service. I look forward to using my background in financial economics and economic regulation of infrastructure across our disputes and advisory services.”

Igor holds a Masters degree in Finance and Bachelor degrees in Economics and in Chemistry.

ABOUT HKA

Headquartered in the UK, HKA is a leading global consultancy in risk mitigation, dispute resolution, expert witness and litigation support services.

For more information about HKA, visit hka.com and connect with us on LinkedIn, X (formerly Twitter, @HKAGlobal) and Facebook.

Media contact:

Name	Suzanne Rayson
Title	Marketing & Communications Director, Europe
Number	+44 1928 756 500
Email	SuzanneRayson@hka.com

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