Liability for fire safety requirements: who bears the risk when the fire strategy cannot be implemented?

Liability for the resulting costs depends on the reason for the change and on the terms agreed between the parties. Was the necessary solution already comprised within the contractor's scope of works? Has a consultant or contractor committed a design error? Or does the matter concern a new requirement, or a condition of the existing building, that the agreement did not address? These questions must be considered separately in determining liability and the allocation of costs.

Allocating liability when a fire strategy cannot be implemented 

The Danish Building Regulations (BR18) set out the principal fire safety requirements applicable to buildings, including how such requirements are to be satisfied and documented. BR18 does not regulate which party bears the risk when the fire strategy proves incapable of implementation. Liability must instead be determined by reference to the contractual arrangements between the parties and the general principles governing design liability between the employer, the consultant and the contractor.

Under a main contract arrangement, the design is generally undertaken by the employer's consultants. The consultant is required to perform its services in accordance with the agreement and in accordance with generally accepted professional standards, and must review its own design, including the interfaces with other parts of the project.

Where the fire strategy cannot be implemented as originally intended, the question is whether the deficiency arises from an error or omission within the scope of the consultant's engagement. The mere fact that a solution requires amendment does not suffice to establish liability. Any such claim must be assessed by reference to the applicable liability provisions governing the consultancy agreement and the general principles of Danish law on liability in damages. The grant of a building permit does not determine the contractual liability as between the parties.

Where the contractor has assumed design responsibility for part of the works, the contractor bears liability for its own design. The employer remains responsible for coordinating the project as a whole and for defining the relevant interfaces. A dispute concerning a fire safety solution may accordingly require close examination both of the contractor's design and of the assumptions, functional requirements and interfaces provided by the employer.

Under a design-and-build contract, the contractor is responsible for carrying out the design and for procuring the necessary approval of the project. Compliance with statutory requirements set out in generally applicable regulations is included in the contract price. The employer must ensure that the information and requirements contained in the tender documents do not conflict with legislation or other public regulations.

Accordingly, where a fire safety solution requires amendment, the form of contract alone cannot determine which party bears the additional cost. It is necessary to examine which requirements applied, what was disclosed in the tender documents, the assumptions and qualifications on which the tender was based and why the original solution could not be implemented.

What does arbitration practice establish?

Arbitral practice does not give a uniform answer to the question of which party bears the cost where a fire strategy must be amended. Instead, the awards illustrate three distinct issues: whether a consultant has committed an error, whether the contractor had already assumed responsibility for the necessary works, and how the scope of a subsequent agreement for additional works is to be construed.

In TBB 2018.140 VBA, the arbitral tribunal held that it had not been established that the consultant had erred in recommending a water mist sprinkler system or in designing the fire strategy. The fact that the authorities subsequently imposed supplementary requirements was not sufficient to demonstrate an error on the part of the consultant. The tribunal had regard to the fact that water mist sprinkling constituted a new method - such that a degree of uncertainty as to the applicable requirements was unavoidable - and to the fact that the consultant had advised the employer of the risk of a protracted and uncertain approval process before the authorities. The award illustrates that a subsequent amendment to the fire strategy does not evidence a design error. The question is whether the advice satisfied the professional standard applicable at the time it was given, including whether the employer had been made aware of any material uncertainties inherent in the solution.

In TBB 2017.63 the tribunal held that the design-and-build contractor knew, or ought to have known, of the fire strategy and the conditions attached to the building permit at the time the contract was concluded. The works required to satisfy the fire safety requirements were accordingly already comprised within the contract and did not give rise to an entitlement to additional payment.

TBB 2019.161 illustrates the significance of the precise scope of the agreement. Sprinkler installation did not form part of the original construction agreement but was subsequently agreed to as additional works. A dispute thereafter arose as to whether the agreed price for the sprinkler works also comprised the sprinkling of the loft space. The tribunal held that the works to the loft space were not comprised within the agreed price, having regard, among other matters, to the specific conditions of the tender and to the fact that neither party had been aware, at the time the agreement was concluded, of the requirement to sprinkler the loft space. The design-and-build contractor accordingly succeeded in its claim for additional payment in respect of that element of the works. The award demonstrates that the fact that certain works are required for fire safety purposes does not determine whether those works fall within an already agreed price.

What should the parties clarify in the agreement? 

Where a fire strategy cannot be implemented as planned, the question is why the underlying assumptions have changed. The parties must then determine which party was responsible for the relevant part of the design, and which works were already comprised within the agreement. Only on that basis can it be assessed whether the resulting cost arises from a defect, constitutes additional works, or arises from a matter for which the agreement allocates risk in some other manner.

This is of particular importance in the context of renovation and extension projects, where the agreement should identify the known conditions of the existing building, the fire safety assumptions, and the interfaces between the various designers. The parties should also agree which new information or amended requirements are to be addressed as regards design, price and time. Should uncertainty arise during the project, it should be documented and resolved before the chosen solution is implemented.

The Danish Agency for Housing and Planning is undertaking a revision of the Building Regulations, which will address the rules applicable to existing buildings. Pending the entry into force of any such amendments, a clear statement of the project's assumptions and of the parties' respective responsibilities remains an important safeguard against disputes concerning fire safety requirements.

Therefore, it is essential that consultants, contractors and employers maintain a clear understanding of their respective roles and of the underlying contractual framework throughout the design process. A clear understanding of which party bears responsibility for which elements of the fire strategy and how the risk of unforeseen regulatory requirements is allocated under the agreement, may substantially reduce the likelihood of subsequent disputes. It is accordingly advisable to review the agreement against the project's actual development on an ongoing basis, and to have any uncertainty as to the allocation of roles and responsibilities clarified at the earliest opportunity. A proactive approach in this respect will generally constitute the most effective means of avoiding unnecessary cost and delay.