WHAT IS IT?
Any Contract for construction operations entered into after 25 July 2016 will now be subject to statutory provisions to improve payment procedures and allow contracting parties the right to refer payment disputes to adjudication. The relevant act is the Construction Contracts Act 2013 and is supplemented with the Code of Practice. As a result of the legislation, Adjudication as a means of resolving payment disputes shall be a statutory right to any contracting party involved in engaging or providing construction services. The process is designed to be a fast track way of resolving payment disputes, albeit in a temporarily binding manner, with a view to maintaining the cashflow of the parties (and the industry as a whole) and allowing them to have a decision on their dispute made by an independent third party.
THE PROCESS –
Adjudication is by its very nature a speedy process and as such the parties to this process must comply with certain timeframes that, if they are not met may compromise the jurisdiction of the adjudicator. It cannot be understated the need to obtain proper advice from experienced adjudication users before entering this process.
The right to refer a payment dispute arises once the claim is presented and the assessment of that payment claim is disputed. Once this happens either party may refer the matter to an impartial adjudicator. The process thereon will be individual to the dispute and may involve meetings, witness statements or specific submissions. The outline below sets out those typical events in the process:
- Notice of Intention to Adjudication (Notice) – An adjudication may be commenced by either party upon the crystallisation of a payment dispute at any time by issuing a Notice to the other party. The Notice must contain certain details, the contract documents and the relevant material relied upon to justify the claim;
- Appointment of the Adjudicator – the Parties may agree on the person to act as adjudicator / agree on the appointing body to make a nomination or rely on an appointment coming from the Chair of the Minister’s Panel of Adjudicators;
- Referral Notice (Referral) – The adjudication timetable commences upon the service of the Referral, this date being day 1 of the 28-day process. The Referral must be issued to the Adjudicator (and to the other party) no later than 7 days after the date of the Notice. This provides a detailed narrative of the disputed matter, the Party’s contentions and is accompanied by all relevant documents that the Referring Party may wish to rely upon.
- Adjudicator sets the timetable – Upon receipt of the Referral, the Adjudicator will likely set the timetable for the Adjudication in accordance with the contract or at his/her discretion. This will allow for a Response from the Responding Party, a Reply to this Response, further submissions, the need for site meeting or party meetings.
- The Adjudicator’s Decision – the Decision is to be issued within 28 days of the Referral, this may be extended by the agreement of the Referring Party up to 42 days with any additional extension requiring the agreement of both parties.
WHO CAN USE IT?
The term ‘Construction Contract’ has been given a very wide definition within the Act. The Act will apply to employers, traditional contractors and subcontractors but will also include contracts for services such as design, landscaping, maintenance etc, so ultimately any party to a contract for construction related services will be effected by this change.
WHY USE IT?
The primary reason for the success of adjudication in other jurisdictions has been the commitment of the legal system to the process and the enforcement of decisions. It remains to be seen how the courts in Ireland will act when enforcement matters come before them however it is hoped that they will not make this process redundant before it can properly demonstrate its potential as an effective means of resolution. It is only a very small proportion of adjudication decisions that come before the courts and the reason for this is that the impartial adjudicator’s decision is often a result the parties can accept as reasonable. If this process is not scuppered by unnecessary challenges in the court system it will be an invaluable resolution tool to the Irish construction industry.
WHAT CAN ELEMENTAL PROVIDE?
Elemental Director, Jarlath Kearney is an accredited and highly respected ADR professional who can guide clients through the Adjudication process. Jarlath has experience in over 100 adjudications and has completed the Adjudication Course recognised by Chartered Institute of Arbitrators, Society of Chartered Surveyors, Royal Institute of Architects Ireland, Engineers Ireland, Association of Consulting Engineers Ireland and The Bar Council & Law Library Ireland.
Drawing upon a wealth of knowledge and experience including construction, quantity surveying, commercial management, law and ADR, Elemental can provide a range of key services to clients whether they are ‘Referring’ or ‘Responding’. These services include:
- General guidance and advice on the step by step process of Adjudication
- Drafting a Notice of Adjudication
- Drafting a Referral Notice
- Drafting Responses, Replies or Rejoinders
- Advocacy and party representation
- In-house training on adjudication and payment procedures under the Construction Act
Jarlath is a member on the adjudicator’s panel of the Society of Chartered Surveyors and the Chartered Institute of Arbitrators.
Jarlath is also a member, and Regional Convenor, of the Adjudication Society and Chair of CIArb NI Chapter and as such, remains at the forefront of developments in Construction Adjudication. Such experience and commitment to this form of ADR is invaluable to Elemental clients.