Home Knowledge Cutting the Costs? Adjudication and the Construction Contracts Bill 2010

Cutting the Costs? Adjudication and the Construction Contracts Bill 2010

The Construction Contracts Bill 2010 seeks to address outstanding payment issues between employers and contractors and sub-contractors by introducing a new dispute resolution mechanism for construction contract disputes in Ireland, through adjudication by an independent third party.  The Bill was presented to the Seanad by Senator Feargal Quinn on 19 May 2010 as a Private Member’s Bill.

Adjudication has been widely used in the UK to resolve construction payment disputes since its introduction under Part II of the Housing Grants, Construction and Regeneration Act 1996. This legislation is due to be updated by the Local Democracy, Economic Development and Construction Act 2009.

The Bill is broadly modelled on the UK legislation. Once enacted it would apply to agreements to carry out or procure construction operations. Broadly defined, this would include works or advices on construction, design, surveying, engineering, decoration, landscaping, repair, maintenance, demolition of structures and works ranging from buildings, road-works and utilities, to scaffolding and painting.

Under the Bill:

  • parties to construction contracts cannot withhold payment of money due unless they have given effective notice of intention to withhold payment;
  • parties can suspend performance due to non-payment, until payment is made in full;
  • parties can refer a dispute to adjudication following 7 days notice; and
  • adjudicator’s decisions must be reached within 28 days of referral, or 42 days with the referring party’s consent.

The contract must specify that the adjudicator’s decision will be considered binding on both parties until the dispute is resolved through agreement, arbitration or litigation. The adjudicator must act in good faith and impartially. The parties must comply with the decision whether or not they object to it and continue to pursue the matter through arbitration or litigation if no agreement can be reached.

Given that the timescales are short, adjudication is generally considered less expensive than prolonged litigation.  

The Bill appears to be receiving widespread support. While acknowledging there needs be some fine-tuning, a consultative process with key stakeholders such as the SCS, CIArb and CIF to progress the Bill is underway.  The Seanad will re-examine the Bill in September 2010.

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