Practical Law

Construction adjudication in Ireland is finally a reality, as the Construction Contracts Act 2013 applies to construction contracts entered into after 25 July 2016.

Over the years, both Jonathan and I have looked at the Act’s progress and, as I was in Dublin a few weeks ago for the latest adjudication and payment claims conference, I thought it was time for another look at what Jonathan once called the “Celtic adjudication tiger“.

A quick recap

The Construction Contracts Act 2013 has been a long time in the making, but it has many similarities with our own Construction Act 1996. For example, it uses the same terminology (like construction contracts and construction operations), and has payment and adjudication regimes that are similar to the UK’s payment and adjudication regimes.

However, there are some key differences, such as:

• Contracts with a value of less than €10,000 are excluded (section 2(1)(a)).
• Owner-occupied dwellings where the floor area is less than 200 m² and the employer does or intends to occupy the property are excluded. Like our residential occupier exclusion but not quite because (it seems), if the house is big enough, the Act will still apply.
• Only payment disputes can be referred to adjudication (section 6(1)).
• The right to suspend for non-payment (section 5(1)) is lost if either party serves a notice of adjudication, referring the payment dispute to adjudication (section 5(3)). Similarly, the right to suspend for non-compliance with an adjudicator’s decision (section 7(1)) will be lost if the adjudicator’s decision is referred to arbitration or the courts (section 7(3)), which must include any enforcement proceedings.

I’ve previously looked at some of the adjudication issues, such as the adjudicator’s code of practice, the adjudicator’s appointment, whether the Wednesbury unreasonableness test applies and unfairness.

However, I didn’t comment on the Act’s scope (I left that to Jonathan), or on what could be described as a rather unusual right to suspend. I’ve seen it suggested that clauses 5(3) and 7(3) can be interpreted as meaning that the party exercising its right to suspend for non-payment has to go back to work, if it chooses to refer the non-payment that gave rise to the suspension in the first place to adjudication, or seeks to enforce the adjudicator’s decision through the courts. Surely that is precisely why there is a right to suspend – to “encourage” the employer to pay – and why there is a right to adjudicate payment disputes. I know some may look at it from the other angle, and argue that since the dispute over non-payment is being dealt with by an adjudicator, why shouldn’t the contractor go back to work?

Only time will tell whether the right to suspend is exercised and, if so, whether contractors find it useful. Certainly in the UK, you don’t see the right to suspend being exercised that often.

One other feature that is worth highlighting is how the timing for the adjudicator’s appointment works, if the parties do not agree on an individual and require the Minister to appoint under section 8. Although the Act prescribes time limits for the referral and a decision, they run from when the adjudicator is appointed. As there is no time prescribed for the Minister’s appointment, in practice this may mean that a responding party will get a bit more time to respond than in the UK.

Bringing all of this up-to-date

As events have moved on since Jonathan and I last blogged about this Act, I thought it was time to highlight a few features.

Probably the main thing people should be aware of is that the Irish government has set up an adjudication service, the Construction Contracts Adjudication Service, which is a section of the Department of Jobs, Enterprise and Innovation (DJEI) and is:

“…responsible for matters in relation to the implementation of the Construction Contracts Act, 2013.”

The DJEI’s website is a really useful place to start as it sets out outline details of the Act and then links through to the many resources that have been published. Unlike in the UK, in Ireland the government has published a Code of Practice governing the conduct of adjudications (under section 9). This one is dated 25 July 2016 and is:

“…binding on all Adjudicators operating under the Act regardless of whether the Adjudicator is appointed to a payment dispute under section 6(3) or 6(4) of the Act.”

It requires adjudicators to be:

“…impartial, independent and only adjudicate where satisfied that no actual conflict of interest exists.”

Further, to:

“…observe the principles of procedural fairness, which shall include giving each party a reasonable opportunity to put their case and to respond to the other party’s case.”

I looked at the draft code last year. Even if the detail has altered in places, the intention behind the code has not. It still sets out an adjudicator’s responsibilities to the parties, explains how the appointment process will be conducted (whether that is by agreement between the parties or via an application to the Chairperson of the Construction Contracts Adjudication Panel), and goes on to explain the referral process and procedures. In many ways, the adjudicator’s powers are similar to those set out in paragraph 13 of the Scheme for Construction Contracts 1998.

A couple of concepts that are more familiar in litigation than in adjudication include an adjudicator adopting procedures that are “commensurate with the nature and value of the payment dispute” and using “reasonable endeavours” to deal with the parties’ payment dispute “in the shortest time and at the lowest cost”. Proportionality by another name.

Both Jonathan and I (and a few other familiar names) are on the Adjudication Panel. Neither of us have been instructed yet, but I guess it is still early days for the legislation.

Enforcing the adjudicator’s decision

Previously I have discussed how adjudication enforcement differs in the two jurisdictions.

However, it seems that the concerns about enforcement have been listened to because now, once the adjudicator issues a decision, a party may apply to the High Court to enforce that decision. This is a new procedure, under a new statutory instrument (SI 450 of 2016).

To me, it looks a lot like the procedure we see in the TCC under CPR 7 and 24, with a party issuing a claim (an “originating notice of motion”) and supporting that claim with a “grounding affidavit” seeing out details of the contract, the adjudicator’s decision and reasons why that decision should be enforced. It provides for the defendant to serve a “replying affidavit”, which should explain why enforcement is being resisted and the applicant may respond to this, with its own “replying affidavit”. After that, it looks like the court will deal with the application without a hearing (at least that is my reading of “every application under this Order shall be heard and determined on affadavit”). The one thing that isn’t clear is how long this will all take, but I’m sure the hope is that it will be a similar time frame to the 28 days allowed for the adjudication itself (just like here).