Construction and Engineering

NEC: PROJECT BANK ACCOUNT

The High Court in England & Wales recently considered the NEC secondary Option Y(UK)1 clause, which provides for a Project Bank Account (“PBA”). In E & TL Jones (Civils) Ltd v Vale of Glamorgan Council [2026] EWHC 2054 (TCC), the main contract was an amended NEC4 Engineering and Construction Contract (June 2017, January 2019 amendments, Option A) between the Council (Client) and ISG (Contractor), incorporating secondary Option Y(UK)1. The claimant was ISG’s groundworks Subcontractor under an NEC4 Subcontract, which incorporated Clause Y(UK)1 in standard subcontract form.

ISG never completed setting up the PBA (owing to delays with the bank) and went into administration before paying the Subcontractor sums it was owed. The Subcontractor sued the Council directly for breach of Clause Y1.8 of the main contract. (The third-party rights route arose in the UK under statute but would be provided for differently in Ireland.)

The claim ultimately failed at the threshold: the Court held the Subcontractor had never become a “Named Supplier” and so had no standing to enforce Clause Y1.8 at all. Everything that follows on how Clause Y(UK)1 operates was therefore obiter, but remains useful practical guidance from the TCC on how the clause should be read. Y(UK)1 operates as an interlocking suite: the Contractor and Subcontractor first enter a subcontract providing for the PBA and Trust Deed. The Subcontractor is then a “Supplier” but not yet a “Named Supplier”. The Contractor must propose the Supplier’s addition to the Project Manager. If accepted, the Client, Contractor and Supplier all execute the Joining Deed, at which point the Supplier becomes a “Named Supplier” and a party to the Trust Deed. Clauses Y1.7 to Y1.12 (the payment mechanics) apply only to the Contractor and Named Suppliers. A mere “Supplier” who has not signed the Joining Deed has no rights under those clauses.

The Court's (obiter) guidance on the practical outworkings of this clause will assist in establishing project arrangements where NEC is used. Guidance included that Y1.8 is not a standing prohibition on direct payment whenever the PBA is not yet operational but instead only bites once the PBA exists and Named Suppliers are in place. Delay in establishing the PBA does not by itself suspend the Client’s ordinary payment obligations under clause 51. 2020 amendments to the standard NEC4 Y(UK)1 wording, which expressly permit direct payment to the Contractor before a PBA exists, were held not to cast light on the proper construction of the earlier version of the clause.

CWMF GUIDANCE

In our July 2026 update, we outlined amendments that have been made to public works contracts with the intent of improving dispute management in public construction projects. Under the CWMF, an updated Guidance Note on Dispute Avoidance and Resolution has now been published.

ADJUDICATION

Minister Dillon has re-appointed Bernard Gogarty as Chairperson of the Construction Contracts Adjudication Panel established pursuant to the Construction Contracts Act 2013.