Potential Impacts of COVID-19 on Construction Projects in Canada
April 20, 2020
Potential Impacts of COVID-19 on Construction Projects in CanadaDownload Article
The COVID-19 pandemic has been a considerable source of discussion and, despite multiple publications, numerous questions and uncertainties remain. Will the COVID-19 pandemic be considered a force majeure event? How will COVID-19 impact construction projects in Canada? How can contractors and owners prepare themselves for eventual discussions on the impact of COVID-19? In this article, we provide our thoughts on these questions.
Will the COVID-19 pandemic be considered a force majeure event?
Leading law firms in Canada have been publishing articles answering this question. The general consensus is: it depends. The application of a force majeure clause will depend on the specific language used in the contract, on the geographical location of the project, and the temporality of the signature of the contract. As some provinces in Canada have ordered a shutdown of construction projects while other provinces have deemed construction an essential service, the application of the force majeure clause may also rely on how the provincial governments react to COVID-19. In other words, a government-ordered stoppage of work may be considered a force majeure while a contractor’s decision to stop work prior to such orders may not constitute a force majeure.
Whether or not COVID-19 will be considered a force majeure, construction projects will be impacted by this rapidly evolving pandemic. As such, contractors need to be prepared to document the actual impacts which will likely be more significant than the duration of the government-imposed shutdowns.