(+45) 70 227 237 info@nexusadvokater.dk

2.1. The employer’s liability in case of delay, cf. ABT 93 § 27, subs. 1

”The contractor shall be entitled to compensation for losses suffered because of delays caused by

(1) circumstances relating to the employer, cf. § 24, subs. 1 (2), and where he is guilty of any errors or neglect, or (2) liability-entailing delays by other contractors, cf. § 25, subs. 1, or liability-entailing delays on the part of other contractual parties.”

  • The compensation which the employer must pay due to delay claims according to § 27 subs. of ABT 93 must be calculated according to the general rules of Danish law and thus includes any financial loss caused by the delay. 
  • In principle, the contractor is entitled to compensation for his full loss, but the basis for the calculation, particularly of the contractor’s lost profits during the delay period and the requirements for proof of the loss, is not clear in arbitration practice.

Lost profits

  • The compensation also includes loss profits which could have been earned by the contractor through the performance of other tasks. 
  • According to Erik Hørlyck, lost profits are calculated according to the following formula according to which the assessment is made considering the profits with which the contractor has calculated and the length of the delay:
  • .According to Torsten Iversen, certain accruals must be made when calculating the calculated contribution margin. Therefore, the crucial factor cannot be the contractor’s anticipated contribution margin for the specific contract but rather the contractor’s “average contribution margin”.
  • An example is TBB 2014.773 where a claim for compensation for the employer’s actionable delay is determined “based on an estimate”, among other factors based on information about the contractor’s “average contribution margin” in “2005 and 2006”.
  1. 2.2. The employer’s liability in case of delay, cf. ABT 93 § 27, subs. 2

“The contractor shall be entitled to indemnity if the cause of the delay falls under:

(1) § 24, subs. 1, 1 (1), 1 (5) and 1 (6), or

(2) § 24, subs. 1 (2), however without falling under subs. 1, or subs. 3, of the present section.
The indemnity shall amount to the loss sustained by the contractor, however to the exclusion of any loss of profit sustained by him by not being able to perform other works for the duration of the delay or similar consequential losses.”

  • The contractor’s claim for indemnity according to § 27 subs. 2 of ABT 93 concerns the direct site-related expenses and share of fixed costs.
    • Site-related expenses
      • The contractor may include the site-related expenses which he has paid during the period of delay. Wage costs may be indemnified, both own hourly-paid employees and rented working capacity.
    • Share of fixed costs
        • The extent to which the contractor’s fixed costs paid during the period of delay can be required paid as a share of the claim for indemnity is uncertain.
        • Fixed costs concern costs for the head office and other typically associated costs, e.g. building insurance, IT systems, expenses for accounting assistance. The uncertainty arises because costs are normally paid as a precondition of the contractor’s other business activities as well. In principle, a share of these expenses will, however, be paid as the basis or a precondition of the contractor’s performance of the specific agreement. Depending on e.g. the size of the specific task compared to the contractor’s total capacity, the contractor’s corporate structure and the systems used for financial management, it will, however, be possible to identify the share of the head office expenses and relate it the specific task in the given circumstances. This will for example be the case when the contractor’s business is based on the performance of few contracts.
          • In practice, indemnity is often not given for fixed costs – in those cases where the opposite is the case, only an indemnity based on an estimate (rather low) is given.

2.3. The contractor’s claim for payment of the acceleration costs

  • ABT 93 contains no rules on acceleration. Acceleration claims are a result of arbitration practice but are codified in the new ABT 18.
  • Acceleration requires an agreement. The contractor is under no obligation to accelerate if the employer is not willing to conclude an agreement.
  • Acceleration agreements can be concluded in the same ways as other general agreements.
    • In writing or orally
    • Expressly or implicitly
    • Through quasi disposition
    • Due to inactivity (no complaint)
  • No specific requirements as to form apply, but the existence of a written agreement makes a big difference.
  • In the given circumstances, the contractor may also receive remuneration for acceleration with no agreement:
    • If the employer caused an actionable delay
    • If the employer refuses the contractor’s claim for extension of time without justification and the contractor accelerates to avoid fines due to the delay
  1. 2.4. The contractor’s right to extension of time limits, cf. ABT 93 § 24

”The contractor shall be entitled to extensions of time limits in case of delay of the work caused by
(1) alterations in the nature and extent of the work ordered by the employer, cf. 14,
(2) circumstances relating to the employer,
(3) circumstances for which the contractor cannot be blamed and which are outside his control, e.g. war, unusual natural events, fire, strikes, lock-out or vandalism,
(4) the occurrence of precipitation, low temperature, strong winds or other weather conditions which prevent or delay the work because they are essentially greater than what is usual for the season and region concerned, or
(5) public orders or bans which were not issued because of the contractor’s own situation, or
(6) the fact that the permits from public authorities required for the performance of the building work have not been obtained within 30 workdays of adequate project documentation having been filed with the public authorities, unless the parties have agreed on a different time limit, cf. § 2, subs. 3 and § 3, subs. 5.

Subs. 2. However, the contractor must endeavour to avoid or limit the extent of delays by means of such measures as can reasonably be required.

Subs. 3. Where the contractor feels entitled to an extension of a time limit, he must inform the employer thereof in writing without delay. The contractor must upon request substantiate that the delay was caused by the circumstances relied upon by him.”

  • When accepting ABT 93, the contractor may require an extension of time in the cases mentioned above in § 24, subs. 1:
    • In case of alterations in the nature and extent of the work
    • In case of the employer’s circumstances or a different contractor’s delay
    • In case of force majeure
    • In case of weather hindrances
    • In case of public orders or bans not caused by the contractor’s own circumstances
  • The contractor may also require an extension of time due to circumstances that obstruct work or make work difficult, see the second sentence of § 15, subs. 3 of ABT 93.
    • ABT 93 § 15, subs. 3: ”The contractor shall immediately inform the employer of the occurrence of any events which obstruct work or render work difficult or due to which the employer is likely to suffer inconvenience or loss, including cases in which the employer will incur liability towards third parties. If there is no time to receive instructions from the employer, the contractor must take the best possible measures for the purpose of avoiding losses being suffered by the employer in return of being granted the necessary extension of time limits and against payment.”

  • The contractor will have to prove that he is entitled to an extension of the time limit.
    • The following is relevant for the assessment of evidence:
      • Whether the contractor made reservations (complained) in consequence of a circumstance allegedly resulting in an extension of the time limit
      • When the complaint took place compared to how much time passes between the circumstances resulting in the extension of the time limit and the time at which the complaint against the employer is made