Today sees the commencement of the long awaited Construction Contracts Act 2013 (the “Act”), almost three years to the day since the Act was enacted (and just over six years since it was originally introduced as a private member’s bill in the Seanad by Senator Fergal Quinn).
Certain construction contracts entered into after 25 July 2016 are covered by this Act which aims to improve payments in construction contracts by:
- imposing minimum requirements for payment arrangements; and
- introducing a 28 day adjudication procedure for payment disputes (which is broadly similar to the adjudication process in the UK).
The Act doesn’t apply to all construction contracts, for example:
- contracts below a value of €10,000;
- supply only contracts; or
- main contracts with owner-occupiers for domestic houses if the floor area is below 200 square metres
are not covered by the Act.
A party to a construction contract (to which the Act applies) may refer a payment dispute to adjudication regardless of any dispute resolution clause contained in the contract which states otherwise.
The Act also introduces a statutory right to suspend works where a party has not been fully paid by the payment due date, by giving notice in writing at least 7 days before the proposed suspension is to begin. This right to suspend work ends immediately once the outstanding amount has been paid by the employer or once a notice of adjudication has been delivered.
Under the Act, an adjudicator may be appointed on agreement of both parties, or, if the parties cannot reach an agreement, an application can be made to the chairperson of the Construction Contract Adjudication Panel to appoint an adjudicator.
An adjudicator must reach a decision within 28 days of the date that a referral is made, although this deadline may be extended by 14 days if agreed by the referring party, or by a longer period if consent is granted by both parties involved in the dispute. The decision is binding unless:
- the parties reach a final settlement of their dispute;
- if the dispute is referred to arbitration; or
- if proceedings are initiated in a court in relation to the adjudicator’s decision.
Adjudicators appointed under this Act are to be bound by the Code of Practice Governing the Conduct of Adjudications.
The Department of Jobs, Enterprise and Innovation has published an information booklet on the Act, available at www.djei.ie.