English court rules that building liability orders can apply to foreign companies
Published on 24 August 2026
Technology and Construction Court opens the way for developers to recover remediation costs from overseas groups
At a glance
The ruling is the first reported decision on section 149 of the Building Safety Act 2022, which targets cladding manufacturers and suppliers.
Developers that funded remediation costs through the government's Building Safety Fund now have clearer grounds to pursue supply chain recovery.
The judgment signals that building safety legislation reaches further into overseas corporate structures than previously tested.
The Technology and Construction Court (TCC) has ruled that legal proceedings brought against two German companies in connection with unsafe cladding on residential tower blocks can continue, in a judgment with significant implications for building safety litigation across group structures.
The ruling, in HB (WM) Ld v STO Ltd [2026], establishes that building liability orders under the Building Safety Act 2022 (BSA) can extend to foreign associated companies and addresses section 149 of the legislation, which has not previously been considered in any reported decision.
The Grenfell legacy
Following the Grenfell Tower fire, Redrow, Lendlease and Barratt carried out inspections and discovered serious fire safety concerns with an external wall cladding system fitted to 18 tall residential blocks. The system in question was the StoTherm Classic wall system, which used expanded polystyrene insulation with poor fire performance. The developers initially funded the remediation costs through the government's Building Safety Fund, but in doing so committed under self-remediation terms contracts to paying the money back.
The developers turned their attention to the supply chain behind the problematic cladding. The first defendant, Sto Ltd, the Scottish manufacturer of the system, is in administration. The developers therefore brought their claims also against the second defendant, Sto SE & Co KGaA, a German company that supplied components to Sto Ltd, and the third defendant, Stotmeister Beteiligungs GmbH (SBG), a German non-trading holding company that is the majority shareholder in Sto Germany.
Jurisdictional challenge
Sto Germany and SBG challenged whether the TCC had authority over them at all. The arguments raised included whether the claims brought against Sto Germany under section 149 of the BSA, which creates a statutory tort relating to defective or misleadingly marketed cladding products, were properly framed and had any realistic chance of success.
The defendants questioned whether the developers' contribution claims against Sto Germany and SBG under the Civil Liability (Contribution) Act 1978 were legally sound and whether a building liability order (BLO) under section 130 of the BSA could ever be granted against SBG, a foreign non-trading holding company with no direct footprint in England. The defendants also questioned whether English statute law could extend that far beyond its borders.
The court's decision
Mr Justice Moody rejected every one of the challenges. While emphasising that none of this amounts to a final determination of the substantive issues, the judge was satisfied that the section 149 claims against Sto Germany were properly constituted and had realistic prospects of getting to trial, given the involvement of Sto Germany in the specification, manufacture and marketing of the cladding system.
The contribution claims were not so flawed as to be dismissed at this early stage, with the court finding that all parties could potentially be liable to building owners and lessees for the costs of remediation.
On the question of territorial reach, the court took the view that where English law governs the underlying liability, as appeared likely here, there is no difficulty in applying the English statute to an associated company, in this case a foreign one. The court also noted that, even if a direct extra-territoriality analysis were required, the broad "just and equitable" standard applicable to BLOs is well suited to fact-specific situations involving foreign group companies. It would therefore be odd, the court noted, if section 130 were not intended to apply to foreign entities that would otherwise fall within its scope had they been registered in the UK.
Osborne Clarke comment
This is a landmark decision for those working in building safety for two reasons.
First, this is the first reported decision to consider section 149 of the BSA. Section 149 is significant as it imposes liability on manufacturers and suppliers of defective cladding products, and on those who make misleading statements about them, for losses suffered by third parties with an interest in the relevant building. It is a provision that has the potential to reshape how cladding supply chain liability is approached, and this judgment suggests that it is capable of reaching foreign manufacturers.
Second, and more broadly, the court's treatment of BLOs and their territorial reach matters for anyone pursuing group companies based outside the UK. The direction of travel from the Technology and Construction Court is that BLOs look very likely to extend to foreign associated companies.
Anushka Kumar, a senior paralegal with Osborne Clarke, helped prepare this Insight.
