Monday, June 22, 2015
In May 2015 the Minister for Business and Employment announced his intention to appoint Dr Nael Bunni as chairperson of the ministerial panel of adjudicators, an appointment under the Construction Contracts Act 2013.
The appointment of a chairperson was the one outstanding matter impeding the commencement of the Act so now it seem there is no reason to delay commencement. Or is there?
Many would say that the time for adjudication was six or seven years ago; more believe that it is inopportune to introduce the system to deal with payment disputes just when construction in our economy is taking off again. In 2015 there have been over 3,500 commencement notices issued (Construction Summit 2015, RDS, 16 June 2015), NAMA are referring to the intensity of their developments with over 20,000 homes “shovel ready” by 2016; the construction industry is starting to thrive again. As Dr Bunni accepts his appointment it seems timely to remember what the process of adjudication will mean and what we all need to be poised for, once the Act commences.
Section 6 of the Construction Contracts Act 2013 (the 2013 Act) sets out the timetable which one adheres to in exercising the right to refer a payment dispute to adjudication. The first step is that an aggrieved party can refer the payment dispute “at any time”. This means that regardless of clauses in your existing contract referring disputes to mediation or conciliation, an aggrieved party can ignore those and leap frog to adjudication under the statute.
The appointment of the adjudicator should be agreed within 5 days and failing agreement of the parties upon that appointment , an appointment will be made from the panel selected by the Minister (a panel chaired by Dr Bunni as aforesaid).
Section 6 (5) of the Act states that the dispute must be referred to the adjudicator (and at the same time a copy to the other party) within 7 days of the adjudicator’s appointment. The adjudicator must then reach its decision within 28 days of the referral. There is a facility to extend this because the Act refers to “such longer period as is agreed” by the parties or there is also a facility for the Adjudicator to extend by 14 days if the referring party consents. These extensions all require consent; if there is no such consent then the timelines become very, very short indeed.
If we do the maths then at the short end, we have:
Notice of adjudication + 5 days + 7 days + 28 days = 40 days
Admittedly this is not allowing for delays which may be incurred (eg. if there is reference to the panel for an appointment leading to an extension beyond 5 days at the early stage, a suspension, an argument as to whether there is a payment dispute to start with) but it is important to appreciate how quickly the short timetable could just be.
Experience in the UK has shown that parties in an adjudication are not typically co-operative and facilitative of extensions. It is a system referred to as “rough justice” where “the need to have the right answer has been subordinated to the need to have an answer quickly” (Carillion Construction Limited v Devonport Royal Dock Yard Limited ).
As the chairperson becomes appointed by the Minister, are the wheels starting to turn towards the introduction of adjudication in Ireland? If so we need to be ready for a new form of dispute resolution with a timeline which this country has never seen!