Setterwalls acts as counsel in several disputes concerning material price increases in construction projects

During the Covid-19 pandemic, material prices increased significantly in the construction industry, which, according to AB 04 and ABT 06, may lead to price adjustments for contractors. Many contracts that were signed before or during the price increases are now being finalised, and if the parties cannot agree, the issue may need to be resolved in court or through arbitration. Setterwalls represents several employers in such disputes, where the values involved are often substantial.

Just before and during the Covid-19 pandemic, prices for materials in the construction industry increased significantly. Under the general provisions (AB 04 and ABT 06) that regularly form part of Swedish construction contracts, the contractor has the possibility to request and adjust the agreed price for the contract in the event of unforeseen and significant increases in the cost of materials. This provision has been discussed ever since the significant price increases and in some cases agreements on compensation, or indexation, have been reached or it has been clarified that the circumstances are such that no adjustment of the price should be made.

Since one condition is that the increased costs must have significantly affected the total cost of the contract, in many cases it has not been possible until now to judge whether the provision should be applied – not all costs have been known. Many contracts are now being finalised where contracts have been signed before or during the price increases and in cases where the parties do not agree, there is a great risk that the issue will be resolved by the courts and, in particular, arbitration.

Setterwalls has been appointed as counsel in several disputes concerning price increases for materials in recently completed construction projects. The value of the dispute is often substantial, which can make it difficult for the parties to reach a settlement agreement. Setterwalls represents both contractors and employers in these disputes.