The Construction Contracts Bill 2010 has been passed by the Seanad (upper house of the Irish Parliament (Oireachtas)) at all stages on 8 March 2011 as one of its last acts before adjourning.
The Bill seeks to address outstanding payment issues between employers and contractors and sub-contractors by introducing a new statutory dispute resolution mechanism for construction contract disputes in Ireland, through adjudication by an independent third party. 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 (HGCRA).
Broadly modelled on the HGCRA, it will apply irrespective of whether parties attempt to limit or exclude its application in a contract.
Once enacted it would apply to agreements to carry out or procure construction operations. Broadly defined, this would include a non-exhaustive list of works or advices on construction, design, engineering, repair, maintenance, demolition of structures and works ranging from buildings, road-works and utilities, to scaffolding and painting. However it potentially excludes supply only or equipment contracts unless these are to be permanently installed.
The Bill has been significantly amended since first introduced. It now excludes contracts:
- Where one party is a State entity and the contract value is not more than €50,000
- Between a State Authority and its private sector partner in a PPP arrangement
- where the contract value exceeds €200,000 and relates to a residential dwelling with a floor area not greater than 200 sqm
- in all other contracts where the contract value is not more than €200,000
The main features of the updated Bill include:
- The statutory interim and final payment mechanisms specified in the schedule to the Bill will apply to all construction contracts in so far as the contract is inconsistent with the Bill
- Paid when paid clauses will generally no longer be acceptable
- Parties to construction contracts cannot withhold payment of money due unless they have responded in writing within 21 days to a payment claim notice
- 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 adjudicator’s decision will be considered binding on both parties until the dispute is resolved through agreement, arbitration or litigation. Parties must meanwhile comply with adjudicators’ decisions whether or not they object to it and continue to pursue the matter through arbitration or litigation if no agreement can be reached.
Since the Bill was first presented to the Seanad by Senator Feargal Quinn in May 2010 as a Private Member’s Bill a consultative process with key stakeholders has occurred. The updated Bill draws on aspects of the unimplemented part of the UK Local Democracy, Economic Development and Construction Act 2009. It is intended that the Bill will be debated by the Dáil (lower house of the Irish Parliament) upon its reconstitution and a Regulatory Impact Assessment is to be carried out. It is likely that the Bill will be subject to further debate and refinement.
For further information, please contact Jarleth Heneghan or Cassandra Byrne of our Projects & Construction Department.