Author: Paul Hughes; Barrister-at-Law, PhD
In Ireland construction disputes are normally resolved by arbitration, conciliation or mediation. On occasion disputes may proceed to litigation. However, pursuant to the provisions of the Construction Contracts Act 2013 adjudication will be introduced into Irish law in the near future and will apply to construction contracts entered into after it becomes law. This will give the parties to a construction contract an alternative method for potentially resolving a dispute. The legislation does not demand that the parties take their dispute to adjudication. The policy of adjudication in construction is ‘pay first, argue later’. The parties are at liberty not to accept the adjudicator’s decision, albeit they are bound by the decision temporarily at least. Adjudication provides ‘temporary finality’.
Adjudication was introduced in the UK in the late 1990s with the intention of resolving construction disputes faster and more economically. The idea behind adjudication in construction disputes is to deal with the gross inequality of the financial strengths between the various parties in construction contracts, from developer, to main contractor to sub-contractor and so forth. The policy considerations relating to construction adjudication in Ireland appear to be similar to that in the UK. During Dáil debates in relation to the adjudication provisions it was stated that:
“This is a critical aspect of the Bill and creates an important mechanism by which unpaid parties to construction contracts can have a relatively quick and cost-effective resolution of their payment disputes … where there is a contract, the bulk of the power rests with the main contractor. In cases where work is carried out on an informal basis, the subcontractor has no way of securing payment where there is a dispute. In the minority of cases where formal contracts are in place, the route to resolving such disputes - arbitration or the courts - is costly and time consuming.”
In broad terms the adjudication process as set out in the Irish legislation is similar to the adjudication legislation in the UK. However, the UK legislation applies to a dispute which includes ‘any difference’, whereas, the Irish legislation only applies to a ‘payment dispute’. The parties cannot limit or exclude adjudication and the legislation applies in circumstances where the substantive law is that of another jurisdiction.
In this article we will examine the adjudication procedure in the context of the Irish Construction Contracts Act 2013. We will discuss the procedure from the emergence of a dispute right through to the adjudicator’s decision. It is difficult to predict at this stage how the Irish courts will apply the legislation. The UK has built up a value resource of information on the process. Consequently, reference will be made to adjudication in the UK.