Payment Adjudication

Table of Contents

Construction Contracts Covered

The Construction Contracts Act 2013 applies to contracts for the carrying out of construction operations, arranging for the carrying out of construction operations by others whether under subcontract or otherwise, or providing his own labour or labour of others for the carrying out of construction operations.

A construction contract includes an agreement to do architectural, design, or surveying work, providing advice on building, engineering, interior or exterior decoration or the laying out of landscape in relation to construction operations.

Where an agreement relates to construction operations and other matters, the Act only applies to it in relation to construction operations. An agreement is deemed to relate to construction operations insofar as it makes provision of the kinds mentioned above.

The Act applies to construction works, and construction contracts entered after commencement of the Act and which relate to the carrying out of construction operations in the State. The Minister may vary the categories of agreements which are deemed construction contracts for the purpose of the legislation.

Excluded Contracts

The Act does not apply to certain residential construction contracts. This covers a contract

if the value of the contract is not more than €10,000, or
if the contract relates only to a dwelling, and ) the dwelling has a floor area not greater than 200 square metres, and ) one of the parties to the contract is a person who occupies, or intends to occupy, the dwelling as his or her residence.

A contract of employment is not a construction contract.

A contract between a State authority and its partner in a public private partnership arrangement, is not a construction contract.

Right to Refer Payment Disputes to Adjudication.

A party to a construction contract has the right to refer for adjudication any dispute relating to payment arising under the construction contract. The party may exercise the right by serving on the other person who is party to the construction contract at any time notice of intention to refer the payment dispute for adjudication.

The parties may, within 5 days beginning with the day on which notice is served, agree to appoint an adjudicator of their own choice or from the panel appointed by the Minister. Failing agreement between the parties, the adjudicator shall be appointed by the chair of the panel selected by the Minister.

The party by whom the notice was served—

shall refer the payment dispute to the adjudicator within 7 days beginning with the day on which the appointment is made, and
shall at the same time provide a copy of the referral and all accompanying documents to the person who is party to the construction contract.

The Adjudicator

The adjudicator shall reach a decision within 28 days beginning with the day on which the referral is made or such longer period as is agreed by the parties after the payment dispute has been referred. The adjudicator may extend the period of 28 days by up to 14 days, with the consent of the party by whom the payment dispute was referred.

The adjudicator shall act impartially in the conduct of the adjudication and shall comply with the code of practice published by the Minister, whether or not the adjudicator is a person who is a member of the panel selected by the Minister.

The adjudicator may take the initiative in ascertaining the facts and the law in relation to the payment dispute and may deal at the same time with several payment disputes arising under the same construction contract or related construction contracts.

The Minister may prepare and publish a code of practice governing the conduct of adjudications.

Decision

The decision of the adjudicator shall be binding until the payment dispute is finally settled by the parties or a different decision is reached on the reference of the payment dispute to arbitration or in proceedings initiated in a court in relation to the adjudicator’s decision.

The decision of the adjudicator, if binding, shall be enforceable either by action or, by leave of the High Court, in the same manner as a judgment or order of that Court with the same effect and, where leave is given, judgment may be entered in the terms of the decision.

The decision of the adjudicator, if binding, shall, unless otherwise agreed by the parties, be treated as binding on them for all purposes and may accordingly be relied on by any of them, by way of defence, set-off or otherwise, in any legal proceedings.

The adjudicator may correct his or her decision so as to remove a clerical or typographical error arising by accident or omission but may not reconsider or re-open any aspect of the decision.

The adjudicator is not liable for anything done or omitted in the discharge or purported discharge of his or her functions as adjudicator unless the act or omission is in bad faith, and any employee or agent of the adjudicator is similarly protected from liability.

Costs

Each party shall bear his or her own legal and other costs incurred in connection with the adjudication. The parties shall pay the amount of the fees, costs and expenses of the adjudicator in accordance with the decision of the adjudicator.

An adjudicator may resign at any time on giving notice in writing to the parties to the dispute and the parties shall be jointly and severally liable for the payment of the reasonable fees, costs and expenses incurred by the adjudicator up to the date of resignation.

The parties to a dispute may at any time agree to revoke the appointment of the adjudicator and the parties shall be jointly and severally liable for the payment of the reasonable fees, costs and expenses incurred by the adjudicator up to the date of the revocation.

Right to Suspend Work for Failure to Comply

Where any amount due pursuant to the decision of the adjudicator is not paid in full before the end of the period of 7 days beginning with that on which the decision is made, the executing party may suspend work under the construction contract by giving notice in writing under the statutory provision.

The notice shall specify the grounds on which it is intended to suspend work and shall be delivered to the other party not later than 7 days before the proposed suspension is to begin.

Work may not be suspended under this provision

after payment by the other party of the amount due, or
after the decision of the adjudicator is referred to arbitration or proceedings are otherwise initiated in relation to the decision.

Where work is suspended and the ability of the executing party or a subcontractor to complete work within a contractual time limit is affected by the suspension of work, the period of suspension shall be disregarded for the purpose of computing the contractual time limit.

A period of suspension of work shall also be disregarded for the purpose of computing the time taken to complete the work under another construction contract where—

the construction contract, the work under which is suspended, is a subcontract,
the other construction contract is also a subcontract and the other party to that other subcontract is the same as the other party to the subcontract the work under which is suspended, and
the ability of the executing party under that other subcontract to complete work within a contractual time limit is affected by the suspension of work.

Selection of Panel of Adjudicators

The Minister shall from time to time select persons to be members of a panel to act as adjudicators in relation to payment disputes and shall select one of those persons to chair the panel. Persons selected shall be members of the panel for a period of 5 years commencing on the date of selection and shall be eligible for reselection at the end of the period of 5 years.

The Minister may, for good and sufficient reason, remove a member of the panel. A member of the panel may at any time resign by giving notice in writing to the Minister.

In selecting persons to be members of the panel, the Minister shall have regard to their experience and expertise in dispute resolution procedures under construction contracts; and a person may not be selected to be a member of the panel unless the person is

a registered professional as defined in section 2 of the Building Control Act 2007 ;
a chartered member of the Institution of Engineers of Ireland;
a barrister;
a solicitor;
a fellow of the Chartered Institute of Arbitrators;
a person with a qualification equivalent to any of those specified in any other Member State of the European Union.

Notices

The parties to a construction contract may agree on the manner by which notices under this Act shall be delivered. If or to the extent that there is no such agreement, a notice may be delivered by post or by any other effective means.

Where under this Act a notice is required to be delivered not later than a specified number of days after a particular date and the last of those days is a day which is a Saturday or Sunday or a public holiday the notice shall be taken to be validly delivered if delivered on the next day which is not such a day.