Adjudication

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The Rare Promulgation of a Private Member’s Bill…

The Construction Contracts Act, 2013 (“the Act”) was finally signed into law by the President on the 25th December 2013 and was commenced on 25th July 2016.

The Act introduces radical changes to the regime of dispute resolution in the construction industry. It remains to be seen whether it will initiate a revolution in the resolution of construction disputes in this jurisdiction similar to that experienced in the UK.

The CBA, lead by Gerard Meehan BL, Michael Munnelly BL and Mark Sanfey SC, represented the interests of the Members of the CBA in its dealings, qua Stakeholder, with the Construction Contracts Adjudication Service, the various actively involved governmental departments and with the other Stakeholders.  The CBA would like to Mr. Meehan, Mr. Munnelly and Mr. Sanfey for their significant contributions in this regard.

The CBA welcomed the appointment of Professor Nael G. Bunni as Chairman of the Adjudication Panel. Professor Bunni has been an enthusiastic friend to the CBA since its formation and memorably chaired the CBA’s first Annual Construction Law Conference in November 2013.

The CBA, guided by the learned contribution of John Trainor SC, has also liaised with the Rules Committee in the drafting of new Rule of the Superior Court implemented to facilitate the functioning of the Construction Contracts Act, 2013 (Click here to download Rule 56B RSC).

Members should also be aware of the Code of Practice Governing the Conduct of Adjudications

Mandatory

Under the Act parties to a construction contract are precluded from contracting out of the statutory adjudication process. However, unlike in the UK, where any dispute arising out of a construction contract may be referred to adjudication the scope of the Act is confined to ‘payment disputes’ (which term, somewhat unhelpfully, has not been explicitly defined in the Act).  It is anticipated that this topic alone is likely to trouble the Court in due course when completed adjudications begin to feed into the courts for reason of enforcement or otherwise.

Rough Justice v Flow of Payments

The Act provides that adjudication is triggered by the referral of the payment dispute by either party to adjudication. The adjudication process is governed by tight time limits. It is axiomatic that the truncated period provided for in the Act in the first instance (28 days) for dealing with the dispute carries with it the risk of ‘rough justice’.  The extent and/or level of the “roughness” which the Irish judiciary may be willing to accept in exchange for the “good” of the efficient operation of contractual payment mechanisms remains to be seen. The proponents of adjudication advocate that this ‘evil’ is a necessary sacrifice to achieve the speedy resolution of payment disputes. It might be anticipated that wise adjudicators, mindful of constitutional imperatives, will be active in creating sufficient time in any process to allow an adequate ventilation of the issues in dispute by both sides.

Under the Act, a party may refer a payment dispute “at any time” which will allow parties to commence fresh adjudication proceedings in the midst of an arbitration or other dispute resolution process.

Binding

An adjudicator’s decision under the Act is binding and ostensibly immediately enforceable.  If it is not discharged, it is capable of summary enforcement in the same way as any Court Order and an Adjudicator’s decision can only be overturned by a superseding arbitrator’s award or Court order.

Judicial Support

The UK judiciary has consistently demonstrated a remarkably supportive approach to adjudication.  The ‘first blush’ opinions of some of the most senior members of the Irish judiciary expressed to date indicate that the same constant fair wind might not be automatically assumed in this jurisdiction.  In circumstances where a complaint of breach of natural justice is made and premised upon constitutional concepts, the Irish Courts may well apply a stricter lens of scrutiny to a dispute resolution process which has not been assented to by the parties in contract but, rather, imposed upon them by way of mandatory statutory provision.

An important feature of adjudication is that each party will pay their own legal and other costs and the adjudicator’s costs will be discharged in accordance with his/her decision.

Future

Our neighbouring jurisdiction has wholehearted embraced the adjudication process where – more often than not – an adjudicator’s decision amounts to the final stage of any dispute. Australia is another common law jurisdiction that has embraced adjudication in the resolution of construction disputes; albeit, it has been accepting of a wider profile of challenge by way of judicial review or otherwise. Time will tell if we will ultimately chart a course similar to either of these fellow common law jurisdictions.

However, in the current state of uncertainty, most informed commentators agree that the first few years of the operation of the Construction Contracts Act 2013 are likely to be interesting….

***Members are invited to register and access the Codex which contains several papers prepared by Members exploring the the corners of the Construction Contracts Act, 2013. For the benefit of Non-Members please click on below link to download Senan Allen SC’s consideration of the Act presented to the CBA Open Conference in July 2014.