Introduction of Adjudication in Ireland?

26 February 2011

It is increasingly likely that Ireland will soon have a Construction Contracts Law modelled on the Housing Grants, Construction and Regeneration Act 1996 which came into effect in the UK in 1998. This legislation will govern payment in construction contracts and provide a mechanism for rapid forms of dispute resolution which will undoubtedly be a welcome change in an industry which is fraught with difficulties concerning payment.

Senator Feargal Quinn introduced the Construction Contracts Bill into the Seanad on 19 May 2010 by way of a Private Members Bill. The Bill has passed the committee, second and report stages and is due back before the Seanad at the beginning of March. All parties are said to support the Bill in which case a change of government should not affect its passing into law. The Bill has been amended by the Department of Finance and the amended version has not yet been released.

In principal however, the Bill aims to enact legislation in Ireland closely based on the Housing Grants, Construction and Regeneration Act 1996. That legislation provides for adjudication as a mandatory means of dispute resolution in construction contracts. Similar legislation applies in Australia, New Zealand and Singapore and the overwhelming opinion is that such legislation is beneficial to construction contracts.

The procedure for adjudication in the UK legislation provides that where a party to a construction contract (any party) has a dispute under the contract (any dispute) it should provide seven days notice to the party against whom the dispute arises. An adjudicator is appointed at the expiration of the seven days and has 28 days within which to make a decision. There are provisions for the extension of time for a further 14 days. Once the decision is made it becomes binding and can be enforced by the relevant party.

Clearly, such a fast track dispute resolution procedure would assist cash flow under the contract and this would be particularly beneficial to cash strapped sub contractors. The legislation is therefore to be welcomed. Significant other changes will have to be introduced in Ireland if adjudication is to succeed including the amendment of all standard forms of contract. The largest obstacle however to the successful implementation of adjudication into Ireland is the lack of a dedicated construction court such as the Technology and Construction Court in the UK. If no changes are made to the system in Ireland then applications for the enforcement of adjudication awards will have to line up behind all other claims in an already clogged court system. It remains to be seen what if any action will be taken to redress this difficulty.